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American Family Mutual Insurance Co. v. Donaldson

United States District Court, District of Minnesota

January 27, 2015

American Family Mutual Insurance Company, Plaintiff,
John Martin Donaldson, Todd Richard Patton, and Jacob Todd Patton, Defendants.



This matter is before the Court on the parties’ cross-Motions for Summary Judgment. For the reasons that follow, the Court grants Plaintiff’s Motion and denies Defendants’ Motion.


This is an insurance case, in which American Family Mutual Insurance Company is suing Todd Patton, his son Jacob Patton, and Jacob’s friend John Donaldson for a declaratory judgment that Todd’s umbrella insurance policy does not cover Donaldson’s injuries sustained while a passenger in Jacob’s car.

The Court’s prior rulings in this case chronicle the facts in greater detail. (See, e.g., Mem. & Order (Docket No. 83) 1-3.) In short, the crash that injured Donaldson occurred after Jacob led police on a drunken high-speed chase. (Id. at 1-2.) Jacob was charged with two counts of criminal vehicular operation and initially pleaded not guilty. (Id. at 2.) Todd owned the car and had purchased an automobile insurance policy and an umbrella policy, which covered him and Jacob, from American Family. (Id.) The two sought insurance coverage for Donaldson’s injuries under both policies. (Id.) Donaldson ultimately received $100, 000 under the auto policy; this dispute is about whether he may receive more than that under the umbrella policy. (Id. at 2-3.) The umbrella policy contains two relevant exclusions to coverage: an intentional-acts exclusion and a violation-of-law exclusion. (L’Esperance Aff. (Docket No. 113) Ex. 2, at 2.)

The Court previously granted summary judgment for American Family and against Defendants on the ground that the intentional-acts exclusion barred coverage. (Mem. & Order 5-7.) In doing so, the Court declined to address the violation-of-law exclusion. (Id. at 7.) At that time, Jacob was awaiting trial on the criminal charges. (Id. at 2.) While the Court’s decision was on appeal to the Eighth Circuit, however, Jacob pleaded guilty to one of the charges: criminal vehicular operation in violation of Minn. Stat. § 609.21, subd. 1(2)(i), which prohibits the negligent operation of a motor vehicle while under the influence of alcohol. (Vraa Aff. (Docket No. 104) Ex. A, at 1.) Given that development, the Eighth Circuit refrained from exercising jurisdiction and remanded for the Court “to address in the first instance any remaining unresolved issues surrounding [Jacob’s] criminal conviction that may prevent [the Eighth Circuit] from considering the violation-of-law exclusion as an alternative ground for affirming” the Court. (Op. (Docket No. 94) 2-3.)

The parties now move for summary judgment on the applicability of the violation-of-law exclusion.


Summary judgment should be granted if the moving party shows that there are no genuine disputes of material fact and that it is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). A fact is material if its resolution affects the outcome of the case. Paine v. Jefferson Nat’l Life Ins. Co., 594 F.3d 989, 992 (8th Cir. 2010). A dispute is genuine if the evidence could cause a reasonable jury to return a verdict for either party. Id. When evaluating a motion for summary judgment, the Court must view the facts in the light most favorable to the nonmoving party and draw all reasonable inferences in that party’s favor. Marlowe v. Fabian, 676 F.3d 743, 746 (8th Cir. 2012).

The material facts, as relevant to the violation-of-law exclusion, are undisputed. The issue then is whether, as a matter of law, the violation-of-law exclusion bars coverage for Donaldson’s injuries. To decide that issue, the Court must interpret the language of the exclusion and determine whether the injuries fall within the exclusion.

When interpreting an insurance policy, the Court—a federal court sitting in diversity—applies state substantive law. E-Shops Corp. v. U.S. Bank Nat’l Ass’n, 678 F.3d 659, 663 (8th Cir. 2012). The parties agree that the law of Minnesota, the forum state, should govern. Under Minnesota law, the interpretation of an insurance policy is a question of law. Thommes v. Milwaukee Ins. Co., 641 N.W.2d 877, 879 (Minn. 2002). Minnesota courts interpret an insurance policy, like all contracts, to “give effect to the intentions of the parties as reflected in the terms” of the policy. Midwest Family Mut. Ins. Co. v. Wolters, 831 N.W.2d 628, 636 (Minn. 2013) (citation and quotation marks omitted). If the policy language is clear and unambiguous, its plain meaning must be enforced. Travelers Indem. Co. v. Bloomington Steel & Supply Co., 718 N.W.2d 888, 894 (Minn. 2006). But if the policy language is ambiguous—in that it is susceptible to two or more reasonable interpretations—the policy is to be construed against the insurer who drafted it and in favor of the insured. Id.

The violation-of-law exclusion unambiguously bars coverage for Donaldson’s injuries. The exclusion precludes coverage for an “injury arising out of violation of a penal law or ordinance by . . . an insured when an insured is convicted of such violation.” (L’Esperance Aff. Ex. 2, at 2.) Jacob is an insured under the policy, Donaldson’s injuries resulted from Jacob’s crash of the car, and Jacob was convicted of criminal vehicular operation for the crash. Jacob was therefore convicted of a violation of criminal law, and his actions plainly meet the criteria of the violation-of-law exclusion.

Defendants urge that that the violation-of-law exclusion cannot be enforced as to Donaldson’s injuries for three independent yet unavailing reasons.

First, Defendants contend that the violation-of-law exclusion is overbroad because it excludes coverage based on all violations of penal law, including petty traffic misdemeanors. Defendants warn that the exclusion as written would allow American Family to avoid coverage in every automobile-collision case given that all automobile collisions theoretically violate at least one Minnesota law. But Defendants’ dire warning falls flat. For one, they lack standing to argue that the exclusion extends too far because Jacob’s violation of penal law—a felony criminal conviction—undoubtedly triggers the exclusion without violating public policy. Plus, other courts, with which this Court agrees, have analyzed nearly identical violation-of-law exclusions and have not hesitated to reject overbreadth arguments waged against them. See, e.g., ...

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