Allstate Ins. Co. v. Gifford, No. 92-1449

CourtCourt of Appeals of Wisconsin
Writing for the CourtFINE
Citation504 N.W.2d 370,178 Wis.2d 341
PartiesALLSTATE INSURANCE COMPANY, d Plaintiff-Appellant-Cross Respondent, v. Ralph GIFFORD and Shelly Gifford, Defendants-Respondents-Cross Appellants.
Decision Date20 July 1993
Docket NumberNo. 92-1449

Page 370

504 N.W.2d 370
178 Wis.2d 341
ALLSTATE INSURANCE COMPANY, d
Plaintiff-Appellant-Cross Respondent,
v.
Ralph GIFFORD and Shelly Gifford,
Defendants-Respondents-Cross Appellants.
No. 92-1449.
Court of Appeals of Wisconsin.
Submitted on Briefs May 4, 1993.
Opinion Released July 20, 1993.
Opinion Filed July 20, 1993.

Before WEDEMEYER, P.J., and SULLIVAN and FINE, JJ.

[178 Wis.2d 344] FINE, Judge.

Allstate Insurance Company commenced this declaratory judgment action seeking a declaration that Ralph and Shelly Gifford could not collect under their Allstate automobile policy for damages sustained in an automobile accident in excess of what the Giffords received from the negligent party's liability insurer. The trial court declared that the Giffords are entitled to recover $25,000 from Allstate. Allstate appeals. 1

This case presents common insurance-law issues rendered increasingly complex by a policy-framework novel to Wisconsin case law: (1) whether the Giffords' claim falls within the terms of coverage set out in their policy; (2) whether Allstate's contractual promise, under the rubric of its uninsured -motorist coverage, to provide coverage against underinsured motorists, is illusory; and, (3) whether Allstate's liability, if any, must be reduced by the amount received by the Giffords from the tortfeasor's insurance company. We reverse and remand for further proceedings.

I.

The facts are undisputed. Ralph Gifford was injured when the car he was driving collided with one driven by Johnny Peoples. Peoples had liability coverage of $25,000, which Peoples' insurer paid to the Giffords. The Giffords, however, contend that their damages exceed $25,000, and claim that they are entitled to $25,000 in underinsured-motorist coverage from their insurer,

Page 372

Allstate, for each of their two cars insured by Allstate, a 1984 Dodge Aries and a 1980 [178 Wis.2d 345] Plymouth Volare. The record does not reveal whether separate premiums were paid for each car under the policy, or what was paid for the various coverages purchased.

Originally, the Giffords' Aries/Volare policy did not provide underinsured-motorist coverage. The coverage was added by an "Uninsured Motorists Endorsement-Wisconsin," which reads in part:

A. The following paragraph has been added to the provision entitled "An uninsured auto is ..." of Part V, Uninsured Motorists Insurance:

An uninsured auto is ...

(5) an underinsured motor vehicle which has bodily injury liability protection in effect and applicable at the time of the accident, but less than the applicable limit of Uninsured Motorist Coverage shown on the declarations page.

B. The following paragraphs are added to the "Limits of Liability" provision of Part V, Uninsured Motorists Insurance:

If the loss involves the use of an underinsured auto, the limit of this coverage will be reduced by all amounts paid by or on behalf of the owner or operator of the underinsured auto, including partial payments made by an insolvent insurer.

Thus, Allstate insured the Giffords against underinsured autos as part of its uninsured -motorist coverage.

[178 Wis.2d 346] II.

The grant or denial of relief in a declaratory judgment action is a matter within the discretion of the trial court. United Fire & Casualty Co. v. Kleppe, 174 Wis.2d 637, 640, 498 N.W.2d 226, 227 (1993). A trial court acts outside the ambit of that discretion when, as we conclude was the case here, it bases its discretionary decision upon an error of law. Id., 174 Wis.2d at 641, 498 N.W.2d at 227.

Resolution of this case turns on the interpretation of the underlying insurance policy. Our review is de novo. See Smith v. Atlantic Mut. Ins. Co., 155 Wis.2d 808, 810, 456 N.W.2d 597, 598 (1990). We interpret an insurance policy using the same rules of construction we apply to other contracts. Ibid. The policy language, as the agreed-upon articulation of the bargain reached between the parties, is dispositive to the extent it is plain and unambiguous. Id., 155 Wis.2d at 811, 456 N.W.2d at 599 ("[W]hen the terms of an insurance policy are plain on their face, the policy must not be rewritten by construction.").

1. The Coverage Issues.

The Allstate policy here is plain on its face. Part V, the uninsured-motorists coverage section, provides that Allstate "will pay damages for bodily injury, sickness, disease or death" suffered by a "person insured" that are caused by the "owner or operator of an uninsured auto." Gifford is a "person insured" who suffered "bodily injury." The question presented, therefore, is whether Peoples' car was "an uninsured auto" as that term is used in the Allstate policy.

[178 Wis.2d 347] Peoples' car was not an uninsured auto as that term was defined in the unamended definitions in Part V of the Giffords' policy. 2 As noted, however, the endorsement broadened the definition of "uninsured auto" to include "underinsured" vehicles. Vehicles meeting the policy's definition of "underinsured," therefore, are entitled to be treated as "uninsured" under the policy.

Page 373

The policy's definition of "underinsured" is substantively identical to the definition of "underinsured" that the Wisconsin Supreme Court held in Smith to be "unambiguous"--a vehicle is underinsured "when the owner or driver of the other vehicle maintains a policy with a lower coverage than" the insured's underinsured-motorist coverage. See id., 155 Wis.2d at 811, 456 N.W.2d at 599. Here, Peoples' car was insured for $25,000, the same amount as the Giffords' uninsured/underinsured-motorist coverage. The coverages being...

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27 practice notes
  • Fire Ins. Exchange v. Basten, No. 94-3377-FT
    • United States
    • United States State Supreme Court of Wisconsin
    • June 20, 1996
    ...determined. Id. at 232-33, 522 N.W.2d 261 (citing Elliott, 169 Wis.2d at 318, 485 N.W.2d 403). 7 See also Allstate Ins. Co. v. Gifford, 178 Wis.2d 341, 504 N.W.2d 370 (Ct.App.1993) (permitting declaratory judgment action by insurer to seek declaration of liability under insurance 8 See Newh......
  • Taylor v. Greatway Ins. Co., No. 99-1329.
    • United States
    • Court of Appeals of Wisconsin
    • February 17, 2000
    ...729 (1995), Hoglund v. Secura Insurance Co., 176 Wis. 2d 265, 500 N.W.2d 354 (Ct. App. 1993) and Allstate Insurance Co. v. Gifford, 178 Wis. 2d 341, 504 N.W.2d 370 (Ct. App. 1993), we may look beyond the policy definition of an underinsured motor vehicle. Taylor contends we may do so when t......
  • Zurich American v. Wis. Physicians Serv., No. 2006AP2320.
    • United States
    • Court of Appeals of Wisconsin
    • November 14, 2007
    ...the extent the policy's language is plain and unambiguous, it is dispositive on the coverage question. See Allstate Ins. Co. v. Gifford, 178 Wis.2d 341, 346, 504 N.W.2d 370 (Ct.App. ¶ 12 Thus, we examine first the pertinent language of the insurance contracts at issue. The health plan at Mi......
  • Kuhn v. Allstate Ins. Co., No. 93-0344.
    • United States
    • United States State Supreme Court of Wisconsin
    • May 23, 1995
    ...coverage situations when the policy expressly defines UM coverage as including UIM coverage. Similarly, in Allstate Ins. Co. v. Gifford, 178 Wis. 2d 341, 347, 504 N.W.2d 370 (Ct. App. 1993), the court of appeals concluded that the tortfeasor was to be treated as an uninsured tortfeasor (not......
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27 cases
  • Fire Ins. Exchange v. Basten, No. 94-3377-FT
    • United States
    • United States State Supreme Court of Wisconsin
    • June 20, 1996
    ...determined. Id. at 232-33, 522 N.W.2d 261 (citing Elliott, 169 Wis.2d at 318, 485 N.W.2d 403). 7 See also Allstate Ins. Co. v. Gifford, 178 Wis.2d 341, 504 N.W.2d 370 (Ct.App.1993) (permitting declaratory judgment action by insurer to seek declaration of liability under insurance 8 See Newh......
  • Taylor v. Greatway Ins. Co., No. 99-1329.
    • United States
    • Court of Appeals of Wisconsin
    • February 17, 2000
    ...729 (1995), Hoglund v. Secura Insurance Co., 176 Wis. 2d 265, 500 N.W.2d 354 (Ct. App. 1993) and Allstate Insurance Co. v. Gifford, 178 Wis. 2d 341, 504 N.W.2d 370 (Ct. App. 1993), we may look beyond the policy definition of an underinsured motor vehicle. Taylor contends we may do so when t......
  • Zurich American v. Wis. Physicians Serv., No. 2006AP2320.
    • United States
    • Court of Appeals of Wisconsin
    • November 14, 2007
    ...the extent the policy's language is plain and unambiguous, it is dispositive on the coverage question. See Allstate Ins. Co. v. Gifford, 178 Wis.2d 341, 346, 504 N.W.2d 370 (Ct.App. ¶ 12 Thus, we examine first the pertinent language of the insurance contracts at issue. The health plan at Mi......
  • Kuhn v. Allstate Ins. Co., No. 93-0344.
    • United States
    • United States State Supreme Court of Wisconsin
    • May 23, 1995
    ...coverage situations when the policy expressly defines UM coverage as including UIM coverage. Similarly, in Allstate Ins. Co. v. Gifford, 178 Wis. 2d 341, 347, 504 N.W.2d 370 (Ct. App. 1993), the court of appeals concluded that the tortfeasor was to be treated as an uninsured tortfeasor (not......
  • Request a trial to view additional results

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