James Prisk v. Travelers Indemnity Co. of America ( 2023 )


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  •               United States Court of Appeals
    For the Eighth Circuit
    ___________________________
    No. 22-2769
    ___________________________
    James Prisk,
    lllllllllllllllllllllPlaintiff - Appellee,
    v.
    Travelers Indemnity Company of America,
    lllllllllllllllllllllDefendant - Appellant,
    ------------------------------
    American Property Casualty Insurance Association,
    lllllllllllllllllllllAmicus on Behalf of Appellant(s),
    Minnesota Association for Justice
    lllllllllllllllllllllAmicus on Behalf of Appellee(s).
    ____________
    Appeal from United States District Court
    for the District of Minnesota
    ____________
    Submitted: June 13, 2023
    Filed: August 25, 2023
    ____________
    Before LOKEN, COLLOTON, and ERICKSON, Circuit Judges.
    ____________
    COLLOTON, Circuit Judge.
    James Prisk sued Travelers Indemnity Company of America, seeking a
    declaration that an insurance policy between Travelers and the City of Hermantown
    authorizes up to $2,000,000 in coverage for his tort claim against the city. The
    district court granted summary judgment for Prisk, and Travelers appeals. We
    conclude that the insurance policy limits the amount of Prisk’s recovery to $500,000,
    and therefore reverse the judgment.
    In May 2020, Prisk was riding his bicycle in Hermantown when he was struck
    and injured by a vehicle owned by the city and driven by a city employee. At the time
    of the accident, Travelers insured Hermantown.
    Prisk sued Travelers in Minnesota state court, seeking a declaratory judgment
    as to the amount of liability insurance available for his claim of bodily injury under
    Hermantown’s automobile insurance policy with Travelers. Travelers removed the
    suit to federal court. The parties stipulated that there were no facts in dispute, and
    that discovery was not necessary to determine the amount of insurance recoverable
    under the policy.
    Both parties then moved for summary judgment. Prisk asserted that he may
    recover up to $2,000,000 under the policy. Travelers argued that the policy provides
    a coverage limit of $500,000 for claims, like Prisk’s, that are subject to Minnesota’s
    limit on municipal tort liability. See 
    Minn. Stat. § 466.04
    . Travelers acknowledged
    a coverage limit of $2,000,000 for claims that are not subject to the statutory limit.
    The district court granted summary judgment for Prisk. The court ruled that
    Hermantown waived the statutory limit on municipal tort liability when it purchased
    $2,000,000 in insurance coverage from Travelers, see 
    Minn. Stat. § 466.06
    , and that
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    the policy therefore authorizes up to $2,000,000 for Prisk’s claim. We review the
    district court’s interpretation of the insurance policy de novo and apply Minnesota
    substantive law. Rest. Recycling, LLC v. Emp. Mut. Cas. Co., 
    922 F.3d 414
    , 417 (8th
    Cir. 2019).
    Insurance policies are interpreted according to general principles of contract
    law. Nathe Bros., Inc. v. Am. Nat’l Fire Ins. Co., 
    615 N.W.2d 341
    , 344 (Minn. 2000).
    “The well-settled general rule in the construction of insurance contracts” is that
    “parties are free to contract as they desire, and so long as coverage required by law
    is not omitted and policy provisions do not contravene applicable statutes, the extent
    of the insurer’s liability is governed by the contract entered into.” Am. Fam. Mut. Ins.
    Co. v. Ryan, 
    330 N.W.2d 113
    , 115 (Minn. 1983). “The provisions of an insurance
    policy are to be interpreted according to plain, ordinary sense so as to effectuate the
    intention of the parties,” and “should be construed according to what a reasonable
    person in the position of the insured would have understood the words to mean.”
    Canadian Universal Ins. Co. v. Fire Watch, Inc., 
    258 N.W.2d 570
    , 572 (Minn. 1977).
    An endorsement to an insurance policy is part of the contract, and must be construed
    together with the policy to give effect to all provisions. Emps. Mut. Co. v. Oppidan,
    
    518 N.W.2d 33
    , 36 (Minn. 1994). An endorsement governs over a conflicting
    provision in the policy. Bobich v. Oja, 
    104 N.W.2d 19
    , 24 (Minn. 1960).
    Under Minnesota law, a municipality is liable for its torts and those of its
    employees acting within the scope of their employment. 
    Minn. Stat. § 466.02
    . A
    municipality’s tort liability to any individual claimant is capped at $500,000. 
    Id.
    § 466.04, subdiv. 1(a)(3). But a municipality may obtain insurance coverage for
    damages “in excess of the limit of liability imposed by section 466.04,” and
    procurement of such insurance waives the statutory limit of liability. Id. § 466.06;
    see Casper v. City of Stacy, 
    473 N.W.2d 902
    , 904-05 (Minn. Ct. App. 1991).
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    Hermantown’s automobile insurance policy with Travelers provides that
    Travelers “will pay all sums an ‘insured’ legally must pay as damages because of
    ‘bodily injury’ or ‘property damage’ . . . caused by an ‘accident’ and resulting from
    the ownership, maintenance or use of a covered ‘auto.’” A provision in the policy
    entitled “Limit of Insurance” states that “the most [Travelers] will pay” is contained
    in the policy’s declarations. The declarations page, in turn, provides that “[t]he most
    [Travelers] will pay for any one accident or loss” is $2,000,000.
    An endorsement to the policy, entitled “Statutory Cap Limits of Insurance
    Endorsement - Minnesota,” expressly modifies the coverage limit stated on the
    declarations page. The endorsement provides that the limit of insurance is $500,000
    for damages (1) “[r]esulting from any one ‘accident’ and sustained by any one person
    or organization that is determined to be a claimant under . . . Minnesota Statute
    Section 466.04” and (2) that “are subject to Minnesota’s statutory cap on damages for
    governmental tort liability in . . . Minnesota Statute Section 466.04.”
    The parties offer competing interpretations of the coverage limits contained in
    the policy. Prisk contends that he is entitled to recover up to $2,000,000. He
    maintains that although Minnesota law caps municipal tort liability at $500,000,
    Hermantown waived the limit by purchasing insurance coverage in excess of
    $500,000.
    Travelers acknowledges that the policy provides for coverage up to $2,000,000
    for certain claims, but argues that the endorsement establishes a $500,000 coverage
    limit for claims subject to Minnesota’s statutory cap on municipal tort liability.
    Travelers maintains that the policy therefore provides two coverage limits: a
    $500,000 limit for claims which are subject to the municipal tort cap, and a
    $2,000,000 limit for claims not subject to the cap. Travelers argues that because the
    policy provides two coverage limits, Hermantown did not waive the statutory limit
    on municipal tort liability.
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    We conclude that the insurance policy authorizes coverage up to only $500,000
    for Prisk’s claim. The policy provides different limits for different types of liabilities.
    The policy provides a coverage limit of $2,000,000 for claims not subject to the
    statutory limit set forth in 
    Minn. Stat. § 466.04
    . For example, if a claim against a
    Minnesota municipality is a federal tort claim or is governed by the law of a different
    state, then the limit would be $2,000,000. Cf. Reimer v. City of Crookston, No. 00-
    370, 
    2003 WL 22703218
    , at *4 n.1 (D. Minn. Nov. 13, 2003); City of Red Wing v.
    Ellsworth Cmty. Sch. Dist., 
    617 N.W.2d 602
    , 606-07 (Minn. Ct. App. 2000). But for
    claims subject to the statutory limit in § 466.04, the endorsement expressly limits
    coverage to $500,000. The substance of this contractual arrangement is no different
    than if the parties agreed on two separate policies for the two different types of
    liability.
    Prisk’s claim for injuries arising from an automobile accident in Hermantown
    is subject to Minnesota’s $500,000 cap on municipal tort liability. See 
    Minn. Stat. §§ 466.02
    , 466.04. Under the plain language of the endorsement to the insurance
    contract, Prisk may recover only up to $500,000. Hermantown thus has not procured
    insurance that provides coverage in excess of the liability limit set forth in 
    Minn. Stat. § 466.04
    . Accordingly, the policy does not trigger the waiver of the limits of
    governmental liability under 
    Minn. Stat. § 466.06
    .
    Prisk suggests that the endorsement to the insurance policy is analogous to the
    policy provision at issue in Frazier v. Bickford, No. 14-cv-3843, 
    2015 WL 6082734
    (D. Minn. Oct. 15, 2015). The policy in that case provided coverage up to
    $5,000,000, and thus in excess of the $500,000 statutory cap on municipal tort
    liability. The policy then included a “non-waiver provision” stating that nothing in
    the policy “shall be deemed a waiver of any statutory immunity or limitation of
    liability.” 
    Id. at *1-2
    . The district court ruled that the mere act of procuring
    insurance in excess of the statutory caps constitutes a waiver of the statutory limit.
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    The court concluded that the contracting parties could not nullify that waiver by
    including a “non-waiver provision” in the policy. 
    Id. at *7, 12
    .
    We need not express a view on the Frazier decision because its reasoning is
    inapplicable here. The municipality in this case did not procure insurance in excess
    of the statutory cap for claims like Prisk’s. The endorsement specifically limits the
    amount of insurance coverage procured to $500,000 per accident of this type.
    Therefore, the policy limit of $500,000 is valid and enforceable.
    For these reasons, the judgment of the district court is reversed, and the case
    is remanded with directions to enter judgment for Travelers.
    ______________________________
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