Stеven VAN ERDEN and Cherie Van Erden, Plaintiffs-Appellants, v. Joseph A. SOBCZAK, Defendant, AMERICAN FAMILY MUTUAL INSURANCE COMPANY and City of Milwaukee, Defendants-Respondents, BADGER MUTUAL INSURANCE, Intervenor.
No. 02-1595
Court of Appeals of Wisconsin
Submitted on briefs January 7, 2004. Decided February 17, 2004.
2004 WI App 40 | 677 N.W.2d 718
Petition to review denied 5-12-04.
On behalf of the defendant-respondent American Family Mutual Insurance Company, the cause was submitted on the supplemental brief of James T. Murray of Peterson, Johnson & Murray, S.C., of Milwaukee.
A nonparty supplemental amicus curiae brief was filed by Robert L. Jaskulski of Domnitz, Mawicke & Goisman, S.C., of Milwaukee, and Charles David Schmidt of Cannon & Dunphy, S.C., of Brookfield, on behalf of the Wisconsin Academy of Trial Lawyers.
Before Fine, Schudson and Curley, JJ.
¶ 2. With respect to the City, the Van Erdens contend that, as а result of its obligation to provide uninsured motorist (UM) coverage for vehicles owned by the City and operated by its employees, pursuant to
¶ 3. Because the City is self-insured, it is not “[a]n insurer writing policies” subject to
¶ 4. As for American Family‘s declarations page, although it does not contain a reference to or otherwise alert the policy holder of the UIM reducing clauses, the declarations page need not list every contingency regarding the reducing clause. Furthermore, the policy need not provide a definition of the term “endorsement,” or alert the policy holder to its location, in order to be enforceable. Additionally, because the reducing clausеs comply with
I. BACKGROUND.
¶ 5. On November 22, 1998, Milwaukee Police Officer Steven Van Erden‘s squad car was struck broadside by a vehicle driven by Joseph Sobczak. Officer Van
¶ 6. The Van Erdens then filed a claim for UIM coverage with their own insurance carrier, American Family. Both policies contained identical reducing and anti-stacking provisions. Based on the terms of the policies, American Family paid the Van Erdens $65,503.67 — the difference between the largest amount of UIM coverage under either policy ($250,000) and the aggregate payments made by Badger Mutual on behalf of Sobczak and the City (as Officer Van Erden‘s worker‘s compensation carrier) ($184,496.33).
¶ 7. On November 16, 2001, the Van Erdens filed a declarаtory judgment action against the City and American Family. All parties moved for summary judgment. The trial court granted summary judgment in favor of the City and American Family.
II. ANALYSIS.
¶ 8. This appeal involves issues decided pursuant to summary judgment. We apply the same summary judgment methodology as the trial court. Preloznik v. City of Madison, 113 Wis. 2d 112, 115-16, 334 N.W.2d 580 (Ct. App. 1983). Thus, our review of the circuit court‘s decision to grant summary judgment is de novo. Green Spring Farms v. Kersten, 136 Wis. 2d 304, 315-17, 401 N.W.2d 816 (1987).
A. The City is not obligated to provide UIM coverage.
¶ 10. We first confine our analysis within the summary judgment analysis to one issue: whether the City, which is a self-insured entity, is “[a]n insurer writing policies” under
¶ 11. “The interpretation and applicatiоn of a statute present questions of law which we review de novo.” State v. Volk, 2002 WI App 274, ¶ 34, 258 Wis. 2d 584, 654 N.W.2d 24. Thus, our interpretation of a statute begins with the language of the statute, and if the language is plain and unambiguous, we will apply it without further inquiry into extrinsic interpretive aids, see State v. T.J. International, Inc., 2001 WI 76, ¶ 20, 244 Wis. 2d 481, 628 N.W.2d 774, because “[i]f the language employed is clear and unambiguous, [it] is conclusive of legislative intent,” see Cemetery Services, Inc. v. Department of Regulation & Licensing, 221 Wis. 2d 817, 825, 586 N.W.2d 191 (Ct. App. 1998).5 However,
”
¶ 12.
An insurer writing policies that insure with respect to a motor vehicle registered or principally garaged in this state аgainst loss resulting from liability imposed by law for bodily injury or death suffered by a person arising out of the ownership, maintenance or use of a motor vehicle shall provide to one insured under each such insurance policy that goes into effect after October 1, 1995, that is written by the insurer and that does not include underinsured motorist coverage written notice of the availability of underinsured motorist coverage, including a brief description of the coverage. An insurer is required to provide the notice required under this subdivision only one time and in conjunction with the delivery of the policy.
(Emphasis added.)
A 1st class city shall provide uninsured motorist motor vehicle liability insurance coverage for motor vehicles owned by the city and operated by city employees in thе course of employment. The coverage required by this section shall have at least the limits prescribed for uninsured motorist coverage under s. 632.32 (4) (a).
(Emphasis added.)
¶ 13. Despite the fact that
We conclude that § 632.32(4)(a), Stats., is inapplicable to Budget as a self-insured entity under § 344.16, Stats. We reach this conclusion based on our determination that § 632.32(4)(a) applies only to policies of insurance issued or delivered in Wisconsin. Budget is not an insurance company and has not issued a policy of insurance. See § 600.03(25), Stats. (defining insurance), § 600.03(27), Stats. (defining insurer), and § 600.03(35), Stats. (defining insurance policy). By merely obtaining a certificate of self-insurance pursuant to ch. 344, Budget did not transform itself into an insurance entity capable of issuing an insurance policy on behalf of the operators of its vehicles.
¶ 14. We also note that language in our recent decision of Prophet v. Enterprise Rent-A-Car Co., 2000 WI App 171, 238 Wis. 2d 150, 617 N.W.2d 225, applied
¶ 15. Thus,
¶ 16. Moreover, if the legislature had intended to open the door wider and require the City to offer UIM coverage, it undoubtedly would have done so by either amending
B. The declarations page is proper.
¶ 17. The Van Erdens now argue that the lack of information found on thе declarations page creates “an illusion of coverage which builds false expectations on the part of a reasonable insured.” They submit this occurs because:
It is precisely the seemingly straightforward nature of the declarations pages which create [sic] the illusion of coverage. [T]hey make no reference to the UIM limits
of $100,000/$300,000 and $250,000/$500,000 being reduced in any fashion. [T]hey fail to alert the insured to reductions for payments made by either: a) a negligent underinsured motorist[;] b) a worker‘s compensation carrier[;] or c) a disability carrier. [T]hey fail to either provide a definition of the term “endorsement,” or explain its significance. [T]hey fail to identify the location of the UIM endоrsement. [A]nd most importantly, they fail to inform the insured in any manner, let alone “adequately” as required by Dowhower and Schmitz, that the policy limits are “arrived at by combining payment made from all sources.”
(Citations omitted.) We disagree.
¶ 18. The Van Erdens point to no case law that requires the term “endorsement” to be defined or explained or that requires the declarations page to identify the location of the UIM endorsement. In our view, the meaning of the word “endorsement” in the insurance context is well-known. Indeed, WEBSTER‘S THIRD NEW INTERNATIONAL DICTIONARY (Merriam Webster, Inc. 1993), includes within its definition for endorsement: “a provision added to an insurance contract altering its scope or application[.]” Id. at 749.
¶ 19. While the location of an endorsement is a factor to consider in determining whether the policy is “user-friendly,” location on the declarations page is not mandatory. Here, the UIM coverage limit is listed under the word “endorsement” on the declarations page. As each policy‘s length including the endorsement is only thirteen pages, a policy holder can easily flip through the policy and find the clearly-labeled endorsement page at the end. We also note that following the declarations pages is a helpful index entitled “Quick
¶ 20. With respect to their argument that the declarations page must аlert the insured to payment reductions or inform the insured that the UIM coverage limits are arrived at by considering payments from other sources, again, no case law supports such sweeping requirements. The declarations pages do reference the upper limits of the UIM coverage, while the endorsements set forth a more detailed explanation of the UIM‘s limits of liability and the reductions for certain payments. As conceded by the Van Erdens, the declarations page is straightforward, although they contend it is not “informative.” Yet, as observed in Folkman v. Quamme, 2003 WI 116, 264 Wis. 2d 617, 665 N.W.2d 857: ¶ 56: “Courts cannot ask for an informative declarations page and then fault the insurer for failing to address every nuance and speculative interpretation of coverage that an insured might raise.” Id., ¶ 56. Thus, we conclude that the declarations pages build neither false hopes, nor give the illusion of coverage.
C. The reducing clause is not ambiguous.
¶ 21. Next, we must determine whether the reducing clause contained in each of the separate policies is ambiguous. The Van Erdens claim that the clause is ambiguous because it does not clearly indicate that Steven‘s total UIM coverage ($250,000) would be reduced by his worker‘s compensation benefits ($159,496.33) and by Sobczak‘s liability insurance carrier payments ($25,000). The clause, contained in both policies issued to the Van Erdens, states:
The limits of this coverage will be reduced by:
A payment made or amount payable by or on behalf of any person or organization which may be legally liable, or under any collectible auto liability insurance, for loss caused by an accident with an underinsured motor vehicle. - A payment under the Liability coverage of this policy.
- A payment made or amount payable because of bodily injury under any workers’ compensation or disability benefits law or any similar law.
(Emphasis in original.)
¶ 22. “The construction or interpretation of an insurance policy presents a question of law to which we apply de novo review.” Badger Mut. Ins. Co. v. Schmitz, 2002 WI 98, ¶ 50, 255 Wis. 2d 61, 647 N.W.2d 223. “We first must determine whether the insurance contract is ambiguous. Words or phrases of an insurance contract are ambiguous if they are susceptible to more than one reasonable construction. Unambiguous language in an insurance contract must not be rewritten by construction.” Id., ¶ 51 (citations omitted). Folkman instructs that, “[a]s a general rule, the language in an insuranсe contract is given its common, ordinary meaning, that is, what the reasonable person in the position of the insured would have understood the words to mean.” 264 Wis. 2d 617, ¶ 17 (citations omitted). Stated differently, “[c]ourts will interpret the words of an insurance contract against the insured when the interpretation conforms to what a reasonable person in the position of the insured would have understood the words to mean.” Id., ¶ 20.
¶ 24. With those rules in mind, we turn to the policies’ reducing clauses. The Van Erdens argue that the reducing clauses violate the narrow exceptions for reducing UM and UIM coverage as set forth in
A policy may provide that the limits under the policy for uninsured or underinsured motorist coverage for bodily injury or death resulting from any one accident shall be reduced by any of the following that apply:
- Amounts paid by or on behalf of any person or organization that may be legally responsible for the bodily injury or death for which the payment is made.
- Amounts paid or payable under any worker‘s compensation law.
- Amounts paid or payable under any disability benefits laws.
The reducing clause in the policies reads:
The limits of this coverage will be reduced by:
A payment made or amount payable by or on behalf of any person or organization which may be legally liable, or under any collectible auto liability insurance, for loss caused by an accident with an underinsured motor vehicle. - A payment under the Liability coverage of this policy.
- A payment made or amount payable because of bodily injury under any workers’ compensation or disability benefits law or any similar law.
(Emphasis in original.) The Van Erdens have adopted an argument found in WATL‘s brief. They contend the clause is invalid because, in referencing the disability benefits, it adds to the language found in
¶ 25. As noted, the policies state: “A payment made or amount payable because of bodily injury under any workers’ compensation or disability benefits law or any similar law.” (Emphasis added.) The inclusion of the additional language does no disservice to the legislative intent. The wording merely acts as a catchall phrase for jurisdictions that may call their disability benefits law by another name. Moreover, that language is not in dispute here; Steven Van Erden received only worker‘s compensation benefits, not disability benefits. After reading the language of the reducing clauses, we conclude they are not ambiguous and they comply with
¶ 26. Deciding that the language found in the reducing clause is unambiguous does not, however, end the matter. A policy clause can be unambiguous and yet become ambiguous because of the wording of other provisions in the policy. “Occasionally a clear and un-
¶ 27. In determining whether a policy contains any contextual ambiguity, courts are cautioned to read the policy as a whole: “There is a complementary principle to contextual ambiguity. Sometimes it is necessary to look beyond a single clause or sentence to capture the essence of an insurance agreement.” Id., ¶ 21. Furthermore, “[t]he language of a policy should not be made ambiguous by isolating a small part from the context of the whole.” Id.
¶ 28. The Van Erdens state that Taylor should not be considered in deciding whether there are any contextual ambiguities in the policies’ UIM clauses because, while favorably construing an American Family automobile policy, the Taylor court did not find the automobile in question to be an underinsured automobile, and thus, the court never discussed the policy‘s reducing coverage language. Further, the Van Erdens also submit that there is no way of knowing whether the policies in Taylor are identical to those found here.6 While we assume the policies are different, we conclude that Taylor provides us with the tools to analyze the policy language.
We conclude that the language in each of American Family‘s policies at issue satisfies the requirements of Dowhower. Each policy clearly sets forth that Taylor purchased a fixed level of UIM recovery that is arrived at by combining payments from all sources, including payments from Hermanson‘s liability coverage....
Taylor, 245 Wis. 2d 134, ¶ 25. Thus, in dicta, Taylor determined both that the UIM clause was unambiguous and that there was no contextual ambiguity in the policy. Taylor also provides a helpful blueprint for deciding whether any contextual ambiguity exists in the policy.
The first page of each policy, the declarations page, lists the coverage limits of the policy, including the $50,000 limit for UIM coverage. The first page of each policy also includes an instruction to “please read your policy” that is located on the top of the page in bold letters. Page 3 of each policy includes an instruction for the insured to read the policy carefully. Pages 11 and 12 constitute the underinsured motorist coverage endorsement of both policies. The underinsured motorist endorsement of each policy instructs the insured to keep the endorsement with the rest of the policy. This instruction is on the top of the first page of the endorsement in bold letters. The definition for underinsured vehicle is located in both policies on page 1 of the endorsement. The reducing clause for UIM coverage is located in both policies on page 2 of the endorsement. When we read the whole policy carefully, as noted on the first and third pages, we find that the policy clearly sets forth that Taylor purchased a fixed level of
UIM recovery that is arrived at by combining payments from all sources, including payments from Hermanson‘s liability coverage.
Id. (footnote omitted). We have applied a similar analysis to the Van Erdens’ policies and found all the safeguards mentioned in Taylor to be present.
¶ 30. Additionally, as directed by Folkman:
The test for determining whether contextual ambiguity exists is the same as the test for ambiguity in any disputed term of a policy. That is, are words or phrases of an insurance contract, when read in the context of the other language, reasonably or fairly susceptible to more than one construction? The standard for determining a reasonable and fair construction is measured by the objective understanding of an ordinary insured.
264 Wis. 2d 617, ¶ 29. Following Folkman‘s directive, after considering the entire policy, we conclude there is оnly one objectively reasonable construction. Consequently, we conclude that no contextual ambiguity exists. Thus, our reading of the Van Erdens’ policies satisfies us that there is no ambiguity in the wording of the limit of liability provisions or any ambiguity when these provisions are read in conjunction with the entire policy.
¶ 31. Furthermore, the American Family reducing clause complies with the public policy of the legislature expressed in
permits motor vehicle insurance policies to reduce the limit that is payable for uninsured or underinsured motorist coverage for bodily injury or death by payments received from other sources, such as the amounts paid by a person who is legally responsible for the bodily injury or death... [or] the amounts paid or payable under the worker‘s compensation law.
¶ 32. The Van Erdens’ policies clearly set forth that their UIM coverage would be fixed at a level of recovery that would be arrived at by combining payments made from the listed sources. Thus, under the declared public policy of the legislature, and given our conclusion that the reducing clause is unambiguous in the context of the whole policy, our inquiry is at an end.
D. The UIM coverage is not illusory.
¶ 33. Finally, the Van Erdens claim that their UIM coverage is illusory. They allege that they would never be able to use the UIM coverage under Steven‘s policy while both policies were in effect because, under the anti-stacking provision contained in each policy, they would always exhaust the higher UIM coverage limit contained in Cherie‘s policy.7 Thus, they conclude that the UIM coverage purchased under Steven‘s policy is illusory because no benefits would ever be paid.
Two or More Cars Insured. The total limit of our liability under all policies issued to you by us shall not exceed the highest limit of liability under one policy.
(Emphasis in original.) This provision is unambiguous and complies with
A policy may provide that regardless of the number of policies involved, vehicles involved, persons covered, claims made, vehicles or premiums shown on the policy or premiums paid the limits for any coverage under the policy may not be added to the limits for similar coverage applying to other motor vehicles to determine the limit of insurance coverage available for bodily injury or death suffered by a person in any one accident.
¶ 35. As American Family‘s original brief explains, circumstances do exist which would permit Steven Van Erden to utilize his $100,000 limit. The reasoning expressed is sound. If Steven Van Erden were driving his own car and was struck by a driver with lesser insurance limits, he could only avail himself of his policy‘s UIM coverage, as he would not be entitled to his wife‘s higher limits due to an exclusion in her policy, which reads: “While occupying, when struck by, a motor vehicle that is not insured under this policy, if it is owned by you or any resident of your household.” Thus, the UIM insurance Steven Van Erden carried was not illusory.
¶ 36. Moreover, the anti-stacking provision in question also comports with the legislative policy behind
¶ 37. Finally, we observe that the policy language found here is also altogether different than that found in Schmitz, in which the court deemed the American Merchant‘s policy “a maze that is organizationally complex and plainly contradictory.” 255 Wis. 2d 61, ¶ 72. The effect of the reducing clause was made clear in the endorsement. The policy made reference to UIM coverage in the declarations page. Further, the endorsement contained no disingenuous or confusing language. Here, there is no contextual ambiguity as there are no inconsistent provisions, provisions that build false expectations, or provisions that produce rеasonable alternative meanings. Therefore, we conclude the UIM policy coverage was neither ambiguous nor illusory.
¶ 38. Based upon the foregoing reasons, the trial court‘s orders are affirmed.
By the Court. — Orders affirmed.
¶ 39. SCHUDSON, J. (concurring in part; dissenting in part). I join in the Majority‘s analysis and conclusion affirming the dismissal of the Van Erdens’ action against American Family. I depart, however, from the Majority‘s decision affirming the dismissal of their action against the City of Milwaukee.
¶ 40. The pivot point is certain. The parties agree that if the City was “[a]n insurer writing policies,” see
¶ 41. In Millers National Insurance Co. v. City of Milwaukee, 184 Wis. 2d 155, 516 N.W.2d 376 (1994), the supreme court, determining whether the City of Milwaukee was required to provide uninsured motorist coverage to one of its police officers, used a sound, common sense approach: “The City may purchase third-party insurance, it may form a municipal insurance mutual..., it may rely upon self-insurance, or any other lawful means to provide the UM insurance coverage. However, regardless of which means the City chooses to provide insurance, the obligation is the same.” Id. at 166 (emphasis added). The supreme court concluded that, “[b]y еlecting to self-insure,” the City had “effectively placed itself in the insurance business” and, therefore, was “responsible for the same liabilities that would attach to third-party insurers covering that same risk.” Id. at 167.
¶ 42. Quite reasonably, therefore, the Van Erdens argue that the City, by creating what it calls an “Uninsured Motorist Self-Insurance Plan” as its means of regulating payment of UM benefits, has become an “[i]nsurer writing policies.” After all, they contend, while not denominated a “policy,” the City‘s “Plan” carries the attributes of an insurance policy:
The “Plan“... regulates how, when and to whom the City will pay damages; defines who is covered, an uninsured vehicle and motor vehicle accident; sets the City‘s limits of liability; regulates the effect of othеr insurance on the City‘s obligation to pay; sets forth the City‘s right to maintain a [
WIS. STAT. § 102.29 thirdparty liability claim]; regulates when and how disputes over payments would be arbitrated; provides the City a right of subrogation; [and] provides the applicable law, forum and severability of the “Plan‘s” provisions in the event of dispute.
(Citations omitted.) Thus, the Van Erdens maintain, the City should not be allowed to escape its obligation to its employees simply by mere artifice. I agree.
¶ 43. Millers National and common sense provide more than enough to sustain the Van Erdens’ claim. But our statutes provide considerably more support. Among others, the Van Erdens invoke: (1)
¶ 44. And perhaps most critically,
The contractual elements of offer, acceptance, and consideration are all present. The City offers the UM Plan to MPA and MPSO mеmbers because it is part of the package of benefits for City employees who drive city-owned vehicles in the course of their employment. Potential City employees accept this offer when they accept employment with the City. Employees give the City consideration for the insurance contract by working for the City. Also, if the City did not provide this benefit, City employees’ unions might bargain for increases in other types of compensation, such as salary. By providing these insurance benefits, consideration flows from the City to the employees.
Thus, the City‘s “Plan” is indeed a “‘policy‘” — a “document... used to prescribe in writing the terms of an insurance contract.” See
¶ 45. Failing to even mention the supreme court‘s decision in Millers National, the Majority primarily relies on this court‘s decisions in Classified Insurance Co. v. Budget Rent-A-Car of Wisconsin, Inc., 186 Wis. 2d 478, 521 N.W.2d 177 (Ct. App. 1994), and Prophet v. Enterprise Rent-A-Car Co., 2000 WI App 171, 238 Wis. 2d 150, 617 N.W.2d 225. Neither case, however, offers much guidance here and, certainly, neither case controls. Evolving from significantly different circumstances, both cases addressed whether Wisconsin‘s statutes required that out-of-state rental car agencies, holding certificates of self-insurance, provide uninsured
¶ 46. As the supreme сourt declared: “The fact that the City is self-insured does not diminish its obligation.... In this context, self-insurance is considered another form of insurance.... [T]he City has effectively placed itself in the insurance business.” Millers National, 184 Wis. 2d at 166-67. The City‘s “Plan” walks and squawks like a “policy” duck. Swimming in the insurance pond, the City is “[a]n insurer writing policies.” Thus, the City was required to meet its corresponding obligation to offer UIM coverage to Officer Van Erden under
Notes
Hubbard v. Messer, 2003 WI 145, ¶¶ 44, 46, 267 Wis. 2d 92, 673 N.W.2d 676 (Roggensack, J., concurring).I write separately to point out that the majority opinion‘s statutory analysis ... is a departure from that which has been this court‘s mode of statutory analysis and that it is not one that the court has discussed and decided to adopt.
. . . .
The majority opinion employs the analytic framework for a statute that is ambiguous, while purposely not analyzing whether [the statute] is ambiguous. This is a change in our traditional analysis.... I offer no opinion about whether our mode of statutory analysis ought to be changed. However, when we change the statutory analysis in a majority opinion without explaining that the majority of the court has not decided to change its analysis, we lead our readers to conclude that we have changed.