Janssen v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 12 February 2002
• Docket Number: No. 01-1302.,01-1302.
• Parties: Tricia JANSSEN, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Respondent.
• Court: Wisconsin Court of Appeals

251 Wis.2d 660

2002 WI App 72

643 N.W.2d 857

Tricia JANSSEN, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Respondent.

No. 01-1302.

Court of Appeals of Wisconsin.

Submitted on briefs December 10, 2001.

Decided February 12, 2002.

On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Stephen C. Dozer of McCarty, Curry, Wydeven, Peeters & Haak, LLP of Kaukauna.

On behalf of the defendant-respondent, the cause was submitted on the brief of Patrick J. Coffey of Menn, Teetaert & Beisenstein, Ltd. of Appleton.

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

¶ 1. CANE, C.J.

Tricia Janssen appeals from a summary judgment in favor of State Farm Mutual Automobile Insurance Company. Janssen argues that the circuit court erroneously interpreted State Farm's uninsured motorist policy to permit State Farm to reduce its uninsured motorist liability by the amount of uninsured motorist payments Janssen received from another carrier. We conclude that the policy's reducing clause applies to payments made by and on behalf of tortfeasors, and does not apply to payments made by other uninsured motorist carriers. Therefore, State Farm should not have been allowed to reduce its liability. We reverse the summary judgment and remand for further proceedings.

STATEMENT OF FACTS

¶ 2. For purposes of the summary judgment motion, the facts were undisputed. Janssen was a passenger in one of two automobiles that were involved in an accident. The drivers of both automobiles were uninsured. Janssen filed a claim with her insurance company, Leader National Insurance Company, for the injuries she sustained in the accident. She settled with Leader for the $25,000 limit of her uninsured motorist policy.

¶ 3. State Farm provided uninsured motorist coverage to Janssen's parents and to members of their household, including Janssen. Thus, Janssen also filed a claim for uninsured motorist benefits under her parents' State Farm policy. State Farm denied the claim, asserting that Janssen was not entitled to the policy's $25,000 uninsured motorist coverage because State Farm's liability was reduced by the $25,000 in uninsured motorist benefits that Janssen received from Leader. Specifically, State Farm asserted that Leader was an organization "legally responsible" for Janssen's bodily injury and, therefore, State Farm's reducing clause applied.

¶ 4. Janssen sued State Farm, which moved for summary judgment on the grounds that its reducing clause barred additional recovery. In response, Janssen argued that the reducing clause language stating that amounts paid to the insured "by or on behalf of any or organization that may be legally responsible for the " referred to tortfeasors and their insurers, and not to payments from other uninsured motorist carriers.¹

¶ 5. The circuit court observed that State Farm's policy language was consistent with WIS. STAT. § 632.32(5)(i)1, which expressly permits insurers to reduce uninsured or underinsured motorist coverage for bodily injury by "[a]mounts paid by or on behalf of any person or organization that may be legally responsible for the bodily injury or death for which the payment is made."²Id. The court concluded that this statutory language suggests that the reduction is not limited to payments by and on behalf of the tortfeasor. The court concluded that State Farm's liability was reduced by the uninsured motorist benefits Janssen received from Leader and dismissed Janssen's complaint. After the court denied Janssen's motion for reconsideration, this appeal followed.

STANDARD OF REVIEW

[1]

¶ 6. This appeal involves interpretations of an insurance policy and WIS. STAT. § 632.32(5)(i)1, both of which present issues of law that we review de novo. Smith v. Atl. Mut. Ins. Co., 155 Wis. 2d 808, 810, 456 N.W.2d 597 (1990) (interpretation of an insurance policy); State v. Dean, 163 Wis. 2d 503, 510, 471 N.W.2d 310 (Ct. App. 1991) (interpretation of a statute).

DISCUSSION

¶ 7. At issue is the interpretation of the reducing clause in the uninsured motorist coverage section of State Farm's policy. State Farm added this reducing clause to its policy in 1995 after the enactment of legislation permitting such clauses. See 1995 Wis. Act 21, § 4, creating WIS. STAT. § 632.32(5)(i). The clause provides:

The most we will pay is the lesser of:

a. the limits of liability of this coverage reduced by any of the following that apply:

(1) the amount paid to the by or on behalf of any or organization that may be legally responsible for the ; or

(2) the amount paid or payable under any worker's compensation or disability benefits law; or b. the amount of damages sustained, but not recovered.

¶ 8. This reducing clause language is consistent with WIS. STAT. § 632.32(5)(i), which states:

(i) A policy may provide that the limits under the policy for uninsured or underinsured motorist coverage for bodily injury or death resulting from any one accident shall be reduced by any of the following that apply:

1. Amounts paid by or on behalf of any person or organization that may be legally responsible for the bodily injury or death for which the payment is made.

2. Amounts paid or payable under any worker's compensation law.

3. Amounts paid or payable under any disability benefits laws.

¶ 9. Prior to the enactment of WIS. STAT. § 632.32(5)(i), insureds successfully challenged the validity of reducing clauses in uninsured and underinsured motorist provisions on numerous grounds. See, e.g., Hoglund v. Secura Ins., 176 Wis. 2d 265, 267, 500 N.W.2d 354 (Ct. App. 1993)

(underinsured motorist provision invalid because it rendered coverage illusory). Following the statute's enactment, we concluded that a policy containing an unambiguous reducing provision consistent with § 632.32(5)(i) is valid and enforceable, and no longer may be deemed illusory. Sukala v. Heritage Mut. Ins. Co., 2000 WI App 266, ¶¶ 16-19, 240 Wis. 2d 65, 622 N.W.2d 457. Our supreme court also rejected a substantive due process challenge to § 632.32(5)(i)1. Dowhower v. West Bend Mut. Ins. Co., 2000 WI 73, ¶ 2, 236 Wis. 2d 113, 613 N.W.2d 557.

¶ 10. Consistent with Sukala and Dowhower, Janssen does not contest the validity of State Farm's reducing clause. Rather, she argues that the policy language, which is consistent with Wis. STAT. § 632.32(5)(i)1, refers to payments made by tortfeasors and their insurers, not to payments made pursuant to the injured person's own uninsured motorist coverage. State Farm disagrees, contending that the statute "allows for a reduction of payments when the claimant receives money from any person or organization."

¶ 11. We conclude that the unambiguous language of WIS. STAT. § 632.32(5)(i)1 and the State Farm policy refers to payments made by and on behalf of tortfeasors, and not to payments made pursuant to the insured's own uninsured motorist coverage.³ Our conclusion is consistent with Wisconsin Supreme Court precedent interpreting similar language in a health insurance policy's subrogation clause. See Employers Health Ins. v. Gen. Cas. Co., 161 Wis. 2d 937, 946-47, 469 N.W.2d 172 (1991)

.

I. Interpretation of WIS. STAT. § 632.32(5)(i)1

[2-6]

¶ 12. The purpose of statutory interpretation is to discern the intent of the legislature. State v. Setagord, 211 Wis. 2d 397, 406, 565 N.W.2d 506 (1997). To do so, we first consider the language of the statute. Id. If it clearly and unambiguously sets forth the legislative intent, we apply that language to the case at hand and do not look beyond the statutory language to ascertain its meaning. Id. A statute is ambiguous if it is capable of being understood by a reasonably well-informed person in either of two senses. Id. If the statutory language is ambiguous and does not clearly set forth the legislative intent, the court will resort to judicial construction. Landis v. Physician Ins. Co., 2001 WI 86, ¶ 15, 245 Wis. 2d 1, 628 N.W.2d 893.

[7, 8]

¶ 13. Although it is true that statutory interpretation begins with the language of the statute, it is also well established that courts must not look at a single, isolated sentence or portion of a sentence, but at the role of the relevant language in the entire statute. Id. at ¶ 16. Moreover, in interpreting a statute, courts must attempt to give effect to every word so as not to render any portion superfluous. Id.

[9]

¶ 14. Here, at issue is which parties the statute includes when it refers to those persons and organizations "legally responsible for the bodily injury or death for which the payment is made." See WIS. STAT. § 632.32(5)(i)1. The parties agree that at a minimum, this phrase refers to tortfeasors and their insurers. State Farm contends, however, that the phrase also includes payments from other uninsured motorist carriers, which are payments made pursuant to contract law. See Berna-Mork v. Jones, 174 Wis. 2d 645, 652, 498 N.W.2d 221 (1993)

(A claim for uninsured motorist benefits is a claim based on contract; an uninsured motorist insurer is not a wrongdoer.). Indeed, State Farm even goes so far as to argue at one point in its brief that the "language allows for a reduction of payments when the claimant receives money from any person or organization."

[10]

¶ 15. We conclude that WIS. STAT. § 632.32(5)(i)1 unambiguously refers to payments made by and on behalf of tortfeasors, and not to payments made pursuant to the insured's own uninsured motorist coverage. Our conclusion is supported by the definition of the word "responsible" and the principle that in interpreting a statute, courts must attempt to give effect to every word, so as not to render any portion of the statute superfluous. See Landis, 2001 WI 86

at ¶ 16.

[11-13]

¶ 16. We begin with our interpretation of the word "responsible," found in WIS. STAT. § 632.32(5)(i)1, which is not defined in the statute. When construing statutes we are to give them their common-sense meaning to avoid unreasonable and absurd...