COURT OF APPEALS DECISION DATED AND RELEASED August 7, 1996 |
NOTICE |
A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 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. 95-2461
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT II
RICHARD G. PAAR and
KATHLEEN PAAR,
Plaintiffs-Respondents,
v.
LIBERTY MUTUAL
INSURANCE
COMPANY, a foreign
corporation,
Defendant-Respondent,
SECURA INSURANCE,
a mutual company, a
Wisconsin
corporation,
Defendant-Appellant.
APPEAL from an order of
the circuit court for Waukesha County:
ROGER P. MURPHY, Judge. Affirmed.
Before Anderson, P.J.,
Brown and Snyder, JJ.
BROWN, J. Richard
G. Paar was employed by E&L Transport when he sustained severe injuries
while driving the company’s utility vehicle.
This case concerns the subsequent dispute between E&L Transport’s
insurance carrier, Liberty Mutual Insurance Company, and Paar’s family
automobile insurer, Secura Insurance.
Secura contends that Liberty Mutual’s policy with E&L Transport is
ambiguous with respect to how much underinsured motorist (UIM) coverage it
provides. Because the policy is
ambiguous, Secura argues that we should construe it in favor of E&L
Transport and rule that it provides coverage up to the policy maximum of two
million dollars. Separately, Secura
raises several claims against permitting Paar to “stack” or bundle the UIM
coverage it provides for each of Paar’s personal vehicles.
We will assume without
deciding that the Liberty Mutual policy is ambiguous with regard to the amount
of UIM coverage it provides to E&L Transport and the company’s
drivers. Nonetheless, we conclude, as
the circuit court did, that the summary judgment record demonstrates an
intention by E&L Transport and Liberty Mutual to include $25,000 of UIM
coverage. We also rule against Secura
on the stacking question and uphold the circuit court’s ruling that Paar may
claim a sum equal to the aggregate total of the coverage allocated to each of
his vehicles in addition to the $25,000 he receives from Liberty Mutual as an
E&L Transport employee.
Liberty Mutual also
challenges part of the circuit court’s ruling.
While Liberty Mutual agrees with the finding that its policy provides
$25,000 of UIM coverage to E&L Transport’s employees, it contests the
circuit court’s decision to permit Paar to tap into this insurance because the
$25,000 of UIM coverage is less than the $50,000 of liability coverage already
made available to Paar through his settlement with the other driver. We conclude that Liberty Mutual has waived
its right to pursue this issue because it did not file a cross-appeal, which is
necessary whenever a responding party is aggrieved by the circuit court’s
result and seeks a change in the judgment.
The traffic accident
occurred in January 1992 when Paar was driving E&L Transport’s Bronco in
the City of Milwaukee. Paar was
severely injured, although he stipulates that his total damages are less than
two million dollars. The driver who hit
Paar has already settled with him for the $50,000 limitation of her liability
coverage.
Because the settlement
with the other driver did not cover all of Paar’s damages, he and his wife
subsequently filed a declaratory action against Liberty Mutual and Secura to
determine which policy’s UIM coverage applied.
Liberty Mutual and Secura each responded by moving for summary judgment.
The circuit court
ultimately ruled that Liberty Mutual’s policy provided $25,000 of coverage and
that the two policies that Paar had with Secura for his family vehicles were
stackable and in the aggregate covered the remaining damages.[1]
Secura now appeals this
decision, and Paar and Liberty Mutual renew the arguments that they each raised
before the circuit court. We review
alleged errors in summary judgment proceedings de novo and apply the same standards
that the circuit court did. See
generally Preloznik v. City of Madison, 113 Wis.2d 112, 115-16, 334
N.W.2d 580, 582 (Ct. App. 1983).
We start with a brief
description of the Liberty Mutual policy since the dispute centers on what this
policy covers. Because E&L
Transport is headquartered in Michigan, much of the policy is directed toward
Michigan rules on insurance coverage.[2] The declarations page at the beginning of
the policy explains that the “coverages” include “underinsured motorists.” The declarations page also has blanks where
the “limit” of each type of coverage is to be filled in. The policy plainly defines “limit” as “The
most we will pay for any one accident or loss.” No amount, however, was inserted in the blank set aside for UIM
coverage. Instead, the policy says to
“see state schedule of limits for underinsured motorists insurance.”
With this background
information in hand, we now turn to Secura’s argument that the Liberty Mutual
policy is ambiguous because it does not give a single reasonable definition of
what its UIM insurance covers and how much of it there is. Emphasizing what is contained on the
declarations page of the Liberty Mutual policy, Secura argues that we cannot
reasonably discern the amount of coverage that the policy provides. Although the policy says to “see state schedule,” Secura complains that the schedule was never
made part of the policy. Moreover,
Secura argues that any person would be further confused when he or she compares
the two million dollar maximum and the instruction to see a nonexistent “state
schedule.” Secura contends that a
person could reasonably interpret these two sections to mean that the default
amount of UIM coverage is the policy maximum of two million dollars and only
changes when the “state schedule” is made part of the insurance package.
Liberty Mutual responds
to these charges in the following manner.
It begins with the concession that its policy “does not contain a
specifically designated limit for underinsured motorist coverage for operations
carried on by E&L Transport in the State of Wisconsin.” In fact, at oral argument, counsel for
Liberty Mutual further conceded that the company made “a clerical error” when
it forgot to include the apparently necessary state schedule. Nonetheless, it suggests that a person would
readily infer that the reference to “state schedule” means whatever the
mandated minimums are in the given state.
Alternatively, Liberty
Mutual argues that discussion about the possible interpretation of the policy
language is not relevant in this case.
Based on case law, such as D'Angelo v. Cornell Paperboard Prods.
Co., 59 Wis.2d 46, 49, 207 N.W.2d 846, 848 (1973), Liberty Mutual
asserts that the most important consideration for this court is the intent of
the contracting parties. Here, it
points to the affidavit of the sales agent who was involved in formulating the
E&L Transport policy. Liberty
Mutual claims that this evidence conclusively demonstrates that it and E&L
Transport intended the policy to provide $25,000 of UIM coverage. So even if this court concludes that the
language which Liberty Mutual and E&L Transport used to capture their
intent is ambiguous, Liberty Mutual believes that we must ultimately rest our
determination on the uncontested evidence that the contracting parties designed
their policy to provide $25,000 of UIM coverage.
We agree with Liberty
Mutual and thus uphold the circuit court’s ruling that its policy provides
$25,000 of UIM coverage. Indeed, we
may assume that Secura’s various contentions about the ambiguity of the Liberty
Mutual policy are correct. Still, such
a finding only takes us to the next level of inquiry which is to determine the
contracting parties’ intent. See
United States Fire Ins. Co. v. Ace Baking Co., 164 Wis.2d 499, 502-03,
476 N.W.2d 280, 282 (Ct. App. 1991).
And when we make this inquiry, we have the undisputed evidence submitted
by Liberty Mutual which shows that it and E&L Transport wanted the policy
to provide $25,000 of UIM coverage. We
hold that this evidence controls our analysis on this issue.
We are aware of Secura’s
citation to Vidmar v. American Family Mut. Ins. Co., 104 Wis.2d
360, 365, 312 N.W.2d 129, 131 (1981), and its rule that courts should construe
ambiguity in insurance contracts against the insurer and in favor of
coverage. But the premise of this rule
is that insurance companies control the drafting process and thus courts should
balance the inquiry towards the insured who had a limited role in formulating
how the policy was written. See Carrington
v. St. Paul Fire & Marine Ins. Co., 169 Wis.2d 211, 219, 485 N.W.2d
267, 270 (1992). In this case, however,
the insured (E&L Transport) does not dispute the evidence of intent that is
being advanced by the insurer. Thus,
without any rebuttal evidence that the $25,000 limit was not the intent of Liberty
Mutual and E&L Transport, we must affirm the circuit court’s conclusion
that Liberty Mutual was entitled to summary judgment on this question.
Having concluded that
the Liberty Mutual policy does provide UIM coverage to Paar as an employee of
E&L Transport, we next turn to Secura’s separate arguments that Paar may
not, nonetheless, rely on the UIM coverage within the Secura policy covering
his personal vehicles. Secura first
contends that its policy has an “other use” exclusion which prevents Paar from
tapping into his family coverage; it states:
We do not cover bodily injury to a
person:
1.
Occupying, or struck by, a motor vehicle owned by or furnished or
available for regular or frequent use by you, a relative or any other
person living in your household, for which insurance is not afforded under this
Coverage.
Secura
argues that its UIM coverage is not applicable because Paar was operating a
vehicle not mentioned in the policy, but was otherwise available for his
regular use.
Secura acknowledges that
the stacking statute, § 631.43, Stats.,[3]
generally applies to void these clauses, thus enabling injured motorists to
stack individual policies. However,
Secura claims that the determination of whether the policyholder may stack
turns on a three-part test that may be “distilled” from the supreme court’s
analysis in Wood v. American Family Mut. Ins. Co., 148 Wis.2d
639, 436 N.W.2d 594 (1989), and Schwochert v. American Family Mut. Ins.
Co., 139 Wis.2d 335, 407 N.W.2d 525 (1987).
(1)
Does the insurance policy written on the car which the insured was
occupying at the time of the accident – “the accident vehicle” – offer coverage
to the insured?
(2)
Would there be additional coverage of the same type under
the non-accident policy(ies) but for a provision in the policy(ies)?
(3)
Does the provision which operates to deny coverage under the
non-accident policy(ies) function as an “other insurance” provision which
operates to reduce coverage to that afforded under the policy written on the
accident vehicle?
In
sum, Secura contends that the stacking statute only invalidates “other car”
exclusions when the answer to all three questions is “yes.”
Paar responds, correctly
in our view, that there is no three-part test and that the stacking statute
instead requires that the court only determine if the policies, which are
allegedly stackable, provide the same type of coverage. The stacking statute
provides in pertinent part:
When
2 or more policies promise to indemnify an insured against the same loss, no
“other insurance” provisions of the policy may reduce the aggregate protection
of the insured below the lesser of the actual insured loss suffered by the
insured or the total indemnification promised by the policies if there were no
“other insurance” provisions.
Section
631.43(1), Stats.
In our view, only the
second of Secura’s proposed tests is pertinent to understanding the difference
between a Schwochert type of case and a Wood
case. If one insurance policy covers
uninsurance and the other policy covers underinsurance, for example, stacking
is disallowed because an insured cannot stack policies covering a different
type of risk upon one another. On the
other hand, if the risks insured against are the same, stacking is
permitted. So, the sole question before
us is whether the Liberty Mutual policy and the Secura policies insured against
the same type of risk. If they did,
stacking is permitted. If not, stacking
is not allowed and the “other use” exclusion would be applicable since the
stacking statute would be irrelevant to the analysis.
Secura addresses this
question by asserting two alternative explanations of why the Liberty Mutual
policy is an uninsurance policy and the Secura policies are underinsurance
policies. First, Secura observes that
the Liberty Mutual policy places underinsurance within the umbrella of
uninsurance. In other words, Liberty
Mutual has made a conscious decision not to separate the two types of risk with
separate definitions, but has decided that an underinsured driver is defined as
though he or she is an uninsured driver.
Secura then cites to our decision in Sobieski v. Farmers Ins.
Exch., 181 Wis.2d 324, 510 N.W.2d 796 (Ct. App. 1993), and claims that
the case stands for the proposition that when an insurer includes underinsured
motorist protection within its uninsured motorist coverage, the policy becomes uninsurance coverage.
Secura is wrong. To begin with, while it is true that the
undersinsured protection was placed in the uninsurance section of the policy,
the fact is that an uninsured motor vehicle is defined in the policy separately
from the definition of an underinsured motor vehicle. What this means is that the reasonable insured would read the
contract to say that there are two separate types of harm which the insurer is
protecting against; the harms are not defined the same and are not subject to
the same limitations and coverages. The
policies clearly insure against two different kinds of harm. Also, Sobieski does not stand
for what Secura claims. In Sobieski,
ambiguities in coverage were read in favor of the insured such that an insured
had “all the benefits” of such coverage.
See id. at 330, 510 N.W.2d at 798. Contrary to Secura’s claim, Sobieski
did not set out a per se rule that requires us to disregard the intent of the
drafting parties and automatically deem uninsured motorist coverage as only
uninsurance coverage.
Secura’s second argument
for why the Liberty Mutual policy should be construed as an uninsured policy
rather than an underinsurance policy is that the underinsurance policy of
Liberty Mutual is illusory and, because it is so, it is either a nullity or the
underinsurance definition must be interpreted to provide only the same kind of
protection that would be afforded in a case involving uninsurance. Here again, the rationale underlying the
rule of insurance construction governing allegedly illusory coverage requires
that such policies be construed in favor of the insured. See Allstate Ins. Co. v. Gifford,
178 Wis.2d 341, 349, 504 N.W.2d 370, 373 (Ct. App. 1993). Additionally, we again note that we have the
summary judgment record which shows that the Liberty Mutual policy was designed
to provide Paar with UIM coverage. Our
reliance on extrinsic evidence to reach a conclusion that Liberty Mutual’s
policy provides UIM coverage does not prevent the beneficiary, Paar, from
taking full advantage of this holding and stacking other UIM coverage from the
Secura policy, which plainly indicates that it provides UIM coverage.
We also reject Secura’s
final contention that Koshiol v. American Family Mut. Ins. Co.,
171 Wis.2d 192, 491 N.W.2d 776 (Ct. App. 1992), prevents Paar from using the
family’s UIM coverage. The Koshiol
panel upheld an “other car” exclusion and seemingly concluded that the stacking
statute may not always prevent an insurance company from enforcing an “other
car” exclusion. See id.
at 198, 491 N.W.2d at 778.
Nonetheless, that
panel’s analysis must be confined to the peculiar circumstances of that
case. The injured driver in Koshiol
received her injuries when she was riding with her husband in the family
car. She knowingly waived any claims
that she might have had to the liability portion of the family policy because
she was concerned that the other drivers injured in the crash would use up the
liability insurance and then seek recovery directly out of the family’s
assets. See id. at 194,
491 N.W.2d at 777. Still, the wife
tried to assert a claim under the family’s UIM coverage arguing that the party
liable for her injuries, her husband, now had no liability insurance to pay for
her damages. See id.
at 194-95, 491 N.W.2d at 777.
The Koshiol
panel upheld the “other car” exclusion written into the UIM coverage and denied
the wife’s claim. It did so, however,
on the basis of public policy.
Specifically, the court was concerned that voiding the exclusion in such
circumstances would wrongly encourage families to take out UIM coverage on only
one of the family’s automobiles and save premiums. Id. at 197, 491 N.W.2d at 778.
In the present case,
however, we face no similar concerns of chicanery by the Paar family. They purchased UIM coverage, in equal
amounts, for their family vehicles. The
special circumstances within Koshiol are not present in this case
and we see no reason to apply that panel’s analysis.
Having answered all of
Secura’s appellate claims, we will now turn our attention to Liberty Mutual’s
concerns with the circuit court’s judgment and briefly discuss our decision to
dismiss its appellate challenges. After
the circuit court found that the Liberty Mutual policy provided Paar with
$25,000 of UIM coverage, it went forward to examine the effect of this
finding. Normally, the first question
asked when interpreting a UIM provision is whether the tortfeasor is actually
underinsured. The driver who hit Paar
had $50,000 of liability coverage and Liberty Mutual thus contended that its
coverage did not apply because the tortfeasor’s $50,000 of coverage was more
than its $25,000 of UIM coverage. See,
e.g., Smith v. Atlantic Mut. Ins. Co., 155 Wis.2d 808, 810-11, 456
N.W.2d 597, 598-99 (1990).
The circuit court,
however, observed that Wisconsin requires that drivers with liability insurance
carry at least $25,000 of coverage. See
§ 344.33(2), Stats. Hence, a driver who buys $25,000 of underinsured
motorist coverage would not have anything of real value because he or she would
never be in a situation where an insured driver had less than $25,000 of
coverage. See Hoglund v. Secura
Ins., 176 Wis.2d 265, 269, 500 N.W.2d 354, 356 (Ct. App. 1993). The circuit court therefore concluded that
Liberty Mutual’s coverage was illusory and required Liberty Mutual to fulfill
its coverage obligations on top of the $50,000 that had already been paid by
the tortfeasor.
In its appeal, Liberty
Mutual contends that the circuit court erred when it arrived at this
remedy. At oral argument, we asked
counsel for Liberty Mutual why it did not present this issue in a cross-appeal
pursuant to Rule 809.10(2)(b), Stats.[4] He claimed that the circuit court’s ruling
generally addressed the coverage available under the Liberty Mutual
policy. Thus, he believed that he was
free to renew all of his arguments because the appropriateness of summary
judgment was again addressed on appeal.
Liberty Mutual, however,
undoubtedly wants to change the result that the circuit court reached. The circuit court found that it must pay
$25,000 and Liberty Mutual argues before this court that it should not have to
pay anything. As a responding party, it
was therefore required to file a cross-appeal.
See id.
Because Liberty Mutual has not done so, we are unable to address the
arguments it raises against the circuit court’s conclusion. See State v. Huff, 123 Wis.2d
397, 407-09, 367 N.W.2d 226, 231-32 (Ct. App. 1985). We affirm the circuit court’s ruling.
By the Court.—Order
affirmed.
Not recommended for
publication in the official reports.
[1] The
circuit court’s written decision states that “it appears undisputed that [Secura]
insured two (2) of Plaintiff Paar’s personally owned motor vehicles, both with
uninsured and underinsured coverage.”
In its brief to this court, however, Secura writes that it “insured
three of the Paar’s personally-owned vehicles.” Paar similarly claims that Secura insured three, not two, of
Paar’s own vehicles. Secura and Paar,
however, have not raised any issue about this discrepancy. We therefore do not reach any conclusions
regarding how this factual discrepancy affects this case, if at all.
[2] For example, the policy sets out the definition of what it terms UIM coverage in an endorsement entitled “Michigan Uninsured Motorists Coverage.” We observe that it applies to all vehicles principally garaged in Michigan.
[3] The
legislature amended § 631.43, Stats.,
to enable automobile insurers to write such exclusions. See 1995 Wis. Act 21, § 2. These changes, however, did not become
effective until July 1995 and do not affect our analysis. See id. at § 6.
[4] The rule
on filing a cross-appeal provides in pertinent part:
A
respondent who seeks a modification of the judgment or order appealed from
or of another judgment or order entered in the same action or proceeding shall
file a notice of cross-appeal within the period established by law ¼.
Rule 809.10(2)(b), Stats. (emphasis added).