Summary: At issue is the effect of North Dakota Century Code § 26.1-36-04[(2)(h) on an exclusion in an accidental death insurance policy, issued by defendant and under which plaintiffs are beneficiaries, excluding loss resulting from intoxication. Each side moved for summary judgment. Court grants defendant's motion, finding the statute permitted the exclusion at issue.

Case Name: Donald Matson, et al. v. J.C. Penney Life Ins.
Case Number: A3-00-27
Docket Number: 12
Date Filed: 8/15/00
Nature of Suit: 110

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NORTH DAKOTA
SOUTHEASTERN DIVISION

I INTRODUCTION

Before the Court are cross motions for summary judgment (doc. #'s 8, 10). The parties have agreed that the issue will be resolved as a summary judgment motion on the basis of submitted briefs and a stipulation of facts(doc. #'s 6, 7).

II BACKGROUND

"Mr. Matson died as a result of multiple injuries sustained in a motor vehicle crash. The manner of death is accidental. Alcohol abuse was a contributing factor."

Matson was insured under an accidental death policy through defendant J.C. Penney Life Insurance Company (J.C. Penney). The policy afforded $100,000 in accidental death benefits, and it named plaintiffs Donald and Marcie Matson sole beneficiaries. The policy was reviewed by the North Dakota Insurance Commissioner's office in December 1995 and approved by the same. The policy was in full force and effect on the date of Matson's death and contained the following relevant provision(s):

EXCLUSIONS

. . . .

4. occurs as a result of the Covered Persons blood alcohol level being .10 percent weight by volume or higher[.]

Plaintiffs' primary contention is that"[t]he exclusionary provision . . . is in direct violation of the clear intent of N.D.C.C. Section § 26.1-36-04[(2)(h)], because it refuses benefits where the deceased was intoxicated." (Pls.' Mot. for. Summ. J. at 3.) That section provides, in pertinent part:

2. Except as provided in subsection 3, no accident and health insurance policy delivered or issued for delivery to any person in this state may contain provisions respecting the matters described in this subsection unless the provisions in the policy are not less favorable in any respect to the insured or the beneficiary.

. . . .

h. A provision that the insurer is not liable for any loss sustained or contracted in consequence of the insured's being intoxicated or under the influence of any narcotic unless administered on the advice of a physician.

Contrarily, J.C. Penney maintains the intoxication exclusion is valid under § 26.1-36-04(2), making the denial of benefits thereunder proper. J.C. Penney contends § 26.1-36-04(2) unambiguously allows an intoxication exclusion in an accidental death policy provided the exclusion is "equal to or more favorable to the insured/beneficiary than the proposed language in subpart (h)." (Def.'s Mot. for. Summ. J. at 5.) Thus, according to J.C. Penney, so long as an exclusion is at least as favorable as the language of the statute, it is permissible. Further, J.C. Penney argues that even if § 26.1-36-04(2) is ambiguous, the North Dakota Insurance Commissioner's approval, along with the legislative history of § 26.1-36-04(2), support its argument. ⁽¹⁾

III ANALYSIS

A. SUMMARY JUDGMENT STANDARDS

Summary judgment is appropriate only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). A fact is "material" if it might affect the outcome of a case, and a factual dispute is "genuine" if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Churchill Bus. Credit, Inc. v. Pacific Mut. Door Co., 49 F.3d 1334, 1336 (8th Cir. 1995).

The "basic inquiry" for purposes of summary judgment is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one sided that one party must prevail as a matter of law." Quick v. Donaldson Co., Inc., 90 F.3d 1372, 1376 (8th Cir. 1996) (citing Anderson, 477 U.S. at 251-52). Along these lines, North Dakota courts view the interpretation of an insurance policy as a question of law. Dundee Mut. Ins. Co. v. Marifjeren, 587 N.W.2d 191, 193 (N.D. 1998). Consequently, such cases are particularly amenable to summary judgment. See John Deere Ins. Co. v. Shamrock Indus., Inc., 929 F.2d 413, 415 (8th Cir. 1991).

IV MOTIONS FOR SUMMARY JUDGMENT

This Court views the primary issue in this case as one of statutory construction. The question to be determined is the meaning of N.D. Cent. Code § 26.1-36-04(2)(h) and application of that interpretation to the intoxication exclusion contained in the insurance policy issued by J.C. Penney to Matson. As set forth below, this Court holds that the statute permits exclusions such as the one at issue and that the exclusion operates to bar recovery in this case.

1. Interpretation of N.D. Cent. Code § 26.1-36-04(2)(h)

The first task before the Court is to interpret N.D. Cent. Code § 26.1-36-04(2)(h), which does not lend itself to easy construction. The key language at issue appears in subsection 2. That section provides that no policy may "contain provisions respecting the matters described in this subsection unless the provisions in the policy are not less favorable in any respect to the insured or the beneficiary." Crucial to this analysis is the meaning of the phrase "unless the provisions in the policy are not less favorable."

Generally, "[s]tatutes must be read to give effect to all provisions so that no part of a statute is inoperative or superfluous." Matter of Estate of Opatz, 554 N.W.2d 813, 816 (N.D. 1996) (citing Trinity Medical Center v. Holum, 544 N.W.2d 148 (N.D. 1996)). Therefore, the phrase "unless the provisions" should be read, if possible, so as to have some meaning. Further, the words of statutes are to be "understood in their ordinary sense." N.D. Cent. Code § 1-02-02 (1987).

Applying these rules to the present case indicates that at least some exclusions of the types listed are permissible. The ordinary sense of the word "unless" is "except on the condition that or under the circumstances that." Webster's II New Riverside University Dictionary (1984). Thus, the statute provides that certain exclusions are prohibited "except on the condition that" they are "not less favorable" than those listed.

The question then is what provisions are "not less" favorable than those listed. The phrase "not less" is a somewhat clumsy double negative, but this Court interprets it to mean "at least as favorable as." The plain meaning of "less" is "to a smaller extent." Webster's II New Riverside University Dictionary (1984). Thus, provisions are permitted if they are "[not] to a smaller extent favorable" than those listed. Notably, this does not necessarily mean "more favorable than," because something can be "not less" than something to which it is equivalent. In short, then, the phrase "not less favorable" means "at least as favorable."

Thus, with these definitions read into it, the statute provides that

"no accident and health insurance policy delivered or issued for delivery to any person in this state may contain provisions respecting the matters described in this subsection [except on the condition that] the provisions in the policy are [at least as] favorable in [all] respect[s] to the insured or the beneficiary."

N.D. Cent. Code § 26.1-36-04(2). Therefore, some exclusions from coverage are clearly permissible.

Thus, plaintiffs' contention that the statute "clearly concludes the North Dakota legislature did not want [insurance policies] to deny benefits due to intoxication" overstates the case. Pls.' Mot. for. Summ. J. at 6.) Rather, insurance policies may deny benefits based on intoxication, "on the condition that" the provisions in the policy doing so are "not less favorable" than the provision listed in the statute. Thus, the question is whether the exclusion contained in the policy at issue in this case is "at least as favorable" as that listed in the statute.

2. Analysis of the policy provision

The policy in this case excludes recovery for any loss "that occurs as a result of the Covered Persons blood alcohol level being .10 percent weight by volume or higher[.]" The statute prohibits provisions that are "not less favorable than" "[a] provision that the insurer is not liable for any loss sustained or contracted in consequence of the insured's being intoxicated . . . ." N.D. Cent. Code § 26.1-36-04(2)(h). As discussed below, the Court finds that the policy provision is "not less favorable" than the statute and is therefore permissible.

First, the two contain identical definitions of intoxication. The policy disallows recovery when the loss results from a blood alcohol level of ".10 percent weight by volume or higher." In their briefs, both parties refer to a blood alcohol content of .10 or more as intoxication under North Dakota law. (Pls.' Mot. for. Summ. J. at 6; Def.'s Mot. for. Summ. J. at 10 (citing N.D. Cent. Code § 39-08-01(1))). Thus, when given the meaning both parties ascribe to it, the word "intoxicated" in N.D. Cent. Code § 26.1-36-04(2)(h) has the same meaning as the definition employed in the policy.

Second, the policy prohibits recovery when the loss "occurs as a result" of intoxication, while the statute uses the phrase "sustained or contracted in consequence" of intoxication. N.D. Cent. Code § 26.1-36-04(2)(h). When given their plain meanings, these phrases are identical. In fact, the plain meaning of "result" includes the word "consequence," and vice versa. Webster's II New Riverside University Dictionary (1984).

Thus, the policy provision and the provision listed in the statute are virtually identical. The exclusion contained in the policy is therefore permissible under the statute, as the policy is "not less favorable" than the statute. N.D. Cent. Code § 26.1-36-04(2)(h). Therefore, so long as the provision was satisfied in this case, J.C. Penney was entitled to deny recovery. N.D. Cent. Code § 26.1-36-04(2)(h)

3. Application to the stipulated facts

The parties' stipulated facts and arguments indicate that the provision was satisfied in this case. The parties agree that Mr. Matson had a blood alcohol concentration of .246; this is clearly in excess of .10, which both the policy and the parties' definition of the statute equate with intoxication. Further, the parties agree that the Coroner's Report concluded that "alcohol abuse was a contributing factor [to Matson's death]." Plaintiffs have not argued that "a contributing factor" does not satisfy the causation requirement of the policy, so the Court has no need to consider this issue.

V CONCLUSION

IT IS SO ORDERED.

Dated this _____ day of August, 2000.

1. Because the Court resolves the case for the reasons set forth below, the Court need not, and expressly does not, decide the effect of the Insurance Commissioner's approval of the policy.