Dissenting, Schumacher, Judge Dakota County District Court File No. CX038716.
Considered and decided by Schumacher, Presiding Judge; Anderson, Judge; and Halbrooks, Judge.
1. The principles set forth in Schmidt v. Clothier, 338 N.W.2d 256 (Minn. 1983), do not apply to nonresident UIM coverage because such coverage does not arise under Minnesota's no-fault act.
2. An insurer cannot be bound by a nonresident insured's use of the notice procedure set forth in Schmidt.
The opinion of the court was delivered by: Halbrooks, Judge
Certified question answered in the negative
A North Dakota resident injured in a motor-vehicle accident in Minnesota settled the underlying tort case for 90% of the tortfeasor's liability-coverage limits. The North Dakota resident then sought to recover underinsured motorist (UIM) benefits from his own insurer. The UIM insurer denied benefits on the ground that the policy terms required exhaustion of a tortfeasor's liability limits and moved for summary judgment. The district court denied the motion for summary judgment but, upon insurer's request, certified to this court the question of whether the principles set forth in Schmidt v. Clothier, 338 N.W.2d 256 (Minn. 1983), apply to nonresident UIM coverage. We answer the district court's question in the negative.
Respondent Mark O. Ziegelmann is a North Dakota resident who was injured in January 1998 in a motor-vehicle accident that occurred in Minnesota. At the time, Ziegelmann was a passenger in his truck, which was driven by his brother, Terry Ziegelmann. The truck collided with a vehicle driven by David Pearce.
Pearce was insured under a policy with Allstate with liability-coverage limits of $50,000. Ziegelmann's coverage on his North Dakota vehicles was with appellant National Farmers Union Property and Casualty Companies (National Farmers).
The policy included underinsured-motorist (UIM) coverage and an exhaustion-of-liability clause:
With regard to . . . an underinsured motor vehicle, we will make payment provided . . . [t]he limits of all bodily injury liability policies and bonds that apply have been exhausted by payment of settlements or judgments, or such limits where the remaining part of them have been offered to the insured person in writing.
This clause is consistent with North Dakota law, which states that UIM coverage does not apply "[u]ntil the limits of all bodily injury liability policies and bonds that apply have been exhausted." N.D. Cent. Code § 26.1-40-15.6 (2003).
In November 2002, Ziegelmann's counsel wrote National Farmers, explaining that Ziegelmann had been offered a settlement in the amount of $45,000 from the $50,000 limit for bodily injury under Pearce's insurance policy with Allstate. The letter states, "I am writing to you pursuant to the procedure outlined in Schmidt v. Clothier in order to preserve any underinsured motorist benefits that might be available to Mark Ziegelmann in ...