Clark v. American Family Mut. Ins. Co., 97-0970

Citation218 Wis.2d 169,577 N.W.2d 790
Decision Date21 May 1998
Docket NumberNo. 97-0970,97-0970
PartiesBradley CLARK, Barnes A. Clark, Plaintiffs-Respondents, ABC Insurance Company, Plaintiff, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Defendant-Appellant.
CourtUnited States State Supreme Court of Wisconsin

For the defendant-appellant there were briefs by John M. Moore, David J. Pliner and Bell, Metzner, Gierhart & Moore, S.C., Madison and oral argument by David J. Pliner.

For the plaintiffs-respondents there was a brief by John M. Riley and Atterbury, Riley & Luebke, S.C., Madison and oral argument by John M. Riley.

¶1 WILLIAM A. BABLITCH, Justice

American Family Mutual Insurance Company appeals from an order of the circuit court which determined that a territorial exclusion contained in an insurance policy for uninsured motorist coverage was not valid under Wisconsin law. Bradley Clark (Clark) was injured on an island off the coast of Greece when the brakes failed on a moped that he had rented from an uninsured Greek citizen. Clark claimed uninsured motorist coverage under his father's automobile policy with American Family. The territorial exclusion in the policy excluded coverage for accidents occurring outside the United States and Canada. Because Wisconsin Statutes expressly allow exclusions not otherwise prohibited by law, and because an exclusion such as the one provided in this insurance policy is not prohibited by law, we reverse the order of the circuit court.

¶2 The facts relevant to the determination of this appeal are not in dispute. In 1991, Clark, then 22 years old, was injured while driving a rented moped on an island off the coast of Greece. The brakes failed on the moped, and he was thrown. The owner of the moped was an uninsured Greek citizen.

¶3 Because the Greek citizen was uninsured, Clark sought recovery under the uninsured motorist provisions of his father's three automobile insurance policies with American Family Insurance. American Family denied coverage because each policy contains a general territorial exclusion which provides as follows: "This policy covers only accidents, occurrences, and losses which occur: a. Within the United States of America, its territories or possessions, or Canada, or between their ports...." This territorial exclusion is included in the section of the policy titled "General Provisions" and applies to all sections of the policy.

¶4 Clark and his father, the insurance policy-holder, filed suit against American Family, claiming that Clark was entitled to uninsured motorist coverage from American Family for the injuries he sustained in the accident. American Family filed a motion for summary judgment on several grounds including its assertion that the territorial exclusion in the policy barred Clark's recovery. The circuit court denied summary judgment on all grounds. With respect to the territorial exclusion, the court reasoned that although Wis. Stat. § 632.32(5)(e) (1989-90) 1 allows insurance companies to create exceptions from coverage for both liability and uninsured motorist coverage, case law has not upheld exceptions from uninsured motorist protection. Therefore, the circuit court determined that the territorial exclusion in American Family's policy did not apply to uninsured motorist coverage and, accordingly, Clark's claim for uninsured motorist benefits was covered.

¶5 The case proceeded to trial. The jury found the Greek citizen to be 65 percent negligent for failing to maintain the moped and found Clark to be 35 percent contributorily negligent for the accident. After imposing the 35 percent reduction for Clark's contributory negligence, see Wis. Stat. § 895.045, damages were assessed at $314,726. The circuit court granted Clark's motion for judgment on the verdict for damages of $314,726 together with costs of $8,913.

¶6 American Family appealed, and the court of appeals certified the case to this court, pursuant to Wis. Stat. § (Rule) 809.61, to determine whether a territorial exclusion included in an insurance policy for uninsured motorist coverage is valid. This question requires that we interpret Wis. Stat. § 632.32, governing uninsured motorist coverage. Statutory interpretation is a question of law which we review de novo. See Stockbridge School Dist. v. DPI, 202 Wis.2d 214, 219, 550 N.W.2d 96 (1996). The main goal of statutory interpretation is to discern the intent of the legislature. See Anderson v. City of Milwaukee, 208 Wis.2d 18, 25, 559 N.W.2d 563 (1997) (citations omitted). We first look to the plain language of the statute. See id. If the plain language is ambiguous, we turn to extrinsic aids such as the legislative history, scope, context and purpose of the statute to determine legislative intent. See id.

¶7 Wisconsin Stat. § 632.32 applies to all motor vehicle insurance policies issued or delivered in Wisconsin. See § 632.32(1). Wisconsin Stat. § 632.32(4)(a) requires that every automobile liability insurance policy issued in this state include uninsured motorist coverage. The statute requires uninsured motorist coverage in limits of at least $25,000 per person and $50,000 per accident. See § 632.32(4)(a).

¶8 Wisconsin Stat. § 632.32 also allows insurance companies to provide exclusions in automobile policies. See Wis. Stat. § 632.32(5)(e). "A policy may provide for exclusions not prohibited by sub. (6) or other applicable law." § 632.32(5)(e). This subsection is not ambiguous, and the legislature's intent is clear. We need not look beyond this unambiguous statutory language to discern the legislature's intent: the intent is to provide that an insurance contract may include exclusions not specifically listed in Wis. Stat. § 632.32(6) or prohibited by other applicable law.

¶9 Therefore, the present case is resolved by considering: 1) whether the territorial exclusion in American Family's policy is prohibited by Wis. Stat. § 632.32(6); if not, then 2) whether the territorial exclusion is prohibited by other applicable law. If the answer to both questions is no, the territorial exclusion included in American Family's automobile insurance contract is valid and bars Clark's claim for uninsured motorist coverage.

¶10 Nothing in Wis. Stat. § 632.32(6) (reprinted below) 2 prohibits a territorial exclusion for uninsured motorist coverage. There is no possible way to construe § 632.32(6) on its face as prohibiting a territorial exclusion for uninsured motorist coverage. Therefore, the answer to the first question, whether the territorial exclusion in American Family's policy is prohibited by § 632.32(6), is "no."

¶11 The second question is whether "other applicable law" prohibits an insurance company from imposing a territorial exclusion on uninsured motorist insurance coverage. Clark has not pointed to any statute which expressly prohibits a territorial exclusion for uninsured motorist coverage, and we can find none. However, Clark points to language in Wis. Stat. § 344.33(2) which requires that liability insurance extend to "damages arising out of the maintenance or use of the motor vehicle within the United States of America or the Dominion of Canada...." § 344.33(2). He argues that the absence of similar language in Wis. Stat. § 632.32(4)(a) shows a legislative intent to not apply a territorial exclusion to uninsured motorist coverage. We are not persuaded by Clark's argument. Section 344.33(2) does not mandate that § 632.32(4) provide coverage for the entire world as Clark invites us to read these statutes. Section 344.33(2) sets a floor, not a ceiling. Section 344.33(2) says that liability policies must provide coverage in the United States and Canada; it does not preclude an insurance company from providing coverage outside the United States and Canada. Accordingly, the absence of a similar mandated minimal coverage area in § 632.32(4) cannot be read as implying a legislative mandate to cover the entire world.

¶12 We also discern no case law which prohibits territorial exclusions for uninsured motorist coverage. Although the exact question presented by this case is one of first impression, this court and the court of appeals have, on several occasions, been faced with clauses in insurance policies which limited or excluded uninsured motorist coverage in certain situations. Clark argues that the courts have consistently invalidated attempts to restrict the scope of uninsured motorist coverage. However, in each instance, the court relied on legislative intent as expressed in a specific statutory provision to hold the limiting or exclusionary clause void and invalid.

¶13 A survey of Wisconsin case law cited to us by the plaintiff shows that in several cases, the courts relied on Wis. Stat. § 631.43(1), allowing stacking of uninsured motorist coverage, to invalidate insurance policy clauses which limited uninsured motorist coverage. See, e.g., Welch v. State Farm Mutual Automobile Ins. Co., 122 Wis.2d 172, 361 N.W.2d 680 (1985); Carrington v. St. Paul Fire & Marine Ins., 164 Wis.2d 148, 473 N.W.2d 591 (Ct.App.1991); Hulsey v. American Family Mutual Ins. Co., 142 Wis.2d 639, 419 N.W.2d 288 (Ct.App.1987); Parks v. Waffle, 138 Wis.2d 70, 405 N.W.2d 690 (Ct.App.1987). 3 In the other cases cited by the plaintiff, the courts relied on Wis. Stat. § 632.32(4)(a), requiring that uninsured motorist coverage be included in insurance policies, to invalidate insurance policy clauses which limit uninsured motorist coverage. See, e.g., St. Paul Mercury Ins. Co. v. Zastrow, 166 Wis.2d 423, 480 N.W.2d 8 (1992); Nicholson v. Home Ins. Co., 137 Wis.2d 581, 405N.W.2d 327 (1987); Niemann v. Badger Mutual Ins. Co., 143 Wis.2d 73, 420 N.W.2d 378 (Ct.App.1988); Hulsey, 142 Wis.2d at 639, 419 N.W.2d 288. 4 However, neither § 631.43(1) nor § 632.32(4)(a) is applicable to territorial exclusions.

¶14 A further distinguishing factor is that all of the cases cited by the plaintiff occurred within the United States. None of these cases raised or decided the issue of...

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