No. 22-2769 ___________________________

James Prisk,

lllllllllllllllllllllPlaintiff - Appellee,

v.

Travelers Indemnity Company of America,

lllllllllllllllllllllDefendant - Appellant,

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American Property Casualty Insurance Association,

lllllllllllllllllllllAmicus on Behalf of Appellant(s),

Minnesota Association for Justice

lllllllllllllllllllllAmicus on Behalf of Appellee(s). ____________

Appeal from United States District Court for the District of Minnesota ____________

Submitted: June 13, 2023 Filed: August 25, 2023 ____________ Before LOKEN, COLLOTON, and ERICKSON, Circuit Judges. ____________ COLLOTON, Circuit Judge.

James Prisk sued Travelers Indemnity Company of America, seeking a declaration that an insurance policy between Travelers and the City of Hermantown authorizes up to $2,000,000 in coverage for his tort claim against the city. The district court granted summary judgment for Prisk, and Travelers appeals. We conclude that the insurance policy limits the amount of Prisk’s recovery to $500,000, and therefore reverse the judgment.

In May 2020, Prisk was riding his bicycle in Hermantown when he was struck and injured by a vehicle owned by the city and driven by a city employee. At the time of the accident, Travelers insured Hermantown.

Prisk sued Travelers in Minnesota state court, seeking a declaratory judgment as to the amount of liability insurance available for his claim of bodily injury under Hermantown’s automobile insurance policy with Travelers. Travelers removed the suit to federal court. The parties stipulated that there were no facts in dispute, and that discovery was not necessary to determine the amount of insurance recoverable under the policy.

Both parties then moved for summary judgment. Prisk asserted that he may recover up to $2,000,000 under the policy. Travelers argued that the policy provides a coverage limit of $500,000 for claims, like Prisk’s, that are subject to Minnesota’s limit on municipal tort liability. See Minn. Stat. § 466.04. Travelers acknowledged a coverage limit of $2,000,000 for claims that are not subject to the statutory limit.

The district court granted summary judgment for Prisk. The court ruled that Hermantown waived the statutory limit on municipal tort liability when it purchased $2,000,000 in insurance coverage from Travelers, see Minn. Stat. § 466.06, and that

-2- the policy therefore authorizes up to $2,000,000 for Prisk’s claim. We review the district court’s interpretation of the insurance policy de novo and apply Minnesota substantive law. Rest. Recycling, LLC v. Emp. Mut. Cas. Co., 922 F.3d 414, 417 (8th Cir. 2019).

Insurance policies are interpreted according to general principles of contract law. Nathe Bros., Inc. v. Am. Nat’l Fire Ins. Co., 615 N.W.2d 341, 344 (Minn. 2000). “The well-settled general rule in the construction of insurance contracts” is that “parties are free to contract as they desire, and so long as coverage required by law is not omitted and policy provisions do not contravene applicable statutes, the extent of the insurer’s liability is governed by the contract entered into.” Am. Fam. Mut. Ins. Co. v. Ryan, 330 N.W.2d 113, 115 (Minn. 1983). “The provisions of an insurance policy are to be interpreted according to plain, ordinary sense so as to effectuate the intention of the parties,” and “should be construed according to what a reasonable person in the po