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Berkley Regional Insurance Co. v. Bernick-Odom

United States Court of Appeals, Eighth Circuit

May 24, 2019

Berkley Regional Insurance Company Plaintiff - Appellee
v.
Debbie Bernick-Odom, personally and as Personal Representative for the Estate of Jeffrey Odom Defendant-Appellant

          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 ...


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