Dan Danbeck v. American Family Mutual Insurance Company

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2001 WI 91 SUPREME COURT OF WISCONSIN Case No.: 99-1142 Complete Title of Case: Dan Danbeck, Plaintiff-Respondent-Petitioner, v. American Family Mutual Insurance Company, Defendant-Appellant. REVIEW OF A DECISION OF THE COURT OF APPEALS 2000 WI App 26 Reported at: 232 Wis. 2d 417, 605 N.W.2d 925 (Published) Opinion Filed: Submitted on Briefs: Oral Argument: Source of APPEAL COURT: COUNTY: JUDGE: JUSTICES: Concurred: Dissented: July 6, 2001 November 1, 2000 Circuit Dane Paul B. Higginbotham BRADLEY, J., dissents (opinion filed). ABRAHAMSON, C.J., joins dissent. Not Participating: ATTORNEYS: For the plaintiff-respondent-petitioner there were briefs by Michael J. Luebke and Gingras, Cates & Luebke, S.C., Madison, and oral argument by Michael J. Luebke. For the defendant-appellant there was a brief by Ward I. Richter, John M. Christenson and Bell, Gierhart & Moore, S.C., Madison, and oral argument by Ann E. Curtiss. An amicus curiae brief was filed by Michael Riley and Atterbury & Riley, S.C., Madison, on behalf of the Wisconsin Academy of Trial Lawyers. 2 2001 WI 91 NOTICE This opinion is subject to further editing and modification. The final version will appear in the bound volume of the official reports. No. 99-1142 STATE OF WISCONSIN : IN SUPREME COURT FILED Dan Danbeck, Plaintiff-Respondent-Petitioner, JUL 6, 2001 v. Cornelia G. Clark Clerk of Supreme Court Madison, WI American Family Mutual Insurance Company, Defendant-Appellant. REVIEW of a decision of the Court of Appeals. ¶1 DIANE S. SYKES, J. Affirmed. This case involves an insurance dispute and requires us to interpret language in an underinsured motorist (UIM) policy that obligates the UIM carrier to pay benefits to its insured only after the underinsured motorist's liability limits "have been exhausted by payment of judgements or settlements." The question is whether the policy's exhaustion requirement can be satisfied by a settlement with the underinsured motorist's insurer for less than liability limits, plus a credit to the UIM carrier for the difference. We conclude that the unambiguous language of the insurance policy No. precludes exhaustion by way of "settlement plus 99-1142 credit" and therefore affirm the court of appeals. I ¶2 The relevant facts are undisputed. Dan Danbeck was seriously injured when a car driven by George Horne struck his bicycle. Horne had $50,000 of liability coverage through Family Mutual Country Mutual Insurance Company. ¶3 Danbeck was insured by American Insurance Company and had $100,000 of UIM coverage.1 policy issued by American Family specified the The UIM circumstances under which it would pay UIM benefits: [American Family] will pay compensatory damages for bodily injury which an insured person is legally entitled to recover from the owner or operator of an underinsured motor vehicle. The bodily injury must be sustained by an insured person and must be caused by accident and arise out of the use of the underinsured motor vehicle. You must notify us of any suit brought to determine legal liability or damages. Without our written consent we are not bound by any resulting judgment. We will pay under this coverage only after the limits of liability under any bodily injury liability bonds or policies have been exhausted by payment of judgements or settlements. ¶4 ($47,500 Danbeck for settled bodily with injury Country and 1 $500 and for Horne the for damage $48,000 to his In Wisconsin, UIM coverage is not mandatory. Rather, Wisconsin law only requires that insurers notify policyholders of the availability of such coverage. See Wis. Stat. § 632.32(4m) (1997-98). Once an insured opts for UIM coverage, § 632.32(4m) sets the minimum amount of coverage at $50,000. 2 No. bicycle). 99-1142 Pursuant to Vogt v. Schroeder, 129 Wis. 2d 3, 383 N.W.2d 876 (1986), Danbeck's attorney notified American Family of the pending settlement by letter. The letter also stated that Danbeck intended to pursue a UIM claim and that American Family would be given credit for the full $50,000 limit of Horne's liability policy.2 ¶5 American Family refused to pay Danbeck's claim. The company took the position that UIM coverage was not available under its policy because Danbeck had settled for less than Horne's liability limit and therefore had not "exhausted" that limit within the meaning of the policy language. ¶6 Circuit American Court for Family Dane moved County, for summary Paul B. denied the motion on several grounds. Danbeck sued. judgment. Higginbotham, The Judge, First, the circuit court applied Teigen v. Jelco of Wisconsin, Inc., 124 Wis. 2d 1, 367 N.W.2d 806 (1985), which interpreted an exhaustion clause in a primary/excess insurance situation to settlement of less than policy limits. allow exhaustion by Further, the circuit court found the exhaustion clause to be ambiguous and therefore construed it in favor of coverage. 2 See Vidmar v. Am. Family This type of settlement is similar to what is typically known as a Loy agreement. In Loy v. Bunderson, 107 Wis. 2d 400, 320 N.W.2d 175 (1982), this court approved the use of such agreements, in which a primary insurer is allowed to settle for less than its policy limits and then is released from liability, while the excess insurer remains liable. Loy approved the agreements in the context of primary/excess insurance in order to promote partial settlements. We affirmed the use of these types of agreements in Teigen v. Jelco of Wisconsin, Inc., 124 Wis. 2d 1, 367 N.W.2d 806 (1985). 3 No. 99-1142 Mut. Ins. Co., 104 Wis. 2d 360, 365, 312 N.W.2d 129 (1981). court also noted would circumstances that allowing promote the coverage purposes of under UIM The these insurance, including compensating the victims of an underinsured motorist's negligence, and concluded that American Family's interpretation of the policy language violated public policy. ¶7 Accordingly, the circuit court interpreted the exhaustion clause to allow recovery of UIM benefits when the UIM policyholder settles his or her claim with the tortfeasor's insurer and credits the UIM carrier for the difference between the settlement amount and the tortfeasor's liability limits. The court then ordered mediation, and the parties agreed that Danbeck was entitled to $20,000. ¶8 American Family appealed the denial judgment, and the court of appeals reversed. of summary The court focused on the policy language and concluded that the exhaustion clause unambiguously required the insured to exhaust the underinsured motorist's limits of liability limitsï£§in this case, $50,000. settlement and credit by payment of full policy The court held that the partial endorsed by the circuit satisfy the policy's requirements for coverage. court did not Danbeck v. Am. Family Mut. Ins. Co., 2000 WI App 26, ¶¶7-9, 15, 232 Wis. 2d 417, 605 N.W.2d 925 (Ct. App. 1999). 4 No. 99-1142 II ¶9 This is an appeal from the denial of a motion for summary judgment, which we review de novo, applying the same methodology as the circuit court. Wis. Label Corp. v. Northbrook Prop. & Cas. Ins. Co., 2000 WI 26, ¶22, 233 Wis. 2d 314, 607 N.W.2d 276. pleadings, Summary judgment is appropriate if "the depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Wis. Stat. § 802.08(2) (1997-98). ¶10 The interpretation of an insurance question of law subject to de novo review. contract is a Katze v. Randolph & Scott Mut. Fire Ins. Co., 116 Wis. 2d 206, 212, 341 N.W.2d 689 (1984). An insurance policy is construed to give effect to the intent of the parties, expressed in the language of the policy itself, which position we interpret of the insured as a would reasonable understand person it. Garriguenc Love, 67 Wis. 2d 130, 134-35, 226 N.W.2d 414 (1975). of an insurance meaning. policy Henderson are v. given State Farm their common and Auto. Mut. in Ins. the v. The words ordinary Co., 59 Wis. 2d 451, 457-59, 208 N.W.2d 423 (1973). Where the language of we the policy is plain and unambiguous, enforce it as written, without resort to rules of construction or principles in case law. Hull v. State Farm Mut. Auto. Ins. Co., 222 Wis. 2d 627, 637, 586 N.W.2d 863 (1998). This is to avoid rewriting imposing the contract by construction 5 and contract No. obligations that the parties did not undertake. 99-1142 Gonzalez v. City of Franklin, 137 Wis. 2d 109, 122, 403 N.W.2d 747 (1987). Contract language is considered ambiguous if it is susceptible to more than one reasonable interpretation. Donaldson v. Urban Land Interests, Inc., 211 Wis. 2d 224, 230-31, 564 N.W.2d 728 (1997). If the language is ambiguous, it is construed in favor of coverage. Garriguenc, 67 Wis. 2d at 135. In interpreting an insurance policy, the court may also consider the purpose and subject matter of the insurance. Employers Health Ins. v. Gen. Cas. Co. of Wis., 161 Wis. 2d 937, 946, 469 N.W.2d 172 (1991). III ¶11 The narrow issue in insurer's obligation to triggered when insured the pay this UIM case is whether benefits to its settles with the a UIM insured is tortfeasor's liability insurer for less than full liability limits and then credits the UIM carrier for the difference. The determination of this issue turns on language in the insurance policy that requires payment of UIM benefits only "after the limits of liability under any bodily injury liability bonds or policies have been exhausted by payment of judgements or settlements." ¶12 The exhaustion parties clause is dispute whether ambiguous. the language American Family of the says the language unambiguously requires full payment of the tortfeasor's liability policy limits benefits. Danbeck as a argues prerequisite that the to payment exhaustion of UIM clause is ambiguous because a reasonable insured might understand it to mean that a settlement that barred 6 further claims and gave No. 99-1142 credit for full payment of liability limits would effectively "exhaust" those limits. ¶13 We agree with American Family and the court of appeals that while the "settlement plus credit" approach to exhaustion has the same practical effect as payment of full policy limits, it is not consistent with the plain language of the policy, which unambiguously requires exhaustion "by payment of judgements or settlements," not "settlement plus credit."3 ¶14 The exhaustion clause in the insurance policy sets forth these requirements for UIM coverage: the limits of the tortfeasor's bodily injury liability policy must be exhausted by payment of liability" coverage judgments or clearly available settlements. refers under liability insurance policy. to the the The total phrase amount tortfeasor's "limits of of liability bodily injury In this case, Horne carried $50,000 of liability insurance. ¶15 The term "exhaust" is also plain and unambiguous and has a readily ascertainable common and ordinary meaning. dictionary defines "exhaust" as: 3 "to use up or The consume Our conclusion that the language of the UIM exhaustion clause is unambiguous is consistent with cases from other jurisdictions that have construed nearly identical language, either in the context of a UIM policy, a UIM statute, or both. See Robinette v. Am. Liberty Ins. Co., 720 F. Supp. 577, 580 (S.D. Miss. 1989); Birchfield v. Nationwide Ins., 875 S.W.2d 502, 503 (Ark. 1994); Farmers Ins. Exch. v. Hurley, 90 Cal. Rptr. 2d 697, 701 (Cal. Ct. App. 1999); Cont'l Ins. Co. v. CebeHabersky, 571 A.2d 104, 106 (Conn. 1990); Lewis v. State Farm Mut. Auto. Ins. Co., 857 S.W.2d 465, 466-67 (Mo. Ct. App. 1993); Fed. Ins. Co. v. Watnick, 607 N.E.2d 771, 774 (N.Y. Ct. App. 1992). 7 No. completely; expend Unabridged Dictionary "exhaust" the the whole 678 (2d tortfeasor's of . . . ." ed. Random 1993). liability 99-1142 House Accordingly, policy limits, the to full $50,000 must be expended in total or used up completely. ¶16 manner Finally, the exhaustion clause specifies that only one of exhaustion will trigger the obligation to pay UIM benefits: exhaustion "by payment of judgements or settlements." Danbeck argues that the term "payment" can be understood in more than one way: payment of full policy limits, or payment of less than full policy limits plus a credit in favor of the UIM carrier for the difference. ¶17 However, constitute commonly a "payment" and settlement of ordinarily of tortfeasor's "settlement this insurer liability credit" limits understood. nature and plus as It bars further protects the that is claim UIM does true not term that against carrier is a the against liability for the difference between the settlement amount and the tortfeasor's full policy limits. exhaust the tortfeasor's policy But it plainly does not limits by payment of those limits, as required by the UIM policy. ¶18 A "payment" is "1. something that is paid; an amount paid; compensation; recompense. Random House 2. the act of paying . . . ." Unabridged Dictionary 1424 (2d ed. 1993). The court of appeals concluded that, in the context of this UIM exhaustion clause, the term "payment" is susceptible of only one reasonable meaning: "compensation paid by the liability insurer and received by the insured." Danbeck, 2000 WI App 26, ¶9. 8 We No. agree. And here, the liability insurer, Country, 99-1142 paid only $48,000 which did not exhaust Horne's $50,000 liability limits by payment of those limits. ¶19 Danbeck's argument that the exhaustion clause ambiguous arises primarily out of his reading of Teigen. reject this argument for two reasons. First, traditional ambiguity analysis on its head. the fundamental principles of contract it turns is We our As we have noted, interpretation do not permit resort to case law to create ambiguity where the contract Second, Teigen is inapplicable language is clear on its face. because it did not concern the interpretation of an exhaustion clause in a UIM policy. ¶20 Teigen arose insurance dispute. in the context of a primary/excess The exhaustion clause at issue in the case established the outer limits of the primary insurer's duty to defend. Specifically, the policy clause in question stated that the insurer was not obligated "to defend any suit after the applicable limit of the company's liability has been exhausted by payment of judgments or settlements." Teigen, 124 Wis. 2d at 8. This court held that the primary insurer's duty to defend was fully dischargedï£§"exhausted" within the meaning of this clauseï£§by a settlement for less than full policy limits, plus the execution of a Loy [Loy v. Bunderson, 107 Wis. 2d 400, 320 N.W.2d 175 (1982)] release. Teigen, 124 Wis. 2d at 8-9. Notably, the opinion did not address whether the policy language was ambiguous. Instead, the decision 9 in Teigen was based No. primarily on general partial settlements. ¶21 It is public policy considerations 99-1142 supporting Id. at 7-8, 12. unquestionably true that partial settlements, and Loy-type agreements effectuating them, serve the interests of the parties and promote judicial economy and therefore have been approved by the courts. In Teigen we noted that: The desirability of Loy type agreements lies in the encouragement of partial settlements in future cases, thereby fostering effective and expeditious resolution of lawsuits. Partial settlements not only benefit the parties involved, but the justice system as a whole. Further, we reemphasize that "public interest requires that a plaintiff be permitted to settle claims against some of the exposed parties without releasing others." [Loy, 107 Wis. 2d] at 425, 320 N.W.2d 175. Accord, Pierringer v. Hoger, 21 Wis. 2d 182, 124 N.W.2d 106 (1963), and Swanigan v. State Farm Ins. Co., 99 Wis. 2d 179, 299 N.W.2d 234 (1980). Teigen, 124 Wis. 2d at 7-8. However, this public policy, as important as it is, cannot supersede unambiguous policy language or impose obligations under the contract which otherwise do not exist. The generalized public policy favoring settlements is 10 No. 99-1142 insufficient to justify voiding or refusing to enforce the clear language of the policy in this case.4 ¶22 As this contract is written, UIM benefits are owed only when the tortfeasor's liability insurance is insufficient to cover the UIM policyholder's damages. According to the plain language of the policy, that insufficiency does not arise unless and until the full limits of the tortfeasor's policy are paid out. In other words, the tortfeasor "motorist" is not "underinsured" as a definitional matter until his or her policy limits are fullyï£§not partiallyï£§paid. Thus, although the public policy supporting partial settlements still figures prominently in our jurisprudence, it does not supplant the plain language of the insurance furthers the contradicts contract. public the clear To policy choose of language 4 an interpretation encouraging of the that settlements contract would be but to The dissent is concerned that "an insured may unknowingly be the subject of agreements between the UIM and liability carriers" in that "the UIM insurer may offer to underwrite a portion of the settlement costs in order to avoid a larger payout under the UIM endorsement," and refers another case heard this term in which this fact pattern occurred. Dissent at ¶37. However, in Danner v. Auto Owners Insurance, 2001 WI 90, ___ Wis. 2d ___, ___ N.W.2d ___, also issued today, we hold, among other things, that such collusive conduct on the part of a UIM carrier, undertaken to defeat a UIM insured's otherwise available UIM coverage, may give rise to a bad faith claim under Anderson v. Continental Insurance Co., 85 Wis. 2d 675, 271 N.W.2d 368 (1978). 11 No. 99-1142 substitute our policy preferences regarding UIM insurance for the agreement of the parties.5 ¶23 Danbeck also argues pursuant to Ranes v. American Family Mutual Insurance Co., 212 Wis. 2d 626, 634, 569 N.W.2d 359 (Ct. App. 1997), that it is the public policy of this state to provide insurance coverage "as long as the insured's failure to perform under the terms of the insurance contract has not resulted in prejudice to the insurer." Ranes concerned a notice of settlement provision in a UIM policy and the consequences of an insured's failure to give notice to the UIM carrier of a settlement with the tortfeasor. Id. at 630-31. The insurance policy in Ranes did not specifically address the issue of the insurer's duty to pay UIM benefits where the insured has failed to give notice of settlement. 5 In the absence of specific The dissent argues that the exhaustion clause in this case is inherently ambiguous because we have interpreted it But as we differently than the exhaustion clause in Teigen. have noted, the policies and the exhaustion clauses in each case are actually quite different, despite the similarity in language. Teigen concerned an exhaustion clause in a primary insurance policy that specified when the insurer's duty to defend its insured was satisfied and at an end. This case, in contrast, concerns an exhaustion clause in a UIM policy (in a sense, an excess policy, as the dissent notes) that specifies when the UIM insurer's duty to pay is triggered, or, stated differently, when the tortfeasor motorist is "underinsured" according to the terms of the policy. This distinction makes Teigen inapplicable; it does not create ambiguity in this contract. If Teigen had concerned the interpretation of language in the excess carrier's policy that specified when excess coverage was triggered, it might well be applicable here. But it did not. 12 No. 99-1142 contract language, the court of appeals looked to public policy to resolve the question. ¶24 By contrast, Id. at 630-34. the insurance policy in this case contains explicit, unambiguous language specifying that the UIM carrier's duty to pay does not arise until exhaustion within the meaning of the policy has occurred. Therefore, and once again, we the are not at liberty to rewrite insurance contract to achieve the public policy invoked in Ranes. ¶25 In summary, we conclude that the unambiguous language of the exhaustion clause in the UIM policy in this case requires the insured to exhaust the tortfeasor's liability limits by payment of full policy limits in order to trigger the duty to pay UIM benefits. Accordingly, because Danbeck's settlement with Horne's insurer was not for full policy limits, he is not eligible for UIM benefits under his policy with American Family. By the Court. The decision affirmed. 13 of the court of appeals is 99-1142.awb ¶26 ANN WALSH minds differ? In the clause "exhausted by susceptible J. (dissenting). Can reasonable This is the tried and true test for determining ambiguity. exhaustion BRADLEY, case at hand, issue payment to at only of one therefore unambiguous. and the majority concludes judgments reasonable examines that or the the phrase settlements" interpretation is and is Such a conclusion is essential to the majority's holding. ¶27 Yet, sixteen years ago this court examined that exact language word for word and interpreted the phrase to mean the opposite of what the majority espouses today. Teigen v. Jelco of Wisconsin, Inc., 124 Wis. 2d 1, 8, 367 N.W.2d 806 (1985). Apparently, reasonable minds can differ. Undoubtedly, the language at issue is ambiguous. ¶28 Its Nevertheless, the majority persists in its conclusion. decision concluding begins that the and ends exhaustion with clause the policy language, unambiguously requires full payment of the at-fault driver's liability limits in order to trigger concludes the that UIM a insurer's settlement obligations. plus credit The cannot majority constitute a language is "payment" under the exhaustion clause. ¶29 I ambiguous would and construction insurer. and public instead apply which the require acknowledge principles it to be that of the insurance construed policy against the Additionally, I would acknowledge both our case law policy require a construction of the clause that allows an insured to "settle and credit." 1 exhaustion 99-1142.awb ¶30 This court's interpretation of the same language in Teigen belies the majority's contention that the language of the exhaustion clause is unambiguous. a third-party liability policy In Teigen, the court examined that terminated the insurer's duty to defend when the insurer's liability was "exhausted by payment of judgments or settlements." Id. at 8. A majority of this court, emphasizing the word "settlements," concluded that under that policy language liability was exhausted by virtue of a settlement and Loy release. ¶31 Today the majority, emphasizing the word "payment" in the same phrase, concludes that there may be no exhaustion under the same language where an insured settles and credits under a Loy-type agreement. The unambiguously require payment there exhaustion. to be majority of The now the reads full ambiguity the language to policy limits for inherent in these conflicting interpretations does not implicate the question of whether Teigen was correctly or incorrectly decided or whether it is distinguishable. The simple fact of the Teigen majority's contrary interpretation is a testament to the ambiguity. ¶32 We do not need more than the ambiguity inherent in these competing interpretations to resolve this case. This case should that be simply a matter of applying the rule the ambiguous language should be construed against the insurer and in favor of coverage. N.W.2d 621 (1992). this rule of Maas v. Ziegler, 172 Wis. 2d 70, 79, 492 However, in addition to the application of policy construction, a decision allowing for exhaustion where an insured enters a settle and credit agreement 2 99-1142.awb is required policy. under our precedent and as a matter of public While the majority's determination that the language is unambiguous implicitly entails the conclusion that the Teigen majority's reading is unreasonable, I conclude that the Teigen majority's reading is not only reasonable, but it is correct and is binding precedent. ¶33 As the majority notes, the settle and credit arrangement entered into by Danbeck and the at-fault driver's liability insurer is similar to a Loy agreement. at n.2. Majority op. Under Loy v. Bunderson, 107 Wis. 2d 400, 320 N.W.2d 175 (1982), a primary insurer may settle with an insured for less than the policy limits in exchange for being released from liability without affecting the excess insurer's liability. As in is Teigen, the question in this case is whether there exhaustion under such an agreement where the policy requires "exhaustion by payment of judgments or settlements." Try as it might to distinguish Teigen, the distinctions the majority draws are distinctions without a difference. ¶34 The majority asserts that "Teigen is inapplicable because it did not concern the interpretation of an exhaustion clause in a UIM policy." Majority op. at ¶19. We are not told, however, why the question should be answered differently in the UIM context than in the context of a primary/excess insurance dispute. What is UIM but excess insurance to the at-fault driver's liability insurance? ¶35 Moreover, the Teigen court itself distinction the majority attempts to draw. 3 dismissed the The court rejected 99-1142.awb the excess insurer's attempt to distinguish Loy on the ground that the insurance relationship was different than that found in Loy. The court explained that the controlling factor is not the nature of the insurance relationship, but is the public policy in encouraging settlement: If the issue of the existence of a true primary/excess insurance situation had been fundamental to our reasoning behind the Loy principle, then our holding in Loy would not control in the present suit. However, that is not the case. The rationale behind our affirmance of the "Loy Release/Covenant Not To Sue" is not anchored to the issue of whether a true primary/excess insurance situation exists. The desirability of Loy-type agreements lies in the encouragement of partial settlements in future cases, thereby fostering effective and expeditious resolution of lawsuits. Teigen, 124 Wis. 2d at 7. Under the proper application of this precedent, the court would acknowledge that the validity of a Loy-type agreement is not anchored to the type of policy at issue, but is a consequence of the public policy that we seek to foster. ¶36 Unfortunately, by invoking the supposed lack of ambiguity to avoid consideration of the policy of encouraging settlement, the majority not only fails to promote that policy, but indeed frustrates it. The loss of all recovery is a strong disincentive to settlement. potential UIM In cases where an injured party is represented by counsel, who after today's decision will be expected to know the harsh consequences of such a settlement, we should have no reason to anticipate settlement where there is the potential for UIM recovery. 4 99-1142.awb ¶37 The most unfortunate aspect of the majority opinion is the harsh result unwitting Wisconsin insureds will bear. While we can expect to see settlement deterred where an injured party is represented by counsel, those individuals without the advice of counsel will most certainly be unaware of today's decision. These injured parties may unwarily agree to settle and credit at the expense of any potential UIM recovery. Additionally, such an insured may unknowingly be the subject of agreements between the UIM and liability carriers. To facilitate settlement, the UIM insurer may offer to underwrite a portion of the settlement costs in order endorsement. to avoid a larger payout under the UIM The suggestion of such agreements has been brought before the court this very term. ¶38 As a result of today's decision, we can now add the UIM exhaustion clause to the growing list of inequitable UIM endorsement provisions that persist under the current state of UIM. In my dissent in Taylor v. Greatway Insurance Co., 2001 WI 93, ___ Wis. 2d ___, ___ N.W.2d ___ (Bradley, J. dissenting), I explained the ways in which the definition of underinsured motor vehicle and expectations coverage. the of reducing Wisconsin clause insureds defeat and the the reasonable purpose of UIM Dan Danbeck is one of the few insureds to reach this court whose prospects of recovery under a UIM endorsement have escaped those pitfalls. However, by invoking the mantra of unambiguous policy language the majority once again defeats an insured's prospects of recovery under a UIM endorsement. 5 99-1142.awb ¶39 I would conclude that not only is the exhaustion clause ambiguous and subject to construction against the insurer but also that our precedent and public policy require a construction under which a settle and credit agreement is deemed to exhaust the at-fault driver's liability limits. Accordingly, I respectfully dissent. ¶40 I am authorized to state that Chief Justice SHIRLEY S. ABRAHAMSON joins this dissent. 6 99-1142.awb 1

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