Prisk v. Travelers Indemnity Company of America

Background

James Prisk alleged that he was struck by a vehicle owned by the City of Hermantown on or about May 21, 2020. The parties agreed that Travelers Indemnity Company of America insured Hermantown at the time. They stipulated that no facts were disputed and that the only issue was the applicable coverage limit under the insurance policy between Hermantown and Travelers.

Prisk contended that the policy provided a $2,000,000 coverage limit. Travelers contended that the applicable limit was $500,000. The parties received permission to file summary-judgment motions before fact discovery ended, and Prisk moved for summary judgment.

Legal framework

The court explained that summary judgment is proper when there is no genuine dispute about a material fact and the moving party is entitled to judgment as a matter of law. The interpretation of an insurance policy is a legal question governed by state law. Under Minnesota law, an insurance policy is read as a whole, and clear language is given its ordinary meaning.

Minnesota law generally caps municipal tort liability at $500,000. But a municipality may purchase insurance exceeding that cap. When it does so, Minnesota Statutes section 466.06 waives the cap to the extent that valid and collectible insurance exceeds the statutory limit and covers the claim. The court relied on Minnesota decisions holding that a municipality and its insurer cannot avoid that waiver through policy language.

Parties’ arguments

The policy provided $2,000,000 for covered-auto liability and described that amount as the most Travelers would pay for one accident or loss. The policy also contained a statutory-cap endorsement stating that $500,000 was the most Travelers would pay for damages subject to Minnesota’s statutory caps on governmental tort liability.

Travelers argued that the endorsement made the applicable limit $500,000 because Prisk’s claim was subject to the municipal tort cap. Travelers relied on an earlier decision involving a policy provision that reduced coverage for a particular category of accidents. The court concluded that the earlier decision did not resolve the issue here because it had not addressed the interaction between such a provision and Minnesota’s statutory cap and waiver rules.

Prisk relied on an earlier federal district court decision holding that a policy provision attempting to preserve a statutory liability limit could not avoid Minnesota’s waiver statute. Travelers argued that the earlier decision involved a non-waiver provision rather than an endorsement limiting coverage. The court found that distinction was one of form, not function, because both provisions attempted to reduce the general coverage limit for claims subject to the municipal tort cap.

Ruling

The court held that when Hermantown purchased $2,000,000 in insurance from Travelers, it waived the $500,000 statutory tort cap. Travelers and Hermantown could not undo that waiver through an endorsement limiting coverage to $500,000 for claims subject to the cap. The court held that the endorsement contravened Minnesota Statutes section 466.06 and was unenforceable.

The court therefore held that the policy authorized up to $2,000,000 in coverage for Prisk’s claim. It granted Prisk’s motion for summary judgment and ordered that judgment be entered accordingly.