Folkman v. Quamme, 02-0261.

Decision Date29 August 2002
Docket NumberNo. 02-0261.,02-0261.
PartiesKenneth A. FOLKMAN, Sr., Debra J. Folkman and Kenneth A. Folkman, Jr., Plaintiffs-Appellants, v. Sheri A. QUAMME, State Farm Mutual Automobile Insurance Company and Keith A. Folkman, Defendants, SOCIETY INSURANCE, Defendant-Respondent.
CourtWisconsin Court of Appeals

On behalf of the plaintiffs-appellants, the cause was submitted on the briefs of George Burnett of Liebmann, Conway, Olejniczak & Jerry, S.C., Green Bay.

On behalf of the defendant-respondent, the cause was submitted on the brief of James W. Mohr, Jr. of Mohr & Anderson, S.C., Hartford.

Before Vergeront, P.J., Dykman and Lundsten, JJ.

¶ 1. VERGERONT, P.J.

This appeal concerns the construction of insurance policy provisions relating to the insurer's limit of liability when there is more than one insured liable in an automobile accident. The circuit court construed Society Insurance's policy to limit its liability to $50,000 per accident regardless of the number of insureds who are liable in the accident. We agree with the insureds that the policy is ambiguous and is reasonably interpreted to provide that the per person and per accident limits for bodily injury apply to each insured liable in one accident. We therefore conclude that this is the proper construction of the policy. Accordingly, we reverse the circuit court's order denying the insureds' request for a declaratory ruling in their favor and its order dismissing Society from this action upon deposit of $50,000 to the clerk of court. We remand for further proceedings consistent with this opinion.

BACKGROUND

¶ 2. Keith Folkman was seventeen years old at the time of the accident and was operating a car owned by his parents, Debra and Kenneth Folkman, Sr., when it collided with another vehicle. Debra and another son, Kenneth Jr., were passengers in the car Keith was driving, and both Debra and Kenneth Jr. were seriously injured. Both Keith's parents had sponsored Keith's driver license.2

¶ 3. Keith's parents' car was insured under a Society policy issued to Debra, as the named insured. The declaration page provided that there was a "split limit" of liability for bodily injury — $25,000 for each person and $50,000 for each occurrence. Keith and Kenneth Sr., as well as Debra, were each insureds under the policy.3

¶ 4. The "Insuring Agreement" section of "Part A — Liability Coverage" provided:

INSURING AGREEMENT
A. We will pay damages for "bodily injury" or "property damage" for which any "insured" becomes legally responsible because of an auto accident. Damages include prejudgment interest awarded against the "insured." We will settle or defend, as we consider appropriate, any claim or suit asking for these damages. In addition to our limit of liability, we will pay all defense costs we incur. Our duty to settle or defend ends when our limit of liability for this coverage has been exhausted. We have no duty to defend any suit or settle any claim for "bodily injury" or "property damage" not covered under this policy.

¶ 5. The endorsement titled "Split Liability Limits" replaced the first paragraph of the "Limit of Liability" provision in Part A and provided as follows. (The layout here is substantially the same to that of the endorsement itself.)

SPLIT LIBILITY LIMITS

SCHEDULE

Bodily Injury Liability Property Damage Liability

The first paragraph of the Limit of Liability provisions in Part A is replaced by the following:

LIMIT OF LIABILITY

The limit of liability shown in the Schedule or in the Declarations for each person for Bodily Injury Liability is our maximum limit of liability for all damages, including damages for care, loss of services or death, arising out of "bodily injury" sustained by any one person in any one auto accident. Subject to this limit for each person, the limit of liability shown in the Schedule or in the Declarations for each accident for Bodily Injury Liability is our maximum limit of liability for all damages for "bodily injury" resulting from any one auto accident.

$_____ each person

$_____ each accident

$_____ each accident

The limit of liability shown in the Schedule or in the Declarations for each accident for property Damage Liability is our maximum limit of liability for all "property damage" resulting from any one auto accident. This is the most we will pay regardless of the number of:

1. "Insureds;"

2. Claims made;

3. Vehicles or premiums shown in the Declarations; or

4. Vehicles involved in the auto accident.

This endorsement must be attached to the Change Endorsement when issued after the policy is written. ¶ 6. The Folkmans4 initiated this action against Keith, Society, the driver of the other vehicle, and that driver's insurer. Society acknowledged Keith's responsibility for the accident, but disagreed with the Folkmans over the limit of the liability coverage. Society contended that its liability limit was $50,000 for the accident, and it filed a motion seeking to deposit this amount with the court and to be dismissed from the action. The Folkmans opposed the motion. They contended that, since Debra was liable to Kenneth Jr. as Keith's sponsor and Kenneth Sr. was liable to Debra and Kenneth Jr. as Keith's sponsor, and since Debra, Kenneth Sr., and Keith were each separately insured under the policy, Society owed $125,000: $50,000 for Keith's liability to Debra, $25,000 for Debra's sponsor liability to Kenneth Jr., and $50,000 for Kenneth Sr.'s sponsor liability. The Folkmans sought a declaratory ruling that this was the correct amount of Society's obligation for liability coverage.

¶ 7. The circuit court concluded that, although the policy provisions quoted above "may appear ambiguous..., the policy is unambiguous when applying the existing case law," and it decided the policy limit for bodily injury liability was $50,000. The court therefore denied the Folkmans' motion for a declaratory ruling in their favor and ordered that Society be dismissed upon deposit of $50,000 with the court.

DISCUSSION

¶ 8. On appeal, the Folkmans contend the court erred in construing the policy to limit Society's liability to $50,000. As they did in the circuit court, they assert that the proper construction takes into account that there is more than one insured liable in this accident and results in coverage of $125,000.5

[1-6]

¶ 9.The proper construction of an insurance policy is a question of law, which we review de novo. Danbeck v. American Family Mut. Ins. Co., 2001 WI 91, ¶ 10, 245 Wis. 2d 186, 629 N.W.2d 150. An insurance policy is construed to give effect to the intent of the parties as expressed in the language of the policy itself. Id. If the language of the policy is unambiguous, we enforce it as written, without resort to rules of construction or principles of case law. Id. Policy language is ambiguous if it is susceptible to more than one reasonable interpretation. Id. If the language is ambiguous, we construe it in favor of the insured. Id. When examining language in an insurance policy, we do not view it in isolation, but in the context of the policy as a whole. Badger Mut. Ins. Co. v. Schmitz, 2002 WI 98, ¶ 61, 255 Wis. 2d 61, 647 N.W.2d 223.

[7]

¶ 10. As noted above, the declaration page under "Limits of Liability" provides split limits for liability for bodily injury, meaning one limit for each person$25,000—and another limit for each occurrence— $50,000. However, this page does not indicate how these limits are to apply when there is more than one insured liable for bodily injury in one accident. We therefore turn to "Part A Liability Coverage," which begins with the broad language in Paragraph A of "Insuring Agreement" that the insurer will pay damages for bodily injury "for which any insured becomes legally responsible because of an auto accident."6 There is no dispute between the parties that Debra and Kenneth Sr., as Keith's sponsors, have liability, along with Keith, for his negligence in this accident. The broad opening sentence is limited later in the paragraph by reference to the language, "In addition to our limit of liability." It is plain from a reading of this entire section, in conjunction with the declaration page, that Society is not agreeing to pay for all damages for which "any `insured' becomes legally responsible," but only for those damages within the "limit of liability." However, it is still not clear how the "limit of liability" on the declaration page is to apply when more than one insured is liable for bodily injury caused by an accident.

¶ 11. We next turn to the "Split Liability Limits" endorsement, which replaces the first paragraph of the "Limit of Liability" section in Part A. The first paragraph of the endorsement addresses damages for bodily injury, and the second addresses property damage; in both the reader is referred to the declaration page for the liability limits, since no figure is written in the schedules in the endorsement. With respect to bodily injury, the first sentence of the first paragraph explains that the per person limit on the declaration page is the "maximum limit for all damages ... sustained by any one person in any one auto accident," and elaborates on this by itemizing the types of damages included in this limit. The second sentence explains that the per accident (or, on the declaration page, per "occurrence") limit is the "maximum limit of liability for all damages... resulting from any one auto accident." The two sentences read together explain the relationship between the split liability limits: the lower of the two controls. If the per person limits exceed $50,000 when they applied to the number of persons injured in one accident, then the per accident limit controls; on the other hand, even if one person's damages for bodily injury exceeds $25,000, if the total damages for personal injury are less than $50,000, the per person limit controls....

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2 cases
  • Folkman v. Quamme
    • United States
    • Wisconsin Supreme Court
    • 16 Julio 2003
    ...of whether Society's policy was ambiguous as to whether multiple insureds share a single limit of liability under the policy. Folkman v. Quamme, 2002 WI App 237, ¶ 1, 257 Wis. 2d 864, 652 N.W.2d 406. The court of appeals held that Society's limits of liability for bodily injury were ambiguo......
  • Sukala v. Heritage Mut. Ins. Co.
    • United States
    • Wisconsin Court of Appeals
    • 17 Junio 2004
    ...court denied the present insurers' petitions for review before it accepted review of our decision in Folkman v. Quamme, 2002 WI App 237, 257 Wis. 2d 864, 652 N.W.2d 406, (Folkman I), rev'd, 2003 WI 116, 264 Wis. 2d 617, 665 N.W.2d 857 (Folkman II). Under the majority's rationale, would a co......
2 books & journal articles
  • Ambiguity not shown by negative implication.
    • United States
    • Wisconsin Law Journal No. 2003, November 2003
    • 23 Julio 2003
    ...Court held on July 16. In doing so, the court reversed a published decision of the court of appeals, Folkman v. Quamme, 2002 WI App 237, 257 Wis.2d 864, 652 N.W.2d In 1998, 17-year-old Keith Folkman was driving a vehicle owned by his parents, Debra and Kenneth Folkman, Sr., when it collided......
  • Three underinsured motorist cases remanded to appeals court.
    • United States
    • Wisconsin Law Journal No. 2003, November 2003
    • 24 Septiembre 2003
    ...injury limitation, that phrase was omitted.The court of appeals held the policy to be ambiguous in Folkman v. Quamme, 2002 WI App 237, 257 Wis.2d 864, 652 N.W.2d 406.However, the Supreme Court reversed, stating, "Here, an unreasonable negative implication must compete against clear text. Th......

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