James Prisk v. Travelers Indemnity Company of America

United States Court of Appeals
For the Eighth Circuit
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No. 22-2769
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James Prisk,
lllllllllllllllllllllPlaintiff - Appellee,
v.
Travelers Indemnity Company of America,
lllllllllllllllllllllDefendant - Appellant,
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American Property Casualty Insurance Association,
lllllllllllllllllllllAmicus on Behalf of Appellant(s),
Minnesota Association for Justice
lllllllllllllllllllllAmicus on Behalf of Appellee(s).
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Appeal from United States District Court
for the District of Minnesota
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Submitted: June 13, 2023
Filed: August 25, 2023
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Before LOKEN, COLLOTON, and ERICKSON, Circuit Judges.
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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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