Marotz v. Hallman

Jeffrey Plaintiff-Appellant-Petitioner, E. Marotz,

v. Arthur E. Jr., ACUITY, a Mutual Hallman, Company, Mega Insurance Life and Health Company Insurance and IMT Insurance (Mutual), Company Defendants, Rural Mutual Insurance Company,

Defendant-Respondent.

Supreme Court argument No. January 2005AP1579. Oral July Decided WI (Also 411.) reported in 734 N.W.2d plaintiff-appellant-petitioner For the there were by Virginia briefs M. Antoine and Habush Habush & argument by Craig S.C., Milwaukee, Rottier and oral A. Christensen. defendant-respondent

For the there was a brief Maroney Maroney, Thomas A. Hansen, Shambeau, and Parry, Waupaca, argument by Anderson & and oral Maroney. Thomas A. by Lynn

An amicus curiae brief was filed R. Laufenberg Laufenberg S.C., & Hoefle, Milwaukee.

¶ 1. WILCOX, JON E J. This is a of an review unpublished appeals court of decision,1which affirmed judgment Waupaca County Court, Circuit John E Judge. Judge Hoffmann, Hoffman denied the motion (Marotz) declaratory judgment Jeffery E. Marotz against and dismissed his claim Rural Mutual Insur- (Rural). Company ance ¶ 2. Two issues are before this First, court.2 does 632.32(5)(i)1. (2005-06),3

Wis. Stat. which allows an Hallman, Marotz v. 2005AP1579, No. unpublished slip op. (Wis. 2005). App. Ct. December 2 The presented issues respective and our holdings are the same this and Bailey case v. State Farm Mutual Automobile Insurance Company, 2007 WI 734 N.W.2d 386, which has day. been released the same 632.32(5)(i) (2005-06) Wisconsin Stat. states: insurer to reduce the limit of underinsured motorist (UIM) coverage by "[a]mounts [to an paid insured] on behalf of any person or organization that may be legally for the responsible bodily injury or death for which the payment made," permit an insurer reduce the UIM limit amount to an paid insured aby non-UIM tortfeasor? We hold does allow an insurer to reduce the limit of UIM liability by the amount paid to insured by a non-UIM Second, tortfeasor. does the reducing clause in the policy issued by Rural unambiguously comply with 632.32(5)(i)l.? We hold that the language does unam- biguously comply §with Accordingly, we affirm the court of appeals.

I 3. On 21, 2002, December ¶ Marotz rode as a in the passenger vehicle of Hallman, Arthur E. Jr. (Hallman) as Hallman drove southbound on County- Highway J Shawano County. Hallman entered the intersection of County Highway J and State Highway 29 without at stopping the posted Donald J. stop sign. policy may provide A policy that the limits under for

uninsured coverage bodily injury or underinsured motorist for or resulting any death from by any one accident shall be reduced following apply: paid by any person 1. Amounts organization or on behalf of or legally responsible bodily injury for the or death for which the is made. paid payable any compensation Amounts or under worker's law. paid payable any disability 3. Amounts under benefits laws. All subsequent references to the Wisconsin Statutes are to version, the 2005-06 unless otherwise stated. driving (Hilgemann),

Hilgemann eastbound who was Highway vehicle. As a Hallman's struck State on injuries. The Marotz sustained collision, result of the injuries bills. $250,000 in medical in more than resulted liability by a was insured 4. Hallman's vehicle policy, insurance ACUITY, a mutual which insurance per (ACUITY), company $25,000 a limit of issued with Hilgemann's person. also insured vehicle was liability policy, Com- IMT Insurance insurance which (Mutual) (IMT) pany $250,000. limit of issued with a parents, O. K. and Orland Joann 5. Marotz's policy at the Rural in effect issued Marotz, had a policy provided UIM cover- Their time of the accident. age any "family The UIM member," such as Marotz.4 for liability per coverage provided $100,000 a limit of person. policy pro- personal declarations auto coverages liability for the various the limits of

vided premium policy, each. as well as the in the included listing limit for the uninsured Before (UM) coverage, the follow- and UIM motorist ing appeared: LIABILITY "THE LIMITS OF statement ARE PER COVERAGES THE FOLLOWING FOR A BE REDUCED AS LIMITS AND SHALL POLICY AMOUNTS FROM RECEIVING RESULT OF YOUR YOUR 'BODILY BECAUSE OF OTHER SOURCES INJURY.'" pertain- included an endorsement 7. The coverage

ing in Wisconsin. The endorsement to UIM respect "[w]ith began by noting to the policy, personal of the auto In the definitions section related to 'Family person member' means a following appears:" your blood, adoption who is a resident of marriage or you child." includes a ward or foster household. This provided by provisions endorsement, this of the policy apply unless modified the endorsement." Un- heading, an der "INSURING AGREEMENT" the en- following: dorsement stated the compensatory damages We will pay which an "insured" legally to operator entitled recover from the owner or of an "underinsured motor of "bodily vehicle" because injury": "insured";

1. Sustained an and 2. Caused accident. operator's liability owner's or damages these ownership,

must arise out or maintenance use motor "underinsured vehicle." pay coverage only We will under this if 1. or 2. below applies: bodily The limits of liability any injury under

liability or policies applicable bonds the "un- derinsured motor vehicle" have been exhausted settlements; by payment judgments or A tentative has been between settlement made an "insured" and the insurer of the "underin- sured motor vehicle" which would exhaust any applicable bodily limits under injury liability policies bonds or and we: a. been given prompt Have written notice of settlement;

such tentative b. Advance to the "insured" equal amount to the tentative settlement days receipt within 30 notifica- after tion. also that"

The endorsement stated 'Underinsured mo- any vehicle' a land tor means motor vehicle or trailer of liability bodily injury type or bond to which bodily applies for of the but its limit at the time accident liability injury liability limit of for this is less than the liability coverage." had a Because Hallman's vehicle (i.e., coverage $100,000 limit of UIM limit less than the liability policy), an "underin- Marotz's it constituted sured motor vehicle." heading, "LIMIT OF LIABILITY" 8. Under a reducing It stated endorsement included a clause. following: limit reduced of sums: of shall be all "bodily injury" by of or on Paid because may be persons organizations who

behalf or paid legally responsible. This includes all sums A; under Part "bodily injury" payable Paid or because any following or

under similar law: law; compensation a. or Workers' Disability b. law. benefits heading, "LIMIT Under the OF LIABILITY" same following duplicate appeared: "We not make a will any under this element of loss for payment has been made on behalf of which or respon- persons organizations legally who sible." filed a claim Rural. 9. Marotz UIM with Rural policy's reducing It

denied claim. asserted that (i.e., applied payments to the made ACUITY clause Hallman) (i.e., $90,000 $25,000 on and IMT on behalf Hilgemann), behalf and therefore $100,000 Marotz exceeded the limit of UIM received Conversely, Marotz liability. argued only ACUITY'S pay- ment on behalf of Hallman subject was to the clause, Rural needed meaning pay to Marotz at least $75,000 in UIM benefits. litigation Marotz commenced and moved for

¶ declaratory with judgment regard to the insurance issued policy by Rural. He requested that circuit (1) court declare that Rural not was entitled to reduce the limit of the UIM liability $90,000 by that IMT (2) paid on behalf of Hilgemann and the policy's reduc- ing clause ambiguous was when considered in the context the entire and policy could not enforced with to made regard ACUITY and IMT. by 11. The circuit court ruled that the reducing 632.32(5)(i)l., § clause with complied that reducing enforceable, clause was not and ambiguous was thus $100,000 that Rural was to entitled reduce the limit $25,000 UIM liability ACUITY'S payment and $90,000 IMT's The a payment. court entered judgment dismissing Marotz's Rural. complaint against 12. Marotz to the appealed appeals, court which affirmed the circuit court. court appeals concluded that Marotz's had an policy unambiguous reducing clause Rural permitted to reduce it amount paid Marotz the amount Marotz re- ceived from both Hallman's insurer and Hilgemann's insurer. It also concluded no contextual ambiguity when viewing existed clause in the reducing context of the entire it policy. concluded that cases Finally, prior interpreting prevent did not Rural from its reducing Marotz obligation by received from a non-UIM tortfeasor.5 appeals The court of filed its case decision this within filing

month of a decision in State Farm Mutual Automobile petition with this filed a for review 13. Marotz granted. court, which was

I I presents First, issues. does 14. This two review 632.32(5)(i)1. permit insurer to reduce Wis. Stat. paid by the a non-UIM UIM limit amount in the Second, does the clause tortfeasor? policy comply unambiguously Rural with issued 632.32(5)(i)1., conform Because Rural's must 632.32(5)(i)l., initially on the statute. we focus with Co., 15, ¶ 13, v. Midwest Sec. Ins. WI See Theis 2d 606 N.W.2d 232 Wis. 632.32(5)(i)l. §

A. Wisconsin Stat. Stat. first address whether Wis. We 632.32(5)(i)l. § permits of an insurer to reduce the limit liability by paid to an insured a UIM the amount statutory This inter- non-UIM tortfeasor. issue involves specific pretation application of a statute to and the 2003AP2482, unpublished Company Bailey, v. No. Insurance (Wis. 2005). Bailey, In the court op. App. Ct. December slip 632.32(5)(i)l. issues, interpreted § considered the same but 632.32(5)(i)l. differently. permit not The court held that does liability by reduce of UIM amounts insurer to the limits Additionally, the insured received from non-UIM tortfeasors. reducing in held clause issued State court (State Farm) Company was Farm Mutual Automobile Insurance unambiguous policy, in which allowed the context of the entire liability by payments the Farm to reduce the limit of UIM State Id., a UIM tortfeasor. 1. State Farm insured received from court, Bailey which petition and filed a for review with this both granted. were questions

facts, which are of law that we review de Cos., novo. v. State Farm Ins. WI Teschendorf ¶ 9, 717 N.W.2d258. preliminary a 16. As matter, Rural contends that Marotz waived this issue. Before the circuit court appeals, argue and the court of Marotz did not ambiguous reading was or that a literal of it would create an absurd result. Marotz focused his argument validity on the clause in policy. general rule, Rural's As a not "issues raised in the circuit court will not be considered for the first time on appeal." Apex Corp. Gee, 378, 384, Elecs. v. 2d (1998). 577 N.W.2d23 Because this rule does not relate jurisdiction appellate appellate to the courts, an court may use its discretion to hear an not issue raised Specifically, "[w]hen circuit Id. court. an issue involves question question fact, of law rather than of when the parties of law has been briefed both when question public of law is of sufficient interest to merit a decision, this court exercise its discretion to ad dress the issue." Id. proper interpretation

¶ 17. The issue 632.32(5)(i) Apex 1. is one that satisfies the criteria. interpretation proper First, is a question parties fully Second, of law. both briefed the Finally, public issue. clarifying there is sufficient interest interpretation

this court's of Accordingly, the court will exercise its discretion and address the issue. permits

¶ 18. Whether an insurer liability by paid to reduce the limit of UIM the amount 441 on a tortfeasor turns our an insured non-UIM to proper interpretation To determine statute. begins statutory language, interpretation the court language of State ex rel. Kalal v. the statute. with the County, ¶ 45, 271 Wis. 2d 58, Ct. 2004 WI Cir. Dane interpreting statute, courts 110. In 633, 681 N.W.2d every portion give that no to so effect word superfluous. v. State Farm Janssen statute is rendered App ¶ 13, 2d Co., 72, 251 Wis. Mut. Ins. 2002 WI Auto. "[Statutory language is inter 660, N.W.2d 857. 643 preted not used; it is in isolation in the context which language part whole; as of a relation to but reasonably, closely-related surrounding statutes; and Kalal, or unreasonable results." to avoid absurd statutory ¶ 633, assume that the lan 2d 46. We Wis. legislature's guage expresses Id., ¶ intent. meaning, language statutory it manifests a clear When unnecessary extrinsic sources to ascertain is to consult history. legislature's legislative Id., intent, such as ¶ 46. ambiguous, to a statute is courts look 19. When legislature's intent,

extrinsic sources to ascertain legislative history. Kalal, 633, 51; as 271 Wis. 2d such Ambiguity exists 123, 293 Wis. 2d Teschendorf, reasonably gives only or more when a statute rise two interpretations. County, Bruno v. Milwaukee 2003 WI 633, Mere 25, 260 2d 660 N.W.2d 656. dis- Wis. agreement meaning of the statute not about enough ambiguity. Kalal, 2d to constitute Although contradictory interpre- reaching ¶ 47. courts statute be indicative ambi- tations of same guity, ¶ 19, Wis. 2d it does not Teschendorf, 293 ambiguity. e.g., necessarily evidence See Milwaukee Sewerage DNR, 63, 70-72, v. Metro. Dist. (1985) (concluding 375 N.W.2d 648 that a statute is unambiguous noting contradictory interpreta- after decisions). appeals tions of the statute Differing interpretations two court of may of the same statute be ambiguity. caused one error, court's rather than Id. 632.32(5)(i)1. language § ¶ previ 20. The has ously unambiguous. been found to be Dowhower v. West Co., Bend Mut. Ins. WI 660, 17, 2000 113, 236 Wis. 2d Janssen, 557; N.W.2d 251 Wis. 2d 15. In 632.32(5)(i)l. § interpreted Dowhower, the court in the involving context of an accident an underinsured mo injured party coverage. torist and an with UIM 632.32(5)(i)l. § "plainly court noted that allows motor vehicle insurance contract to state that the maximum pay amount that the insurer will under the will paid by be setoff amounts Dowhower, a tortfeasor." Wis. 2d every possible ¶ 21. Because scenario cannot be anticipated by legislature, the words selected an unambiguous ambiguous statute in one context another. Teschendorf, 20. In this 632.32(5)(i)l. question § case, is whether becomes ambiguous involving in the context of an accident (i.e., Hallman), underinsured motorist an insured mo- (i.e., Hilgemann), injured party torist and an with UIM Marotz). (i.e., argues Marotz the con- 632.32(5)(i)l. ambiguous. case, text of this Rural change contends context of this case not does previous court's ambiguous. conclusion that is un- agree ¶ 22. We with Rural: the context of this case ambiguous. does not render Wisconsin 632.32(5)(i) Stat. reads as follows: (5) Provisions.... Permissible

(i) limits under the policy may provide A that the or underinsured motorist policy for uninsured resulting any one bodily injury or death from for following by any of the that accident shall be reduced apply: any person or paid

1. Amounts or on behalf may legally responsible for the organization that injury payment for is made. bodily or death which any payable or worker's paid 2. Amounts under compensation law. disability payable any under paid

3. Amounts benefits laws. language statute, of the

Our examination of appears, to that it leads us conclude context which 632.32(5)(i)l. § prohibit an from re- does not insurer paid ducing the limit of UIM an amount long tortfeasor, non-UIM as as the an insured a scope payment falls within the subsec- otherwise tion. 632.32(5)(i) provides 23. The structure of

only payments scope that fall of one of within liability. reduce the limit of UIM three subsections will policy provide "[a] under states, It that the limits policy cov- for uninsured or underinsured motorist any erage bodily injury resulting or death from one by any following of the accident shall be reduced types payments apply," the list of that will followed liability. limit Wis. Stat. reduce of UIM 632.32(5)(i). Family Mutual In Welin v. American Co., 81, 49, 73, 2d Insurance 2006 WI 292 Wis. "[w]e explained 690, N.W.2d the court noted that have purpose purchas numerous times that the insured's ing purchase predetermined, a UIM is to fixed recovery by combining level of UIM that is arrived at payments from all sources." See also Van Erden v. App Sobczak, 2004 WI 163, "[t]he N.W.2d 718. As we noted in Teschendorf, words apply' protection against payments 'that apply are a that do not coverage."

and thus do not reduce Teschendorf,293 Accordingly, interpretations Wis. 2d subsections determine whether a will reduce interpretation UIM limits. In case, this our determines whether to an in apply." sured from non-UIM tortfeasors are ones "that ¶ 24. Wisconsin Stat. limits the scope payments of that will reduce the limit of UIM liability "[a]mounts paid by any to or on behalf of person organization may legally responsible or that be bodily injury payment for the or death for which the is phrase "legally responsible" parties made." The means bodily injury (i.e., that caused the or death at issue tortfeasors). Janssen, 2d In 17. this Hilgemann case, Hallman and tortfeasors, were both making persons may legally responsible. them that be paid by "[a]mounts The words or on behalf any person organization" of or restrict that by will reduce the limit of UIM to those made a by any person organization tortfeasor, or other or on legislature's the tortfeasor's behalf. The decision to modify "person organization" "any" or with the word application per- indicates broad when it comes to the organizations scope sons and that fall within the provision. suggest "person organi- It does not that a or payment zation" be a need UIM tortfeasor for their coverage. case, reduce the insured's UIM In this ACU- paid paid and IMT $25,000 behalf of Hallman ITY on bodily Hilgemann Marotz's of $90,000 on behalf injuries in this in the accident at issue that he suffered case. scope is limited The bodily injury phrase or death for which "for the legislature's

payment inclusion of the is made." The injury pay- phrase bodily or death for which "for the potential ambiguity as to ment made" resolves a is any person paid "[a]mounts on or or behalf which may may legally responsible" organization re- be liability. It ensures that duce the limit of UIM paid by person may amounts not be reduced limits legally responsible accident, in the but who bodily injury arising payment not made for a whose injury bodily phrase "for the from the accident.6 The scope payment is made" limits the death for which establishing requisite purpose payment the insured that must exist before made to provision applies. bodily injury or death for which the phrase "for the of different prevents is made" reductions a number instance, prevent it would a reduction where scenarios. For persons previously who had entered accident occurs between agreement, and where the subse purchase an unrelated into buyer attributable to quent payment from the to the seller is injuries arising from the purchase agreement and not to in a phrase prevent The would also reductions situa accident. paid by person the who be tion such as where amounts injury than the one for which legally responsible for an other might arise where the is made. Such a situation injured prior 1 claim with an insured Tortfeasor settles a hospital injuries arising from an paying current costs would be involving Tortfeasor 2 and which costs accident to Tortfeasor 2. properly attributable 632.32(5)(i)l. § scope is limited The of also 632.32(5)(i). § any phrase one accident" the "from payments language This limits that will reduce UIM injury to the or death from limits to those that relate phrase at issue in the case.7 The "from the one accident 632.32(5)(i)l. by § scope any the of one accident" limits injury establishing requisite or death cause of 632.32(5)(i) § provisions exist before the of that must apply. present example not of an 28. This case does being ambiguous

unambiguous in a different statute language of the context. Based on our review 632.32(5)(i)l., § mind, of this case in with the context excluding of non-UIM we conclude required by reducing tortfeasors from clauses not statute. § interpretation is con- 29. Our coverage, addressing statutes UIM

sistent with other specifically 632.32(4m). § Stat. Stat. Wisconsin 632.32(4m)(a)2. requires give § that insurers the insured coverage. availability of UIM Wisconsin notice of 632.32(4m)(d) accepts provides if an insured Stat. coverage, of at least insurer must include limits UIM per per person $100,000 accident. In and $50,000 provisions explained interplay Dowhower, we 632.32(5)(i)l.: 632.32(4m) total, "In these purchased limit that the UIM statutes establish the combination of contri- the insured is reached type legally responsible sources. butions from all is neither clause authorized $10,000 instance, pays injured party For if a tortfeasor accident, leg in an October injury he caused to her left for an UIM insurer's not used to reduce the that amount could right her arm in a injury incurred to liability for the she accident. separate November

ambiguous contrary public policy."Dowhower, nor to 236 statutory language 113, Wis. 2d 20. There is no indi- cating previous UIM status would alter the court's assessment that the statutes establish that contributions legally responsible from all sources are to be considered reaching coverage the insured's UIM limit. previously ¶ 30. We have discussed various theo may coverage. ries that underlie an insured's UIM State Langridge, Farm 113, Mut. Auto. Ins. Co. v. 2004 WI Badger ¶¶ 17-18, 35, 275 Wis. 2d 75; 683 N.W.2d Mut. Schmitz, ¶¶ 98, 17-24, Ins. Co. v. 2002 WI 255 Wis. 2d Dowhower, 61, 223; 647 113, N.W.2d 236 Wis. 2d quoted Dowhower, In the court a treatise that stated " purpose coverage 'the of underinsured motorist solely put position [or she] to the insured in the same he occupied would have had the tortfeasor's limits been the same as the underinsured motorist limits purchased by Dowhower, 61, insured.'" 255 Wis. 2d (quoting Liability Schermer, 18 3 Irvin E. Automobile (3d 1995)). p. 57.01, Insurance 57-2 ed. The court has "[i]n years, legislature also noted that recent has policies embodying [this] view, authorized and courts recognized legitimacy policies." have of these Langridge, (citing ¶35, Schmitz, 275 Wis. 2d 18 Taylor Greatway ¶ 61, 73; Co., Wis. 2d v. Ins. 2001 WI ¶93, Dowhower, 245 Wis. 2d 916; N.W.2d 33.)

¶ 31. We discussed the various theories of UIM highlight types to that there are different legislature permis- clauses that the deemed enacting sible in We did not discuss the legislative purpose theories to articulate every may By context that arise. taking previous our discussions out of context and failing appreciate quoting we were treatise, one already this court has decided that conclude that liability may only by be reduced limit of UIM tortfeasor. That would be a from an UIM the first case we have addressed mistake. This is 632.32(5)(i)l. an insurer to reduce the allows whether liability by payments made to the insured limit of UIM tortfeasor. a non-UIM plain language ¶ the statute on the 32. Based appears, it we hold that the context which and 632.32(5)(i)l. to reduce the limit does allow an insurer liability by paid amount a non-UIM of UIM tortfeasor.8 Policy Language

B. reducing ¶ clause We now turn to whether unambiguously complies policy Rural in the issued interpretation of an insurance The with presents question policy de of law that we review ¶ 116, 12, 264 Quamme, 2003 WI novo. Folkman v. Construing provisions 617, 2d 665 N.W.2d857. policy requires an examination of an insurance of specific provisions

at issue and assessment ambiguity Schmitz, exists. 255 contextual whether ¶61, Wis. 2d

8 interpretation of Wis. Stat. The dissent finds the court's dissent, "problematic," and "surprising," ¶ Id., id., "superfluous." statute parts renders 52. It Id., 55. It conjures up "peculiar" scenarios. It 58-59. ¶¶ Id., "rests on a mistake." Id. 67. It "ignores precedent." disagrees the dissent's assessment. Obviously, court with aptly most opinion those labels may ponder to which Others apply.

1. clause in the issued Rural principles ¶ 34. General of contract construction interpretation control the of an insurance contract. Taylor, (citing 245 Wis. 2d Kremers-Urban Employers Co., Co. v.Am. 722, 735, Ins. 119 Wis. 2d (1984)). Discerning giving N.W.2d156 effect to the parties objective. Sprangers intent of is the v. Greatway Co., Ins. 521, 536, 514 N.W.2d 1 (1994). give end, Toward that courts the common, ordinary meaning (i.e., policy language to the what the person position reasonable in the insured's would un mean). Folkman, derstand them to 264 Wis. 2d 617, Any ambiguity ¶ 17. exist is construed in insured, favor of the while exclusions in are (cit narrowly against Id., ¶ construed the insurer. 16 ing Co., Smith v. Atlantic Mut. Ins. 808, 155 Wis. 2d (1990)). Ambiguity 811, 456 N.W.2d 597 arises if the language policy "susceptible of is to more than one resulting interpreta reasonable Id. The construction." policy's language tion of the "should advance expectations coverage." Taylor, insured's reasonable 134, Wis. 2d 10. reducing ¶ 35. The clause in this case states liability "[p]aid the limit of will be reduced amounts 'bodily injury' persons because of the or on behalf of or organizations legally responsible." who be The com ordinary language meaning mon, establishes that the language § meaning this mimics the See Ruenger App Soodsma, v. 2005 WI 281 Wis. 2d (concluding 228, 695 N.W.2d 840 that a Rural Mutual Company reducing Insurance clause identical to the one 632.32(5)(i)l.). complied in this case with phrasing reducing The of the clause differs 632.32(5)(i)l., slightly language from the used but meaning. the difference not affect the does While phrase bodily injury uses the "for the payment made," death for which the the first subsec- 'bodily injury.'" phrases tion uses "because of Both scope provision limit the of the to made for injuries arising Accordingly, from the accident. like statutory language, reducing scope of the clause payor may legally responsible, is set whether a not payor's UIM status. reducing unambiguously ¶ 37. The clause com- 632.32(5)(i). plies common, with Based on the ordi- nary language, person a reasonable in the insured's position would understand the clause to the effect have reducing by payments the UIM limit made legally responsible or on behalf of those for the regardless issue, accident at of their UIM status. reducing clause the context of the entire inquiry ¶ 38. Our does not end because of our language conclusion that the clause is unambiguous. Schmitz, 42. As the necessary "[s]ometimes Folkman, court noted in it is beyond single capture look clause or sentence to agreement." Folkman, essence of an insurance agreement ¶ 617, Wis. 2d 21. essence of the unambiguous provision that an read in isolation reveal ambiguous provisions in the context of other of the policy. ¶ Schmitz, 61. ambiguity provi-

¶ a 39. Contextual exists when reasonably susceptible sion is to more than one con- context other policy's struction when read Folkman, 2d 29. "To prevent 264 Wis. language. ¶ should avoid inconsistent ambiguity, policy contextual that build false up expectations, provisions, provisions reasonable alternative produce and provisions Id., For inconsistencies to alter the meanings." 31. ¶ unambiguous provision, construction of an otherwise "material to the issue in the inconsistencies must be and be of such a nature that a reasonable dispute Id., insured would find an alternative meaning." 40. Other of the in this case do provisions policy reasonably not render clause reducing susceptible to more than one construction. The at issue is 34 policy declarations, "generally It with which is pages. begins of an insurance to which the insured portion policy Schmitz, first." 2d 62. On the third looks declarations, liability the limits of for the page listed, are as as the coverages premium various well each. Before the limits of for UM and listing UIM statement "THE coverage, following appears: THE LIMITS OF LIABILITY FOR FOLLOWING COV- BE ERAGES ARE PER POLICY LIMITS AND SHALL A REDUCED AS RESULT OF YOUR RECEIVING OF AMOUNTS FROM OTHER SOURCES BECAUSE The "other re- YOUR 'BODILY INJURY.'" sources" in the statement are detail in provided ferred to more above, clause. reducing As mentioned in the UIM clause is endorsement related to provided in Wisconsin. coverage does not include Although title, index or their on identify endorsements declarations,

the bottom of the first the forms page and attachments are listed their numbers. For instance, the UIM endorsement is listed as "PP0427(10-01)." On the corner right of the UIM top endorsement "PP 04 27 following appears: different, and 10 01." is there is a lack of spacing (10-01), or a but a parenthesis hyphen reasonable in the insured's would conclude that person position "PP0427(10-01)" and "PP 04 27 10 01" refer to the same document. 42. The endorsement pertaining to UIM cover- in Wisconsin

age begins by noting "[w]ith respect the coverage by endorsement, this provided unless modified provisions policy apply endorsement." Under the "INSURING AGREEMENT" it heading, following: states pay compensatory damages We will which an "insured" legally operator entitled to recover from the owner or "bodily of an "underinsured motor vehicle" because of injury": "insured";

1. Sustained 2. Caused the accident. operator's liability damages

The owner's or for these ownership, of must arise out of the maintenance or use the "underinsured motor vehicle." pay coverage only will under his if 1. or 2. We below applies: liability any bodily injury

1. The under limits liability policies applicable bonds or to the "under- insured motor vehicle" have been exhausted settlements; judgments or 2. A tentative settlement has been made between an

"insured" and the insurer the "underinsured motor vehicle" which would exhaust the limits liability any applicable bodily injury under policies bonds or and we: given notice of such prompt

a. Have been written settlement; and tentative to the "insured" in an b. Advance equal amount to the tentative settlement days receipt 30 after the of notification. within that" 'Underinsured mo- The endorsement also states any means a land motor vehicle or trailer of tor vehicle1 type bodily injury liability policy bond or to which a bodily applies its limit for at the time of the accident but injury liability limit this is less than the for coverage." may isolation, in that 43. Read one conclude language provision

the of the first under the "INSUR- heading indicates that the UIM ING AGREEMENT" coverage payments from relates to made the UIM point ambiguity However, the of contextual tortfeasor. provisions Folkman, is not to read isolation. (stating language "[t]he ¶ 21 a Wis. 2d policy ambiguous by isolating should not be made a whole"). part Subsequent small from the context of the heading, policy to the "LIMIT OF LIABILITY" provides scope limit exclusions. The exclusions coverage. Similarly, reducing appears UIM clause subsequent to the AGREEMENT" head- "INSURING ing. person position A in the of the insured reasonable reducing clause, after the would understand that provisions AGREEMENT," may under "INSURING would payments affect the he or she receive under the policy. reducing clause, 44. After the states following: duplicate payment "Wewill not make a coverage any

under this payment element of loss for which for persons has been made or on behalf of organizations legally responsible." Like the who reducing provision clause, this addresses limits on the payments person A the insured will receive. reasonable position appreciate in the of the insured would that the provisions under "INSURING ad- AGREEMENT" dress the broad terms of the and then the subsequent provisions specifics define the of the cover- age. Considering policy "clearly context, Rural's purchasing

sets forth that the insured fixed level of recovery by combining UIM that will be arrived at Dowhower, made from all sources." 2d 33. In case, this the combination of the reducing notification the declarations and the clause complies requisite with create the clarity clause to be deemed enforce- Accordingly, reducing able. hold that the in we clause policy by unambiguously complies the issued Rural 632.32(5)(i)l. §with

I I I plain language ¶ 46. Based on 632.32(5)(i) § 1., UIM insurers reduce the limit of liability UIM amounts an insured receives from or regardless payors' tortfeasors, on behalf of of the UIM status. The clause included unambiguously Rural forth the issued sets parents purchased, making that Marotz's it enforce- able. Because Marotz received from IMT ACUITY and exceed the limit of UIM policy, pay any the Rural Rural need not benefit to Marotz.

By appeals the Court.—The decision of the court of is affirmed. (dissent- BRADLEY, WALSH J. 47. ANN interpretations

ing). Despite conflicting of the court addressing petitioner's appeals inter- and without majority pretation declares Wis. Stat. statute, 632.32(5)(i)l. (2005-06) unambiguous meaning and its interpretation "plain." that the ma- No matter that the statutory jority language superflu- finds renders obvious prior ous, and no matter that it conflicts with this court's interpretation of the statute. majority's disagree

¶ 48. I with the conclusion unambiguously permits Stat. by payments to reduce UIM limits made from insurers majority's interpre- non-UIM Because the tortfeasors. statutory language superfluous, tation renders prior it fails to this court's decisions because interpreting follow respectfully statute, I dissent. 1—I majority readily surprising It is so 632.32(5)(i) meaning unambigu- claims that the diametrically appeals ous. The court of has reached opposed conclusions as to whether that section allows by payments insurers to reduce UIM limits made to the majority op., ¶ insured non-UIM tortfeasors. See n.5. Bailey,

¶ 50. In State Farm Mut. Auto. Ins. Co. v. appeals the court of concluded that does by payments UIM not allow reduction of limits made unpublished 2003AP2482, non-UIM tortfeasors. No. (Wis. 2005). slip op., App. ¶ 1, 1 Ct. December Three Bailey appeals decided, after weeks was court of that reversed course and concluded the section does Hallman, allow such reductions. Marotz v. No. (Wis. unpublished op., App. slip ¶ 2005AP1579, 16 Ct. 2005). 22, December previously determined that when 51. We have contradictory interpretations statute, of a reach

courts ambiguity." indicative of v. State Farm it "is Teschendorf Cos., Ins. 2006 WI (citing Stockbridge Dep't Sch. Dist. v. N.W.2d 258 Boundary Appeal Bd., 202

Public Instruction Sch. Dist. (1996)). majority's 214, 222, 2d 550 N.W.2d96 unambiguous is determination that squared the fact that two well-reasoned cannot be with appeals opinions interpreted that have section court ways. incompatible in two different and H-l I—1 opposing disregarding 52. In addition to majority's appeals, interpretations of the court of problematic interpretation is because superfluous. part Section it renders of the statute 632.32(5)(i) provides as follows:

(i) policy may provide A that the limits under the coverage for for uninsured or underinsured motorist any one bodily injury resulting or death from accident following apply: by any of the shall be reduced any person or paid by or on behalf Amounts legally responsible for the organization payment made. bodily injury death for which the is or any Amounts worker's com- paid payable or under pensation law. any disability ben- payable under paid

3. Amounts efits laws. added.)

(Emphasis phrase petitioner "for contends that 53. The made made" refers to which by applicable cover- UM or UIM an insurer under the age. addressing petitioner's interpretation, Without majority unambiguous. asserts that the statute is Majority op., implicitly adopts ¶ 22. It the view that payment "[a]mounts "for is made" which refers to any paid by person organization or on behalf of or may legally responsible bodily injury be for the explain why death." What it fails to the words "for payment which is made" are the statute in the first instance. majority

¶ 54. The asserts that subsection 1. con- bodily injury tains the words "for the or death for which payment [] potential ambigu- the ity." is made" to "resolve a Specifically, precludes ¶

Id., 26. it insurers from "by paid by person UIM limits amounts a who legally responsible accident, in the but whose bodily injury arising is not made for a from the interpretation accident." Id. one No else advances this good —and for reason. examples given support 55. to

majority's interpretation peculiar. First, novel are majority conjures a scenario in "an which accident persons previously occurs between had who entered purchase agreement, into an unrelated and where the subsequent payment buyer from the to the seller is purchase agreement [attrib- attributable to that utable] and not injuries arising Id., the accident." from added). (emphasis n. 6 majority Second, maintains that phrase prevents payments made to the insured a entirely separate imagines tortfeasor in an accident. It prior situation which "Tortfeasor 1 settles a claim injured by paying hospital with an insured current costs injuries arising involving from an accident Tortfea- properly 2sor and which costs would be attributable to Tortfeasor 2." Id. only peculiar, These are not but scenarios language

they precluded other in the statute. are 632.32(5)(i) explicit of UM is that reductions Section "resulting pertain coverage any UIM to and limits from "potential ambigu- accident." There is therefore no one by pay- ity" that or UIM limits could be reduced UM resulting purchase agree- "unrelated ments from an arising another, or unrelated accident as ment" out majority the maintains. majority's that in- 58. The view bodily injury phrase the or death for

cludes the "for payment prevent made" reductions for the is to which payments pursuant accidents and to

made to other any unrelated to accident therefore renders that events doing majority phrase superfluous. violates a In so the statutory principle of construction: "When fundamental meaning given every construing to statutes, should be statute, the and a con- word, clause and sentence in super- part would make of the statute struction which possible." Hutson v. be avoided wherever fluous should ¶ 49, Comm'n, 97,WI Pers. 2003 State Adamany, (quoting v. Kollasch 665 N.W.2d (1981)). 552, 563, 2d 313 N.W.2d47 majority's interpre- that the 59. The conclusion bodily injury phrase or "for death the the tation renders superfluous sup- payment is is made" which the for only phrase appended ported is to fact the permit reductions 1. Subsections and 3. subsection disability compensation for limits worker's UIM explicitly payments. do not However, those subsections compensation and disabil- for limit reductions worker's bodily injury ity payments or "for death which unnecessary language payment is Such made." 632.32(5)(i) pay- precisely is restricted because any one accident." ments "from interpretation contrast, In of the statute proffered by petitioner rendering part avoids 632.32(5)(i) superfluous. According petitioner's to the interpretation part 632.32(5)(i)l., first "[a]mounts paid person any or on behalf of organization may legally responsible for the bodily injury or death. . allows that UIM may by payments be reduced made or on behalf of tortfeasors. If subsection 1. ended it there, would be support majority's interpretation. sufficient to petitioner's interpretation, ¶ 61. Under the addition of "for which the is made" refers to applicable made an insurer under the UM coverage. UIMor It therefore to limit serves which payments by onor behalf of tortfeasors reduce UM policies coverage. Specifically, provides or UIM it coverage only payments reduce limits made require or on behalf of tortfeasors whose actions the 632.32(5)(i) payments insurer to make under —UIM and UM motorists. petitioner's interpretation

¶ Thus, the also 632.32(5)(i) explains §why phrase contains the "from any one accident" while at the same time phrase pay- contains the "for which the why explains ment Further, is made." it subsections 2. phrase and 3. do not contain the "forwhich the phrase is made." The is contained in subsection 1. as a way application to restrict its to made on behalf of UM or However, UIM tortfeasors. no such required respect compen- is limitation with to worker's disability payments. sation and majority ¶ provided explanation 63. The has no as why petitioner's interpretation to despite the is unreasonable, advantage majority's it holds over the view part super- insofar as it does not render of the statute 460 explain light In this failure to alternative fluous. of contradictory interpretation, light in of and court why majority appeals simply decisions, I cannot see 632.32(5)(i) "plain" unambigu- is and maintains interpretation of the section violates ous where its statutory principle fundamental construction.

I—I h—I majority's this 64. The view also conflicts with 632.32(5)(i). interpretation In court's established Co., 73, 18, Ins. WI v. W.Bend Mut. 2000 Dowhower 113, 557, 2d we concluded that "the 236 Wis. 613 N.W.2d coverage solely purpose is to of underinsured motorist (or she) position put in the he would the insured same occupied liability limits been have tortfeasor's had pur the underinsured motorist limits the same as years Badger Mut. insured." later chased Two Schmitz, 98, 61, 255 2d 18, Co. v. 2002 WI Ins. quoted passage this from Dowhower N.W.2d we 647 interpretation again embraced the same coverage. purpose legislative of UIM recently Mut. Ins. in State Farm Auto. 65. More Langridge, 2d 275 Wis. v. WI Co. (citations omitted), our deter we reiterated N.W.2d designed put that "UIM mination position have as he or she would insured the same occupied limits been the tortfeasor's had purchased motorist limits as the underinsured same (internal quotations ¶ Id., 17 and brack insured." the omitted). omitted)(citations Langridge court The ets "ought reasonably expect explained to an insured that only promises for differ to insure the that the insurer higher limit the insured's UIM and ence between the liability ¶ Id., limit." lower tortfeasor's interpretation Dowhower, 66. The consistent Badger Langridge Mutual, and would entitle Marotz to coverage pays that the difference between the insured's higher liability UIM limit and the underinsured's lower Badger Dowhower, Mutual, limit. Under the and Langridge interpretation coverage, of UIM Marotz coverage $75,000 would be entitled to under the (that is, $100,000 Rural UIM limit minus the insurer). he $25,000 received from Hallman's Under the majority's interpretation coverage, new UIM Marotz penny policy. does not receive even a Clearly, under Rural put position him this does not same he occupied liability would have had Hallman's limits been same as Marotz's UIM limits. overruling withdrawing any ¶ 67. Without lan- guage prior majority simply ignores cases, from our precedent. adopts interpretation. It instead a new It that now contends "the statutes establish that contri- legally responsible butions from all sources are to be reaching coverage considered in the insured's UIM payments limit" and that this includes non-UIM Majority op. majority's tortfeasors. 29.1 The conten- tion, however, rests on a mistake.

1 The majority's contention that that this court discussed Dowhower, Mutual, Badger coverage theories of UIM Langridge merely to "highlight" different sorts of permissible clauses under Stat. is incorrect. Mutual, In Badger Majority op., example, we stated providing insurers UIM policies that reduce UIM limits from other "are required sources to clear make to purchasers of they UIM are purchasing coverage put that will in the position they them same would be in if equal underinsured had limits amount tortfeasor UIM coverage purchased." Badger the insured Mut. Co. v. Ins. Schmitz, 223(em 2002 WI N.W.2d added). phasis majority's view requirement renders this useless. may by only coverage

¶ 68. limits be reduced UIM 632.32(5)(i).2 recognized Thus, under those sources Rural reduce the amount whether petitioner's coverage by payments a limits from UIM depends upon pay- such whether non-UIM tortfeasor That, under how- ments are included support very court. To the ever, is issue before the coverage may be amount UIM conclusion by payments from with non-UIM tortfeasors reduced by coverage proposition UIM is arrived at (i.e., combining payments all all sources from sources statute) merely question. recognized begs the under above, I conclude that For the reasons stated 69. ambiguous. language Questions of the statute precedent ambiguity our aside, should follow we following Doing requires prin- interpreting it. so put coverage ciple "to the insured that UIM serves occupied [or she], position have as he would the same limits been the same as had the tortfeasor's by purchased in- motorist limits underinsured Langridge, ¶35, Under this 17. sured." 632.32(5)(i) permit principle, an insurer to does not paid coverage by amounts reduce the limit UIM on of a non-UIM tortfeasor. insured behalf Accordingly, respectfully I dissent. Chief Justice I am to state that authorized B. and Justice LOUIS S. ABRAHAMSON SHIRLEY join dissent. BUTLER, JR. this not reduce UIM example, For could recovery or to aid donated others one's limits amounts 632.32(5) (i). Wis. Stat. given gratuitously a benefactor.

Case Details

Case Name: Marotz v. Hallman

Court Name: Wisconsin Supreme Court

Date Published: Jul 10, 2007

Citation: 734 N.W.2d 411

Docket Number: 2005AP1579

Court Abbreviation: Wis.