Kozlik v. Gulf Ins. Co.

• Decision Date: 25 September 2003
• Docket Number: No. 03-0175.,03-0175.
• Citation: 2003 WI App 251,673 N.W.2d 343,268 Wis.2d 491
• Parties: Charles F. KOZLIK, Estate of Jacquelyn Kozlik, and Jaden Kozlik, Plaintiffs, ESTATE OF Phillip R. LEVERANCE, by his personal representative, Diane L. Weis, Involuntary-Plaintiffs-Respondents, v. GULF INSURANCE COMPANY, Defendant-Appellant.
• Court: Wisconsin Court of Appeals

268 Wis.2d 491

2003 WI App 251

673 N.W.2d 343

Charles F. KOZLIK, Estate of Jacquelyn Kozlik, and Jaden Kozlik, Plaintiffs, ESTATE OF Phillip R. LEVERANCE, by his personal representative, Diane L. Weis, Involuntary-Plaintiffs-Respondents, v. GULF INSURANCE COMPANY, Defendant-Appellant.

No. 03-0175.

Court of Appeals of Wisconsin.

Submitted on briefs September 25, 2003.

November 19, 2003.

On behalf of the defendant-appellant, the cause was submitted on the briefs of Nathan J. Bayer and Timothy F. Mentkowski of Crivello, Carlson & Mentkowski, S.C. of Milwaukee.

On behalf of the involuntary plaintiff-respondent, the cause was submitted on the brief of James J. Gende II and Charles David Schmidt of Cannon & Dunphy, S.C. of Brookfield.

Before Brown, Nettesheim and Snyder, JJ. para; 1. BROWN, J.

¶1. Phillip R. Leverance was a repeat client of Enterprise Rent-a-Car who always signed up for personal accident insurance (PAI), which included benefits for accidental death. This insurance was actually handled by Gulf Insurance Company. Leverance was killed in an auto accident while driving an Enterprise rental car. He was drunk at the time. Gulf contended before the trial court and contends here that it should not have to pay the Estate of Phillip R. Leverance because of an exclusion in its policy stating that it will not pay when the renter was driving while intoxicated. But the trial court held, and we agree, that because Leverance did not, with regard to the rental in question, receive a copy of the policy or a summary outlining the provisions and limitations of the policy, Gulf may not assert the exclusion. We also agree with the trial court that the Estate was entitled to prejudgment interest on the strength of its offer to settle. We affirm.

¶ 2. The following facts are relevant to this appeal. On November 1, 1999, Gulf issued a PAI policy to Enterprise. Under this policy, Gulf agreed to provide accidental death insurance to Enterprise's renters. Pursuant to the PAI policy's "Benefits Schedule," Gulf provided Enterprise with the option of offering two levels of accidental death coverage to its insured renters, either $50,000 or $100,000. When a renter paid Enterprise the premium for the accidental death coverage, he or she was insured under the PAI policy only for the duration of the rental agreement under which he or she purchased that coverage. The PAI policy expressly required Enterprise to provide each renter with written notice of the terms and conditions of the PAI coverage, including the exclusions, at the commencement of each and every rental agreement:

There shall be delivered to each Insured Renter a statement summarizing the insurance protection to which he [or she] is entitled, to whom payable, and such limitations and requirements as may pertain to the insurance afforded hereunder.

Gulf's assistant vice president of claims summarized the reasoning behind this requirement: "[T]he consumer needs to be aware of what they pay for, the coverage they have elected to purchase." To fulfill the policy's notice requirement, Enterprise required its employees to provide a "ticket jacket" to each renter at the commencement of each and every rental agreement. Among other things, the ticket jacket summarizes the terms and conditions of the PAI coverage, including the exclusion for an accident that occurs while the renter is under the influence of alcohol. Gulf's assistant vice president of claims also explained that the company requires the summary to be delivered "[s]o that the customer understands that there are exceptions. They understand the benefits and the exclusions of the Personal Accident Insurance."

¶ 3. From December 18, 1999, until his death on December 16, 2000, Leverance rented cars from Enterprise on nine different occasions. These rentals were documented by nine separate rental agreements. Each rental agreement pertained to different cars and had a different contract number and a different rental period. All of Leverance's rental agreements included PAI coverage.

¶ 4. On November 30, 2000, Leverance went to an Enterprise office to rent a car. Enterprise did not provide Leverance with a copy of the rental agreement or the accompanying ticket jacket on that date. Enterprise did not prepare the rental agreement until after the office had closed for the day, which was approximately an hour and a half after Leverance left the office. Leverance did not sign the agreement. Instead, the Enterprise branch manager simply wrote "SOF"—an abbreviation for "signature on file"—on each of the lines where Leverance's signature or initials was required. According to the agreement, Leverance had paid $3 per day for $100,000 in PAI coverage.

¶ 5. On December 16, 2000, Leverance and his passenger, Jacquelyn Kozlik, were killed in an accident involving Leverance's Enterprise rental car. Leverance was under the influence of alcohol at the time of his death. In 2001, Leverance's Estate sued Gulf, seeking to recover the $100,000 PAI death benefit from Leverance's November 30 rental agreement. Gulf had denied coverage based on the "alcohol exclusion," which denied benefits for any accident that occurred while the insured was under the influence of alcohol or other intoxicants.

¶ 6. On March 15, 2002, the Estate served on Gulf an offer to settle its claim. In response, Gulf filed a motion in limine to preclude Kozlik's family members from testifying at trial and a motion to remove the Kozliks from the caption in this case. As Gulf pointed out, the only claims by the Kozliks were against Enterprise, and pursuant to both the court's order dismissing Enterprise on December 21, 2001, and the court's order approving the minor settlement of Jaden Kozlik on February 20, 2002, neither the Kozliks nor Enterprise remained in the case. The trial court granted both of Gulf's motions. Gulf rejected the Estate's offer and the claim proceeded to trial.

¶ 7. Following a bench trial, the court determined that Gulf could not rely upon the exclusion to deny coverage and awarded to the Estate the amount of the PAI death benefit. The court reasoned that Enterprise had breached its contractual duty to deliver to Leverance a summary of the terms and conditions of the November 30, 2000 rental agreement and, as a result, Gulf was not entitled to assert the alcohol exclusion. In addition, the court awarded to the Estate prejudgment interest pursuant to WIS. STAT. § 807.01 (2001-02).¹ Gulf appeals.

¶ 8. We begin with the threshold issue of whether the Estate is entitled to the $100,000 PAI death benefit pursuant to Leverance's November 30, 2000 rental agreement. It is well established that a claim for benefits under an insurance policy gives rise to a shifting burden of proof. The claimant bears the initial burden to prove that his or her loss falls within the policy's broad grant of coverage. Glassner v. Detroit Fire & Marine Ins. Co., 23 Wis. 2d 532, 536, 127 N.W.2d 761 (1964). If the claimant meets this burden, the burden shifts to the insurer to prove that an exclusion precludes coverage for the loss. Id. Applying this standard to the instant case, it is undisputed that the Estate met its burden to prove that Leverance's death fell within the broad grant of the policy's PAI coverage. Hence, the question narrows to whether Gulf has proven that the alcohol exclusion precludes coverage.

¶ 9. The Estate argues that despite the policy's clear exclusion for alcohol-related accidents, Gulf failed to satisfy its burden because Enterprise did not put Leverance on notice of the exclusion by providing him with a summary of the policy's coverage and limitations. Gulf responds that the trial court erred in finding that Leverance did not receive notice of the exclusions in the PAI coverage pursuant to his November 30, 2000 rental agreement. In the alternative, Gulf argues that even if Leverance did not receive a copy of the policy or the summary of its terms and limitations, it is nevertheless entitled to rely on the alcohol exclusion.

¶ 10. We first address whether Leverance received notice of the alcohol exclusion. The issue of whether an insured has received notice of exclusions contained in his or her insurance coverage is an issue of fact. We will not overturn a trial court's findings of fact unless clearly erroneous. WIS. STAT. § 805.17(2). ¶ 11. At the conclusion of the trial in this case, the trial court found, among other things:

4. That Phillip Leverance was in Enterprise's office on November 30, 2000, when the Rental Agreement at issue was printed. However, Enterprise failed to deliver said agreement, along with a summary of the limitations of Gulf's Personal Accident Insurance, to Leverance on that date or any date thereafter.

5. That it was clear that Phillip Leverance never received a summary of the limitations of Gulf's Personal Accident Insurance policy for the November 30, 2000 Rental Agreement as required by the contract of insurance between Enterprise and Gulf.

....

8. That Gulf's actual policy of Personal Accident Insurance was never delivered to Phillip Leverance.

These findings are supported by overwhelming evidence in the trial court record. Enterprise's loss control manager and branch manager both testified that on November 30, 2000, Leverance went to an Enterprise office and rented a car. Enterprise's loss control manager further testified that there was a new rental contract opened on November 30 to document Leverance's rental. The loss control and branch managers additionally testified that despite the need to have a renter sign his or her rental agreement to verify that the renter has notice of the terms and conditions of the contract and applicable insurance, Leverance was not asked to, nor did he, sign the November 30, 2000 rental agreement. Indeed, both witnesses confirmed that Enterprise did not prepare the November 30, 2000 rental agreement until approximately an hour and a half after Leverance had left the...