Jonathan Lisowski v. Hastings Mutual Insurance Company
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2009 WI 11 SUPREME COURT CASE NO.: COMPLETE TITLE: OF WISCONSIN 2006AP2662 Jonathan Lisowski, Plaintiff-Appellant-Petitioner, v. Hastings Mutual Insurance Company, Defendant-Respondent. REVIEW OF A COURT OF APPEALS DECISION Reported at: 308 Wis. 2d 394, 746 N.W.2d 604 (Ct. App. 2007-Unpublished) OPINION FILED: SUBMITTED ON BRIEFS: ORAL ARGUMENT: SOURCE OF APPEAL: COURT: COUNTY: JUDGE: JUSTICES: CONCURRED: DISSENTED: January 28, 2009 October 13, 2008 Circuit Buffalo James J. Duvall BRADLEY, J., dissent (opinion filed). ABRAHAMSON, C.J., joins dissent. NOT PARTICIPATING: ATTORNEYS: For the plaintiff-appellant-petitioner there were briefs by Joel W. Brodd and Brodd Law Firm, L.L.C., Hudson, and oral argument by Joel W. Brodd. For the defendant-respondent there was a brief by Lee J. Fehr and Fehr Law Office, Onalaska, and oral argument by Lee J. Fehr. An amicus curiae brief was filed by James A. Friedman, Linda S. Schmidt, and Godfrey & Kahn, S.C., Madison, on behalf of the Wisconsin Insurance Alliance, and oral argument by James A. Friedman. An amicus curiae brief was filed by Timothy A. Barber and Axley Brynelson, LLP, Madison, on behalf of the Wisconsin Association for Justice. 2009 WI 11 NOTICE This opinion is subject to further editing and modification. The final version will appear in the bound volume of the official reports. No. 2006AP2662 (L.C. No. 2005CV78) STATE OF WISCONSIN : IN SUPREME COURT Jonathan Lisowski, FILED Plaintiff-Appellant-Petitioner, JAN 28, 2009 v. Hastings Mutual Insurance Company, David R. Schanker Clerk of Supreme Court Defendant-Respondent. REVIEW of a decision of the Court of Appeals. ¶1 N. PATRICK CROOKS, J. This is a Affirmed. review of an unpublished court of appeals per curiam opinion1 that affirmed a circuit court decision dismissing a claim by Jonathan Lisowski against motorists Hastings coverage Mutual under Insurance Lisowski's Company for father's underinsured business auto policy. ¶2 The "for a covered auto" language on which this case turns is substantive language that appears in several places in the policy, including the endorsement page. 1 When the provisions Lisowski v. Hastings Mut. Ins. Co., unpublished slip op. (Wis. Ct. App. Jan. 31, 2008). No. 2006AP2662 of the policy are read together, the language is not ambiguous. We agree with the reasoning of Crandall v. Society Insurance, 2004 WI App 34, 269 Wis. 2d 765, 676 N.W.2d 174, and we believe it controls underinsured here. Like Crandall, motorist (UIM) this endorsement case to a concerns business an auto policy; also, like Crandall, it involves an injured party who is not the named insured, a driver who is not an insured under the policy, and a vehicle not listed in the policy. Even if the covered auto language is characterized as an exclusion in the UIM endorsement, it is valid when the conditions in Wis. Stat. § 632.32(5)(j)(2005-06)2 are satisfied, as they are here. We therefore affirm the decision of the court of appeals. I. ¶3 BACKGROUND This case involves a family with multiple personal and business vehicles insured under policies purchased from three companies. Dennis Lisowski, a farmer, owned a Chevy Lumina, a Chevy pickup, a Dodge Avenger, and a Mack semi tractor. He bought insurance policies for the Lumina and the pickup from First Community Insurance Company but allowed the policies to lapse. He Lisowski,3 had who purchased bought the Avenger insurance for for the his car son, Jonathan from Northern 2 As explained more fully below, Wisconsin Stat. § 632.32(5)(j) permits insurers to exclude coverage under certain circumstances. All subsequent references to the Wisconsin Statutes are to the 2005-06 version unless otherwise indicated. 3 Dennis Lisowski testified that he considered Jonathan the owner of the Avenger and had intended to transfer the title to him but had not gotten around to doing so before the accident. 2 No. 2006AP2662 Progressive Insurance Company but bought no UIM coverage with that policy. The Mack semi tractor, which Dennis Lisowski used exclusively for farming, was covered by a business auto policy issued by Hastings Mutual Insurance Company (Hastings Mutual), which included a UIM endorsement. ¶4 That business auto policy is the policy against which the claim was made. The car accident involving the Avenger, and giving rise to this claim, occurred January 18, 2004. Jonathan Lisowski was a passenger, and a friend of his was driving at the time of the accident. ¶5 Jonathan Lisowski sued Hastings Mutual, claiming coverage under the UIM endorsement to the business auto policy on his father's semi tractor. He claimed coverage on the grounds that, as a family member of the named insured, he was entitled to coverage for any injury caused by an underinsured motorist. Hastings Mutual denied coverage on the grounds that the UIM policy applied to covered autos only. ¶6 Following a hearing, the Buffalo County Circuit Court, the Honorable James Duvall presiding, dismissed the complaint. The circuit court found that: (1) Dennis Lisowski was the owner of the Avenger; (2) Jonathan Lisowski was a passenger in the Avenger when he was injured; (3) Jonathan Lisowski was an insured under the UIM endorsement of the Hastings Mutual policy; (4) the Avenger was an underinsured motor vehicle under the terms of the UIM endorsement; and (5) the Avenger was not a covered Crandall, auto the in the circuit Hastings court Mutual concluded 3 policy. that "the Relying on introductory No. 2006AP2662 language 'for a covered auto' in the UIM endorsement required Jonathan Lisowski to be an occupant of a covered auto in order to trigger UIM coverage" under the Hastings Mutual policy. Because the Avenger was not a covered auto under the policy, the court ordered the case dismissed. ¶7 Jonathan Lisowski appealed. On August 23, 2007, the court of appeals certified the appeal to this court, but we did not grant the certification. In an unpublished per curiam opinion, the court of appeals then affirmed the circuit court's decision, on the same grounds: that Crandall required the "for a covered auto" language to be given effect, and the Hastings Mutual policy therefore did not provide UIM coverage. Lisowski v. Hastings Mut. Ins. Co., unpublished slip op., ¶9 (Wis. Ct. App. Jan. 31, 2008). ¶8 Jonathan Lisowski filed a petition for review, and on May 13, 2008, review was granted. II. ¶9 Interpretation STANDARD OF REVIEW of an insurance question of law that we review independently. policy presents a Smith v. Atlantic Mut. Ins. Co., 155 Wis. 2d 808, 810, 456 N.W.2d 597 (1990). If words or phrases in a policy are susceptible to more than one reasonable construction, they are ambiguous. Id. at 811. In such a case, we construe the policy as it would be interpreted by a reasonable insured. Holsum Foods v. Home Ins. Co., 162 Wis. 2d 563, 568-69, 469 N.W.2d 918 (Ct. App. 1991). If the policy is not ambiguous, we will not rewrite it by construction to impose liability for a risk the insurer did not contemplate. 4 No. 2006AP2662 Taylor v. Greatway Ins. Co., 2001 WI 93, ¶10, 245 Wis. 2d 134, 628 N.W.2d 916. "Applying the canons of interpretation for insurance contracts . . . we interpret the policy based on what a reasonable person in the position of the insured would have understood the words to mean." Mau v. North Dakota Ins. Reserve Fund, 2001 WI 134, ¶17, 248 Wis. 2d 1031, 637 N.W.2d 45. Where it is necessary to apply a statute, the review is de novo. State v. T.J. Int'l, Inc., 2001 WI 76, ¶20, 244 Wis. 2d 481, 628 N.W.2d 774. III. ¶10 ANALYSIS There is no dispute that the vehicle involved in the accident was not a covered vehicle under the Hastings Mutual business auto policy. Nor is there any dispute that Jonathan Lisowski was an insured as a family member of the named insured, Dennis Lisowski. What the parties dispute is whether Jonathan Lisowski was entitled to coverage as an insured regardless of where he was at the time he was injured by the underinsured motorist. Mutual Jonathan could have Lisowski contends that even if Hastings excluded coverage for him under these circumstances without running afoul of Wisconsin law, the policy was not written in such a way that it actually and unambiguously did so. "all sums He points to a statement describing UIM coverage as the compensatory 'insured' damages is from 'underinsured motor vehicle.'" legally the entitled owner or to recover driver of as an Jonathan Lisowski also points to the UIM endorsement's language identifying insureds. Where the named insured is an individual, the endorsement states, insureds 5 No. 2006AP2662 are "[t]he Named Insured and any 'family members'" and "[a]nyone else 'occupying' a covered 'auto'. . . ." member provision contains no mention of Because the family a covered auto, he contends, there is no requirement that a family member of the named insured be in a covered auto in order for coverage to apply. He also notes that none of the endorsement's exclusions applies. ¶11 Hastings Mutual points to the sentence at the top of the UIM endorsement that begins, "For a covered 'auto'. . . ." It contends that this language mirrors the "covered auto" language in the main body of the policy and limits UIM coverage accordingly. As for the exclusions, Hastings Mutual argues that they operate only to limit coverage, not create it, and that the exclusions are relevant only after coverage is established. A. The key language ¶12 policy's The language on which this case turns is found in the declarations coverage. Lisowski On as the the page and in declarations named insured. the endorsement page, Item One Item Two, the for lists UIM Dennis Schedule of Coverages and Covered Autos, says, "Each of these coverages will apply only to those 'autos' shown as covered 'autos'. 'Autos' are shown as covered 'autos' for a particular coverage by the entry of one or more of the symbols from the covered auto section of the business auto coverage form next to the name of 6 No. the coverage."4 2006AP2662 The symbol from the business auto coverage form that appears next to the UIM coverage on the list of coverages under Item indicates Two that is "07." where The "07" business auto coverage form used, "any auto" means is "Specifically Described 'Autos'." "[o]nly those 'autos' That is further described as described in Item Three of the Declarations for which a premium charge is shown . . . ." In Item Three, the "Schedule of Covered Autos You Own" lists one vehicle: the 1985 Mack semi tractor. The premium for underinsured motorist coverage for that vehicle is $30. ¶13 Turning to the endorsement page, one finds the words, "For a covered 'auto' licensed or principally garaged . . . in[] Wisconsin, this the following: endorsement modifies insurance Business Auto Coverage Form." provided under On the same page, in section A.1., the policy reads, "We will pay all sums the 'insured' is legally entitled to recover as compensatory damages from the owner or driver of the 'underinsured motor vehicle.'" In section B.1., the endorsement states that where the named insured is an individual, which is the case here, insureds are "[1]a. The Named Insured and any 'family members'" and "[1]b. Anyone else 'occupying' a covered 'auto'. . . ." ¶14 There is no dispute that Jonathan Lisowski, as a family member, is an insured under his father's business auto 4 For each type of coverage (liability, auto medical payments, uninsured motorists, underinsured motorist, physical damage, and comprehensive), the Schedule of Coverages and Covered Autos also lists the policy limits and the premium. 7 No. policy and under the UIM endorsement. designates Dennis Lisowski as 2006AP2662 The Declarations page an individual, and the Endorsement, in section B.1.a., says the named insured and any "family members" are insureds when the named insured is designated in the Declarations as an individual. B. Discussion ¶15 business Jonathan Lisowski auto policy his advances father a held half-dozen on the reasons the 1985 Mack semi tractor should provide coverage for the injuries he sustained as a passenger in the Avenger, even though it is not a covered vehicle: (1) the "for a covered auto" language in the UIM endorsement is not part of the policy; it is nothing more than introductory language and should not be given effect; (2) the UIM endorsement changed the "covered auto" requirement in the declarations page and trumps any conflicting language elsewhere in the policy; (3) Hastings Mutual is wrongly seeking to have the court either add policy a words to the permissible policy exclusion or write under into Wis. the Stat. § 632.32(5)(j) that Hastings Mutual itself omitted; (4) the "for a covered auto" language should be treated as an exclusion and construed insurer; 8 narrowly against the No. (5) the introductory and thus must language be is construed 2006AP2662 contextually ambiguous in Jonathan Lisowski's favor; and, finally, (6) Crandall should not apply here because it is factually distinguishable and its holding is overbroad. ¶16 Hastings Mutual responds that the "for a covered auto" language is part of the policy, and, if characterized as an exclusion, is a proper one; that there is no ambiguity; and that Crandall is both rightly decided and applicable. ¶17 Jonathan Lisowski first contends that the "for a covered auto" language is not actually a part of the policy because it is merely "introductory language." He contends that this court's decision in Mau, 248 Wis. 2d 1031, rests on the premise that prefatory headings do not determine coverage.5 ¶18 Mau concerned a German tourist, Wolfgang Mau, who had purchased an underinsured motorist insurance policy for a rental car. While traveling, he was involved in a minor accident on an icy road, and a deputy stopped to assist him. At the deputy's request, Mau sat in the squad car while towing arrangements were made for the disabled vehicle. lost control and crashed As Mau waited, a passing driver into the squad car; Mau sustained serious injury. 5 Jonathan Lisowski also proffered an affidavit from an editor of an insurance industry trade publication in support of his position that the introductory language cannot modify the coverage terms. For the reasons stated herein, we do not find the editor's affidavit persuasive. 9 No. ¶19 To determine whether there was 2006AP2662 coverage under the policy Mau had purchased for the rental car, we first determined that "Mau [was] a named insured under the [UIM] policy." then determined that the occupancy requirement in the We UIM endorsement was not valid under Wis. Stat. § 632.32 (1995-96) because the statute prohibits an exclusion for a named insured. Mau, 248 Wis. 2d 1031, ¶1. ¶20 Mau is inapposite here; the footnote to which Jonathan Lisowski cites says merely, "[R]ather than relying on the heading to determine who is a named insured, we look to the substance named of Endorsement insured." Id., #1, ¶14 the n.4 definitions, (emphasis to define added). The the first question in Mau was whether the person seeking coverage was a named insured, and we were presented with a policy that was ambiguous in declarations defining page a named referred to insured. the There, endorsement where for the the named insured ("Named Insured: See Endorsement #1" (Id., ¶10)), we did nothing more than read all of answer. Nothing in that approach requires us to ignore language in the Hastings Mutual policy. "Endorsement #1" to find the Unlike in Mau, the language we look to here is substantive language, not a heading.6 ¶21 Jonathan Lisowski's argument that the endorsement changes the policy and trumps any language to the contrary in 6 In this case, the heading on the endorsement page "Wisconsin Underinsured Motorists Coverage" is not relevant to the question of whether this business policy provides coverage when the injured person is neither a named insured nor an occupant of a covered vehicle. 10 No. the declarations page is easily disposed of. endorsement says, at changes the policy. that an the top of the It's true that the page, "This Please read it carefully." endorsement is "a provision 2006AP2662 added endorsement It is also true to an insurance contract altering its scope or application that takes precedence over printed portions of the policy in conflict therewith." Muehlenbein v. West Bend Mut. Ins. Co., 175 Wis. 2d 259, 265, 499 N.W.2d 233 (Ct. App. 1993). The endorsement page similarly notes, "With respect to coverage provided by this endorsement, the provisions of the coverage form apply unless modified by the endorsement." ¶22 covered Because auto" the endorsement requirement, contains the is there itself conflict between no endorsement and the rest of the policy. there is no way to read the "for a the For the same reason, endorsement as modifying the provisions of the Coverage Form to expunge the "covered auto" requirement. because the insured as As noted above, Jonathan Lisowski contends that definition "[t]he in Named section Insured B.1.a., and any which 'family defines an members,'" contains no mention of a covered auto, the requirement of a covered auto does not apply to a family member of the named insured. He notes that section B.1.b., which applies to "anyone else 'occupying' a covered 'auto,'" does impose the requirement. These two provisions, however, merely parrot the statute, which dictates what § 632.32(6)(b)1. a policy ("No must policy may cover. exclude See from Wis. the Stat. coverage afforded or benefits provided [] [p]ersons related by blood, 11 No. marriage or adoption to the insured."); and 2006AP2662 Wis. Stat. § 632.32(3)(a) ("[E]very policy . . . issued to an owner shall provide that [] [c]overage provided to the named insured applies in the same manner and under the same provisions to any person using any motor vehicle described in the policy . . . ."). These provisions, which are included pursuant to statute, cannot be read as creating UIM coverage for Jonathan Lisowski where the policy, read as a whole, explicitly denies it. ¶23 Jonathan Lisowski contends that for this court to deny coverage here we must rewrite the policy in one of two ways, either covered (1) by auto" adding to the in words such definition of as "who is an insured; occupying or (2) a by inserting an exclusion permitted under Wisconsin statutes that the insurer failed to put into the policy explicitly enough.7 We 7 Wisconsin Stat. § 632.32(5)(j) permits insurers to exclude coverage under certain circumstances: A policy may provide that any coverage under the policy does not apply to a loss resulting from the use of a motor vehicle that meets all of the following conditions: 1. Is owned by the named insured, or is owned by the named insured's spouse or a relative of the named insured if the spouse or relative resides in the same household as the named insured. 2. Is not described in the policy under which the claim is made. 3. Is not covered under the terms of the policy as a newly acquired or replacement motor vehicle. Jonathan Lisowski argues, without citation to authority, that such an exclusion is permissible only "if [the insurer] had specified the three requirements of Wis. Stat. § 632.32(5)(j) in 12 No. disagree. 2006AP2662 As we explained above, the language that requires denying coverage is already found in the declarations page and in the endorsement. First, the endorsement page begins with the words "For a covered 'auto,'" so there is no need to add the words to the endorsement. Second, the policy, as written, excludes any vehicle owned by the named insured that is neither described in the policy nor covered as a newly acquired vehicle. In the policy, one finds on the Declarations page the "Schedule of Coverages and Covered Autos" (with "07" in the column titled "Covered Autos") and the "Schedule of Covered Autos You Own," neither coverage "07," of which form which include is the Avenger. cross-reference explicitly Described 'Autos.'" the limits the The for business the coverage auto designation to of "Specifically That was a decision made by Dennis Lisowski when he bought the policy; there are other levels of coverage available which provide coverage for any autos owned by the policyholder, even those the policyholder "acquire[s] ownership of after the policy begins." characterize the covered auto Jonathan Lisowski urges us to language as an exclusion. We agree with him that such an exclusion, sometimes called a "drive other car exclusion," can be valid only where it complies with the three specific requirements of Wis. Stat. § 632.32(5)(j). See Blazekovic v. City of Milwaukee, 2000 WI 41, 234 Wis. 2d 587, 610 N.W.2d 467. Even if the covered auto language is so the express written exclusion clauses of the UIM endorsement." There is, however, no such requirement in the statute. 13 No. 2006AP2662 characterized, however, it is valid because it complies with the three specific requirements of the statute: It is owned by the named insured, is not described in the policy under which the claim is made, replacement and motor is not covered vehicle. as a Wis. newly Stat. acquired or § 632.32(5)(j) (permitting insurers to make such exclusions).8 ¶24 Jonathan Lisowski asserts that Mau compels us to construe the "for a covered auto" language as an exclusion and In Mau, one of the to construe it narrowly against the insurer. questions before this court was whether an "occupancy requirement," the equivalent of a "covered auto requirement," could apply § 632.32(6). what a against a named insured under Wis. Stat. In order to apply the statute, which addresses policy may not exclude, we acknowledged that a requirement can be the functional equivalent of an exclusion. Mau, 248 Wis. 2d 1031, ¶33. Jonathan Lisowski contends that the same principle applies here. the outcome. Such an approach does not change Even where we construe language narrowly, we are still required to give meaning to the terms. Contrary to his assertion, it is not necessary to give the "for a covered auto" language conclusion an "overly that it broad applies interpretation" here. 8 Even to reach the construing the Given this statutory scheme, the dissent's distinctions between Class I and Class II insureds where, as here, it is clear under the language of well as under the circumstances presented that coverage; therefore, we do not find that significant. 14 focus on the is misplaced, the policy as there is no distinction No. 2006AP2662 requirement as an exclusion, consistent with our approach in Mau, we reach the same result.9 ¶25 Jonathan Lisowski asserts that a discrepancy between the endorsement's statements creates ambiguity the introductory language mentions covered autos and the coverage definitions do not. If words or phrases in a policy are susceptible to more than one reasonable construction, they are ambiguous. Wis. 2d 1031, ¶13. isolation. Mau, 248 However, we do not read policy terms in As we noted in Mau, "[W]e must give meaning to all provisions in the insurance policy." Id., ¶20 n.7 (citing 2 Lee R. Russ & Thomas F. Segalla, Couch on Insurance 3d § 21:19 (Dec. 1995) ("All its words, parts, and provisions must be construed together as one entire contract, each part interpreted in the 9 Jonathan Lisowski does not claim that the policy violates Wis. Stat. § 632.32(6)(b)2. Mau v. North Dakota Insurance Reserve Fund, 2001 WI 134, 248 Wis. 2d 1031, 637 N.W.2d 45, and Ruenger v. Soodsma, 2005 WI App 79, 281 Wis. 2d 228, 695 N.W.2d 840, addressed whether an occupancy requirement for a named insured violated Wis. Stat. § 632.32(6)(b)2., which states: (b) No policy may exclude from the coverage afforded or benefits provided: . . . . 2.a. Any person who is a named insured or passenger in or on the insured vehicle, with respect to bodily injury, sickness or disease, including death resulting therefrom, to that person. In both cases, the answer was that an occupancy requirement violated the statute because both cases involved injured parties who were named insureds. In this case, that statute is not implicated because Jonathan Lisowski is neither a "named insured" nor "[a] passenger in or on the insured vehicle." 15 No. 2006AP2662 light of all the other parts, in connection with the risk or subject matter.")). The language in the endorsement which refers to "covered auto" is consistent with the language in the declarations page,10 which also refers to "covered autos." The language links the endorsement page to the declarations page. Having considered the position taken by the dissent, we find it more persuasive to read the "for a covered auto" language as a key to the question of coverage. ¶26 It is true, as Jonathan Lisowski points out, that none of the endorsement's exclusions applies.11 difference. coverage But that makes no An exclusion is relevant only in a context where exists. Crandall, 269 Wis.2d 765, ¶16 n.2 ("The Crandalls raise additional arguments to establish that [their daughter] is an insured and that none of the UIM exclusions applies. However, coverage . . . . those arguments do not create Rather, coverage must first be established. Then, if the policy provides coverage we would, for example, 10 See Dowhower v. West Bend Mut. Ins. Co., 2000 WI 73, ¶40, 236 Wis. 2d 113, 613 N.W.2d 557 (Bradley, J., concurring) ("Arguably, the Declaration page is the most crucial section of the policy for the typical insured . . . ."). 11 The exclusions apply, for example, when the named insured is occupying a vehicle he or she owns that is not a covered auto; when a family member is occupying a vehicle that the named insured's family member owns; and when a family member is occupying a vehicle owned by the named insured that has UIM coverage under another policy. Jonathan Lisowski fit none of those descriptions. He was not the named insured. He was a family member occupying a car (the Avenger) owned by the named insured (Dennis Lisowski). The car had no UIM coverage under any other policy. 16 No. 2006AP2662 analyze whether any exclusions apply."); Bulen v. West Bend Mut. Ins. Co., 125 Wis. 2d 259, 263, 371 N.W.2d 392 (Ct. App. 1985) ("Such clauses subtract from coverage rather than grant it."). ¶27 Jonathan Lisowski and Hastings Mutual differ as to the applicability of Crandall to this case. Crandall involved a policyholder who had purchased a business policy for his garage operations. The policy contained a UIM endorsement. When the policyholder's daughter was injured in an accident, in a vehicle driven by father's a friend, UIM included the daughter coverage. the words, principally this "For garaged, Wisconsin, The or sought coverage endorsement a covered 'garage endorsement language, 'auto' operations' modifies under as her here, licensed or conducted in insurance . . . ." Crandall, 269 Wis. 2d 765, ¶2. ¶28 Crandall This case mirrors Crandall's facts in relevant ways. involved a businessowner's garage operations here, the policy involved is a business auto policy. of the policy here notes "Business Auto Policy." in large bold type that policy; The cover it is a In both cases, an insured, but not the named insured, was injured while a passenger in an underinsured vehicle not listed in the policy. The relevant language in the policies' endorsements is identical. ¶29 We agree with the court of appeals' reasoning Crandall that: [T]his is a policy for Crandall's business, not for him as an individual. . . . The policy is described in various places within the policy as a businessowner's policy and a garage policy. It would 17 in No. 2006AP2662 be unexpected for this kind of policy to cover Crandall and his family under circumstances wholly unrelated to Crandall's business. Id., ¶9. IV. ¶30 CONCLUSION The "for a covered auto" language on which this case turns is substantive language that appears in several places in the policy, including the endorsement page. When the provisions of the policy are read together, the language is not ambiguous. We agree with the reasoning of Crandall, 269 Wis. 2d 765, and we believe it controls here. underinsured motorist Like Crandall, this case concerns an (UIM) endorsement to a business auto policy; also, like Crandall, it involves an injured party who is not the named insured, a driver who is not an insured under the policy, and a vehicle not listed in the policy. Even if the covered auto language is characterized as an exclusion in the UIM endorsement, it is valid when the conditions in Wis. Stat. § 632.32(5)(j) are satisfied, as they are here. We therefore affirm the decision of the court of appeals. By the Court. The decision affirmed. 18 of the court of appeals is No. ¶31 ANN WALSH BRADLEY, J. (dissenting). 2006AP002662.awb I agree with the majority that the dispute here is "whether Jonathan Lisowski was entitled to coverage as an insured regardless of where he was at the time he was injured by the underinsured motorist." Majority op., ¶10 (emphasis added). Based upon what I refer to as Rule 101 of underinsured motorist coverage (UIM), the answer is undoubtedly: yes. ¶32 By underinsured Rule 101, motorist I mean coverage that is basic that it to is the nature of "personal and portable" for resident family members of the named insured. As a learned treatise on Wisconsin insurance law explains: "Keep in mind that UIM as well as UM coverage is personal and portable and follows Class I insureds [resident family members of the named insured]." 1 Arnold P. Anderson, Wisconsin Insurance Law § 4.14 (5th ed. 2004). ¶33 What does it mean to be "personal and portable"? "Personal" means that the coverage follows the person and not the vehicle, and "portable" means that it follows the person regardless of where he is at the time of the accident. Unlike general automobile liability policies which insure a specific auto, UIM policies insure the person. ¶34 We have previously explained that coverage for Class I insureds follows the insured "wherever he may go, be it 'in an unowned vehicle, on a motorcycle, on a bicycle, whether afoot or on horseback or even on a pogo stick.'" Teschendorf v. State Farm Ins. Co., 2006 WI 89, ¶25, 293 Wis. 2d 123, 717 N.W.2d 258 1 No. (quoting Welch v. State Farm Mut. Auto 2006AP002662.awb Ins. Co., 122 Wis. 2d 172, 181, 361 N.W.2d 680 (1985)).1 ¶35 The majority correctly acknowledges that there is no dispute that, as a resident family member of the named insured, Jonathan is a Class I insured. conclude based portable") on that Rule 101 Jonathan is Majority op., ¶10. (UIM coverage covered is under Thus, I "personal his UIM and policy regardless of where he was at the time he was injured. ¶36 The problem with the majority opinion is twofold: (1) by ignoring this basic tenet of UIM coverage, it collapses the distinction between Class I and Class II insureds, requiring all insureds to be occupants of covered autos; and (2) by concluding that the language of the policy is clear and unambiguous, it contradicts a parade of cases from other courts and avoids the cannon of construction that ambiguity is decided in favor of the insured. I ¶37 The majority concludes that occupancy of a covered auto is a requirement for UIM coverage under this policy. reaching this coverage for conclusion Class I the majority insureds is determines neither In that UIM "personal" nor "portable." ¶38 UIM policies classes of insureds. traditionally cover three distinct Wisconsin Insurance Law, supra, § 4.11. 1 While Teschendorf dealt with an uninsured motorist (UM) policy, its analysis applies to UIM policies as well. See 1 Arnold P. Anderson, Wisconsin Insurance Law § 4.14 (5th ed. 2004). 2 No. 2006AP002662.awb The named insured and any relatives who reside in the named insured's household insureds, or are "occupant Class I insureds. insureds," occupying a covered auto. Id. Id. include anyone Class else II while Finally, anyone who is entitled to a derivative claim is a Class III insured. Id. In Wisconsin as well as nationally, UIM coverage is personal and portable for Class I insureds.2 ¶39 The correspond provisions with this of Jonathan's understanding of father's UIM UIM policy insurance. The initial grant of coverage states that Hastings will "pay all sums the 'insured' compensatory is damages legally from entitled the 'underinsured motor vehicle.'" owner to or recover driver of as an The policy further defines three distinct classes of insureds: I. The Named Insured and any [resident] "family members." II. Anyone else "occupying" a covered "auto" or temporary substitute for a "covered auto". . . . III. Anyone for damages he or she is entitled to recover because of "bodily injury" sustained by another "insured." ¶40 The definition occupancy requirement. covered auto to be of The afforded Class only I insureds coverage 2 insureds are who Class contains no must occupy a II insureds. Wisconsin Insurance Law, supra, § 4.14; see also Alan I. Widiss & Jeffrey E. Thomas, Uninsured and Underinsured Motorist Insurance § 33.2 (3d ed. 2005) ("Most significantly, clause/class (1) insureds do not have to be an occupant of an insured vehicle when an injury occurs in order to be covered."). 3 No. 2006AP002662.awb Under the majority's analysis, however, there is no distinction between Class I and Class II insureds both must be occupants of a covered vehicle in order to receive coverage. ¶41 that An established principle of policy interpretation is courts should read a policy to give meaning to every provision, avoiding constructions that render portions of the policy meaningless. Isermann v. Wis. 2d 136, ¶25, 605 N.W.2d 210 language given the effect MBL is (Ct. advanced Life Assur. App. by Corp., 1999). 231 the majority, the If the definition of Class I insureds is rendered meaningless here. Why would the policy differentiate between Class I insureds and Class II insureds if there is no distinction? ¶42 Reading this policy to give meaning to every provision, I conclude that there is a distinction between Class I and Class II insureds Class I insureds need not occupy a covered auto in order to be covered under the UIM endorsement. As a Class I insured, Jonathan's UIM coverage is personal and portable and he is entitled to coverage wherever he may go. II ¶43 the After eschewing this basic principle of UIM coverage, majority language of embarks the upon policy is a determination ambiguous or of whether unambiguous. the The lynchpin of the majority's analysis is that the language of the policy is clear and unambiguous. concluded that the language was If, however, ambiguous, it the would majority have to decide the case in favor of coverage for Jonathan. Ambiguity in an insurance of policy must be construed 4 in favor coverage. No. Folkman v. Quamme, 2003 WI 116, ¶13, 264 2006AP002662.awb Wis. 2d 617, 665 N.W.2d 857. ¶44 The problem with the majority opinion is that it remains steadfast to its conclusion that the language is clear and unambiguous, disregarding the court examining the same language. has examined identical language conclusions of court after Indeed, a parade of courts and reached a conclusion opposite to the majority. ¶45 Both the circuit court and the court of appeals found Jonathan's argument persuasive. that the language was ambiguous to be Nonetheless, both courts were bound to follow the holding of Crandall ex rel. Johnson v. Society Insurance,3 in which the court of appeals determined that similar language unambiguously restricted UIM coverage to occupants of covered autos. Both courts struggled to reconcile the obvious ambiguity in this UIM endorsement with the unequivocal holding in Crandall that it was unambiguous. ¶46 To begin, the circuit court stated that Jonathan's legal arguments and secondary authorities were persuasive: "I would be tempted to be sympathetic to the language to a finding that it does concluded as create it ambiguity." must that it Nonetheless, was the court constrained to follow Crandall. ¶47 to this Initially, the court of appeals certified the question court, noting that "[t]he introductory provision Crandall relied on is plainly inconsistent with the provisions 3 2004 WI App 34, 269 Wis. 2d 765, 676 N.W.2d 174. 5 No. that follow Crandall. it" and asked us to modify, 2006AP002662.awb limit, or overrule We did not accept certification, and the court of appeals ultimately determined that under Cook v. Cook,4 it must follow the conclusion of the disagreed with it. Crandall court, even though it Lisowski v. Hastings Mut. Ins. Co., No. 2006AP2662, unpublished slip op., ¶1 (Ct. App. Jan. 31, 2008). ¶48 Likewise, the court of appeals in Ruenger v. Soodsma, 2005 WI App 79, 281 Wis. 2d 228, 695 N.W.2d 840, struggled to reconcile Crandall's unequivocal inconsistent policy language. holding with plainly Ruenger, the insured, argued that identical introductory language as here created ambiguity when read in conjunction endorsement. Id., with the ¶34. coverage section court acknowledged The of the UIM that the coverage section of the UIM endorsement, read alone, provided coverage for the Class I insured while occupying an uncovered vehicle. Id., ¶31. Noting that there was merit to Ruenger's ambiguity argument, the court concluded that nonetheless, it was bound by the holding in Crandall. ¶49 Courts around the Id., ¶34. country have examined identical language and have uniformly determined that it is ambiguous. See Reisig (finding v. Allstate, ambiguity 645 because N.W.2d 544, the terms of 550-51 the UIM (Neb. 2002) endorsement conflicted with the introductory language "for a covered auto"); Bushey v. N. Assurance Co., 766 A.2d 598, 603 (Md. Ct. App. 2001) (same); see also Stoddard 4 v. Citizens Ins. Co., 643 208 Wis. 2d 166, 189, 560 N.W.2d 246 (1997) (stating that the court of appeals may not overrule, modify, or withdraw language from a prior court of appeals decision). 6 No. N.W.2d 265, 269 similar endorsement UIM (Mich. Ct. App. 2002) unambiguously 2006AP002662.awb (determining provided that coverage to a a Class I insured even though the insured did not occupy a covered auto). ¶50 It should give the majority pause that in all of these cases, the courts have determined that identical language was, at the very least, contextually ambiguous. Nonetheless, the majority unhesitatingly turns a blind eye to this overwhelming weight of authority, clings to Crandall, and concludes that the language of the policy is clear and unambiguous. Wisconsin stands alone in this interpretation. ¶51 because The the majority covered determines auto language that in there the is UIM no ambiguity endorsement is consistent with the declarations page of the liability policy. Majority op., ¶25. It ignores, however, the obvious conflict between the covered auto language and the grant of coverage in the UIM endorsement. In focusing on the symmetry between the declarations page and the "for a covered auto" language, the majority skirts the established principle of insurance policy construction that ambiguity must be construed in favor of coverage. ¶52 Finally, as requested by the court of appeals in its certification memorandum to this opportunity to modify Crandall. court, I would take this The court of appeals correctly explained that "[t]he introductory provision Crandall relied on is plainly inconsistent with the provisions that follow it." Our interpretation should comport with the reality observed by 7 No. 2006AP002662.awb other courts that have examined the same language the policy language is ambiguous. ¶53 clear and Instead, Although the majority proclaims that the language is unambiguous, all too it often does this not necessarily court finds make policy it so. language unambiguous which then obviates the need for further meaningful analysis. I am reminded of the words of a nonsense poem by Lewis Carroll: "I have said it thrice: What I tell you three times is true."5 ¶54 Just because Wisconsin courts thrice proclaim that this language is clear and unambiguous, it makes it no more true than was the proclamation in Carroll's poem. For the above reasons, I would conclude that Jonathan's injuries are covered 5 "Just the place for a Snark!" the Bellman cried, As he landed his crew with care; Supporting each man on the top of the tide By the finger entwined in his hair. "Just the place for a Snark! I have said it twice: That alone should encourage the crew. Just the place for a Snark! I have said it thrice: What I tell you three times is true." Lewis Carroll, "The Hunting of the Snark" (1876). 8 No. under his father's UIM policy. This 2006AP002662.awb interpretation is consistent with established principles of UIM coverage and of insurance policy interpretation. Accordingly, I respectfully dissent. ¶55 I am authorized to state that CHIEF JUSTICE SHIRLEY S. ABRAHAMSON joins this dissent. 9 No. 1 2006AP002662.awb
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