Hoglund v. Secura Ins., 93-0037-FT

• Decision Date: 13 April 1993
• Docket Number: No. 93-0037-FT,93-0037-FT
• Citation: 500 N.W.2d 354,176 Wis.2d 265
• Parties: Florence M. HOGLUND, Plaintiff-Appellant, v. SECURA INSURANCE, a mutual company, a domestic insurance corporation, Douglas D. Lebal, Defendants, American States Insurance Company, a foreign insurance corporation, Defendant-Respondent. d
• Court: Wisconsin Court of Appeals

Page 354

500 N.W.2d 354

176 Wis.2d 265

Florence M. HOGLUND, Plaintiff-Appellant, v. SECURA INSURANCE, a mutual company, a domestic insurance corporation, Douglas D. Lebal, Defendants,

American States Insurance Company, a foreign insurance

corporation, Defendant-Respondent. ^d

No. 93-0037-FT.

Court of Appeals of Wisconsin.

Submitted on Briefs March 30, 1993.

Opinion Released April 13, 1993.

Opinion Filed April 13, 1993.

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

MYSE, Judge.

Florence Hoglund appeals a summary judgment dismissing her complaint against American States Insurance Company for payment under its underinsured motorists (UIM) policy provisions. She contends the trial court erred by concluding that American States' policy definition of "underinsured motor vehicle" was valid and enforceable and precluded her recovery under the UIM provisions. She argues that the definition, providing coverage only if the tortfeasor's policy limits are less than Hoglund's $25,000 UIM policy limits, (1) renders coverage under the UIM provision illusory because motorists are statutorily required to carry at least $25,000 of liability insurance under sec. 344.33, Stats., and (2) is inconsistent with the insured's reasonable expectation of coverage. We conclude that American States' policy definition of "underinsured motor vehicle" is unambiguous; however, because we conclude that the purchased UIM coverage constitutes an illusory contract, we reverse the judgment.

Hoglund was injured when Douglas Lebal's vehicle collided with her husband's truck, in which she was a passenger. Lebal had a $25,000 automobile liability policy with Secura Insurance. Hoglund's damages exceeded Secura's $25,000 policy limits. The Hoglund vehicle was insured under an American States policy that included $25,000 UIM coverage. An agent of American States twice confirmed to the Hoglunds that the premiums they paid purchased UIM coverage.

Hoglund commenced a personal injury action against Lebal and Secura Insurance. American States was joined because of its provision of UIM coverage to Hoglund and its subrogated rights to payments it made to Hoglund under its medical payment provisions. American States moved the trial court for summary judgment as to the UIM coverage issue, claiming that its policy definition of an underinsured motor vehicle precluded Hoglund's recovery under the UIM provisions. The trial court agreed and granted summary judgment to American States.

Summary judgment is appropriate because the facts are undisputed. Section 802.08(2), Stats. When reviewing a grant of summary judgment, we apply the same methodology as the trial court. Green Spring Farms v. Kersten, 136 Wis.2d 304, 314-15, 401 N.W.2d 816, 820 (1987). Because that methodology is familiar, we need not repeat it here. See id.

Interpretation of an insurance policy is a question of law. Keane v. Auto-Owners Ins. Co., 159 Wis.2d 539, 547, 464 N.W.2d 830, 833 (1991). We may not modify an insurance policy's unambiguous language. Schroeder v. Blue Cross & Blue Shield, 153 Wis.2d 165, 173, 450 N.W.2d 470, 473 (Ct.App.1989). A policy's language is ambiguous when it is susceptible to more than one reasonable interpretation. Id. at 174, 450 N.W.2d at 473. Whether an insurance contract is illusory is a question of law. We review questions of law independently of the trial court's determinations. Ball v. District No. 4 Area Bd., 117 Wis.2d 529, 537, 345 N.W.2d 389, 394 (1984).

The American States policy defines "Underinsured Motor Vehicle" as "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; however its limit for bodily injury liability is less than the limit of liability for this coverage." (Emphasis added Our supreme court held that the only reasonable interpretation of almost identical language is that UIM coverage is denied if the other motorist's liability coverage amount is equal to or more than the insurer's UIM policy limits, and thus is unambiguous as a matter of law. Smith v. Atlantic Mut. Ins. Co., 155 Wis.2d 808, 811, 456 N.W.2d 597, 599 (1990). The definition in Smith was: "[A] land motor vehicle ... 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." Id. (emphasis in original). Because there is no meaningful difference between the language in Smith and American States' language, we are compelled to conclude that this language is unambiguous. Under the plain meaning of the definition, Lebal's vehicle is not underinsured.

Hoglund argues that the policy's definition of underinsured motor vehicle, when read in conjunction with sec. 344.33, Stats., and the policy's definition of uninsured motor vehicle, renders UIM coverage under the policy illusory because there are no circumstances under which Hoglund can recover under the UIM provisions. Thus, Hoglund argues, the definition is inconsistent with the insured's reasonable expectations of UIM coverage and should be construed against the insurer, American States. We agree. American States points to Smith and Krech v. Hanson 164 Wis.2d 170, 175 n. 2, 473 N.W.2d 600, 602-03 n. 2 (Ct.App.1991), contending that Hoglund's arguments were previously rejected. However, the unique circumstances presented in this case were lacking in those cases; therefore, they do not compel the same result here.

In Smith, our supreme court refused to entertain an illusory contract argument, not...