Kuhn v. Allstate Ins. Co., 93-0344

• Decision Date: 28 December 1993
• Docket Number: No. 93-0344,93-0344
• Citation: 510 N.W.2d 826,181 Wis.2d 453
• Parties: Linda A. KUHN, Plaintiff-Respondent, v. ALLSTATE INSURANCE COMPANY, d Defendant-Appellant, Rusk County Department of Social Services, Nominal-Defendant.
• Court: Wisconsin Court of Appeals

Page 826

510 N.W.2d 826

181 Wis.2d 453

Linda A. KUHN, Plaintiff-Respondent, v. ALLSTATE INSURANCE COMPANY, ^d Defendant-Appellant Rusk County Department of Social Services, Nominal-Defendant.

No. 93-0344.

Court of Appeals of Wisconsin.

Submitted on Briefs Sept. 20, 1993.

Opinion Released Dec. 28, 1993.

Opinion Filed Dec. 28, 1993.

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

LaROCQUE, Judge.

Allstate Insurance Company appeals an amended summary judgment allowing its injured insured, Linda Kuhn, to twice stack her automobile policy coverage, once under the underinsured motorist (UIM) coverage and again under the uninsured motorist (UM) coverage. Kuhn's damages arose out of an auto accident with an insured tortfeasor, Catherine Schlewitz, whose insurer paid its liability limits of $25,000 to Kuhn. The circuit court construed Allstate's UM/UIM coverage to provide both the $50,000 UM and the $50,000 UIM benefits for a single accident, and, because the policy covered two autos, applied stacking principles to each benefit separately for a total of $200,000. The court also stacked separate $2,000 medical pay benefits for an additional $4,000 and awarded Kuhn prejudgment interest of 12% from the date of the accident. Allstate moved the circuit court to reconsider. The court denied the motion and amended the judgment granting Kuhn $10,000 in attorney fees.

We conclude that: (1) Allstate's policy does not provide both UM and UIM benefit for a single accident; (2) Allstate's reducing clause is invalid and contrary to public policy because it renders the UM coverage illusory; (3) prejudgment interest from the date of the accident is barred by prior case law; (4) attorney fees pursuant to sec. 806.04(8), Stats., are not available; and (5) Allstate violated the provisions of sec. 809.23(3), Stats., prohibiting the citation of unpublished decisions of this court. We therefore reverse those parts of the amended summary judgment The facts giving rise to this appeal are as follows. The plaintiff, Kuhn, was standing at the rear of her auto parked alongside the highway when an auto driven by Catherine Schlewitz ran into her. As a result of the accident, Kuhn suffered severe injuries, leading to the amputation of her left leg. Her medical bills alone exceeded $100,000. Schlewitz' insurer, General Casualty Insurance Company, did not contest liability and paid Kuhn its liability policy limits of $25,000. ¹ The Kuhns owned two vehicles insured by an Allstate policy at the time of the accident, and paid separate premiums for the respective coverage pertaining to each vehicle.

inconsistent with this opinion and remand for reentry of judgment consistent therewith.

Incorporated into an affidavit in support of summary judgment filed by Kuhn's attorney is a copy of the relevant policy together with an affidavit from an Allstate officer indicating that the Kuhns' coverage included "SS Uninsured Motorists" benefits with limits of $50,000 per person and $100,000 per accident, and also coverage for "SU Underinsured Motorists" with similar limits. The policy's table of contents refers to "Uninsured Motorists Insurance (Coverage SS)." Prior to Kuhn's accident, however, Allstate amended its policy to include within its definition of an uninsured motorist an underinsured motorist. The amendment to the definitions in the policy stated:

5. Part V, Uninsured Motorists Insurance, is amended as follows:

A. The following paragraph is added to the provision entitled "An uninsured auto is....":

An uninsured auto is ...

(5) an underinsured motor vehicle which has bodily injury liability protection in effect and applicable at the time of the accident, but less than the applicable limit of Uninsured Motorist Coverage shown on the declarations page.

Also included in the documents furnished by Allstate to counsel was the "IMPORTANT NOTICE," presumably issued contemporaneously with the amendment to the policy. This notice advises that the policy includes "Coverage SS" for "Uninsured Motorists" including "Underinsured Motorists who are drivers with liability limits less than your Coverage SS limits. This applies only if your SS Coverage limits are greater than the minimum limits required by law in Wisconsin." ²

A copy of a declarations sheet introduced as an exhibit at the summary judgment hearing shows that the Kuhns paid separate $12 premiums for "SS Uninsured Motorists" coverage on each vehicle as well as separate $3 premiums for medical payments coverage on each, but discloses no separate premium for "SU Underinsured Motorists." Allstate, maintaining that Kuhn could stack UM/UIM coverage once but not twice, paid $52,000. ³

Kuhn sued Allstate seeking a total recovery of $204,000 (less the $52,000 paid), representing the $50,000 per person limits on each of the two insured vehicles stacked twice, once under the UM coverage and again under the UIM coverage, and $4,000 for the separate $2,000 medical payment coverage for each vehicle.

The parties cross-moved for summary judgment indicating there were no factual issues for trial. The circuit court granted Kuhn's motion and awarded her $204,000, plus 12% interest accruing from the date of the accident. Allstate moved for reconsideration of that portion of the trial court's decision that awarded both UIM and UM benefits, as well as the court's decision that failed to give effect to the reducing clause. The court denied Allstate's motion in all respects, and, pursuant to Elliott v. Donahue, 169 Wis.2d 310, 485 N.W.2d 403 (1992), awarded Kuhn $10,042.57 in attorney fees. Other relevant facts are set forth later herein.

UNINSURED/UNDERINSURED MOTORIST BENEFITS

Kuhn contends that the Schlewitz vehicle that struck Kuhn was both underinsured and uninsured, entitling her to double benefits. Further, under the stacking principle, Kuhn contends that each of the two coverages must be stacked. We first address the issue of double benefits.

The interpretation of words or clauses in an insurance contract is a question of law this court decides independently of the trial court's decision. Just v. Land Reclamation, Ltd., 155 Wis.2d 737, 744, 157 Wis.2d 507, 456 N.W.2d 570, 572 (1990). This construction is controlled by the same rules of construction as are applied to contracts generally. Kremers-Urban Co. v. American Employers Ins. Co., 119 Wis.2d 722, 735, 351 N.W.2d 156, 163 (1984). "[T]he test is ... what a reasonable person in the position of the insured would have understood the words to mean." Id.

Kuhn bases her claim for double benefits upon Allstate's reference to coverage for "SS Uninsured Motorists" as well as "SU Underinsured Motorists," coupled with the fact that nowhere in the policy, prior to the "IMPORTANT NOTICE," is "SU Underinsured Motorists" coverage further explained.

Contrary to Kuhn's contention, we see no ambiguity sufficient to create double benefits. If a reference in Allstate's records to "SU Underinsured Motorist" coverage without further explanation created an ambiguity, it was effectively resolved by the amendment to the policy.

Kuhn argues that the failure in the notice to separate the various definitions of an uninsured motorist with disjunctives creates multiple benefits. We disagree. The policy plainly means to provide alternate coverage. It would be entirely unreasonable for an insured to read the policy to provide that the other driver's vehicle, covered by $25,000 of liability insurance, is somehow both uninsured and underinsured. We conclude that a reasonable person in the position of the insured would read the policy as a statement of alternatives. Kuhn is therefore covered only once under the UM/UIM provisions of the policy. Allstate does not contest Kuhn's right to stack the coverages for the two vehicles. ⁴

THE REDUCING CLAUSE

We next turn to the question of the efficacy of Allstate's reducing clause, which provides:

If the loss involves the use of an underinsured auto, the limit of this coverage will be reduced by all amounts paid by or on behalf of the owner or operator of the underinsured auto, including partial payments made by an insolvent insurer.

Allstate contends that the $25,000 liability coverage from the tortfeasor is therefore subtracted from Allstate's $50,000 UM coverage as to each vehicle, and the resulting $25,000 is then stacked. We reject its contention and conclude that the reducing clause renders the purported $50,000 coverage illusory and contrary to public policy. ⁵

This court recently declared an underinsurance coverage reducing clause illusory in Hoglund v. Secura Ins., 176 Wis.2d 265, 500 N.W.2d 354 (Ct.App.1993). In that case, the injured underinsured plaintiff had $25,000 UIM coverage and the tortfeasor carried $25,000 liability coverage. Despite the unambiguous definition of an underinsured motorist as one whose "limit for bodily injury liability is less than the limit of liability for this coverage," id. at 269, 500 N.W.2d at 355-56, we concluded that: "Because [the insured] has paid a premium for UIM coverage under which no benefits will ever be paid, the coverage is illusory and against public policy." Id. at 271, 500 N.W.2d at 357.

We recognize that the illusion created in Hoglund is different from the illusion created by Allstate. The difference, however, is only a matter of degree. In the former, the insured injured by an underinsured motorist will receive no UIM payments. In the latter, Allstate's insured will receive some but never all of the $50,000 coverage. An illusion is a deception, intentional or unintentional, the attribution of more or less to something than is actually the case. Webster's Third New Int'l Dictionary 1127 (Unabr. 1976).

The result we reach here finds some support in language used by our supreme court in Wood. In Wood, the insured had UIM coverage of $100,000 on each of two vehicles and the tortfeasor had liability coverage of $25,000. Although Wood rejected the reducing clause as ambiguous, a...