Prisk v. Travelers Indemnity Company of America

Background

In May 2020, a vehicle owned by the City of Hermantown struck James Prisk. Travelers insured Hermantown. The policy stated that Travelers would pay up to $2,000,000 for a covered-autos liability accident. It also contained a Minnesota statutory-cap endorsement stating that the most Travelers would pay for claims subject to Minnesota’s municipal tort-liability cap was $500,000.

Prisk brought this action seeking a declaratory judgment—a court ruling establishing the parties’ rights under the policy—that the $2,000,000 limit applied to his claim. The parties agreed that no facts were disputed and that the only issue was the applicable coverage limit. On July 18, 2022, the court granted Prisk’s motion for summary judgment.

Travelers’s Motion

Travelers moved under Federal Rule of Civil Procedure 59(e) to alter or amend the judgment. That type of motion is limited to correcting a clear legal or factual error or considering newly discovered evidence. Travelers argued that the court had made a clear legal error by concluding that the statutory-cap endorsement conflicted with Minnesota law.

Analysis

Minnesota law caps municipal tort liability at $500,000. The law also provides that when a municipality obtains insurance exceeding that cap, the municipality waives the cap to the extent that valid and collectible insurance covers the claim. The court relied on the policy’s $2,000,000 limit for covered autos and the parties’ agreement that the vehicle involved in the accident was a covered auto.

The court rejected Travelers’s argument that only $500,000 in valid and collectible insurance existed because of the statutory-cap endorsement. It found this case analogous to a prior District of Minnesota decision holding that an insurer could not use a policy provision to avoid the statutory waiver created when a municipality buys insurance exceeding the statutory cap. The court reasoned that enforcing Travelers’s endorsement would similarly limit otherwise available coverage to $500,000 for claims subject to the municipal cap while preserving higher coverage for claims outside that cap.

The court also rejected Travelers’s argument that Minnesota law merely permits municipalities to buy insurance above the cap without requiring them to do so or preventing different limits for different risks. The court concluded that Hermantown procured $2,000,000 in covered-autos coverage and therefore waived the statutory cap. It held that the statutory-cap endorsement was invalid. The court noted that its ruling did not bar a negotiated limit above the statutory cap, because such a limit would clearly waive rather than circumvent the cap.

Disposition

The court concluded that it had a reasonable legal basis for its earlier decision and had not committed a clear legal error. Judge Wilhelmina M. Wright denied Travelers Indemnity Company of America’s motion to alter or amend the judgment. The July 18, 2022 summary-judgment ruling remained in effect.