National Indemnity Co. of Minnesota v. Ness

PARKER, Judge

(dissenting).

I concur with the majority as to part II of the opinion, but I respectfully dissent as to part I and would apply the doctrine of reasonable expectations. I believe an issue would still exist for determination by the finder of fact as to the reasonableness of those expectations.

It is now five years since the supreme court held in Atwater Creamery that the doctrine might be applied in Minnesota. The trial courts, and this court, seem loath to do so. Ross v. City of Minneapolis, 408 N.W.2d 910, 914 (Minn.App.1987), pet. for rev. denied (Minn. Sept. 23, 1987). But see Grinnell Mutual Reinsurance Co. v. Wasmuth, 432 N.W.2d 495, 499 (Minn.App.1988), pet. for rev. denied (Minn. Feb. 10, 1989) (describing the “narrowly recognized doctrine” and the “unusual case requiring application of Atwater”).

*760This case seems to present a fact situation appropriate to the doctrine; it seems quite similar to Atwater Creamery itself and in some respects seems more persuasive:

1. The application informed the company that Ness was 23 years old and that this was to be the “First policy on his own.” Thus, the company was aware he was an unsophisticated insured.

2. He told the insurance agent he needed “full coverage;” the written binder given him by the agent contained no reference to a restrictive endorsement and appeared to assure what Ness was required by Buckley Trucking Co. to obtain. Such plain language in a binder has been held to be an ambiguity when contradicted by an endorsement (found by a jury not to have been delivered). Schmidt v. St. Paul Fire & Marine Insurance Co., 376 N.W.2d 237, 241 (Minn.App.1985).

3. The company then issued him a policy with almost illusory coverage. On the declarations page it listed the liability, P.I.P. and uninsured coverages mandated in Minnesota as applicable (by reference to described autos) when his tractor was attached to an unowned trailer. In an attached endorsement, the coverage was limited to those occasions when Ness drove his tractor unattached to any trailer. Ness testified that this occurred only twice in the time he owned the trailer (about 20 months until the accident).

4. The trial court found that the insurance agency mailed a letter to Ness explaining, in part, the “bobtail” coverage; it found that he denied ever receiving it. The trial court did not resolve this apparent contradiction, but found he had received and not read the policy.

5. The premium charged ($355) seems inconsistent with the drastically limiting endorsement. Buckley Trucking paid $470 for the same coverage on tractors, with an additional $35 for coverage on trailers. Thus, the premium charged would not seem to have put him on notice.

I would submit that the inconsistency between his application for insurance, the binder given him and the coverages listed on the policy declarations page on the one hand, and the endorsement attached to the policy on the other hand, created an ambiguity. I would also submit that the policy issued failed to provide coverages adequate to meet the mandates of the Minnesota No-Fault Act for an applicant who wanted “complete coverage.”

The doctrine of reasonable expectations should have been applied and the finder of fact should now be required to decide whether Ness did, in fact, receive the explanatory letter and whether his expectations were reasonable. If found to have been received, the adequacy of the letter as notice may present a further issue. I would reverse and remand for trial on this issue alone.