Berquist and Thompson v. Am. Family Mut. Ins. Co.

• Decision Date: 28 December 1999
• Docket Number: 99-0574
• Parties: This opinion is subject to further editing. If published, the official version will appear in the bound volume of the Official Reports. A party may file with the Supreme Court a petition to review an adverse decision by the Court of Appeals. See § 808.10 and Rule 809.62, Stats. Richard G. Berquist and Jerry M. Thompson, on behalf of themselves and all persons similarly situated, Plaintiffs-Appellants, v. American Family Mutual Insurance Company, Defendant-Respondent.STATE OF WISCONSIN IN COURT OF APPEALS DISTRICT III DATED AND FILED:
• Court: Wisconsin Court of Appeals

This opinion is subject to further editing. If published, the official version will appear in the bound volume of the Official Reports.

A party may file with the Supreme Court a petition to review an adverse decision by the Court of Appeals. See § 808.10 and Rule 809.62, Stats.

Richard G. Berquist and Jerry M. Thompson, on behalf of themselves and all persons similarly situated, Plaintiffs-Appellants v American Family Mutual Insurance Company, Defendant-Respondent

No. 99-0574

STATE OF WISCONSIN IN COURT OF APPEALS DISTRICT III

DATED AND FILED: December 28, 1999

APPEAL from a judgment of the circuit court for St. Croix County: SCOTT R. NEEDHAM, Judge. Reversed and cause remanded with directions.

Before Cane, C.J., Hoover, P.J., and Peterson, J.

PER CURIAM.

¶1. The plaintiffs, former American Family Mutual Insurance Company agents who served for at least fifteen consecutive years and then left the company, appeal a summary judgment dismissing their breach of contract action against American Family. The trial court concluded that American Family did not breach any contractual obligation imposed by a health care contract when it created a separate risk pool for the former agents and discontinued a 20% premium subsidy for them. They had previously enjoyed the same premium structures as active agents. Because we conclude that the health care contract should be construed to accord the former agents the same premium structure as active agents, we reverse the judgment and remand with directions to grant summary judgment on liability in favor of the former agents.

¶2. The former agents have a health care contract with American Family. Provisions of this contract allow the former agents to continue coverage under "this plan" or "this policy" upon payment of the premiums when due.¹ As of January 1, 1993, American Family put inactive long-term agents in a newly created separate risk pool resulting in higher premiums for that group. The trial court ruled that the health care policy did not provide the plaintiffs with a vested right to the subsidized lower premium rate and specifically reserved the right for American Family to adjust the premium rates. The court further concluded that the former agents were independent contractors, distinguishing them from employees who were held to have a vested entitlement under similar facts. See Schlosser v. Allis-Chalmers Corp., 86 Wis.2d 226, 271 N.W.2d 879 (1979).

¶3. An insurance policy is ambiguous if it is reasonably susceptible to more than one meaning. See Ehlers v. Johnson, 164 Wis.2d 560, 563, 476 N.W.2d 291, 293 (Ct. App. 1991). Ambiguities in the contract are construed against the drafter.² See Dairyland Equip. Leasing v. Bohen, 94 Wis.2d 600, 609, 288 N.W.2d 852, 856 (1980). Therefore, any provision in the policy that is reasonably susceptible to an interpretation granting a benefit to the insured will be construed in that manner.

¶4. Focusing on the fifteen-year eligibility clause, American Family contends that this language is a condition of eligibility, not a promise. That is one interpretation. The portions of the policy that grant the former agents with fifteen years of service the right to continue "this policy" upon payment of the premiums subject to the terms of "this plan" can also be reasonably construed to give the insureds the benefit of a premium structure identical to that of active agents. The creation of a risk pool combining the former agents with fifteen years' service and the active agents, coupled with the right to continue "this plan," created a reasonable expectation that the former agents would continue to have the same premium structure as the active agents. We conclude that the entire clause allowing former agents to continue coverage under "this policy" is susceptible to the reasonable interpretation that it promises continuation in the same risk pool created by "this plan." Therefore, the contract must be construed in this manner.

¶5. The trial court focused...