Frost v. Whitbeck

• Decision Date: 17 December 2002
• Docket Number: No. 01-0327.,01-0327.
• Citation: 654 N.W.2d 225,257 Wis.2d 80,2002 WI 129
• Parties: Brittany FROST, by her Guardian ad Litem, Michael S. Anderson, and Tina Frost, Plaintiffs-Appellants, v. Doreen WHITBECK, Defendant, AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Defendant-Respondent-Petitioner.
• Court: Wisconsin Supreme Court

257 Wis.2d 80

2002 WI 129

654 N.W.2d 225

Brittany FROST, by her Guardian ad Litem, Michael S. Anderson, and Tina Frost, Plaintiffs-Appellants, v. Doreen WHITBECK, Defendant, AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Defendant-Respondent-Petitioner.

No. 01-0327.

Supreme Court of Wisconsin.

Oral argument October 7, 2002.

Decided December 17, 2002.

For the defendant-respondent-petitioner there were briefs by Virginia L. Newcomb, Paul F. Graves, Patryk Silver, and Borgelt, Powell, Peterson & Frauen, S.C., Madison, and oral argument by Virginia L. Newcomb.

For plaintiffs-appellants there was a brief by Michael S. Anderson and Axley Brynelson, LLP, Madison, and oral argument by Michael S. Anderson.

¶ 1. SHIRLEY S. ABRAHAMSON, CHIEF JUSTICE.

This is a review of a published decision of the court of appeals, Frost v. Whitbeck, 2001 WI App 289, 249 Wis. 2d 206, 638 N.W.2d 325, reversing the judgment and order of the Circuit Court for Dane County, Richard J. Callaway, Judge.

¶ 2. The circuit court granted summary judgment to American Family Mutual Insurance Co., concluding that Tina Frost and Brittany Frost were excluded from coverage for bodily injury under Doreen Whitbeck's homeowner's policy because Tina Frost is a relative of Ms. Whitbeck and was residing in Doreen Whitbeck's household at the times her daughter, Brittany Frost, suffered bodily injuries.

¶ 3. The court of appeals reversed the judgment and order of the circuit court, concluding that the word "relative" in the policy exclusion was ambiguous and was to be construed against American Family in favor of coverage. We affirm the decision of the court of appeals.

[1]

¶ 4. A summary judgment is granted if there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law.¹ An appellate court reviews a summary judgment applying the same standards and methods used by the circuit court.² [2, 3]

¶ 5. At issue in this case is the interpretation of a homeowner's insurance policy. The interpretation of an insurance policy is a question of law when no extrinsic evidence is introduced to interpret the wording of the policy.³ This court decides questions of law independently of the circuit court and court of appeals, benefiting from the analyses of those courts.⁴

¶ 6. The specific question of law presented in this case is whether Tina Frost, one of the claimants, is a relative of Doreen Whitbeck, the policyholder, within the definition of "insured" so that the claims of Tina Frost and her daughter Brittany seeking damages for bodily injury are barred from coverage under the policy's intra-insured exclusion, sometimes referred to herein as the resident-relative exclusion.⁵ ¶ 7. Applying the oft-repeated, well-accepted rules for construing insurance policies leads us to conclude that Tina Frost is not a relative of Doreen Whitbeck for the purpose of the resident-relative exclusion in Ms. Whitbeck's homeowner's insurance policy. The word "relative" is an indefinite, elastic, intrinsically imprecise word in the context of the exclusion and accordingly should be construed against American Family and in favor of coverage. A reasonable insured would not have understood that Tina Frost, who has a great-great-grandfather as a common ancestor with the policyholder, is a relative within the exclusion. Construing the word "relative" not to include Tina Frost, a third cousin separated by eight degrees of kinship, does not render the resident-relative exclusion meaningless and does not undermine the purpose of this exclusion.

¶ 8. The facts can be stated simply for purposes of this review. Tina Frost and Doreen Whitbeck first met as teenagers. At some point, Doreen Whitbeck's mother told the two women that they were "shirttail relatives."⁶ Apparently, Tina Frost and Doreen Whitbeck share the same great-great-grandfather.⁷ Tina Frost's great-grandfather, Barney Van Ert, and Doreen Whitbeck's great-grandfather, John Van Ert, were brothers. Thus Tina Frost and Doreen Whitbeck are third cousins separated by eight degrees of kinship.⁸ Tina Frost's daughter, Brittany Frost, and Doreen Whitbeck are third cousins once removed and separated by nine degrees of kinship.

¶ 9. Tina Frost and Brittany (age 6) came from Kentucky to stay in Doreen Whitbeck's Wisconsin home in May 1996. During the course of their stay, Brittany was allegedly bitten twice by Doreen Whitbeck's dog, once on June 4, 1996, and the second time on November 20, 1996. Brittany suffered injuries on both occasions. Shortly after the second dog bite, both Tina Frost and Brittany left Ms. Whitbeck's home and returned to Kentucky. Three years later, on November 10, 1999, Tina Frost and Brittany filed suit in Wisconsin, naming, as the defendants, Doreen Whitbeck and American Family, her homeowner's insurance company.

¶ 10. American Family moved for summary judgment, arguing that Doreen Whitbeck's homeowner's insurance policy contains an express exclusion of coverage for bodily injury of a resident relative. This review therefore relates to insurance coverage, not to liability for the injuries.

¶ 11. The policy provides several types of coverage. Section I of the policy provides coverage for first-party claims for property loss with some exclusions. Section II of the policy provides coverage for third-party claims with some exclusions. This case involves a Section II exclusion for a claim for bodily injury. ¶ 12. Specifically, Section II of Ms. Whitbeck's homeowner's insurance policy provides personal liability coverage for compensatory damages for bodily injury for which an insured is legally liable. It provides:

We will pay, up to our limit, compensatory damages for which any insured is legally liable because of bodily injury or property damage caused by an occurrence covered by this policy.

This section of the policy explicitly excludes coverage for compensatory damages for bodily injury to an insured. The policy states:

11. Intra-insured Suits. We will not cover bodily injury to any insured.

The policy defines an insured to include a relative who resides in the policyholder's household. The policy reads:

5. Insured

a. Insured means you and, if residents of your household:

(1) your relatives; and

(2) any other person under the age of 21 in your care or in the care of your resident relatives.

¶ 13. The question of law presented is whether Tina Frost, one of the claimants, is a relative of Doreen Whitbeck, the policyholder, within the definition of an insured in the policy so that the claims of Tina Frost and her daughter Brittany seeking damages for bodily injury are barred from coverage under the policy's resident-relative exclusion. ¶ 14. The court has set forth, in numerous cases, overlapping rules for interpreting an insurance policy. These rules of interpretation are as follows:

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¶ 15. Words and phrases in insurance contracts are subject to the same rules of construction that apply to contracts generally.⁹

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¶ 16. The primary objective in interpreting and construing a contract is to ascertain and carry out the true intent of the parties.¹⁰

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¶ 17. If the language of an insurance policy is unambiguous, a court will not rewrite the policy by construction¹¹ and will interpret the policy according to its plain and ordinary meaning to avoid imposing contract obligations that the parties did not undertake.¹²

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¶ 18. On the other hand, the language of an insurance policy may be ambiguous. Words and phrases in an insurance policy are ambiguous when they are so imprecise and elastic as to lack any certain interpretation¹³ or are susceptible to more than one reasonable construction.¹⁴ Terms of an insurance policy may be inherently ambiguous or may be ambiguous when considered in the context of the insurance policy as a whole.¹⁵ Whether ambiguity exists in an insurance policy is a question of law.¹⁶

[10, 11]

¶ 19. If terms in an insurance policy are ambiguous, they should be construed against the insurance company that drafted the policy. Thus, ambiguous terms are to be construed in favor of coverage,¹⁷ and exclusions are to be narrowly construed against an insurer.¹⁸

[12, 13]

¶ 20. Language in an insurance policy is construed as understood by a reasonable person in the position of an insured rather than as intended by the insurer.¹⁹ The reasonable expectations of coverage of an insured should be furthered by the interpretation given.²⁰ [14]

¶ 21. A construction of an insurance policy that gives reasonable meaning to every provision of the policy is preferable to one leaving part of the language useless or meaningless.²¹

[15]

¶ 22. Furthermore, in construing an insurance policy as it is understood by a reasonable person in the position of the insured, a court may consider the purpose or subject matter of the insurance, the situation of the parties, and the circumstances surrounding the making of the contract.²²

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¶ 23. With these rules in mind, we examine the meaning of the word "relative" in the intra-insured policy exclusion to determine whether Tina Frost is a relative of Ms. Whitbeck so that the Frosts' claims are excluded from coverage.

¶ 24. American Family urges this court to begin and end its inquiry with the rule of construction that when the language of an insurance policy is unambiguous, a court will interpret the policy according to its plain and ordinary meaning to avoid imposing contract obligations that the parties did not undertake. American Family argued in the court of appeals and in its brief in the present court that the word "relative" is unambiguous and that the plain and ordinary meaning of the word is, at minimum, "a person related to another by blood . . . no matter how distant or remote the connection."²³

¶ 25. American Family contends that its position is supported by Wisconsin case law, relying on In re Estate of Haese, 80 Wis. 2d 285, 259 N.W.2d 54 (1977), and Peabody v. American Family...