A.O. Smith Cоrporation appeals two circuit court orders affirming the denial of four claims it filed with the Wisconsin Insurance Security Fund (WISF). A.O. Smith argues that the circuit court erred in concluding that the "net worth statute," § 646.31(12), Stats., bars the claims. Specifically, A.O. Smith contends that on the effective date of the net worth statute, it had vested statutory and contractual rights to collect from thе WISF, and the retroactive application of the statute to its claims violates both the Due Process and the Contract Clauses of the United States and Wisconsin Constitutions. Because A.O. Smith did not file the four specific claims until after the effective date of § 646.31(12), we conclude that the statute was not applied retroactively. Moreover, we conсlude that A.O. Smith had acquired no vested statutory or contractual rights to recover on its claims from the WISF, and hence the corporation suffered no constitutional deprivations on account of the application of the net worth statute to its claims. Accordingly, we affirm the trial court's orders.
When an insurer is declared insolvent under Chapter 645, STATS., the WTSF "[s]tand[s] in thе position of the insurer in the investigation, compromise, settlement, denial and payment" of certain claims arising under policies issued by the insolvent insurer. Section 646.13(l)(b), STATS. Payment of claims by the WISF, however, is subject to various eligibility conditions and limitations, one of which is the "net worth statute," § 646.31(12), STATS.:
(12) Net Worth Of Insured. Except for claims under s. 646.35, payment of a first-party claim under this chaptеr to an insured whose net worth, as defined in s. 646.325(1), exceeds $10,000,000 is limited to the amount by which the aggregate of the insured's claims that satisfy subs. (1) to (7), (9) and (9m) plus the amount, if any, recovered from the insured under s. 646.325 exceeds 10% of the insured's net worth.
The statute essentially creates a deductible for claims against the WISF by insureds whose net worth exceeds $10 million. The legislation which enacted the net worth limitation specified that it first applies "to liquidation claims for which information is filed on the effective date of this subsection [April 28,1988] that at a minimum specifically identifies the insured event on which the claim is based." 1987 Wis. Act 325, § 23(3).
A.O. Smith had been insured at various times under five separate liability insurance policies issued by Integrity Insurance Company. The claims at issue in this appeal stem from four third-party lawsuits brought against A.O. Smith alleging that the company was liable for events which occurred during the time it was insured under the Integrity policies. On March 24,
Subsequently, in June 1993, A.O. Smith filed supplementary claims which identified the four third-party actions which had been filed against it. Each of these actions was commenced after March 25, 1988, the liquidation bar date, and after April 28, 1988, the effective date of the net worth statute. A.O. Smith stipulated that it had no notice of any of the four specific claims until some time after April 28,1988. The WISF claims manager denied liability for the four supplementary claims filed by A.O. Smith. The claims manager based the denial on his determination that A.O. Smith's claims were filed after the effective date оf the net worth statute, and that the four claims against the fund totaled approximately $1.5 million, which is less than ten percent of A.O. Smith's net worth of $290 million.
A.O. Smith appealed the denial of its claims to the WISF Board. See § 646.32, Stats.
A.O. Smith then petitioned the Dane County Circuit Court for review of the WISF Board's decision denying its claims. The circuit court affirmed the Board's decision, concluding that the net worth statute had not been applied retroactively because on April 28, 1988, the effective date of the statute, A.O. Smith had nо enforceable claim against either Integrity or the WISF. The court reasoned that the legislature was free to "prospectively" absolve the WISF of claims from A.O. Smith which arose and were filed after that date. A.O. Smith appeals the circuit court's orders.
ANALYSIS
(a) Standard of Review
Whether A.O. Smith's claims were properly denied under the net worth statute involves an interpretation of thе provisions of Chapter 646. The interpretation and application of a statute is a question of law which we review de novo. State ex rel. Sielen v. Circuit Court,
A.O. Smith claims that since the Integrity liability policies insured against "accidents and occurrences," the "insured events" were not the third-party lawsuits commenced against A.O. Smith, as the circuit court concluded, but were instead the four accidents or losses which had occurred years before both the liquidation claims bar date and the effective dаte of the net worth statute. A.O. Smith contends that "the liability of the insurer is deemed fixed, and the insured's right to performance from the insurer is deemed vested, at the time the accident occurs." See generally 11 COUCH ON Insurance 2d, §44:256 at 399-401 (Rev. ed. 1982). Thus, A.O. Smith argues, the WISF applied the net worth statute retroactively to bar its four claims, thereby depriving the corporation of certain vested statutory and contractual rights.
After examining the language of the insurance policies, the circuit court determined that no event had occurred which triggered the insurer's duty to defend before the claims bar date of March 25, 1988, or the later effective date of the net worth statute. The court concluded that A.O. Smith's claims against Integrity, and thus against the WISF, did not arise until it was sued on the undеrlying claims in 1993. We agree. In Wisconsin, an insurer generally has no obligation to its insured to defend against a third-party claim under a liability policy until a suit' has been initiated. City of Edgerton v. General Cas. Co.,
Even if we. were to accept A.O. Smith's contention that Integrity's duties with respect to the claims relate back to the dates оf the underlying occurrences, we would still conclude that § 646.31(12), Stats., did not operate to retroactively deny A.O. Smith a contractual right. Nothing in § 646.31(12) affects A.O. Smith's claims against Integrity under the insurance contract. Thus, it would appear that A.O. Smith is entitled to pursue any contractual claims it may have against Integrity in the liquidation proceedings. However, as we discuss below, under Chaрter 646, Stats., the WISF assumes only those contractual obligations of Integrity which the statutes direct it to assume. See § 646.31(1) ("A claim is not eligible for payment from the fund unless ... all of the following conditions are met....").
A.O. Smith also argues that § 646.31(12), Stats., does not apply to the claims at issue because it had filed generic, omnibus proofs of claim with the New Jersey liquidator prior to the effectivе date of the statute. According to A.O. Smith, the New Jersey liquidator's decision to accept the subsequent supplementary filings as part of its original claim is binding on the WISF. We agree that the liquidator's acceptance of the supplementary claims appears to trigger the WISF's statutory obligations,
Our conclusion is supported by the decisions of courts in other jurisdictions that have concluded guaranty fund obligations are not preserved by the filing of blanket or general claims with a liquidator. The Rhode Island Supreme Court recently held that a blanket claim does not circumvent the claims bar date under that state's guaranty fund law, stating:
[T]he filing of such contingent or blanket claims prior to the statutory deadline of the guaranty fund does not toll the cutoff date or allow a guaranty fund to provide coverage for a more specific claim ■ presented to the guaranty fund after the filing deadline.
Kent County Mental Health Ctr. v. Cavanaugh,
Information specifically identifying the insured events at issue was not filed until some five years after the effective date of § 646.31(12), Stats. As of the effective date of the net worth statute, no lawsuits had been filed against A.O. Smith, and the corporаtion had no notice or knowledge of the four liability actions that were subsequently brought against it. The net worth statute was thus not applied retroactively to the four claims. Rather, the statute was properly applied, prospectively, to claims which arose and were filed after its effective date.
(c) Whether the Application of§ 646.31(12), STATS., to the Fоur Claims Impairs Any Vested Statutory or Contractual Rights of A. O. Smith.
Even if we were to conclude that the effective date provisions set forth in 1987 Wis. Act 325, § 23(3), affected A.O. Smith's claims "retroactively," it would not necessarily follow that a constitutional violation has occurred. In Wisconsin, the general rule is that statutes should be construed as relating only to future acts unless an express statement of intent is given to the contrary. State v. Elliott,
The WISF was created "to protect insureds from losses occasioned by the insolvency of their insurance company." Fireman's Fund Ins. Co. v. Pitco Frialator,
[T]he clear and unambiguous purpose of ch. 646 is to protect insureds from losses occasioned by the insolvency of their insurance company. . . .[T]he Wisconsin Insurance Security Fund Law is a remedial statute which must be construed to give effect to its lеading idea and must be brought into harmony with its purpose.
Id. at 532,
Due to the remedial nature of insurance insolvency laws, creditors "do not acquire vested rights to particular modes of distribution [in the insolvency] that are beyond the power of [the legislature] to alter." Maryland Ins. Guar. Ass'n v. Muhl,
A.O. Smith argues that the cases cited are inappo-site because the rights at issue in those cases werе not fully fixed and vested, unlike A.O. Smith's rights under §§645.42(2) and 646.13(l)(b), Stats., with respect to these four claims.
First, we note that the Maryland statutes discussed in Muhl closely parallel the Wisconsin provisions оn which A.O. Smith rests this argument: " 'The rights and liabilities of the insurer and of its creditors [and] policyholders ... shall, unless otherwise directed by the court, be fixed as of the date on which the order directing the liquidation of the insurer is filed ....,'" Muhl,
The Minnesota Supreme Court has recently concluded that statutory language requiring a guaranty association to assume the cоntractual obligations of an insolvent insurer did not make the guaranty association a party to the insurance contract:
To the extent an annuity contract owner enjoys any rights against the Association, it is because they are set forth in a statute. The Association's statutory obligations are not coextensive with the contractual obligations of a fаiled insurer.
Honeywell, Inc. v. Minnesota Life and Health Ins. Guar. Ass'n,
A.O. Smith relies heavily on our opinion in In re All-Star Ins. Corp.,
[Clreates an insurance guaranty association with attendant statutory obligations to safeguard the*267 financial well-being of [Wisconsin] residents to whom contractual obligations are owed by its member insurance companies. [The chapter] does not create a contrаct; instead, it creates a statutory safety net to protect the economic well-being of [Wisconsin] resident policy owners in the event a member insurer becomes insolvent.
Honeywell, Inc.,
We conclude, therefore, as have the courts in other states with insurance guaranty fund laws, that due to the remedial nature of the WISF, no statutory or contractual rights were vestеd in A.O. Smith on April 28, 1988, that were immune from legislative alteration.
CONCLUSION
Section 646.31(12), Stats., was not applied retroactively to A.O. Smith's claims, and the application of the net worth statute to A.O. Smith's claims impaired no vested statutory or contractual rights of the corporation. We therefore affirm the circuit court's orders and the WISF's denial of the claims. We do not further discuss A.O. Smith's constitutional arguments, because each is dependent on the validity of its assertions regarding vested rights and the retroactive application of the statute, both of which we have rejected.
By the Court. — Orders affirmed.
Notes
Section 646.32, Stats., permits a disappointed claimant to appeal an adverse determination to the WISF Board, and to have the Board's decision judiсially reviewed.
Section 646.13(l)(b)l, Stats., provides, generally, that WISF has no obligation with respect to claims filed after the bar date "unless the liquidator determines that the claim is timely filed and participates in the same distribution as timely filed claims."
Section 645.42(2), STATS., provides that "[u]pon issuance of the [liquidation] order, the rights and liabilities of any such insurer and of its creditors, policyhоlders, shareholders, members and all other persons interested in its estate are fixed as of the date of filing of the petition for liquidation." Section 646.13 (l)(b), Stats., in turn provides that the WISF shaH "[s]tand in the position of the insurer in the investigation, compromise, settlement, denial and payment of claims."
We note, however, that two concurring judges along with the five dissenters all concluded that the Minnesota guaranty fund statute provided the insured with a contractual right to recover from the Fund. See Honeywell, Inc. v. Minnesota Life and Health Ins. Guar. Ass'n,