PUBLISHED OPINION
Case No.: 94-3386
†Petition for
review filed.
Complete
Title
of
Case:THOMAS L.
DANIELSON,
Plaintiff-Appellant,†
v.
THE LARSEN COMPANY,
ABC INSURANCE COMPANY,
AND XYZ INSURANCE COMPANY,
Defendants-Respondents.
Submitted
on Briefs: September 11, 1995
COURT COURT OF
APPEALS OF WISCONSIN
Opinion
Released: October 19, 1995
Opinion
Filed: October
19, 1995
Source
of APPEAL Appeal from a judgment
Full
Name JUDGE COURT: Circuit
Lower
Court. COUNTY: Jefferson
(If
"Special" JUDGE: Arnold
Schumann
so
indicate)
JUDGES: Eich,
C.J., Dykman and Vergeront, JJ.
Concurred:
Dissented:
Appellant
ATTORNEYSFor the plaintiff-appellant the
cause was submitted on the briefs of Craig R. Johnson and Nicholas J.
Loniello of Loniello Johnson Simonini of Madison.
Respondents
ATTORNEYSFor the defendants-respondents the
cause was submitted on the brief of Peggy E. Straub of Law Offices of
Stilp, Cotton and Wells of Milwaukee.
COURT OF APPEALS DECISION DATED AND RELEASED October
19, 1995 |
NOTICE |
A party may file with the Supreme Court a petition to review an
adverse decision by the Court of Appeals pursuant to § 808.10 and Rule 809.62, Stats. |
This opinion is subject to further editing. If published, the official version will appear in the bound
volume of the Official Reports. |
No. 94-3386
STATE OF WISCONSIN IN
COURT OF APPEALS
THOMAS
L. DANIELSON,
Plaintiff-Appellant,
v.
THE
LARSEN COMPANY,
ABC
INSURANCE COMPANY,
AND
XYZ INSURANCE COMPANY,
Defendants-Respondents.
APPEAL
from a judgment of the circuit court for Jefferson County: ARNOLD SCHUMANN, Judge. Affirmed.
Before
Eich, C.J., Dykman and Vergeront, JJ.
VERGERONT,
J. Thomas Danielson appeals from a
judgment granting The Larsen Company's motion to dismiss his complaint and
denying his motion to amend the complaint.
In his complaint, Danielson alleged that he was entitled to compensation
for injuries he sustained in an accident while employed by Larsen under several
insurance policies issued to Larsen.
Danielson raises two issues on appeal:
(1) whether Larsen waived the exclusive remedy provision of the Worker's
Compensation Act by purchasing a worker's compensation and employer's liability
insurance policy from Employers Insurance of Wausau (Wausau); and
(2) whether Wausau waived or limited its right to reimbursement under
§ 102.29(1), Stats., for
payments made to Danielson on behalf of Larsen by the terms of an endorsement
to the policy. We resolve each issue
against Danielson and affirm.
BACKGROUND
Danielson
was injured in the course of his employment with Larsen. While standing next to a corn picker parked
on the side of a road, he was struck by a car driven by Shelly Tomlinson. Pursuant to a worker's compensation
insurance and employer's liability insurance policy issued to Larsen by Wausau,
Wausau paid worker's compensation benefits under ch. 102, Stats., to Danielson for the injuries
he sustained as a result of the accident.
Danielson
also filed a third-party action against Tomlinson and American Family Insurance
Company. Danielson settled the action
for $100,000. Pursuant to
§ 102.29(1), Stats.,[1]
Danielson reimbursed Wausau $37,329.50 from the settlement he reached with
American Family.
Danielson
then commenced this action against Larsen and two unnamed insurers. In his complaint, Danielson alleged that he
was an insured under a commercial general liability insurance policy, an
automobile liability insurance policy and/or umbrella liability insurance
policy issued to Larsen by certain unknown insurance companies, and that he was
entitled to compensation for his injuries under these policies.[2]
Larsen
filed a motion to dismiss the complaint on the ground that Danielson had not
stated a claim upon which relief could be granted. Larsen's position was that Danielson had received worker's
compensation benefits and that this was his exclusive remedy against Larsen
under § 102.03(2), Stats.[3] Larsen also argued that, in any event,
Danielson had not alleged any negligence on the part of Larsen such that Larsen
would be liable under any of its insurance policies.
Danielson,
in turn, filed a motion for leave to amend his complaint to allege a common law
negligence claim against Larsen. He acknowledged
that worker's compensation is generally an injured employee's exclusive remedy
against his employer. However, he
argued that Larsen had voluntarily insured its employees over and above the
statutory limits of worker's compensation law by purchasing employer's
liability insurance from Wausau.
In
a supplemental brief in opposition to the motion to dismiss and in support of
his motion for leave to amend the complaint, Danielson stated that he also
intended to assert an unjust enrichment claim against Wausau to recoup the
amount Wausau had claimed under § 102.29(1), Stats., in Danielson's third-party action settlement. Danielson argued that pursuant to a
Wisconsin law endorsement to the worker's compensation insurance and employer's
liability insurance policy, Wausau had waived or limited its right to
reimbursement of worker's compensation benefits paid under § 102.29(1)
until Danielson was made whole.
The
trial court granted Larsen's motion to dismiss and denied Danielson's motion
for leave to amend the complaint. The
trial court held that worker's compensation was the only remedy available to
Danielson since the employer's liability insurance issued to Larsen could not
be read to waive the exclusive remedy provision in § 102.03(2), Stats.
The trial court also ruled that even if there were extra coverage under
the employer's liability insurance, Danielson had not alleged any negligence on
the part of Larsen which would justify leave to amend the complaint. According to the trial court, because the
complaint failed to state a claim against Larsen and could not be amended to
state a claim against Larsen, Danielson's action had to be dismissed. The court did not specifically address
Danielson's argument regarding the Wisconsin law endorsement's effect on
Wausau's statutory right to reimbursement under § 102.29(1), Stats.
The
resolution of the issues in this case involves an interpretation of the
insurance policy issued by Wausau. The
interpretation of an insurance policy is a question of law. Maas v. Ziegler, 172 Wis.2d
70, 79, 492 N.W.2d 621, 624 (1992).
This court decides questions of law de novo. Tahtinen v. MSI Ins. Co., 122
Wis.2d 158, 166, 361 N.W.2d 673, 677 (1985).
In construing an insurance contract, a construction that gives reasonable
meaning to every provision is preferable to one leaving part of the language
useless or meaningless. Stanhope
v. Brown County, 90 Wis.2d 823, 848-49, 280 N.W.2d 711, 722 (1979).
EXCLUSIVITY OF
WORKER'S COMPENSATION
Danielson
contends that Larsen waived the exclusive remedy provision of the Worker's
Compensation Act, § 102.03(2), Stats.,
by the express terms of the employer's liability insurance it purchased from
Wausau.
In
Wisconsin, worker's compensation is the exclusive remedy an injured employee has
against his or her employer. Section
102.03(2), Stats. However, an insurer can waive statutory
immunity under § 102.03(2) through the terms of its policy. Maas, 172 Wis.2d at 82, 492
N.W.2d at 625; § 102.30(2), Stats. For a waiver of immunity to occur, there
must be express policy language indicating that waiver was intended. Id.
Wausau
provided both worker's compensation insurance and employer's liability
insurance to Larsen in a single policy.
This single policy covers Larsen in all the states in which it conducts
business, including Wisconsin. Part I
of the policy is worker's compensation insurance. Part II of the policy is employer's liability insurance.
The
worker's compensation insurance (Part I) provides that it "applies to
bodily injury by accident or bodily injury by disease," and that
"[w]e will pay promptly when due the benefits required of you by the
workers compensation law." In a
section entitled "Recovery From Others," the insurance provides: "We have your rights, and the rights of
persons entitled to the benefits of this insurance, to recover our payments
from anyone liable for the injury. You
will do everything necessary to protect those rights for us and to help us
enforce them." Part I also
states: "Terms of this insurance that
conflict with the workers compensation law are changed by this statement to
conform to that law."
The
employer's liability insurance (Part II) provides that it "applies to
bodily injury by accident or bodily injury by disease." It states:
We will pay all sums you legally must pay as
damages because of bodily injury to your employees, provided the bodily injury
is covered by this Employers Liability Insurance.
The damages we will pay, where recovery is
permitted by law, include damages:
1.
for which you are liable to a third party by reason of a claim or suit
against you by that third party to recover the damages claimed against such
third party as a result of injury to your employee;
2. for care and loss of services; and
3. for consequential bodily injury to a spouse,
child, parent, brother or sister of the injured employee; ... and
4. because of
bodily injury to your employee that arises out of and in the course of
employment, claimed against you in a capacity other than as employer.
In
a section entitled "Recovery From Others," Part II provides: "We have your rights to recover our
payment from anyone liable for an injury covered by this insurance. You will do everything necessary to protect
those rights for us and to help us enforce them." Part II also contains the following
exclusion: "This insurance does
not cover ... any obligation imposed by a workers compensation, occupational
disease, unemployment compensation, or disability benefits law, or any similar
law."
Danielson
alleges that there is an express waiver of the immunity under § 102.03(2),
Stats., because both the worker's
compensation insurance and the employer's liability insurance provide coverage
for bodily injury to Larsen's employees.
In Danielson's view, this demonstrates that Larsen intended to provide
coverage in addition to worker's compensation for its employees injured
in the course of their employment.
However,
while the scope of coverage in both parts of the policy is the same, the
employer's liability insurance plainly states that, "This insurance does
not cover ... any obligation imposed by a workers compensation, occupational
disease, unemployment compensation, or disability benefits law, or any similar
law." It is undisputed that
Danielson's injuries gave rise to an obligation under worker's compensation
law. Therefore, the employer's
liability insurance does not cover Danielson's injuries. Danielson's argument that this exclusion was
designed only to prevent double recovery by deducting worker's compensation
benefits from the scope of the employer's liability insurance is not
persuasive. We read the exclusion to
unambiguously state that the employer's liability insurance applies only where
worker's compensation immunity does not.
Moreover,
the employer's liability insurance provides coverage only for sums which Larsen
"legally must pay." Under
§ 102.03(2), Stats., Larsen
is not legally obligated to pay anything more than worker's compensation
benefits absent an express waiver. The
fact that both parts of the policy provide coverage for bodily injury to
Larsen's employees does not constitute an express waiver of the statutory
immunity under § 102.03(2). The
policy provides insurance coverage for Larsen in the many states in which it
does business, including Wisconsin.
Each state varies with respect to what injuries are covered under
worker's compensation law and what benefits are required. In Wisconsin, for example, an employer's
liability extends beyond worker's compensation when the employer acted in a
"dual persona" capacity. See
Henning v. GM Assembly Div., 143 Wis.2d 1, 419 N.W.2d 551 (1988);
Schweiner v. Hartford Accident and Indem. Co., 120 Wis.2d 344,
354 N.W.2d 767 (Ct. App. 1984). For
this reason, Larsen might reasonably seek insurance coverage for
employment-related incidents not covered by a worker's compensation statute, as
well as for employment-related injuries that are covered by worker's
compensation.
Danielson's
reliance on Maas is incorrect.
In Maas, four employees of a home cleaning company were
injured or killed when the automobile in which they were riding, leased by the
company, crossed an intersection against a stop sign and collided with a
truck. The issue was whether an endorsement
to the company's general liability insurance policy, which removed a
co-employee exclusion from the policy, waived the exclusive remedy provision of
the Worker's Compensation Act, § 102.03(2), Stats. Maas,
172 Wis.2d at 80, 492 N.W.2d at 625.
The
general liability policy in Maas provided that the insurer would
pay all sums the insured legally must pay as damages because of bodily injury
caused by an accident, except bodily injury to any fellow employee arising out
of his or her employment. An endorsement
to the policy provided that the co-employee exclusion did not apply if the
bodily injury resulted from the use of an auto owned by the company. The court concluded that the endorsement
waived the exclusive remedy provision of the Worker's Compensation Act because
any other interpretation would render the endorsement meaningless. Id. at 80-81, 492 N.W.2d at
625. The only way to give meaning to
all of the policy's provisions, including the endorsement, was to read the
endorsement as waiving the co-employee immunity provided by § 102.03(2), Stats.
Id. at 81, 492 N.W.2d at 625.
In
Maas, the endorsement unambiguously provided that the exclusion
relating to bodily injury to fellow employees did not apply if the bodily
injury resulted from the use of a covered auto. Here, in contrast, Danielson is unable to point to any language
that can be construed as waiving the exclusivity provision or indicating an
intent to provide benefits above those required by the worker's compensation
law.
Because
Danielson's exclusive remedy for his injuries was worker's compensation, the
trial court properly dismissed his complaint and denied his motion for leave to
amend his complaint to allege a common law negligence claim against Larsen.
REIMBURSEMENT
UNDER § 102.29(1), Stats.
Danielson
next contends that Wausau waived or limited its right to reimbursement under
§ 102.29(1), Stats., until
he has been made whole, by the terms of an endorsement to the policy. According to Danielson, since he has not
been made whole the trial court erroneously denied his motion for leave to
amend his complaint to add an unjust enrichment claim to recoup the amounts
Wausau received from his third-party settlement.
While
worker's compensation is an injured employee's exclusive remedy against his or
her employer, the employee may pursue claims against third-party tortfeasors,
as Danielson did in this case. See
Nelson v. Rothering, 174 Wis.2d 296, 302, 496 N.W.2d 87, 90
(1993). When an injured employee sues a
third-party tortfeasor, § 102.29(1), Stats.,
governs the distribution of proceeds recovered. It provides a distribution scheme under which the employee
receives at least one-third of any proceeds after costs and collection fees,
and the compensation insurer is reimbursed as fully as possible from the
remainder of the sum collected, with any balance going to the employee. Id. at 303, 496 N.W.2d at
90. With the consent of the parties, a
trial court may deviate from the statutory formula. Id. at 304, 496 N.W.2d at 91.
Danielson
argues that the following provision of the Wisconsin law endorsement, attached
to the worker's compensation and employer's liability policy, waives Wausau's
reimbursement rights under § 102.29(1), Stats.,
until he is made whole:
This policy is amended to reflect the following
changes and/or additions to clarify or comply with Wisconsin Law:
....
IV. Any language
involving "Recovery From Others" is amended to provide that we are
entitled to recover our payments under this policy from anyone liable for the
covered injury, but only if you and the persons entitled to benefits under this
insurance have been fully compensated.[4]
The
Wisconsin law endorsement applies to both the employer's liability portion of
the policy and the worker's compensation portion of the policy. With respect to the employer's liability
insurance, the policy includes a section entitled "Recovery From
Others," which provides that Wausau has "your rights to recover our
payment from anyone liable for an injury covered by this insurance." Without the Wisconsin law endorsement, this
provision would contravene Wisconsin insurance law. Under Wisconsin common law rules of subrogation, one who claims
subrogation rights is barred from any recovery unless the insured is made
whole. Rimes v. State Farm Mut.
Auto. Ins. Co., 106 Wis.2d 263, 272, 316 N.W.2d 348, 353 (1982). Even though an insured has recovered from a
tortfeasor a sum more than sufficient to equal the subrogated amount claimed by
the insurer, the insurer is not entitled to subrogation unless the insured has
been made whole for his or her loss. Id.
at 271-72, 316 N.W.2d at 353. The
employer's liability insurance would contravene Wisconsin insurance law because
it does not condition Wausau's right to recover its payments on whether an
employee has been made whole by his or her third-party action. However, consistent with the endorsement's
stated purpose "to clarify or comply with Wisconsin Law,"[5]
the endorsement permits Wausau to recover from others payments made under the
employer's liability insurance only after the employee is fully compensated.[6]
With
respect to the worker's compensation insurance, the insurance also includes a
section entitled "Recovery From Others," which provides that Wausau
has "your rights, and the rights of persons entitled to benefits of this
insurance, to recover our payments from anyone liable for the
injury." However, unlike the
identical section in the employer's liability insurance, this section in the
worker's compensation insurance does not conflict with Wisconsin law on
subrogation.[7] In Martinez v. Ashland Oil, Inc.,
132 Wis.2d 11, 390 N.W.2d 72 (Ct. App. 1986), this court ruled that common law
rules of subrogation do not apply to worker's compensation. The carrier's right of subrogation under
§ 102.29(1), Stats.,
supersedes the employee's rights to be "made whole" and is not
contingent upon the size of the third-party settlement agreement. Id. at 16, 390 N.W.2d at
74. See also Nelson,
174 Wis.2d at 306, 496 N.W.2d at 92.
Since
the endorsement expressly provides that its purpose is to make the policy
comply with Wisconsin law, the language Danielson relies on cannot reasonably
be construed as a consent to a deviation from, or a waiver of, the statutory
scheme of distribution under § 102.29(1), Stats.
Danielson's
reliance on Maas is again incorrect. In Maas, the endorsement was interpreted as an
express waiver of the statutory immunity granted by § 102.03(2), Stats., because that was the only
interpretation that gave meaning to all the terms of the policy, including the
endorsement. Maas, 172
Wis.2d at 82, 492 N.W.2d at 625. The
Wausau endorsement, in contrast, is not meaningless unless interpreted as a
waiver or limitation of Wausau's reimbursement rights under § 102.29(1), Stats.
Rather, the endorsement brings the "Recovery From Others"
section of the employer's liability insurance into compliance with Wisconsin
insurance law.
Because
the endorsement is not an express waiver of Wausau's right to reimbursement
under § 102.29(1), Stats.,
until the employee is made whole, the trial court did not erroneously exercise
its discretion in denying Danielson's motion for leave to amend his complaint to
allege an unjust enrichment claim against Wausau.
By
the Court.—Judgment affirmed.
[1] Section 102.29(1), Stats., provides that the proceeds of an injured employee's
third-party action against a tortfeasor shall be divided as follows:
After deducting the reasonable cost of collection,
one-third of the remainder shall in any event be paid to the injured employe or
the employe's personal representative or other person entitled to bring
action. Out of the balance remaining,
the employer ... shall be reimbursed for all payments made by it, or which it
may be obligated to make in the future, under this chapter .... Any balance remaining shall be paid to the
employe or the employe's personal representative or other person entitled to
bring action.
[2] In his brief, Danielson's counsel explained
that he suspected these policies might reveal underinsured motorist coverage
for Danielson as an insured under the policies. He added, however, that when the policies were produced pursuant
to a discovery request, he realized his complaint was "off
target."
[3] Section 102.03(2), Stats., provides in part:
Where such
conditions [for benefits under ch. 102, Stats.]
exist the right to the recovery of compensation under this chapter shall be the
exclusive remedy against the employer, any other employe of the same employer
and the worker's compensation insurance carrier.
[4] The entire section of the endorsement
provides:
This policy is
amended to reflect the following changes and/or additions to clarify or comply
with Wisconsin Law:
I. If our agent
has knowledge of a change in or a violation of a policy condition, this will be
considered our knowledge and will not void the policy or defeat a recovery for
a claim.
II. "Workers
Compensation Law" means Chapter 102, Wisconsin Statutes. It does not include and this policy does not
apply to any obligation under Chapter 40, Wisconsin Statutes, or Section
66.191, Wisconsin Statutes, or any amendment to these laws.
III. Any language
involving "Actions Against Us" is replaced and amended to provide
that no legal action may be brought against us until there has been full
compliance with all the terms of this policy.
IV. Any language
involving "Recovery From Others" is amended to provide that we are
entitled to recover our payments under this policy from anyone liable for the
covered injury, but only if you and the persons entitled to benefits under this
insurance have been fully compensated.
V. If an injury
occurs that may be covered by this insurance, the policy is amended to provide
that you must notify us of that injury as soon as reasonably possible.
VI. The Cancellation Condition
of the policy, as respects coverage provided in Wisconsin, is replaced ....
[5] Danielson contends that it is unclear whether
the phrase "to clarify or comply with Wisconsin Law" modifies both
"additions" and "changes," or only
"additions." According to
Danielson, a fair reading is that the intended "changes" are not
designed "to clarify or comply with Wisconsin Law." We disagree. The endorsement plainly provides that the policy is "amended"
by making certain changes and/or additions in order to clarify or comply with
Wisconsin law. Danielson concedes that,
with the exception of the "fully compensated" provision, the other
provisions of the endorsement were inserted "to conform the policy to
insurance requirements codified in Wisconsin Statutes regulating insurance
contracts." Danielson does not
explain why the "fully compensated" provision would be an exception.
[6] While the endorsement uses the term
"fully compensated," as opposed to "made whole," the terms
are synonymous. See Rimes v.
State Farm Mut. Auto. Ins. Co, 106 Wis.2d 263, 275, 316 N.W.2d 348, 355
(1982) ("The injured or aggrieved party is not made whole unless all
his damages arising out of the tort have been fully compensated.")
(emphasis in original).
[7] The "Recovery From Others" section
in the worker's compensation insurance does not refer to the distribution
scheme under § 102.29(1), Stats.,
and read alone, appears inconsistent with Wisconsin law in that sense. However, another section in the worker's
compensation insurance provides that all terms that conflict with worker's
compensation law are changed to conform to that law. Read in its entirety then, the worker's compensation insurance
permits Wausau to recover from others worker's compensation benefits paid to an
employee only as allowed by § 102.29(1).