                        This opinion will be unpublished and
                        may not be cited except as provided by
                        Minn. Stat. § 480A.08, subd. 3 (2012).

                             STATE OF MINNESOTA
                             IN COURT OF APPEALS
                                   A14-0048

                       North Star Mutual Insurance Company,
                        as Subrogee of Jacob Quernemoen,
                                    Appellant,

                                         vs.

                  State Farm Mutual Automobile Insurance Company,
                                    Respondent.

                               Filed August 11, 2014
                                     Affirmed
                                  Johnson, Judge

                            Ramsey County District Court
                              File No. 62-CV-13-5279


Jeannie Provo-Petersen, Daniel J. Stahley, Provo-Peterson & Associates, P.A., Lake
Elmo, Minnesota (for appellant)

Karen Cote, David M. Werwie & Associates, St. Paul, Minnesota (for respondent)


      Considered and decided by Rodenberg, Presiding Judge; Johnson, Judge; and

Chutich, Judge.

                       UNPUBLISHED OPINION

JOHNSON, Judge

      North Star Mutual Insurance Company paid no-fault benefits to Jacob

Quernemoen, who was injured in an automobile accident. In this subrogation matter,
North Star seeks to recover from State Farm Mutual Automobile Insurance Company the

amount of the benefits paid on the grounds that State Farm also had an obligation to pay

benefits and that State Farm’s obligation is higher in priority. The district court granted

State Farm’s motion for summary judgment. We affirm.

                                         FACTS

      On October 1, 2011, Quernemoen was injured in an automobile accident. He was

a passenger in a vehicle driven by a friend, Jordan Henrichs. Quernemoen incurred

medical expenses of $15,179.50.

      In October 2011, Quernemoen sought no-fault benefits from both North Star and

State Farm. North Star insured Henrich’s vehicle. State Farm insured Quernemoen’s

vehicle, which was not involved in the accident, pursuant to a policy issued to

Quernemoen’s parents.     State Farm denied Quernemoen’s claim on the ground that

Quernemoen was not an “insured” but, rather, merely a “driver” on the policy that was

issued to his parents. North Star tendered Quernemoen’s claim to State Farm on the

ground that State Farm has a higher-priority obligation to pay the claim. State Farm

denied North Star’s tender. North Star paid Quernemoen’s medical bills.

      In September 2012, North Star commenced this action against State Farm, seeking

a money judgment for the value of the no-fault benefits paid to Quernemoen. In July

2013, North Star brought a motion for a declaratory judgment to establish that State Farm

has a higher-priority obligation to pay the benefits. In August 2013, State Farm brought a

motion for summary judgment.




                                            2
       The parties’ motions required the district court to determine whether Quernemoen

was a resident of his parents’ household at the time of the accident. The undisputed facts

relevant to that issue are as follows.

       In the spring of 2007, Quernemoen was 15 years old and was living with his

parents in the city of Carver. He was having some difficulties at school. With the

approval of his parents, he moved to the home of an aunt and uncle in the city of Elbow

Lake to attend a high school there. Quernemoen’s sister moved into his former bedroom

at their parents’ home. Quernemoen visited his parents’ home on some weekends and

during breaks from school.

       In March 2009, when Quernemoen was 18, his grandfather bought him a car, a

Chevrolet Cobalt. Quernemoen’s parents obtained insurance coverage for the vehicle on

their auto-insurance policy. Quernemoen’s father informed their insurance agent that the

Cobalt belonged to Quernemoen and that Quernemoen would be the person driving it on

a regular basis. State Farm’s records reflect that Quernemoen is a “driver,” not an

insured, and State Farm rated the policy accordingly. The record is unclear as to whose

name was on the title to the Cobalt.

       After Quernemoen graduated from high school in the spring of 2010, he stayed at

his parents’ home “for a while” and then moved back to his aunt’s and uncle’s home. He

started a job and began attending college as a part-time student in September 2010. He

continued to live with his aunt and uncle until December 2010, when he rented an

apartment of his own in the city of Elbow Lake. Quernemoen moved most of his

belongings out of his parents’ home when he moved into his apartment. Quernemoen


                                            3
assumed responsibility for paying insurance premiums on his car at that time.

Quernemoen’s parents paid his rent for approximately four or five months but stopped

doing so when Quernemoen dropped out of college in approximately February 2011. At

that time, his parents began forwarding him any bills that were sent to him at his parents’

address.

       In the spring of 2011, Quernemoen began working full-time for a contractor in

Elbow Lake. His parents did not expect him to return to their home, though they were

somewhat unsure because of the seasonal nature of his job. During the summer and fall

of 2011, Quernemoen’s parents provided him with some financial assistance by helping

him pay for automobile insurance, medical insurance, and other living expenses, when

necessary.

       In November 2013, the district court denied North Star’s motion, granted State

Farm’s motion, and entered summary judgment in favor of State Farm. North Star

appeals.

                                      DECISION

       A district court must grant a motion for summary judgment if the evidence

demonstrates “that there is no genuine issue as to any material fact and that either party is

entitled to a judgment as a matter of law.” Minn. R. Civ. P. 56.03. A genuine issue of

material fact exists if a rational trier of fact, considering the record as a whole, could find

for the non-moving party. Frieler v. Carlson Mktg. Grp., Inc., 751 N.W.2d 558, 564

(Minn. 2008). This court applies a de novo standard of review to the district court’s legal




                                              4
conclusions on summary judgment and views the evidence in the light most favorable to

the non-moving party. RAM Mut. Ins. Co. v. Rohde, 820 N.W.2d 1, 6 (Minn. 2012).

                                I. Resident-Relative Status

       North Star argues that the district court erred by concluding that State Farm is not

obligated to provide coverage for Quernemoen’s injuries because Quernemoen was not a

resident of his parents’ household at the time of the accident.

       North Star’s subrogation claim is based on the Minnesota No-Fault Automobile

Insurance Act, which allows a no-fault insurance carrier that has paid a claim to recover

from another no-fault carrier that has a higher-priority obligation to pay the claim. See

Minn. Stat. § 65B.47, subd. 6 (2012). The act specifies the order of priority of multiple

obligations:

                      (a)    The security for payment of basic economic
               loss benefits applicable to injury to an insured is the security
               under which the injured person is an insured.

                       (b)    The security for payment of basic economic
               loss benefits applicable to injury to the driver or other
               occupant of an involved motor vehicle who is not an insured
               is the security covering that vehicle.

                      (c)    The security for payment of basic economic
               loss benefits applicable to injury to a person not otherwise
               covered who is not the driver or other occupant of an
               involved motor vehicle is the security covering any involved
               motor vehicle. An unoccupied parked vehicle is not an
               involved motor vehicle unless it was parked so as to cause
               unreasonable risk of injury.

Id., subd. 4. In this case, the parties agree that North Star is obligated to pay benefits

pursuant to paragraph (b). North Star seeks to establish that State Farm has an obligation



                                              5
to pay benefits pursuant to paragraph (a), which would have priority over North Star’s

obligation. State Farm contends that it has no obligation to pay benefits to Quernemoen.

      To resolve the parties’ dispute, we must analyze and interpret the insurance policy

that State Farm issued to Quernemoen’s parents. See Carlson v. Allstate Ins. Co., 749

N.W.2d 41, 46 (Minn. 2008). In doing so, we apply general principles of contract

interpretation. Lobeck v. State Farm Mut. Auto. Ins. Co., 582 N.W.2d 246, 249 (Minn.

1998). We give the language used in the policy its “natural and ordinary meaning.”

American Family Ins. Co. v. Walser, 628 N.W.2d 605, 609 (Minn. 2001). If a contract is

“clear and unambiguous,” a court “should not rewrite, modify, or limit its effect by a

strained construction.” Valspar Refinish, Inc., v. Gaylord’s, Inc., 764 N.W.2d 359, 364-

65 (Minn. 2009). “Whether a contract is ambiguous is a question of law,” which we

review de novo. Carlson, 749 N.W.2d at 45.

      The auto-insurance policy that State Farm issued to Quernemoen’s parents

provides that State Farm will provide coverage for certain medical expenses arising from

“bodily injury to an insured, caused by accident resulting from the maintenance or use of

a motor vehicle as a vehicle.” The policy defines the term “insured” to mean:

                    1.     you [i.e., a named insured];

                    2.     resident relatives; and

                    3.     any other person when:

                          a.     occupying your car, a newly acquired car
             or a temporary substitute car; or

                            b.    not a driver or occupant of another motor
             vehicle, if the bodily injury occurs in Minnesota and results


                                            6
              from the maintenance or use of your car, a newly acquired car
              or a temporary substitute car.

In this case, the declarations page of the policy identifies only Quernemoen’s parents as

the named insureds.

       North Star contends that Quernemoen was an “insured” under the second clause of

the definition of that term, which extends coverage to “resident relatives.” The policy

defines the term “resident relative” to mean, with respect to an adult, “a person other than

you who is . . . related to you by blood, marriage or adoption who resides with you.” The

policy further defines the concept of “resident” as follows: “A person resides in the same

household with you if that person’s home is usually in the same family unit, even though

temporarily living elsewhere.”     This part of the State Farm policy conforms to the

statutory definition of a resident relative: “A person resides in the same household with

the named insured if that person’s home is usually in the same family unit, even though

temporarily living elsewhere.” See Minn. Stat. § 65B.43, subd. 5 (2012).

       The parties have referred to a body of caselaw concerning whether a minor or

young adult is a resident relative of a policyholder’s household. The most prominent

cases are three opinions of the supreme court, two of which reached the conclusion that a

young person was not a resident for purposes of resident-relative coverage.              In

Fruchtman v. State Farm Mutual Automobile Ins. Co., 274 Minn. 54, 142 N.W.2d 299

(1966), a woman was a passenger while her 27-year-old son was driving his own vehicle.

Id. at 55, 57, 142 N.W.2d at 300-01. The son, who was on leave between military

assignments, had moved out of his mother’s home two and one-half years earlier, had not



                                             7
visited the home for more than a week or two, and did not intend to return, even though

he kept most of his belongings there. Id. at 56-57, 142 N.W.2d at 301. The supreme

court concluded that the woman and her son did not reside in the same household. Id. at

57-58, 142 N.W.2d at 300-01. Similarly, in Van Overbeke v. State Farm Mut. Auto. Ins.

Co., 303 Minn. 387, 227 N.W.2d 807 (1975), the injured person was 19 years old, was

employed, was providing for his own financial needs with no assistance from others,

attended post-secondary school in Mankato, and intended for Mankato to be his

residence. Id. at 391-92, 227 N.W.2d at 809-10. The supreme court concluded that he

was not a resident relative of his older brother’s household. Id.

       In Firemen’s Ins. Co. of Newark, New Jersey v. Viktora, 318 N.W.2d 704 (Minn.

1982), however, the supreme court concluded that the injured person was a resident

relative. Id. at 707. The injured person was a 23-year-old man who had been employed

in a different city but moved into his parents’ home during a strike that suspended his

employment indefinitely. Id. at 705, 707. He had lived with his parents for nearly four

months at the time of the accident. Id.. He did not pay his parents for room or board, and

his mother regularly did his laundry. Id. at 705. The supreme court reasoned that the

young man “was not self-supporting while at his parents’ home” and that he and his

parents “enjoyed the intimate, informal family relationship indicative of a legal

residency.” Id.

       The parties also cite a series of opinions issued by this court after the enactment of

the statutory definition of resident relative. See 1974 Minn. Laws ch. 408, § 3, at 764

(codified at Minn. Stat. § 65B.43, subd. 5). Those cases typically consider multiple


                                             8
factors, such as (1) the age of the injured person, (2) whether the person had established a

separate residence, (3) whether the person was self-sufficient, (4) the frequency and

duration of the person’s presence at the policyholder’s home, and (5) whether the person

intended to return to the family home. See, e.g., Wood v. Mutual Serv. Cas. Ins. Co., 415

N.W.2d 748, 750 (Minn. App. 1987), review denied (Minn. Feb. 12, 1988).

       The undisputed facts of this case are substantially similar to the facts in the

supreme court’s opinions in Fruchtman and Van Overbeke. In each of those cases, a

young adult had moved out of his childhood home, had established his own home, was

entirely or mostly self-sufficient financially, and had no intention of returning to the

childhood home. See Van Overbeke, 303 Minn. at 391-92, 227 N.W.2d at 809-10;

Fruchtman, 274 Minn. at 57-58, 142 N.W.2d at 300-01; see also French v. State Farm

Mut. Auto. Ins. Co., 372 N.W.2d 839, 843 (Minn. App. 1985) (relying on Fruchtman and

Van Overbeke to conclude that young adult was not resident of parents’ home because he

had moved out, was self-supporting, and had no intention to return). In addition, the

multi-factor test adopted by this court leads to the conclusion that Quernemoen is not a

resident relative. First, Quernemoen was 20 years old at the time of the accident, which

means that he was an emancipated adult. Second, Quernemoen had moved out of his

parents’ home approximately four years before the accident and had established his own

residence approximately 10 months before the accident.           Third, Quernemoen had

discontinued his education and had obtained full-time employment, and he was mostly

independent financially. Fourth, Quernemoen made only short visits to his parents’

home, except for the period immediately following his high school graduation, which was


                                             9
more than one year before the accident. Fifth, Quernemoen had no intention of living at

his parents’ home again in the future.

       The undisputed facts of this case are dissimilar to the facts of Viktora because the

young man in that case was living with his parents day-after-day, was completely

dependent financially on his parents, and had no definite plans to leave his parents’ home.

See 318 N.W.2d at 707. In addition, the undisputed facts of this case are distinguishable

from the cases cited by North Star, in which young adults had not yet settled down and

established their own residences because they were students or in military service. See

Schoer v. West Bend Mut. Ins. Co., 473 N.W.2d 73, 77 (Minn. App. 1991); Wood, 415

N.W.2d at 750; Skarsten v. Dairyland Ins. Co., 381 N.W.2d 16, 18-20 (Minn. App.

1986), review denied (Minn. Mar. 27, 1986); Morgan v. Illinois Farmers Ins. Co., 392

N.W.2d 37, 40 (Minn. App. 1986), review denied (Minn. Oct. 22, 1986).

       Thus, we conclude that Quernemoen was not a resident of his parents’ household

at the time of the accident and, thus, was not an “insured” under the State Farm policy.

Accordingly, State Farm does not have an obligation to pay no-fault benefits to him.

                                II. Alternative Theories

       North Star also argues that the district court erred by rejecting three alternative

arguments that North Star asserted in an attempt to overcome the terms of the insurance

policy. We note State Farm’s responsive argument that North Star failed to plead these

claims in its complaint.    We also question whether the alternative theories may be

asserted by an insurer against another insurer in a subrogation action rather than by an




                                            10
individual seeking coverage from an insurer. But we need not address those issues

because we conclude that North Star’s alternative arguments fail on the merits.

A.     Reasonable-Expectations Doctrine

       North Star argues that the district court erred by rejecting its argument that State

Farm should be obligated to pay no-fault benefits to Quernemoen pursuant to the

reasonable-expectations doctrine. See Atwater Creamery Co. v. Western Nat’l Mut. Ins.

Co., 366 N.W.2d 271, 1276-77 (Minn. 1985).           The supreme court has limited the

reasonable-expectations doctrine to cases in which an insurance policy is ambiguous and

in which application of the doctrine is necessary to correct an “extreme situation[].”

Carlson, 749 N.W.2d at 49; see also Atwater Creamery, 366 N.W.2d at 279 (Simonett, J.,

concurring specially) (reasoning, with three other justices, that ambiguous policy is

prerequisite).

       North Star contends that the State Farm policy is ambiguous because it does not

define the term “driver.” A definition of that term is unnecessary because the State Farm

policy does not provide coverage based on such a designation. The policy states that it

provides coverage to an “insured,” and the policy defines that term to include a “resident

relative,” and the policy further defines the term “resident relative.”      These policy

provisions are similar to language in other policies that have been deemed unambiguous.

See Viktora, 318 N.W.2d at 706; Skarsten, 381 N.W.2d at 19. For the same reasons, the

State Farm policy’s definition of “resident relative” is unambiguous.             Thus, the

reasonable-expectations doctrine does not apply.




                                            11
B.     Illusory-Coverage Doctrine

       North Star argues that the district court erred by rejecting its argument that State

Farm should be obligated to pay no-fault benefits to Quernemoen pursuant to the

illusory-coverage doctrine.

       The doctrine of illusory coverage derives from the supreme court’s observation

that “‘insurance contracts should, if possible, be construed so as not to be a delusion to

those who have bought them.’” Jostens, Inc. v. Northfield Ins. Co., 527 N.W.2d 116, 118

(Minn. App. 1995) (quoting Motor Vehicle Cas. Co. v. Smith, 247 Minn. 151, 157, 76

N.W.2d 486, 490-91 (1956), review denied (Minn. Apr. 27, 1995)). The doctrine is

similar to the reasonable-expectations doctrine in that it seeks “to avoid an unreasonable

result when a literal reading of a policy unfairly denies coverage.” See id. The doctrine

of illusory coverage “is best applied . . . where part of the premium is specifically

allocated to a particular type or period of coverage and that coverage turns out to be

functionally nonexistent.” Id. at 119.

       North Star argues that the State Farm policy provides illusory coverage because

Quernemoen’s parents paid a premium for no-fault coverage yet the policy did not

provide coverage for Quernemoen.         State Farm responds by arguing that no-fault

coverage for Quernemoen potentially was available, depending on various facts, such as

whether he was an occupant of a vehicle covered by the policy. Specifically, the State

Farm policy provides coverage if either of Quernemoen’s parents is involved in an

accident, if a resident relative is involved in an accident, if any person is involved in an

accident while an occupant of the Cobalt, or if any person other than an occupant is


                                            12
injured by operation of the Cobalt. Under the policy, Quernemoen could receive no-fault

benefits in any of these circumstances, but none of them are present in this case.

Accordingly, this is not a case in which no-fault coverage was “nonexistent.” See id.

Thus, the illusory-coverage doctrine does not apply in this case.

C.     Reformation

       North Star contends that the district court erred by rejecting its argument that the

State Farm policy should be reformed to provide coverage to Quernemoen based on an

alleged mutual mistake.

       The doctrine of reformation allows a district court to alter or amend a written

agreement to reflect the parties’ true intentions at the time they entered into the

agreement. SCI Minn. Funeral Servs., Inc. v. Washburn-McReavy Funeral Corp., 795

N.W.2d 855, 864 (Minn. 2011); Jablonski v. Mutual Serv. Cas. Ins. Co., 408 N.W.2d

854, 857 (Minn. 1987). “[R]eformation of a written agreement is available when parties

reached an agreement, attempted to reduce it to writing, but failed to express [the

agreement] correctly in the writing.”      SCI Minn. Funeral Servs., Inc. v. Washburn-

McReavy Funeral Corp., 779 N.W.2d 865, 870 (Minn. App. 2010), aff’d, 795 N.W.2d

855 (Minn. 2011). To prevail, a plaintiff seeking reformation must prove the following

elements of the claim:

              (1) there was a valid agreement between the parties
              expressing their real intentions; (2) the written instrument
              failed to express the real intentions of the parties; and (3) this
              failure was due to a mutual mistake of the parties, or a
              unilateral mistake accompanied by fraud or inequitable
              conduct by the other party.



                                             13
Nichols v. Shelard Nat’l Bank, 294 N.W.2d 730, 734 (Minn. 1980). The plaintiff must

prove each element of a reformation claim “by evidence which is clear and consistent,

unequivocal and convincing.” Id. The doctrine of reformation may be applied to an

insurance policy to provide coverage that is not available under the terms of the policy.

See Peterson v. Marlowe, 264 N.W.2d 133, 135 (Minn. 1977); Wood Goods Galore, Inc.

v. Reinsurance Ass’n of Minn., 478 N.W.2d 205, 208-09 (Minn. App. 1991), review

denied (Minn. Jan. 30, 1992).

       North Star’s reformation argument fails because North Star has presented no

evidence that the insurance policy “failed to express the real intentions of the parties” to

the policy, i.e., State Farm and Quernemoen’s parents. See Nichols, 294 N.W.2d at 734.

State Farm denies that it intended anything other than what is reflected in the language of

the policy, and North Star has not presented any evidence to contradict State Farm’s

denial. Thus, North Star cannot, as a matter of law, prevail on its reformation claim.

                                           III. Interest

       North Star argues that it is entitled to interest at the rate of 15% on any money

judgment entered against State Farm. See Minn. Stat. § 65B.54, subd. 2 (2012). North

Star raised this issue in the district court, but the district court did not address it because

the district court granted summary judgment to State Farm. Likewise, because we are

affirming the district court’s grant of summary judgment to State Farm, we do not reach

the issue. Unless and until North Star obtains a judgment against State Farm, North

Star’s request for interest is not ripe.

       Affirmed.


                                                14
