Wadzinski v. Auto-Owners Insurance
818 N.W.2d 819
Wis.2012Background
- This is a Wisconsin Supreme Court review of a court of appeals decision reversing a circuit court grant of summary judgment for Auto-Owners.
- The dispute centers on whether the Executive Umbrella policy grants first-party UM coverage of $2,000,000.
- The underlying Commercial Auto policy provides $1,000,000 third-party liability and first-party UM/UIM; but its UM is excluded.
- The Executive Umbrella provides $2,000,000 excess over Schedule A but excludes UM/UIM, with an endorsement captioned Exclusion of Personal Injury to Insureds Following Form.
- The endorsement states: “We do not cover personal injury to you or a relative. We will cover such injury to the extent that insurance is provided by an underlying policy listed in Schedule A.”
- The circuit court held the endorsement clearly excluded first-party coverage; the court of appeals found contextual ambiguity and favored coverage for the insured.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the Executive Umbrella grant first-party UM coverage? | Wadzinski argues ambiguity supports UM. | Auto-Owners argues grant is only third-party coverage. | No; grant is exclusively third-party coverage. |
| Is the endorsement contextually ambiguous and capable of reasonable interpretation supporting UM? | Context and caption suggest potential first-party coverage. | Text, structure, and Schedule A undermine any such ambiguity. | No; policy language unambiguously excludes first-party UM. |
| Does the endorsement’s following-form language alter the initial grant of coverage? | Following form could incorporate underlying UM terms. | Endorsement reaffirms underlying obligations but does not create UM. | Endorsement does not create first-party UM; following-form concept does not rewrite grant. |
| How do maintenance of underlying insurance and exclusions interact with the initial grant? | Maintenance of underlying insurance could imply UM continuity. | Maintenance clause does not convert umbrella into UM provider. | Maintenance clause confirms third-party focus, does not create UM. |
Key Cases Cited
- Folkman v. Quamme, 264 Wis. 2d 617 (Wis. 2003) (ambiguous terms resolved in insured's favor; exclusions construed narrowly)
- Jaderborg v. Am. Family Mut. Ins. Co., 239 Wis. 2d 533 (Wis. 2000) (exclusion cannot be rewritten by exceptions; initial grant matters)
- Stubbe v. Guidant Mut. Ins. Co., 257 Wis. 2d 401 (Wis. Ct. App. 2002) (endorsement can grant UM coverage; read whole policy)
- Muehlenbein v. W. Bend Mut. Ins. Co., 175 Wis. 2d 259 (Wis. Ct. App. 1993) (endorsement can alter scope; exclusions and exceptions interplay)
- Acuiy v. Bagadia, 310 Wis. 2d 197 (Wis. 2008) (independent review of policy ambiguity; purpose of policy)
- Estate of Sustache v. Am. Family Mut. Ins. Co., 311 Wis. 2d 548 (Wis. 2008) (three-part inquiry for coverage: grant, exclusions, exceptions)