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

Decision Date17 August 1999
Docket NumberNo. 98-0267.,98-0267.
Citation601 N.W.2d 312,230 Wis.2d 56
PartiesLawrence D. LEDMAN and Barbara Ledman, Plaintiffs-Respondents, v. STATE FARM MUTUAL AUTOMOBILE INS. CO., Defendant-Appellant.
CourtWisconsin Court of Appeals

On behalf of the defendant-appellant, the cause was submitted on the briefs of Thomas E. Goss, Jr. of Mueller, Goss & Possi, S.C. of Milwaukee.

On behalf of the plaintiffs-respondents, the cause was submitted on the brief of Timothy S. Trecek of Habush, Habush, Davis & Rottier, S.C. of Milwaukee.

Before Wedemeyer, P.J., Schudson and Curley, JJ.


State Farm Mutual Automobile Ins. Co. appeals from an order granting a declaratory judgment to Lawrence D. Ledman and his wife, Barbara Ledman. The judgment declared that a policy of insurance issued to the Ledmans provided uninsured motorist coverage to them for their wrongful death claim arising from the death of their adult emancipated daughter, Catherine Ledman. It further granted them actual attorney's fees incurred in pursuing their claim for declaratory relief.

State Farm claims that the trial court erred in construing the provisions of the policy in the Ledmans' favor and in awarding them actual attorney's fees. Because the trial court's interpretation of the uninsured motor vehicle provisions would lead to an absurd result, we reverse.


On March 10, 1996, Catherine, the thirty-year-old daughter of the Ledmans, was driving an automobile, owned by her fiancé, which was struck by another vehicle operated by an uninsured motorist. Catherine died as a result of the injuries sustained in the accident. At the time of the accident, Catherine, who resided in Irma, Wisconsin, had not lived with her parents for over a year and a half.

The Ledmans, who live in Brownsville, Wisconsin, owned a 1994 Ford van which was insured by State Farm. This vehicle was not involved in the accident. The policy contained uninsured motor vehicle provisions, under which the Ledmans made a claim for the death of Catherine. When State Farm denied coverage on the uninsured motorist claim, the Ledmans filed a declaratory judgment action. After State Farm answered the complaint denying liability, the Ledmans filed a motion for judgment.

The Ledmans argued that the disputed provisions of the policy clearly provide that State Farm "will pay damages[,] for `bodily injury' to a `person'[,] that an `insured' is legally entitled to collect from the owner or driver of a[n] uninsured motor vehicle." In reply, State Farm argued that the applicable policy language required that bodily injury must be incurred by an insured before there is coverage. In an oral decision, the trial court ruled that the relevant policy language was unambiguous and the Ledmans were insureds legally entitled to collect from an owner or driver of an uninsured motor vehicle. The court also ruled that they were entitled to recover actual attorney's fees under § 806.04(8), STATS.2 State Farm now appeals.

A. Coverage Determination.


The interpretation of an insurance contract and the conclusion as to whether coverage exists under a given contract are questions of law which we review independently. See Tara N. v. Economy Fire & Cas. Ins. Co., 197 Wis. 2d 77, 84, 540 N.W.2d 26, 29 (Ct. App. 1995). We interpret an insurance contract "to mean what a reasonable person in the position of the insured would have understood the words of the contract to mean." Id. at 90-91, 540 N.W.2d at 32. In the process, we utilize the same rules of construction that we apply to other contracts. See Allstate Ins. Co. v. Gifford, 178 Wis. 2d 341, 346, 504 N.W.2d 370, 372 (Ct. App. 1993). "The policy language, as the agreed-upon articulation of the bargain reached between the parties, is dispositive to the extent it is plain and unambiguous." Id. If the terms of an insurance contract "`are plain on their face, the policy must not be rewritten by construction.'" Id. (quoted source omitted).

[5, 6]

An insurance contract "is to be construed so as to give effect to the intentions of the [contracting] parties." Kennedy v. Washington Nat'l Ins. Co., 136 Wis. 2d 425, 428, 401 N.W.2d 842, 844 (Ct. App. 1987). The policy "must be considered as a whole to give reasonable meaning to every provision." Berg v. Schultz, 190 Wis. 2d 170, 175, 526 N.W.2d 781, 782 (Ct. App. 1994). "A construction of an insurance policy which entirely neutralizes one provision should not be adopted if the contract is susceptible of another construction which gives effect to all of its provisions and is consistent with the general intent." Inter-Insurance Exch. v. Westchester Fire Ins. Co., 25 Wis. 2d 100, 106, 130 N.W.2d 185, 188 (1964).


When a policy is clear and unambiguous on its face, the terms of that policy "should not be rewritten by construction to bind an insurer to a risk . . . it [never] contemplate[d] or [was willing] to cover, and for which it was never paid." Limpert v. Smith, 56 Wis. 2d 632, 640, 203 N.W.2d 29, 33-34 (1973). "[A] clear contractual provision must be construed as it stands." American States Ins. Co. v. Skrobis Painting and Decorating, Inc., 182 Wis. 2d 445, 450-51, 513 N.W.2d 695, 697 (Ct. App. 1994). "While . . . we must construe . . . exceptions that tend to limit liability . . . strictly against the insurer, . . . strict construction does not permit strained construction." Bulen v. West Bend Mut. Ins. Co., 125 Wis. 2d 259, 264, 371 N.W.2d 392, 394 (Ct. App. 1985). "Insurance policies should be given a reasonable interpretation and not one that leads to absurd results, and construction should not bind an insurer to a risk it did not contemplate." Thompson v. Threshermen's Mut. Ins. Co., 172 Wis. 2d 275, 282, 493 N.W.2d 734, 737 (Ct. App. 1992) (citations omitted).

State Farm claims that the trial court erred as a matter of law in three respects: (1) it did not apply the entire definition of the defined term "uninsured motor vehicle"; (2) it did not construe the policy as a whole; and (3) it interpreted the uninsured motor vehicle provisions in such a way as to lead to an absurd result.

In response, the Ledmans claim the language relating to uninsured motorist coverage clearly provides that State Farm is obligated to pay damages, for bodily injury, that an "insured" is legally entitled to collect from an owner or driver of an uninsured motor vehicle. They argue that because of § 895.04, STATS., Wisconsin's wrongful death statute, as parents of Catherine, they are permitted to recover damages for the loss of society and companionship of their deceased daughter plus medical expenses, funeral expenses and related charges incurred as a result of her death. They maintain that their daughter's death satisfied the definition of "bodily injury" set forth in the policy, which reads: "Bodily injury-means bodily injury to a person . . . or death which results from it." The policy defines "person" as "a human being." They then reason that because "bodily injury" is not limited to injury to or death of an "insured," but is more expansive and includes, as in this case, death of a "person," they are entitled to coverage. The Ledmans' logic has appeal, but it also contains some fatal flaws. Thus, we are not convinced.

At the outset of our analysis, it is helpful to note that no one maintains that the provisions of the policy under examination are ambiguous. Additionally, no one claims that the deceased daughter was an "insured" under the Ledmans' policy.

Both parties, in advancing their respective arguments, cite the policy's uninsured motor vehicle payment provision which reads: "We will pay damages for bodily injury an insured is legally entitled to collect from the owner or driver of an uninsured motor vehicle. The bodily injury must be caused by accident arising out of the operation, maintenance or use of an uninsured motor vehicle" (emphasis in original).

The Ledmans claim that because they are the first person named in the declarations and his or her spouse, they are insureds as the term "insured" is used in the policy's uninsured motor vehicle coverage provision. To support their contention, the Ledmans argue that "if the uninsured motor vehicle coverage provision . . . was intended to only pay damages for bodily injury [incurred by] an `insured,' [State Farm] could have clearly set forth such a limitation." The Ledmans, however, ignore the definition of an "uninsured motor vehicle," and cite no authority necessitating that any limitation as suggested by them be contained within the definition of "bodily injury."

Within the provisions of the State Farm policy, the term "uninsured motor vehicle" is defined as follows:

Uninsured Motor Vehicle—means:

1. a land motor vehicle, the ownership, maintenance or use of which is:
a. not insured or bonded for bodily injury liability at the time of the accident; or b. insured or bonded for bodily injury liability at the time of the accident; but
(1) the limits of liability are less than required by the financial responsibility act of the state where your car is mainly garaged; or
(2) the insuring company denies coverage or is or becomes insolvent; or
2. a "hit-and-run" land motor vehicle whose owner or driver remains unknown and which strikes:
a. the insured or
b. the vehicle the insured is occupying and causes bodily injury to the insured.3

(Emphasis in original.) It is a lengthy definition consisting of two main parts describing two types of vehicles which qualify as uninsured vehicles. Each type of vehicle is further described by relative clauses. Notwithstanding the Ledmans' position to the contrary, we conclude that the definition of an "uninsured motor vehicle" is one long sentence consisting of a series of disjunctives and one conjunctive within the relative clauses. Synthesizing the components of the definition pertinent to this case, the sentence reads: Uninsured motor vehicle means a land motor...

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