Filing v. Commercial Union Midwest Ins. Co.

• Decision Date: 03 March 1998
• Docket Number: No. 97-2136,97-2136
• Citation: 579 N.W.2d 65,217 Wis.2d 640
• Parties: Richard M. FILING, Phyllis Filing, and Hazel Boggs, Plaintiffs-Appellants, v. COMMERCIAL UNION MIDWEST INSURANCE COMPANY, Defendant-Third-Party Plaintiff-Respondent, d Lisa Marie Filing, Metropolitan Life Ins. Co., ABC Ins. Co., Blue Cross/Blue Shield United of WI, Aetna Insurance Co., and Donna Shalala, Secretary of the United States Department of Health & Human Services, Third-Party Defendants.
• Court: Wisconsin Court of Appeals

Page 65

579 N.W.2d 65

217 Wis.2d 640

Richard M. FILING, Phyllis Filing, and Hazel Boggs Plaintiffs-Appellants, v. COMMERCIAL UNION MIDWEST INSURANCE COMPANY Defendant-Third-Party Plaintiff-Respondent, ^d Lisa Marie Filing, Metropolitan Life Ins. Co., ABC Ins. Co. Blue Cross/Blue Shield United of WI, Aetna Insurance Co. and Donna Shalala, Secretary of the United States Department of Health & Human Services, Third-Party Defendants.

No. 97-2136.

Court of Appeals of Wisconsin.

Submitted on Briefs Jan. 27, 1998.

Opinion Released March 3, 1998.

Opinion Filed March 3, 1998.

On behalf of the plaintiffs-appellants, the cause was submitted on the briefs of Virginia M. Antoine of Habush, Habush, Davis & Rottier, S.C. of Milwaukee, and John D. Murray of Habush, Habush, Davis & Rottier, S.C. of Appleton.

On behalf of the defendant-third-party plaintiff-respondent, the cause was submitted on the brief of Michael T. Steber of Nelson, Dries & Zimmerman, S.C. of Brookfield.

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

CANE, Presiding Judge.

In this dispute involving underinsured motorist coverage (UIM), the plaintiffs appeal from a declaratory judgment concluding that they could not claim underinsured benefits from their insurer, Commercial Union Midwest Insurance Company, for injuries incurred in a two-vehicle accident. The plaintiff, Richard Filing, was driving his automobile with three family members as passengers: his wife, Phyllis; his daughter, Lisa; and his mother-in-law, Hazel Boggs. The plaintiffs were injured when their vehicle was struck by a vehicle operated by Gregg Gulbrand. At the time of the accident, Gulbrand was insured by American Family Insurance Company with bodily injury liability coverage of $100,000 per person/$300,000 per accident. Richard Filing had two vehicles insured by Commercial with underinsured motorist coverage for each of his vehicles in the amount of $300,000. Commercial concedes that each plaintiff is an insured under its policy.

Because Gulbrand's liability insurance was insufficient to cover the plaintiffs' injuries, each plaintiff made a claim against Commercial for underinsured benefits. ¹ Commercial denied the claims and both sides sought a declaratory judgment on the issue of whether the plaintiffs were entitled to recover underinsured benefits. The trial court concluded that the Gulbrand vehicle was not an underinsured vehicle and, therefore, granted Commercial's motion and denied the plaintiffs' motion.

Only the coverage issue is before us on appeal. Specifically, the plaintiffs contend that in determining whether Gulbrand's vehicle was underinsured, the trial court incorrectly compared the $300,000 per accident liability limit of Gulbrand's policy rather than the $100,000 per person limit. Because we conclude that the Gulbrand vehicle was an underinsured motor vehicle at the time of the accident, we reverse and remand the matter for further proceedings.

The interpretation of an insurance policy is a question of law, and we owe no deference to the trial court's interpretation. Keane v. Auto-Owners Ins. Co., 159 Wis.2d 539, 547, 464 N.W.2d 830, 833 (1991). When interpreting words of an insurance contract, we operate under the principle that the test is not what the insurer intended the words to mean, but rather what a reasonable person in the position of the insured would have understood the words to mean. Wood v. American Family Mut. Ins. Co., 148 Wis.2d 639, 652, 436 N.W.2d 594, 599 (1989), rev'd in part on other grounds by Matthiesen v. Continental Cas. Co., 193 Wis.2d 192, 199, 532 N.W.2d 729, 733 (1995). This test is an objective test. Bertler v. Employers Ins. of Wausau, 86 Wis.2d 13, 17, 271 N.W.2d 603, 605 (1978).

Whether an ambiguity in an insurance policy exists depends on the meaning that the term or provision would have to a reasonable person of ordinary intelligence. Kozak v. United States Fid. & Guar. Co., 120 Wis.2d 462, 467, 355 N.W.2d 362, 364 (Ct.App.1984). An ambiguity exists when the policy is reasonably susceptible to more than one construction from the viewpoint of a reasonable person of ordinary intelligence in the position of the insured. Northwestern Nat'l Ins. Co. v. Nemetz, 135 Wis.2d 245, 255, 400 N.W.2d 33, 37 (Ct.App.1986). When an ambiguity exists, the court must construe the policy against the insurance company which drafted it and in favor of the insured. Stanhope v. Brown County, 90 Wis.2d 823, 849, 280 N.W.2d 711, 722 (1979).

This issue is one of first impression in Wisconsin. In our analysis, we begin with the definition of "underinsured motor vehicle" in Commercial's policy. The definition, common to many auto insurance policies, reads as follows:

"Underinsured motor vehicle" means a land motor vehicle or trailer of any type to which a bodily injury liability bond or policy applies at the time of the accident but its limit for bodily injury liability is less than the limit of liability for this coverage. (Emphasis added.)

Thus, to determine whether Gulbrand's vehicle is underinsured, the phrase "limit for bodily injury liability " under American Family's policy must be compared to the single limit of $300,000 underinsured motorist coverage under the Commercial policy. When defining an underinsured motor vehicle in its policy, Commercial does not specify which bodily injury limit, the per person or the per accident limit, is to be compared with its single limit. Under the rationale in Smith v. Atlantic Mut. Ins. Co., 155 Wis.2d 808, 811, 456 N.W.2d 597, 599 (1990), if we compare the $100,000 per person limit to Commercial's $300,000 UIM limit, Gulbrand's vehicle is an underinsured vehicle. On the other hand, if we compare the $300,000 per accident limit to Commercial's $300,000 UIM limit, Gulbrand's vehicle is not an underinsured vehicle. ² See id.

The parties agree that a policy providing $100,000 per person/$300,000 per accident means that, in any one accident, if only one person is killed or injured, the maximum liability limit is $100,000, but if two or more persons are killed or injured, the maximum liability limit is $300,000. Here, four people in Filing's vehicle were injured in the accident. Therefore, American Family's policy has a maximum liability limit of $300,000, which it paid.

Commercial argues that the per person limit merely acts to apportion the vehicle limit and the Gulbrand vehicle does not become an underinsured vehicle simply because the individual claimants receive less than the full vehicle limits. It asserts that what is significant is what the claimants are dividing, which in this case would be the $300,000 limit. Commercial also explains that its definition of underinsured motor vehicle cannot specify which limit (per person or per accident) will apply because that cannot be known until after the accident occurs. Here, it reasons that, in this accident, the per person limit cannot be the vehicle's limit since it is undisputed the per accident limit applies and the per person limit does nothing more than divide up the larger vehicle limit. Consequently, it concludes that because the $300,000 amount is equal to the Commercial UIM $300,000 limit, the Gulbrand vehicle is not an underinsured motor vehicle.

On the other hand, the plaintiffs contend that because the phrase, "limit for bodily injury liability " is fairly susceptible to two reasonable meanings as to which limit applies in this situation, it must be ambiguous. It follows, they argue, that since ambiguities in an insurance policy must be construed in favor of the insured and against the insurer, the phrase must be construed to refer to the per person liability limit. Additionally, they contend this interpretation would be consistent with the reasonable expectations of the insured and any other construction would lead to absurd results. ³

It is fundamental that insurance policy language should be given its common everyday meaning and should be interpreted as a reasonable person in the insured's position would understand it. Paape v. Northern Assur. Co., 142 Wis.2d 45, 51, 416 N.W.2d 665, 668 (Ct.App.1987). When a policy's terms are unambiguous and plain on their face, the policy must not be rewritten by construction. Smith, 155 Wis.2d at 811, 456 N.W.2d at 599. Although ambiguity in policy language exists when the policy is reasonably susceptible to more than one construction from the viewpoint of a reasonable person of ordinary intelligence in the position of the insured, Fletcher v. Aetna Cas. & Sur. Co., 165 Wis.2d 350, 355, 477 N.W.2d 90, 91 (Ct.App.1991), the fact that a word has more than one meaning does not make that word ambiguous if only one...