77 F.4th 546
7th Cir.2023Background
- Jadair International insured a Cessna (N1JA); owner/pilot David Schmutzler was listed on the application as the only authorized pilot and represented he had an FAA medical certificate and initialed a “Minimum Pilot Requirements” clause.
- Policy Item Nine required any pilot to have a current and valid FAA medical certificate, flight review, and pilot certificate and stated “THERE IS NO COVERAGE IF THE PILOT DOES NOT MEET THESE REQUIREMENTS.”
- An Endorsement stated it “completes or changes” Item Nine and set additional pilot/experience requirements, including an “Otherwise, David Schmutzler” line.
- In May 2020 the Cessna crashed due to an apparent mechanical failure; Schmutzler (the pilot) had no current FAA medical certificate at the time and was killed.
- American National denied the claim under the policy’s medical-certificate exclusion; the district court granted summary and declaratory judgment for the insurer. Jadair appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Endorsement removes the Item Nine medical-certificate requirement so coverage applies | Endorsement omits Item Nine’s explicit “THERE IS NO COVERAGE” language and the “Otherwise, David Schmutzler” clause exempts Schmutzler from the medical requirement | Endorsement supplements/completes Item Nine and does not supplant or conflict with Item Nine’s medical-certificate requirement; exclusion remains | Endorsement supplements Item Nine; medical-certificate requirement remains operative; exclusion precludes coverage |
| Whether Wis. Stat. §631.11(3) bars denial of coverage unless insurer proves the breach increased risk or caused the loss | §631.11(3) requires insurer to show the insured’s failure increased risk or contributed to the accident | §631.11(3) governs conditions subsequent/warranties, not policy exclusions | §631.11(3) does not apply because the medical-certificate rule is an exclusion, not a condition subsequent; insurer need not prove causal connection |
| Whether extrinsic evidence (application) creates ambiguity or supports insured’s reading | Ambiguity in the Endorsement should be resolved for the insured | The application (pilot designation and initials) and ordinary-meaning reading confirm the requirement | Application and ordinary meaning confirm the requirement; no reasonable jury could find otherwise |
| Whether to certify to the Wisconsin Supreme Court the scope of §631.11(3) in aviation insurance | Request certification whether §631.11(3) requires a causal link in aircraft-insurance cases | Existing Wisconsin precedent answers the question; certification unnecessary | Denied—court not genuinely uncertain; Fox controls the statute’s scope |
Key Cases Cited
- Am. Fam. Mut. Ins. Co. v. Am. Girl, Inc., 673 N.W.2d 65 (Wis. 2004) (three-step framework for insurance coverage/exclusion analysis)
- Fox v. Catholic Knights Ins. Soc., 665 N.W.2d 181 (Wis. 2003) (§631.11(3) applies to conditions subsequent/warranties, not exclusions)
- Inter-Ins. Exch. of Chi. Motor Club v. Westchester Fire Ins. Co., 130 N.W.2d 185 (Wis. 1964) (endorsement will not abrogate policy provisions unless it expressly substitutes or irreconcilably conflicts)
- Romero v. W. Bend Mut. Ins. Co., 885 N.W.2d 591 (Wis. Ct. App. 2016) (endorsements read with the rest of the policy)
- Progressive N. Ins. Co. v. Hall, 709 N.W.2d 46 (Wis. 2006) (defining exclusions that eliminate coverage)
- Bortz v. Merrimac Mut. Ins. Co., 286 N.W.2d 16 (Wis. Ct. App. 1979) (distinguishing exclusions from conditions and their legal effects)
- Johnson Controls, Inc. v. London Market, 784 N.W.2d 579 (Wis. 2010) (unambiguous policy terms enforced as written)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (summary-judgment/genuine-dispute standard)