American National Fire Ins. Co. v. Hughes

In American National Fire Ins. Co. v. Hughes, 2003 ND 43, 658 N.W.2d 330, a closely held corporation had an insurance policy on its vehicles and equipment but did not explicitly name the corporation's owners, officers, or employees as insureds. Hughes, who was an employee and officer of the corporation and whose parents owned all of the corporation's stock, started a fire while he was working on his personal snowmobile. Id. We held the insurance company could not bring a subrogation claim against Hughes, because the corporation permitted Hughes and its corporate owners to use its shop for work on their snowmobiles. The Court concluded the public policy for averting potential conflicts of interest necessitated the preclusion of the subrogation action. Id. The Court held that it would compromise the integrity of the insurance company's relationship with the corporation and create a potential conflict of interest to allow the insurance company's subrogation claim against Hughes. Id.