The respondents were seriously injured in a motorcycle accident in Minnesota caused by a state-owned truck operated by a state employee.
Due to Minnesota's statutory damage cap under the Tort Claims Act, they recovered only US$500,000 (inclusive of legal fees), despite damages exceeding that amount.
They sought the shortfall from their Canadian insurer under an underinsured motorist endorsement (OPCF 44R).
The insurer refused, arguing Minnesota was not "inadequately insured" and that legal fees were not recoverable.
The motion judge found in favor of the respondents on both issues.
On appeal, the court held that Minnesota was an inadequately insured motorist despite being self-insured and having statutory immunity, but reversed the finding that legal fees could be claimed as special damages.