Link v. General Cas. Co. of Wisconsin

• Decision Date: 03 May 1994
• Docket Number: No. 93-2734,93-2734
• Citation: 518 N.W.2d 261,185 Wis.2d 394
• Parties: Carla LINK, Plaintiff-Appellant, v. GENERAL CASUALTY CO. OF WISCONSIN, Defendant-Respondent.
• Court: Wisconsin Court of Appeals

Page 261

518 N.W.2d 261

185 Wis.2d 394

Carla LINK, Plaintiff-Appellant, v. GENERAL CASUALTY CO. OF WISCONSIN, Defendant-Respondent.

No. 93-2734.

Court of Appeals of Wisconsin.

Submitted on Briefs April 15, 1994.

Opinion Released May 3, 1994.

Opinion Filed May 3, 1994.

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

CANE, Presiding Judge.

Carla Link appeals a summary judgment granted in favor of General Casualty Co. of Wisconsin. Link argues that she is entitled to underinsured motorist (UIM) coverage for the negligence of the driver of the other car involved in the accident, and the trial court erred by concluding that the definition of "underinsured motor vehicle" precludes coverage. Because the language of the contract is unambiguous and the insurance contract is not illusory, we affirm the judgment on this issue.

Link also argues that the motorcycle on which she was a passenger was an underinsured motor vehicle, and she is therefore entitled to UIM coverage provided in two policies covering two of Link's vehicles that were not involved in the accident. Link contends that the trial court erred when it concluded that the drive-other-car exclusion and the exclusion in the underinsured motorist definition precluded such coverage. We conclude that the drive-other-car exclusion and a similar definitional exclusion in Link's policies are invalid, and therefore reverse on this issue.

Carla Link was injured when the motorcycle her husband was driving and on which she was a passenger was struck by an automobile driven by Jennifer Reitz. The Reitz vehicle carried a policy with a $100,000 liability limit. Link has settled with the liability carrier for the full $100,000. The motorcycle, owned by Link's husband, carried a policy with a liability limit of $25,000.

Because the injuries Link suffered as a result of this accident are alleged to exceed the available liability coverage, Link made an underinsured motorist claim against General Casualty for coverage under two separate policies issued to Link and her husband for two vehicles not involved in this accident. Each of these nonaccident vehicles carry UIM coverage with limits of $100,000 for each person and $300,000 for each accident. There are two distinct issues: (1) Is the Reitz vehicle an underinsured motor vehicle under Link's policies; and (2) is the motorcycle an underinsured motor vehicle under Link's policies?

A motion for summary judgment can be used to address issues of insurance policy coverage. Germanotta v. National Indem. Co., 119 Wis.2d 293, 296, 349 N.W.2d 733, 735 (Ct.App.1984). The record here reveals that there is no material issue of disputed fact. The only issue is the legal question concerning the validity of the definition of "underinsured motor vehicle" and the drive-other-car exclusion in the General Casualty policies. The interpretation of an insurance contract presents a question of law. Katze v. Randolph & Scott Mut. Fire Ins. Co., 116 Wis.2d 206, 212, 341 N.W.2d 689, 691 (1984). When reviewing a summary judgment determination, we will reverse where the trial court has incorrectly decided a legal issue. Germanotta, 119 Wis.2d at 297, 349 N.W.2d at 735.

THE UNDERINSURED MOTOR VEHICLE DEFINITION

Link contends that although the Reitz vehicle is not an underinsured motor vehicle under the plain language of the contract, she is entitled to UIM coverage because the language renders the contract illusory and is, therefore, invalid. We do not agree. The contract states: " 'Underinsured motor vehicle' means 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 but its limit for bodily injury liability is less than the limit of liability for this coverage."

Insurance contracts are controlled by the same rules of construction as are applied to other contracts. Ehlers v. Colonial Penn Ins. Co., 81 Wis.2d 64, 74, 259 N.W.2d 718, 724 (1977). Ambiguities in coverage are to be construed in favor of coverage, while exclusions are narrowly construed against the insurer. Davison v. Wilson, 71 Wis.2d 630, 635-36, 239 N.W.2d 38, 41 (1976). Words and phrases are ambiguous when they are susceptible to more than one reasonable construction. However, when an insurance policy's terms are plain on their face, the policy must not be rewritten by construction. Limpert v. Smith, 56 Wis.2d 632, 640, 203 N.W.2d 29, 33-34 (1973).

We agree with the trial court that the definition of underinsured motor vehicle is unambiguous. Under this definition, the Reitz vehicle is not an underinsured motor vehicle because the liability limit in the applicable policy ($100,000) is equal to, not less than, the limit of UIM coverage provided in Link's policies. These facts are the same as in Smith v. Atlantic Mut. Ins. Co., 155 Wis.2d 808, 456 N.W.2d 597 (1990). In Smith, Smith's policy with Atlantic Mutual contained, substantively, the same definition of underinsured motor vehicle as Link's policy. Id. at 811, 456 N.W.2d at 599. Because the liability limits on the other car involved in the accident, Goulias' vehicle, were the same as Smith's UIM coverage, "under the clear terms of the policy, Goulias' vehicle is not an underinsured motor vehicle, and Atlantic Mutual need not provide coverage." Id.

Link contends, however, that we cannot strictly construe the definition of underinsured motor vehicle, as the supreme court did in Smith, because to do so would render the insurance contract illusory. Link cites Hoglund v. Secura Ins., 176 Wis.2d 265, 500 N.W.2d 354 (Ct.App.1993), and Kuhn v. Allstate Ins. Co., 181 Wis.2d 453, 510 N.W.2d 826 (Ct.App.1993), to support her contention. This case is distinguishable from Hoglund and Kuhn. Thus, just as the supreme court in Smith, "[w]e are unpersuaded" by the illusory contract argument. See Smith, 155 Wis.2d at 813, 456 N.W.2d at 600.

In Hoglund, the policy provided by Secura Insurance had, essentially, the same definition of underinsured motor vehicle as does the General Casualty policy in this case. While we concluded in Hoglund that the definition language was unambiguous, we went on to conclude that the definition rendered the contract illusory, and was thereby invalid. In Hoglund, we adopted the definition of illusory contract from Indiana case law which stated that under an illusory contract, "a premium was paid for coverage which would not pay benefits under any reasonably expected set of circumstances." Id. 176 Wis.2d at 271-72, 500 N.W.2d at 357, quoted in Meridian Mut. Ins. Co. v. Richie, 540 N.E.2d 27, 30 (Ind.1989). In Hoglund, the UIM coverage was only $25,000: When combined with § 344.33, STATS., requiring holders of liability insurance to have minimum of $25,000 coverage, there was no circumstance in which the insured could collect under the UIM provision and it was therefore illusory. While the definition in the General Casualty policy precludes Link from collecting under the UIM provision in this instance, it is not the case that she can under no circumstance collect under the UIM coverage provision, ¹ therefore Hoglund does not apply to the facts presented here.

In Kuhn, we took Hoglund one step further. While the definition of underinsured motor vehicle was met under the facts in Kuhn, a reducing clause reduced the UIM coverage limit by amounts paid on or behalf of the owner or operator of the underinsured motor vehicle. Kuhn, 181 Wis.2d at 462, 510 N.W.2d at 830-31. We concluded...