Submitted: February 14, 2019
Appeal
from United States District Court for the District of North
Dakota - Bismarck
Before
LOKEN, COLLOTON, and KELLY, Circuit Judges.
LOKEN,
CIRCUIT JUDGE.
Jeffrey
Odom died in a motor vehicle accident driving a pick-up truck
owned by his employer and insured by a Berkley Regional
Insurance Company commercial auto policy. The other
driver's tractor-trailer was owned by his employer and
insured by a Zurich America commercial auto policy.
Odom's widow, Debbie Bernick-Odom, filed a claim with
Berkley for underinsured motorist (UIM) benefits. Berkley
filed this diversity action seeking a declaratory judgment of
no UIM coverage; Bernick-Odom counterclaimed for UIM coverage
and other relief. The district court[1]granted Berkley's motion
for summary judgment, concluding that the other driver's
vehicle was not an "underinsured motor vehicle" as
defined in Berkley's policy and in the auto insurance
provisions of the North Dakota Century Code. Bernick-Odom
appeals. Reviewing the grant of summary judgment de
novo, we affirm.
I.
The
issue on appeal is whether the tractor-trailer insured by
Zurich was an "underinsured motor vehicle." The
North Dakota statute defines underinsured motor vehicle as a
vehicle:
for which there is a bodily injury liability insurance policy
. . . in effect at the time of the accident, but the
applicable limit of bodily injury liability of such policy .
. .:
a. Is less than the applicable limit for underinsured
motorist coverage under the insured's policy; or
b. Has been reduced by payments to other persons injured in
the accident to an amount less than the limit for
underinsured motorist coverage under the insured's
policy.
N.D.C.C. § 26.1-40-15.1(2). Berkley's commercial
auto policy promised to pay any sum its insured "is
legally entitled to recover . . . from the . . . driver of an
'underinsured motor vehicle.'" The policy
incorporated the statutory definition of "underinsured
motor vehicle" almost word for word.
The
Berkley policy limited UIM coverage to $1, 000, 000. The
Zurich commercial auto policy provided its insureds a
combined limit of $1, 000, 000 for covered bodily injury and
property damage. After Odom's death, Zurich agreed to pay
Berkley $40, 000 to reimburse Berkley for payment to
Odom's employer for the loss of its pick-up truck. Zurich
and Bernick-Odom then agreed to settle her wrongful death
claim against Zurich's insureds for $960, 000, the
remainder of Zurich's $1 million combined policy limit.
Bernick-Odom's attorney gave Berkley notice of this
settlement and advised that Bernick-Odom's wrongful death
claim exceeded the Zurich policy limits and she would seek to
recover UIM benefits from Berkley. Berkley paid Bernick-Odom
$960, 000 as a "substitute payment" to preserve its
right of subrogation against an underinsured motorist.
See N.D.C.C. § 26.1-40-15.5(2). Counsel for
Berkley advised counsel for Bernick-Odom that this payment
"does not waive Berkley's rights . . . to deny that
the [tractor-trailer insured by Zurich] is an underinsured
motor vehicle." This lawsuit followed.
II.
Like
the district court, we conclude that the tractor-trailer
insured by Zurich was not an "underinsured motor
vehicle." The North Dakota statute and Berkley's
policy provide that the vehicle was underinsured if (a) the
applicable limit of Zurich's bodily injury policy
"in effect at the time of the accident" was less
than the $1, 000, 000 UIM limit in Berkley's policy, or
(b) the applicable limit of Zurich's bodily injury
liability "[h]as been reduced by payments to other
persons injured in the accident." Bernick-Odom argues
the vehicle was underinsured because Zurich's payment of
$40, 000 for the property damage to the employer's
pick-up reduced the applicable limit of Zurich's bodily
injury policy to $960, 000, less than Berkley's $1, 000,
000 UIM limit. At oral argument, Bernick-Odom conceded the
obvious -- that she is not entitled to UIM coverage under
...