American Family Mut. Ins. Co. v. Powell, 91-2686

• Decision Date: 02 June 1992
• Docket Number: No. 91-2686,91-2686
• Citation: 169 Wis.2d 605,486 N.W.2d 537
• Parties: AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Plaintiff-Appellant, v. Gordon Dwayne POWELL, Defendant-Respondent.
• Court: Wisconsin Court of Appeals

Page 537

486 N.W.2d 537

169 Wis.2d 605

AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Plaintiff-Appellant, v. Gordon Dwayne POWELL, Defendant-Respondent.

No. 91-2686.

Court of Appeals of Wisconsin.

Submitted on Briefs May 11, 1992.

Opinion Released June 2, 1992.

Opinion Filed June 2, 1992.

On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Susan Schleif Gherty of Gherty and Gherty, S.C. of Hudson.

On behalf of the defendant-respondent, the cause was submitted on the brief of William E. Jepsen of Karon, Jepsen & Daly, P.A. of St. Paul, Minn.

Before CANE, P.J., and LaROCQUE and MYSE, JJ.

CANE, Presiding Judge.

American Family Mutual Insurance Company appeals a summary judgment holding that Minnesota law applies to determine whether Gordon Powell could settle with Steven Arnold, a Minnesota tortfeasor, for less than Arnold's liability insurance limits and recover his remaining damages from American Family, Powell's underinsurance carrier. American Family argues that Wisconsin law applies because Powell is a Wisconsin resident, American Family is a Wisconsin corporation that issued the underinsurance policy to Powell in Wisconsin and the issue involves a contract claim. We agree and reverse the judgment.

Powell, a Wisconsin resident, was injured in an automobile accident when his car collided with Arnold's car. Arnold is a Minnesota resident, and the accident occurred in Minnesota.

At the time of the accident, Powell had underinsurance coverage of $100,000 through American Family. American Family, a Wisconsin corporation, negotiated and issued the policy in Wisconsin. State Farm Mutual Insurance issued a policy to Arnold in Minnesota with liability limits of $30,000.

Powell, claiming damages in excess of $30,000, informed American Family that he intended to settle his claim against Arnold and State Farm for $17,500, and make a claim against American Family for his remaining damages. American Family filed an action seeking a declaration of rights under its underinsurance policy. The circuit court issued a summary judgment holding that Minnesota law applied to the insurance contract between American Family and Powell to determine whether Powell could settle with Arnold and recover his remaining damages from American Family under his underinsurance coverage.

We review summary judgments de novo. Grosskopf Oil v. Winter, 156 Wis.2d 575, 581, 457 N.W.2d 514, 517 (Ct.App.1990). The methodology for reviewing a summary judgment has been set forth many times, and it need not be repeated here. See Grams v. Boss, 97 Wis.2d 332, 338, 294 N.W.2d 473, 476 (1980).

Minnesota statute sec. 65B.49, subd. 4a (1988), allows an insured, who settles with a tortfeasor for less than the tortfeasor's liability limits, to recover from his underinsurance carrier the difference between the actual settlement proceeds and the tortfeasor's liability limits. Onasch v. Auto-Owners Ins. Co., 444 N.W.2d 587, 591 (Minn.App.1989). Under Minnesota law, Powell would be able to recover from American Family $12,500, the difference between the settlement proceeds and Arnold's liability limits.

Wisconsin has no comparable statute. Under Wisconsin law, we interpret and apply insurance contracts according to their unambiguous language. See Just v. Land Reclamation Ltd., 155 Wis.2d 737, 744, 456 N.W.2d 570, 572-73 (1990). The underinsurance policy American Family issued to Powell provides that American Family will pay under its underinsurance coverage "only after the limits of liability" under a bodily injury liability policy have "been exhausted by payment of judgements or settlements." Under Wisconsin law, therefore, Powell would not be able to recover the $12,500 difference from his underinsurer, American Family.

Whether Minnesota or Wisconsin law applies to enforce and interpret the underinsurance contract between Powell and American Family is a question of law. See Urhammer v. Olson, 39 Wis.2d 447, 450, 159 N.W.2d 688, 689 (1968). We review questions of law without deference to the trial court. Ondrasek v. Tenneson, 158 Wis.2d 690, 694, 462 N.W.2d 915, 917 (Ct.App....