Hoglund v. Dakota Fire Insurance Co.

#24470, #24471-a-DG

2007 SD 123

IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA

* * * *

KADEN HOGLUND and
MONTE HOGLUND, Plaintiffs and Appellants,

v.

DAKOTA FIRE INSURANCE COMPANY, Defendant and Appellee.

* * * *

APPEAL FROM THE CIRCUIT COURT OF
THE FIFTH JUDICIAL CIRCUIT
MARSHALL COUNTY, SOUTH DAKOTA

* * * *

HONORABLE JACK R. VON WALD
Judge

* * * *
CHET GROSECLOSE
Sioux Falls, South Dakota

and

KERRY CAMERON of
Cameron Law Office
Sisseton, South Dakota Attorneys for plaintiffs
and appellants.

DOUGLAS M. DEIBERT of
Cadwell, Sanford, Deibert & Garry
Sioux Falls, South Dakota Attorneys for defendant
and appellee.

* * * *
CONSIDERED ON BRIEFS
ON OCTOBER 1, 2007

OPINION FILED 12/05/07
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GILBERTSON, Chief Justice

[¶1.] A motions hearing was held in the South Dakota Fifth Judicial Circuit

on August 21, 2006, in regard to a declaratory judgment action filed by Monte and

Kaden Hoglund, father and son (collectively Hoglunds), seeking a ruling that Monte

could recover expenses from Dakota Fire Insurance Company (Dakota Fire) in

connection with injuries to Kaden resulting from an automobile collision caused by

its insured, Matthew West (West). Prior to the hearing, Dakota Fire filed a motion

for summary judgment. On February 12, 2007, the circuit court entered its

judgment and order granting Dakota Fire’s motion. We affirm.

FACTS AND PROCEDURE

[¶2.] There is no dispute about the facts underlying this case. On January

24, 2004, at about 12:00 p.m., Kaden was severely injured in an automobile collision

while driving to his home at Langford, South Dakota. The collision occurred at a

rural intersection when West failed to stop for a stop sign. 1 Kaden suffered

permanent injuries as a result of the collision.

[¶3.] At the time, Kaden was 17-years-old. He did not reach his 18th

birthday until July 8, 2004. During the intervening period Monte incurred

$38,627.21 in hospitalization, medical and surgical care expenses on Kaden’s

behalf. 2 In addition to this sum, Monte claimed that he was entitled to $1,630.00

1. Dakota Fire has acknowledged that West’s negligence is the sole proximate
cause of the collision.

2. A parent is required by law to provide support and care for his minor child.
Matter of Certification of Questions of Law from U.S. Court of Appeals
(Knowles v. United States), 1996 SD 10, ¶41, 544 NW2d 183, 192 (citation
(continued . . .)
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attributable to his loss of after-tax income during a one-month period that he took

off from work to care for Kaden after the accident. Kaden claimed damages,

resulting from the collision with West in excess of $100,000.00 for pain and

suffering, loss of enjoyment of life, permanent injuries and future medical expenses.

[¶4.] The auto insurance policy, issued to West by Dakota Fire, capped the

insured’s liability coverage at $100,000.00 per person and $300,000.00 per accident.

Dakota Fire offered to settle with Hoglunds for $100,000.00 in exchange for West’s

release. On December 2, 2005, Hoglunds commenced an action against Dakota Fire

seeking a declaratory judgment that Dakota Fire was also liable under the policy

for a second “per person” limit to cover Monte’s expenses and services provided on

Kaden’s behalf. 3

[¶5.] On December 20, 2005, Dakota Fire answered the complaint and

counterclaimed seeking a determination that it was liable for no more than

$100,000.00 under a single “per person” limit. On July 13, 2006 Dakota Fire filed a

motion for summary judgment. The matter was heard by the circuit court on

August 21, 2006. The court, in its memorandum opinions of October 12, 2006 and

December 28, 2006, concluded that while Dakota Fire was not obligated for a second

“per person” limit under the policy, Monte was entitled to $1,630.00 for the value of

________________________
(. . . continued)
omitted); SDCL 25-7-6.1. Since Kaden’s mother died in 2003, Monte was
solely obligated for the payment of Kaden’s expenses incurred prior to his
18th birthday.

3. Sometime after the complaint was served, Dakota Fire paid Hoglunds
$100,000.00 under an agreement whereby both parties agreed to preserve all
rights and defenses.

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services provided to Kaden. On February 12, 2007, the circuit court entered

findings of fact and conclusions of law in this regard and entered judgment and

order granting Dakota Fire’s motion for summary judgment in all other respects.

[¶6.] In addition to Hoglunds’ appeal, Dakota Fire raises issues by notice of

review. We combine Hoglunds’ first appeal issue and Dakota Fire’s first review

issue as follows:

1. Whether Monte’s claims were separate from Kaden’s.

The following issues were raised by Hoglunds on appeal:

2. Whether the terms of the insurance policy that Dakota
Fire issued to West were ambiguous such that they
should have been construed in favor of Hoglunds,
thereby entitling Monte to recovery for damages
under a second “per person” liability limit.

3. Whether Monte and Kaden both sustained “bodily
injury” within the meaning of the policy.

Dakota Fire raises an additional issue by notice of review:

4. Whether there was sufficient evidence to sustain
the circuit court’s award of $1,630.00 for the value
of Monte’s services rendered to Kaden.

STANDARD OF REVIEW

[¶7.] “In reviewing a grant of summary judgment under SDCL 15-6-56(c) we

must determine whether the moving party has demonstrated there is no genuine

issue of material fact and he is entitled to judgment as a matter of law.” Rogers v.

Allied Mut. Ins. Co., 520 NW2d 614, 615 (SD 1994) (citations omitted). “Once we

determine that the material facts are undisputed, our review is limited to whether

the law was correctly applied.” Pauley v. Simonson, 2006 SD 73, ¶7, 720 NW2d

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665, 667 (citations omitted). “We review questions of law de novo with no discretion

given to the circuit court.” Id. (citations omitted).

[¶8.] “When interpreting insurance contracts, we have uniformly held them

reviewable as a matter of law under the de novo standard.” Friesz ex rel. Friesz v.

Farm & City Ins. Co., 2000 SD 152, ¶5, 619 NW2d 677, 679 (citing DeSmet Ins. Co.

v. Gibson, 1996 SD 102, ¶5, 552 NW2d 98, 99; Economic Aero Club, Inc. v. Avemco

Ins. Co., 540 NW2d 644, 645 (SD 1995); State Farm Mut. Auto. Ins. Co. v. Vostad,

520 NW2d 273, 275 (SD 1994)). “This includes determining whether an insurance

contract is ambiguous.” Id. (citing Rogers, 520 NW2d at 616).

ANALYSIS AND DECISION

[¶9.] 1. Whether Monte’s claims were separate from
Kaden’s.

[¶10.] While the circuit court found for Dakota Fire in rejecting Monte’s claim

to coverage under a second “per person” limit, it nonetheless concluded that he had

a separate cause of action for medical expenses incurred prior to Kaden’s 18th

birthday, and for the value of service that he provided to Kaden.4 We agree.

[¶11.] This Court has reviewed appeals dealing with facts similar to those of

this case. In Knowles v. United States¸ 1996 SD 10, 544 NW2d 183, we discussed

several cases that considered the nature of parent claims arising out of tortious

injury to children. In Knowles we reviewed certified questions submitted by the

United States Court of Appeals for the Eighth Circuit, pertaining to claims filed

4. Monte also claimed damages attributable to the loss of Kaden’s service prior
to his 18th birthday. However, the circuit court rejected this claim for
insufficient evidence. Hoglunds do not challenge this decision on appeal.

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against the United States under the Federal Tort Claims Act. Id. ¶4, 544 NW2d at

185.

[¶12.] The claims in Knowles, were brought by the parents of an infant who

suffered severe brain damage following hospitalization and routine treatment at the

Ellsworth Air Force Base Hospital near Rapid City, South Dakota. Id. ¶¶5, 6, 544

NW2d at 185. The parents brought claims on their own behalf and for the infant for

medical malpractice, emotional distress, and loss of consortium. Id. ¶6, 544 NW2d

at 185. Pertinent to the instant case was the Court’s analysis of the third and

fourth certified questions, respectively; whether South Dakota law recognized

parental claims for emotional distress or loss of consortium that arose from injuries

to a minor child; and, whether South Dakota’s statutory limitation for malpractice

damages applied separately to the claims and to the plaintiffs. Id. ¶6, 544 NW2d at

185-86.

[¶13.] We rejected the existence of parental claims for emotional distress and

loss of consortium. 5 Id. ¶43, 544 NW2d at 193. However, we reiterated our prior

holding “that a parent may bring a cause of action to recover consequential damages

incurred because of negligent injury to a child.” Id. ¶40, 544 NW2d at 192 (citing

Barger for Wares v. Cox, 372 NW2d 161, 164 (SD 1985)). The basis for a parent’s

5. Noting that we had recognized a claim for spousal loss of consortium and that
it was grounded in the common-law, Knowles, 1996 SD 10, ¶42, 544 NW2d at
192 (citing Hoekstra v. Helgeland, 78 SD 82, 98 NW2d 669, 670-79 (1959), we
consulted with the treatise of professors Prosser and Keeton, The Law of
Torts § 125, 934 (5thEd 1984), in concluding that no similar basis existed for
parental claims for loss of consortium or emotional distress. Id. ¶43, 544
NW2d at 193.

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cause of action against a tortfeasor, for recovery of medical expenses resulting from

negligent injury to a child, arises from the common-law rule that obliges the parent

to provide medical attention for the minor child. 6 Id. ¶42, 544 NW2d at 193 (citing

Prosser and Keeton, The Law of Torts § 125, 934 (5thEd 1984)). See also SDCL 25-

7-6.1 (codifying the parent’s obligation to a minor child).

[¶14.] We also analyzed whether the surviving medical malpractice claims of

the parents were separate and distinct or derivative actions. Id. ¶¶45-49, 544

NW2d at 193-94. In arriving at the answer to this question we relied heavily on our

prior holding in Barger.

[¶15.] Barger was another case that involved a claim brought by a parent on

behalf of a tortuously injured minor child and a parental claim to recover medical

expenses incurred on the behalf of the child. 372 NW2d at 164. In Barger, the

child’s claim was barred by our former guest statute. 7 The issue this Court

addressed was whether the parent’s claim was similarly barred. The Court’s task

in addressing the issue was to decide whether the parent’s claim was derivative of

the child’s or separate and distinct.

[¶16.] The Court observed that the parent’s claim was not a true derivative

action in so much as that designation belongs to those causes of action which accrue

6. Although not at issue in the instant case, the parent’s right to recover for the
lost services of a tortiously injured minor child is similarly grounded in the
common-law rule that entitles a parent to such services. Id. ¶42, 544 NW2d
at 193 (citing Prosser, § 125, 934).

7. Our former guest statute was codified under SDCL 32-34-1 (repealed by 1978
SD Sess. Laws ch 240, § 2).

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to fatally injured persons and survive their deaths, which are then maintainable by

the representatives of the estates. Id. at 165 (quoting Irlbeck v. Pomeroy, 210

NW2d 831 (Iowa 1973)). Such claims are subject to any defense that could have

been raised against the decedent. Id. The Court went on to conclude that while

claims such as the one in Barger, brought by the parent to recover medical expense

incurred on behalf of the child, are not truly derivative in that the parent who

incurred them was the injured party, such claims nevertheless arise out of and are

consequential to the injury sustained by the child. Id. We also observed:

An act or omission of a person which causes a loss of the
services of a minor child to a parent, or necessitates
expenditures to cure an injury done to the child, entitles
the parent to recover damages when it appears that the
act or omission is one which the law holds to be a legal
wrong. . . . [I]n such a case as this, where the basis of the
claimed wrongful conduct is the failure of the defendant
to take certain steps to prevent the child from suffering
injury, the parent cannot recover unless that failure
constituted a legal wrong to the child.

Id. (citing Shiels v. Audette, 174 A 323, 325 (Conn 1934)) (citation omitted)

(emphasis added). In coming to the determination that the parent’s claim in Barger

was barred by our former guest statute, the Court implied in the holding that the

parent’s claim, while separate and distinct from the child’s, was, nevertheless,

derivative in nature. Id. (analogizing with Titze v. Miller, 337 NW2d 176 (SD 1983)

(holding that a husband’s cause of action for loss of consortium failed when the

injured spouse was unable to recover damages for her own personal injuries,

because although separate and distinct from the injured spouse’s claim for personal

injuries, the loss of consortium claim was in any case derivative in nature)).

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[¶17.] This was precisely the basis upon which we answered question four in

Knowles. We said:

Due to the differing nature of the parents’ claim in
comparison to the child’s, we find that parents’ claim is
a distinct ‘action’ as applied to [our statutory damages
cap.] 8 However, the actions are linked in regard to liability
issues and the parents cannot recover unless the child
also has a good cause of action. . . . Because, [our statutory
damages cap] is a limitation on damages only, not liability,
we hold the parents’ ‘action’ and child’s ‘action’ are separate
and distinct for purposes of the damages cap.

Knowles, 1996 SD 10, ¶50, 544 NW2d at 194.

[¶18.] While the facts of the instant case are different from Knowles, the

basis upon which we decide this issue is identical. Monte sought to recover medical

expenses incurred prior to Kaden’s 18th birthday. Kaden claimed damages for pain

and suffering, loss of enjoyment of life, permanent injuries and future medical

expenses. However, the two plaintiffs’ claims are linked by liability stemming from

West’s negligent act of running a stop sign and colliding with Kaden. Therefore,

Monte’s ability to state a cause of action depended on Kaden’s ability to show that

his damages were the proximate cause of West’s negligence. Thus, while Monte’s

and Kaden’s claims are separate and distinct, they are derivative in nature.

[¶19.] 2. Whether the terms of the insurance policy that
Dakota Fire issued to West were ambiguous such
that they should have been construed in favor
of Hoglunds, thereby entitling Monte to recovery
for damages under a second “per person” liability
limit.

8. The constitutionality of our statutory, malpractice damages cap, codified
under SDCL 21-3-11, was at issue in Knowles and abrogated by our answer
to certified question 1. ¶72, 544 NW2d at 199.

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[¶20.] Hoglunds argue that the “LIMIT OF LIABILITY” paragraph under the

“PART A – LIABILTY COVERAGE” section of the auto insurance contract issued to

West by Dakota Fire is ambiguous and therefore should be construed to provide a

second “per person” liability limit to cover Monte’s consequential damages. The

paragraph provides as follows:

LIMIT OF LIABILITY

...
The limit of liability shown in the Declarations for each
person for Bodily Injury Liability is our maximum limit
of liability for all damages, including damages for care,
loss of services or death arising out of “bodily injury”
sustained by any one person in any one auto accident.
Subject to this limit for each person, the limit of liability
shown in the Declaration for each accident for Bodily Injury
Liability is our maximum limit of liability for all damages
for “bodily injury” resulting from any one auto accident.

[¶21.] Hoglunds advocate that we employ the rule of statutory and

grammatical construction known as “The Doctrine of the Last Antecedent” to

interpret the insurance contract in their favor. Under the rule, the modifying

clause is confined to the last antecedent, unless there is something in the dominant

purpose of the provision that requires a different interpretation. Rogers, 520 NW2d

at 617 (quoting Kaberna v. School Bd. of Lead-Deadwood Sch. Dist. 40-1, 438 NW2d

542, 543 (SD 1989)) (citing Lewis v. Annie Creek Mining Co., 74 SD 26, 33, 48

NW2d 815, 819 (1951)) (citing State v. Ventling, 452 NW2d 123, 126 (SD 1990)).

[¶22.] Hoglunds contend that employing the general rule to the language of

the paragraph, the modifying clause “sustained by any one person,” applies to the

last antecedent, “bodily injury,” such that “per person” liability limits are available

to provide coverage only for “bodily injury” as defined in the policy. Application of

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the general rule would exclude coverage for Monte’s claims because they are not

included in the definition. However, Hoglunds assert that the dominant purpose of

the provision is to limit liability for damages, thereby taking precedence over the

general rule. Hoglunds thus contend that the modifying clause applies to the term

“all damages,” thereby including coverage for Monte’s claims under a second “per

person” limit.

[¶23.] Addressing this issue, we rely on our well-established principles for

interpreting an insurance contract when ambiguities are alleged:

Where the provisions of an insurance policy are fairly
susceptible of different interpretations, the interpretation
most favorable to the insured should be adopted. This
rule of liberal construction in favor of the insured and
strictly against the insurer applies only where the language
of the insurance contract is ambiguous and susceptible
of more than one interpretation. . . . This rule does not
mean, however, that the court may seek out a strained
or unusual meaning for the benefit of the insured.

Olson v. U.S. Fidelity and Guar. Co., 1996 SD 66, ¶6, 549 NW2d 199, 200 (citing

Rogers, 520 NW2d at 616). “Ambiguity in an insurance policy is determined by

reviewing ‘the policy as a whole and plain meaning and effect of its words.’” Chord

v. Reynolds, 1999 SD 1, ¶15, 587 NW2d 729, 732 (quoting American Family Mut.

Ins. Co. v. Elliot, 523 NW2d 100, 102 (SD 1994)).

[¶24.] In addition to the aforementioned paragraph governing the limit of

liability, supra ¶4, Dakota Fire’s policy declarations page reflects that the liability

coverage for “BODILY INJURY” is $100,000.00 per person and $300,000.00 for each

accident. The “INSURING AGREEMENT” under “PART A – LIABILITY

COVERAGE” provides as follows: “We will pay damages for ‘bodily injury’ . . . for

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which an ‘insured’ becomes legally responsible because of an auto accident.” The

“DEFINITIONS” section of the policy defines “bodily injury” as: “bodily harm,

sickness or disease, including death that results.”

[¶25.] We juxtapose these provisions with the paragraph limiting liability

and reject Hoglunds’ claim of a dominant purpose that would result in a strained

and unusual meaning. Considering the whole policy and the plain meaning and

effect of its words, we find no ambiguity in the policy. The policy provides

$100,000.00 of “per person” “bodily injury” liability coverage. 9 The part of the policy

under which Dakota Fire agrees to pay claims states that it will “pay for bodily

injury. . . .” “Bodily injury” as defined in the policy does not include the type of

claims for which Monte seeks recovery. Since we conclude that the dominant

purpose of the limiting paragraph is to limit Dakota Fire’s liability exposure for

“bodily injury,” damages, 10 we find no basis upon which to reverse the circuit court

on this issue.

9. Although the text of this insurance policy controls the resolution of this issue,
the issue itself has arisen in other jurisdictions:

. . . where a minor is injured by an insured, the minor’s parents’
claim for recovery of loss of the minor’s service and the minor’s
medical expenses under the terms of an automobile liability
policy do not make the parent a separate “person” for purposes
of recovering more than the policy limits of liability for “bodily
injury” to “each person.”

Couch on Insurance § 170:8. Couch goes on to cite 43 cases from 13
jurisdictions which adhere to this holding.

10. While not an issue in this case, the limiting paragraph also functions to
limit Dakota Fire’s liability exposure for property damage.

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[¶26.] 3. Whether Monte and Kaden both sustained “bodily
injury” within the meaning of the policy.

[¶27.] Hoglunds argue that the terms “bodily injury” and “personal injury”

are used interchangeably or that “personal injury” is a broad term that includes

“bodily injury.” Hoglunds then cite Knowles for the proposition that “personal

injury” includes a “personal right.” 1996 SD 10, ¶49, 544 NW2d 183, 194

(reiterating that a parent’s cause of action for consequential damages resulting from

the negligent injury to a child is a personal right). Hoglunds assert that since in

Knowles we concluded that the parents’ cause of action for their medical

malpractice claims were separate and distinct from the child’s claims, having

recognized that they were grounded in a personal right, Monte thereby is entitled to

coverage under a second “per person” liability limit on the basis of personal right.

[¶28.] Hoglunds cite a number of cases and statutes to illustrate that the

terms “bodily injury” and “personal injury” have been used interchangeably. We do

not disagree that these terms have frequently been used in this fashion. Where we

do disagree is in Hoglunds’ interpretation of our analysis in Knowles. While we

reiterated a prior holding that the term personal injury includes injuries to personal

rights, the statement was made in a statutory context. Id. ¶49, 544 NW2d at 194

(citing Titze, 337 NW2d at 177). The question in Knowles pertaining to the analysis

that Hoglunds cite was whether the statutory limitation on damages applied to the

consequential claims of the parents as well as the minor child. Id. ¶44, 544 NW2d

at 193; see also supra ¶12. The issue here is whether Monte can recover damages

under the insurance policy for his claims consequential to Kaden’s injury. While

our analysis of the preceding two issues indicates that Monte has a cause of action

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separate and distinct from Kaden’s, his ability to recover under the policy is

precluded by the language therein.

[¶29.] 4. Whether there was sufficient evidence to sustain
the circuit court’s award of $1,630.00 for the value
of Monte’s services rendered to Kaden.

[¶30.] A parent is required by law to provide support and care for his minor

child. Knowles, 1996 SD 10, ¶41, 544 at 192 (citations omitted); SDCL 25-7-6.1.

Whether Monte contemplated the legal obligation when he took a month off from

work to care for his severely injured son is not a matter of record. What is a matter

of record is that doing so cost him $1,630.00 in after-tax income. The circuit court

concluded an award of $1,630.00 was appropriate for the value of Monte’s services.

Our review of the record indicates Dakota Fire failed to preserve this issue for our

appellate review. See Anderson v. Johnson, 441 NW2d 675, 677 (SD 1989)

(reiterating that issues not properly preserved below cannot be reviewed by this

Court on appeal) (citations omitted).

[¶31.] Affirmed.

[¶32.] SABERS, KONENKAMP, ZINTER, and MEIERHENRY, Justices,

concur.

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