Gulmire v. St. Paul Fire & Marine Ins. Co.

• Decision Date: 23 December 2003
• Docket Number: No. 03-1199.,03-1199.
• Parties: Mary L. GULMIRE, Plaintiff-Appellant, CASUALTY INSURANCE COMPANY, Intervening-Plaintiff-Respondent, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, State Farm Mutual Automobile Insurance Company, State Farm Fire and Casualty Company, and Floyd E. Klister, Defendants-Respondents.
• Court: Wisconsin Court of Appeals

269 Wis.2d 501

2004 WI App 18

674 N.W.2d 629

Mary L. GULMIRE, Plaintiff-Appellant, CASUALTY INSURANCE COMPANY, Intervening-Plaintiff-Respondent, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY,¹ State Farm Mutual Automobile Insurance Company, State Farm Fire and Casualty Company, and Floyd E. Klister, Defendants-Respondents.

No. 03-1199.

Court of Appeals of Wisconsin.

Submitted on briefs October 13, 2003.

Decided December 23, 2003.

On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Avram D. Berk and Jolene D. Schneider of Peterson, Berk & Cross, S.C. of Appleton.

On behalf of the defendants-respondents, State Farm Mutual Automobile Insurance Company and State Farm Fire and Casualty Company, the cause was submitted on the brief of Jonathan M. Menn of Menn, Teetaert & Beisenstein, Ltd. of Appleton.

On behalf of the defendant-respondent, St. Paul Fire & Marine Insurance Company, the cause was submitted on the brief of Stephen W. Pasholk and Ellen L. Wiesner of Hogan, Ritter, Minix & Pasholk of Waukesha.

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

¶ 1. CANE, C.J.

Mary Gulmire appeals a summary judgment granted in favor of State Farm Fire and Marine Insurance Company and State Farm Fire and Casualty Company (collectively "State Farm"), and a declaratory judgment granted to St. Paul Fire and Marine Insurance Company. Gulmire claims that various exclusions in State Farm's personal automobile insurance policy and in St. Paul's Commercial automobile insurance policy either do not apply or, alternatively, if they do apply there is a violation of the omnibus statute, WIS. STAT. § 632.32.²

¶ 2. As to State Farm, we hold that the "non-owned vehicle" exclusion is not prohibited by the omnibus statute and precludes coverage. As to St. Paul, we do not address the issue of whether the exclusions conflict with the omnibus statute because we hold that none of them bars coverage due to the "separation of protected persons" provision. Accordingly, we affirm the summary judgment and reverse the declaratory judgment.

BACKGROUND

¶ 3. On August 16, 1999, Gulmire was injured when she was hit by a vehicle operated by Floyd Klister on the premises of their employer, Fox Valley Auto Auction. At the time of the incident, both Gulmire and Klister were acting in the course of their employment. The vehicle Klister operated was a Dodge Colt titled in the name of Fox Valley Wholesale Company. Pursuant to Wis. STAT. § 102.03(2), Gulmire commenced an action against Klister, State Farm (Klister's personal automobile insurer), and St. Paul (Fox Valley Auto Auction's commercial automobile liability insurer) for Klister's negligent operation of a motor vehicle.³

¶ 4. State Farm moved for summary judgment. Its automobile policy provided coverage for damages Klister was legally obligated to pay because of bodily injury to others caused by accident and resulting from the ownership, maintenance or use of Klister's personal automobile, a 1996 Oldsmobile Cutlass. However, State Farm claimed a "non-owned vehicle" exclusion barred coverage. The exclusion stated, "[t]here is no coverage for non-owned cars . . . while . . . being . . . used by any person while that persons is working in any car business." Gulmire argued the exclusion violated the omnibus statute, specifically WIS. STAT. § 632.32(6)(b)2.a.⁴

¶ 5. The trial court determined the exclusion barred coverage and concluded this did not violate the omnibus statute. Because the automobile insurance did not afford coverage, the court also concluded State Farm's umbrella policy was inapplicable. ¶ 6. St. Paul asked for a declaratory judgment that it was not obligated to defend or indemnify Klister for the accident. St. Paul's commercial automobile liability policy provided coverage to "protected persons" for damages they are legally obligated to pay for bodily injury that results from the use of a covered automobile. It is undisputed that Klister was a protected person and that the vehicle involved in the accident, the Dodge Colt, was a covered automobile. However, St. Paul raised three exclusions: the "fellow employee" exclusion, the "employer's liability" exclusion, and the "worker's compensation" exclusion.

¶ 7. Gulmire claimed that the exclusions did not apply. She contended the worker's compensation exclusion was inapplicable because she was not seeking to recoup worker's compensation costs, but rather was suing Klister for the negligent operation of a motor vehicle. She argued the fellow employee and the employer's liability exclusions should not apply because of the "separation of protected persons" provision. Gulmire claimed the provision functioned to separate Klister from the other insureds and to treat him as if he was the only named insured. Therefore, she concluded that fellow employee and the employer's liability exclusions did not apply because Klister did not employ Gulmire. Alternatively, Gulmire maintained that if the exclusions nevertheless barred coverage, the omnibus statute was violated.

¶ 8. The trial court concluded the fellow employee exclusion barred coverage. It acknowledged the separation of protected persons provision required Klister to be treated as if he was the only named insured. However, it concluded the fellow employee exclusion nevertheless applied and that this was lawful. Gulmire appeals.

DISCUSSION

[1, 2]

¶ 9. When reviewing a summary judgment, we perform the same function as the trial court, making our review de novo. Green Spring Farms v. Kersten, 136 Wis. 2d 304, 315, 401 N.W.2d 816 (1987). Summary judgment must be entered "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." WIS. STAT. § 802.08(2). The summary judgment requires an interpretation of the omnibus statute and State Farm's insurance policies. These present questions of law we also review do novo. See Hull v. State Farm Mut. Auto. Ins. Co., 222 Wis. 2d 627, 636, 586 N.W.2d 863 (1998)

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[3, 4]

¶ 10. Finally, the grant or denial of a declaratory judgment is addressed to the trial court's discretion. Jones v. Secura Ins. Co., 2002 WI 11, ¶ 19, 249 Wis. 2d 623, 638 N.W.2d 575. However, when the exercise of such discretion turns upon a question of law, we review the question de novo, benefiting from the trial court's analysis. Id. Here, the issue turns upon the construction of St. Paul's insurance contract, an exercise that presents a question of law we independently review. See Folkman v. Quamme, 2003 WI 116, ¶ 12, 264 Wis. 2d 617, 665 N.W.2d 857

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I. STATE FARM AUTOMOBILE LIABILITY INSURANCE POLICY

[5]

¶ 11. Klister's State Farm automobile liability insurance policy contains a "non-owned vehicle" exclusion. It states, "[t]here is no coverage for non-owned cars . . . while . . . being . . . used by any person while that person is working in any car business." Gulmire has not raised any issue regarding the applicability of the exclusion by its plain terms. Instead, she narrowly argues the exclusion contravenes the omnibus statute, WIS. STAT. § 632.32(6)(b)2.a.

[6, 7]

¶ 12. Generally speaking, the omnibus statute is remedial in nature and is to be construed broadly. Home Ins. Co. v. Phillips, 175 Wis. 2d 104, 111, 499 N.W.2d 193 (Ct. App. 1993). Its purpose is to afford compensation to victims of automobile accidents. Id. However, the omnibus statute specifically authorizes insurers to incorporate exclusions that limit coverage connected with automobile accidents. See Wis. STAT. § 632.32(5)(e).⁵ To determine if an exclusion violates the omnibus statute, we apply a two-part test. Mau v. North Dakota Ins. Reserve Fund, 2001 WI 134, ¶ 32, 248 Wis. 2d 1031, 637 N.W.2d 45. First, we look to § 632.32(6) to decide whether the exclusion falls within one of the enumerated prohibitions. Id. If it does, the matter is resolved. Id. If not, we then consider whether any other applicable law proscribes the exclusion. Id.

¶ 13. Turning to the first part of the test, Gulmire argues the exclusion is prohibited by WIS. STAT. § 632.32(6)(b)2.a. That section states: "No policy may exclude from the coverage afforded or benefits provided: ... Any person who is a named insured or passenger in or on the insured vehicle, with respect to bodily injury, sickness or disease, including death resulting therefrom, to that person." The plain language of this prohibition reveals that it invalidates an exclusion only when all of the following circumstances are present: (1) the persons excluded must be a named insured or a passenger; (2) the named insured or passenger must have been in or on the insured vehicle; and (3) "that person," either the named insured or passenger, must have sustained injuries while being in or on the insured vehicle. See id.

¶ 14. The non-owned vehicle exclusion is not prohibited by WIS. STAT. § 632.32(6)(b)2.a. Again, the exclusion states, "[t]here is no coverage for non-owned cars . . . while . . . being . . . used by any person while that person is working in any car business." It is evident that the exclusion only seeks to bar coverage for non-owned vehicles under given circumstances. However, § 632.32(6)(b)2.a only prohibits excluding coverage for certain individuals relating to the insured vehicle. Thus, considering that the exclusion bars coverage for a non-owned vehicle, it is not prohibited by § 632.32(6)(b)2.a.

¶ 15. Gulmire argues WIS. STAT. § 632.32(6)(b)2.a. does more. She argues that phrase "coverage afforded" implies a general right of the named insured to indemnity. In support of her position, she cites Davis v. Wilson, 71 Wis. 2d 630, 641, 239 N.W.2d 38 (1976). We are not persuaded. Davison held that "coverage afforded" did not imply a right to indemnity because interpreting the statute in that manner would lead to an absurd result. Id....