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Tomars v. United Financial Casualty Co.

United States District Court, D. Minnesota

June 17, 2015

Michael Anthony Tomars, by his conservator Jacqueline Mannering, Plaintiff,
United Financial Casualty Company, The Progressive Corporation, and Progressive Casualty Insurance Company, Defendants.


JOAN N. ERICKSEN, District Judge.

This is an action for underinsured motorist ("UIM") benefits brought by Plaintiff Michael Anthony Tomars. The case is before the Court on two motions for summary judgment ” one by Defendant United Financial Casualty Company, and the other brought jointly by Defendants The Progressive Corporation and Progressive Casualty Insurance Company (collectively, "the Progressive Defendants").

For the reasons discussed below, United and The Progressive Corporation are dismissed from this action. Progressive Casualty is responsible for providing Tomars with the minimum levels of UIM coverage required by Minnesota's No-Fault Act. The precise amount of Tomars' recovery remains to be determined.


United is an insurance company that writes commercial lines, and Progressive Casualty is an insurance company that writes personal lines automobile coverage. Both are wholly-owned subsidiaries of The Progressive Corporation. All three are Ohio corporations with their principle place of business in the Cleveland area.

Tomars was a claims investigator for Progressive Casualty, working out of its Roseville, Minnesota office. Progressive Casualty assigned Tomars a 2007 Ford 500, which was registered and licensed in Minnesota and garaged at the Progressive claims office in Roseville, to use in the course of his work. That car was part of a fleet of several thousand vehicles garaged across the United States that Progressive Casualty leased for the use of its employees. This nationwide fleet, with the exception of less than 100 vehicles that were garaged in Michigan, was insured by a single policy that was issued by United and which identified "THE PROGRESSIVE CORP ETAL" (sic) as the named insured.

In January of 2010, while driving the Ford 500, Tomars was injured in a collision with a truck on a snowy stretch of highway in Minnesota. The record here does not detail the injuries Tomars suffered, but it is undisputed that his total damages exceed $1 million.

The truck with which Tomars collided was insured to a $1 million limit of liability for bodily injury. Tomars sued the driver and the owner of the truck in Minnesota state court. That case settled in 2012. By the terms of the settlement, Tomars received just under $1.3 million, which consisted of a lump sum payment from the insurer of the truck that exhausted its $1 million liability limit as well as $300, 000 in payments directly from the driver and the owner.

Tomars subsequently filed this action, alleging in a single-count Complaint that the policy that insured the Ford 500 at the time of the accident provides up to $1 million in UIM coverage and that United had breached the terms of that policy by denying his application for those benefits. United twice moved for summary judgment on that breach of contract claim. The briefing on those motions revealed a dispute between Tomars and United regarding the contents of the operative insurance policy and the nature of the UIM coverage it affords. Both of the motions were denied without prejudice.

Tomars subsequently amended his Complaint to add a second count, asserting that, if he is not entitled to $1 million of UIM coverage under the United policy, then "that same coverage becomes available through" The Progressive Corporation and Progressive Casualty.[1]

The two pending motions for summary judgment ” from United on Count I and from the Progressive Defendants on Count II ” have now followed.


Summary judgment is warranted where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). "A dispute is genuine if the evidence is such that it could cause a reasonable jury to return a verdict for either party; a fact is material if its resolution affects the outcome of the case." Gazal v. Boehringer Ingelheim Pharm., Inc., 647 F.3d 833, 837-38 (8th Cir. 2011) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 252 (1986)). "In determining whether there is any genuine factual dispute, the court must look at the record and any inferences drawn therefrom in the light most favorable to the... non-moving party." Grider v. Bowling, ___ F.3d ___, No. 14-2869, 2015 WL 2168302, *2 (8th Cir. May 11, 2015) (citing Anderson, 477 U.S. at 255).

As an initial matter, The Progressive Corporation contends that it should be dismissed from this action because, while it appears as the named insured on the policy that covered Progressive Casualty's fleet, it is neither the owner nor the insurer of those vehicles. Consequently, The Progressive Corporation argues, there is no basis on which it could be liable to Tomars for the payment of UIM benefits.

At oral argument, Tomars and the Progressive Defendants agreed, based on a review of the lease agreement, that Progressive Casualty was the long-term lessee of the Ford 500 and therefore that vehicle's "owner" within the meaning of Minnesota's No-Fault Act. See Minn. Stat. § 65B.43, subd. 4 (defining the lessee of a motor vehicle that is "the subject of a lease having an initial term of six months or longer" as its "owner"). As a result, Tomars did not object to the dismissal of The Progressive Corporation as a defendant. Therefore, in that respect, the Progressive Defendants' motion is granted.

Two Defendants ” United and Progressive Casualty ” thus remain. On its motion for summary judgment, United argues that the claim for UIM benefits that Tomars asserts against it fails in the face of the plain terms of the fleet policy that insured the Ford 500 at the time of the accident and, while Tomars urges that those terms be reformed, there is no basis for doing so here. For its part, Progressive Casualty argues that, if no UIM benefits are available to Tomars under the fleet policy, then it may only be liable to Tomars by implication of law for the minimum level of UIM coverage that an owner is required to maintain on a Minnesota vehicle under Minnesota's No-Fault Act.

As explained below, on this record, the Court agrees with the Defendants.

I. Policy.

The place to begin is with the policy. It is undisputed that Progressive Casualty leased the Ford 500 on a long-term basis, registered it in Minnesota, garaged it at its claims office in Roseville, assigned it to Tomars for his use in the scope of his employment, and insured it under a commercial automobile policy that was issued by United in Ohio and which covered Progressive Casualty's entire nationwide fleet, with the exception of less than 100 vehicles located in Michigan.

Ascertaining the precise contents of this policy, though, has been the source of some consternation throughout the course of this litigation. Underlying much of the confusion has been that

[t]he insurance industry customarily uses standardized forms [that] are generically written to provide for the insurance needs of a wide range of policyholders. Combinations of the various standardized forms are used to create a customized policy for each policyholder. This is accomplished by using base forms such as Commercial Auto, Personal Auto, Personal Umbrella, or Commercial General Liability, which are supplemented by state-specific endorsements that expand or limit the extent of insurance coverage in accordance with the desire of the parties and with each state's laws.

Westfield Ins. Co. v. Galatis, 797 N.E.2d 1256, 1262 (Ohio 2003).

Thus, where a commercial auto policy covers a fleet of vehicles that are registered and garaged across the country, it would perhaps be expected that that policy would include a series of state-specific endorsements conforming its coverages to the requirements imposed by the insurance laws of the states in which particular vehicles are located. E.g., Murphy v. Milbank Mut. Ins. Co., 388 N.W.2d 732, 734 (Minn. 1986) (analyzing a "policy cover[ing] a commercial fleet of over 2, 000 vehicles operated nationwide [that] provided for uninsured motorist coverage conforming to the state where a particular vehicle was registered"). With this approach, a single commercial fleet policy can, in effect, be broken down into constituent state-specific policies, each applicable to the portion of the fleet located within that particular state. Cf. Restatement (Second) of Conflict of Laws § 193, cmt. f (1973) (noting that "multiple risk policies which insure against risks located in several states... usually incorporate the special statutory forms of the several states involved [and, p]resumably, the courts would be inclined to treat such a case, at least with respect to most issues, as if it involved [multiple] policies, each insuring an individual risk").

Earlier in this litigation, there was evidence ” emanating from United itself ” that this was in fact how the commercial auto policy insuring Progressive Casualty's nationwide fleet was constructed. In the spring of 2011, Tomars requested a certified copy of the policy that insured the Ford 500 at the time of his accident in January of 2010. In response, United provided Tomars with a set of policy documents that it certified to be "a true and complete copy of the original" fleet policy applicable to the Ford 500. See Letter of April 20, 2011 and Enclosures, ECF No. 39-1 at 3-56 (letter on "Progressive" letterhead from Jason Ball to Tomars' counsel enclosing "[c]opy of applicable insurance policy" with "[d]eclarations sheet" and "[e]ndorsements" that were certified to be "a true and complete copy of the original"); United's Memorandum in Support of First Motion for Summary Judgment at 7, ECF No. 36 (identifying Jason Ball as a "United Financial representative[] involved in the issuance of the policy and the certification of the policy"). This certified policy consists of:

¢ an "Ohio Commercial Auto Policy" jacket (Form 1781 OH (01/09));
¢ a declarations page ” with the premiums evidently redacted and the space for listing the "attachments to policy at issuance" blank ” indicating that the policy provides a $1 million limit of liability for bodily injury, property damage, collision, comprehensive, and "uninsured motorists" coverages;
¢ a Commercial Auto base form (Form 6912 (09/05)); and
¢ a number of endorsements, including a Minnesota Amendatory Endorsement (Form 4881 MN (07/07)) and a Minnesota Uninsured/Underinsured Motorist ("UI/UIM") Coverage Endorsement (Form 2852 MN (09/05)).

Enclosures to Letter of April 20, 2011, ECF No. 39-1 at 3-56.

The importance that attaches to determining which state-specific UI/UIM endorsement covered the Ford 500 at the time of Tomars' accident lies in the fact that "[t]here are four general types of UIM coverage systems ” difference of limits, damages less limits, limits less paid, and damages less paid...." Dohney v. Allstate Ins. Co., 632 N.W.2d 598, 600 (Minn. 2001). Since 1989, Minnesota's No-Fault Act has defined UIM as "damages less paid" coverage, meaning that it provides "for the protection of persons insured under that coverage who are legally entitled to recover damages for bodily injury from owners or operators" of "a motor vehicle or motorcycle to which a bodily injury liability policy applies at the time of the accident but its limit for bodily injury liability is less than the amount needed to compensate the insured for actual damages." Minn. Stat. §§ 65B. 43, subd. 17, 19. In other words, in Minnesota, payment for an insured's bodily injury damages under the UIM provision in an auto policy "begins where payment from the tortfeasor leaves off." Dohney, 632 N.W.2d at 602-603.

The Minnesota UI/UIM endorsement included in the policy that United certified and provided to Tomars in the spring of 2011 provides this species of UIM coverage. See Minnesota UI/UIM Endorsement at 12-13, 15, ECF No. 39-1 (obligating insurer to "pay for damages" ” less "all sums paid... by or on behalf of any persons or organizations that may be legally responsible" for the damages ” "which an insured is entitled to recover from the owner or operator of an underinsured auto because of bodily injury, " where "underinsured auto" is defined as "an auto or trailer of any type to which a bodily injury liability bond applies at the time of the accident, but its limit of liability for bodily injury is less than the damages, which an insured is entitled to recover from the owner or operator of that auto because of bodily injury"). And Tomars, as an occupant of the Ford 500, is an insured under that endorsement. Id. at 12-13 (defining "insured" as "any person occupying your insured auto"). Because it is undisputed that the damages for the bodily injury that Tomars sustained in the accident exceed the $1 million limit of liability for bodily injury in the policy covering the truck with which he collided, Tomars would be entitled to payment from United for his unrecovered damages, to a cap of $1 million, under this certified policy.

With that policy in hand, Tomars filed suit against the driver and owner of the truck in Minnesota state court in the summer of 2011, while notifying United, through Ball, of the commencement of the action. That case proceeded over the next year before settling in the summer of 2012; Tomars notified United of that development as well.

Shortly thereafter, in August of 2012, Tomars filed suit against United in Hennepin County District Court, claiming that it had breached the policy covering the Ford 500 by refusing his demand for payment of up to $1 million in UIM benefits. See Washington v. Milbank Ins. Co., 562 N.W.2d 801, 805 (Minn. 1997) (explaining that "a UIM claimant may... settle the tort action for the best settlement, ' give notice to the underinsurer, and then maintain a claim for UIM benefits") (citing Schmidt v. Clothier, 338 N.W.2d 256, 261 (Minn. 1983)). United removed the case to this Court.

The following summer, United moved for summary judgment, asserting that it had provided the certified policy containing the Minnesota UI/UIM endorsement to Tomars in error and ” despite the fact that Progressive Casualty's vehicles were registered and garaged in 47 different states ” that the fleet policy insuring all of them contained only Ohio endorsements. United ...

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