Progressive Preferred Insurance Company v. McMorris

Background

On May 1, 2019, Trevon McMorris was parked in a 2005 Dodge Durango in Minneapolis when police approached because of a report of a suspicious vehicle. McMorris fled in the Durango and soon crashed into a vehicle driven by Jose Angel Madrid Salcido. The crash killed Madrid Salcido. McMorris pleaded guilty to and was convicted of fleeing police in a motor vehicle in a way that resulted in another person’s death, violating Minnesota Statutes section 609.487, subdivision 4. During his plea hearing, McMorris acknowledged that the crash caused Madrid Salcido’s death and resulted from his attempt to flee and evade police.

At the time of the crash, McMorris was a named insured under an auto policy issued by Progressive Preferred Insurance Company. The policy promised liability coverage for damages caused by an accident for which an insured became legally responsible. But it excluded bodily injury or property damage caused by, or reasonably expected to result from, an insured person’s criminal act or omission. The exclusion did not include traffic violations within the definition of criminal acts.

Martha Perea de Madrid, acting as trustee for the heirs and next of kin of Madrid Salcido, demanded the available liability-policy limits. Progressive filed this case seeking a declaration that the criminal-act exclusion barred coverage. Perea de Madrid filed a counterclaim seeking a declaration that coverage existed. Trevon McMorris was served with the complaint but did not answer. Progressive and Perea de Madrid filed cross-motions for summary judgment, which asks the court to decide a claim when there is no genuine dispute about a material fact and the law entitles one side to judgment.

Parties’ Arguments

Progressive argued that the criminal-act exclusion was clear and applied because Madrid Salcido’s bodily injury was caused by McMorris’s criminal act of fleeing police. Perea de Madrid argued that the exclusion was invalid because it conflicted with Minnesota’s No-Fault Automobile Insurance Act. She also argued that the exclusion did not apply because speeding, which she said caused the crash, was a traffic violation; that the policy was ambiguous about the interaction between a criminal act and a traffic violation; and that public policy favored coverage.

Court’s Analysis

The court applied Minnesota substantive law because the case was based on diversity jurisdiction. Under Minnesota law, interpreting an insurance policy and deciding whether an exclusion is valid and enforceable are legal questions for the court. Clear policy language is given its usual meaning, while ambiguous language is generally interpreted against the insurer.

The court held that the criminal-act exclusion was unambiguous. It clearly excluded bodily injury caused by, or reasonably expected to result from, an insured person’s criminal act. McMorris’s guilty plea and conviction established that he committed a criminal act. The court also determined that his criminal offense included increasing speed to evade police and that the offense required his fleeing to cause another person’s death.

The court rejected the argument that the traffic-violation exception required coverage. That exception means the exclusion does not bar coverage when the insured committed only a traffic violation and no criminal act. Even if speeding could be considered separately from fleeing police, McMorris still committed a criminal act that caused the crash. The court also found no ambiguity in applying the exclusion when an insured clearly commits a crime that results in an accident.

The court further held that the exclusion did not violate Minnesota’s No-Fault Automobile Insurance Act. The court explained that the Act requires liability coverage but does not prohibit insurers from imposing limitations on third-party liability coverage, so long as an exclusion does not eliminate all liability coverage. The court found that this exclusion applied only to a limited category of conduct and therefore did not impermissibly eliminate all liability coverage.

The court also stated that the exclusion, as applied here, did not violate public policy. During oral argument, Perea de Madrid’s counsel stated that Madrid Salcido’s vehicle was insured. The court therefore described the case as involving under-compensated victims rather than uncompensated victims.

Disposition

The court concluded that the criminal-act exclusion was enforceable and barred liability coverage for the crash. Judge Donovan W. Frank granted Progressive Preferred Insurance Company’s motion for summary judgment and denied Martha Perea de Madrid’s motion for summary judgment. The order directed that judgment be entered accordingly.