Matthiesen v. Continental Cas. Co.

• Citation: 193 Wis.2d 192,532 N.W.2d 729
• Decision Date: 07 June 1995
• Docket Number: No. 93-0453.,93-0453.
• Parties: Mark A. MATTHIESEN, Plaintiff-Interpleader-Appellant-Petitioner, EMPLOYERS HEALTH INSURANCE COMPANY, Involuntary-Plaintiff-Interpleader-Defendant, v. CONTINENTAL CASUALTY COMPANY, Defendant-Interpleader-Plaintiff, ESTATE OF Edward WILD and Marilyn Wild, Interpleader-Plaintiffs, v. Mary K. MATTHIESEN, Interpleader-Defendant, AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Interpleader-Defendant-Respondent.
• Court: United States State Supreme Court of Wisconsin

193 Wis.2d 192

532 N.W.2d 729

Mark A. MATTHIESEN, Plaintiff-Interpleader-Appellant-Petitioner, EMPLOYERS HEALTH INSURANCE COMPANY, Involuntary-Plaintiff-Interpleader-Defendant, v. CONTINENTAL CASUALTY COMPANY, Defendant-Interpleader-Plaintiff, ESTATE OF Edward WILD and Marilyn Wild, Interpleader-Plaintiffs, v. Mary K. MATTHIESEN, Interpleader-Defendant, AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Interpleader-Defendant-Respondent.

No. 93-0453.

Supreme Court of Wisconsin.

Oral argument March 7, 1995.

Decided June 7, 1995.

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For the plaintiff-interpleader-appellant-petitioner there were briefs by William M. Cannon, Mark L. Thomsen and Cannon & Dunphy, S.C., Milwaukee and oral argument by Mark L. Thomsen.

For the interpleader-defendant-respondent there was a brief by Janet E. Cain and Peterson, Johnson & Murray, S.C., Milwaukee and oral argument by James T. Murray.

Amicus curiae brief was filed by Robert L. Jaskulski and Domnitz, Mawicke, Goisman & Rosenberg, S.C., Milwaukee for Wisconsin Academy of Trial Lawyers.

Amicus curiae brief was filed by Noreen J. Parrett, Joanne R. Whiting and LaFollette & Sinykin, Madison for the Wisconsin Insurance Alliance.

Amicus curiae brief was filed by Mark A. Klinner and Terwilliger, Wakeen, Piehler & Conway, S.C., Wausau for the Civil Trial Counsel of Wisconsin.

DAY, J.

This is a review of an unpublished decision of the court of appeals affirming a judgment of the circuit court for Milwaukee County, Honorable Michael J. Barron, Judge, that granted summary judgment against Mr. Mark A. Matthiesen in favor of American Family Mutual Insurance Company, Mr. Matthiesen's underinsured motorist (UIM) insurer. The sole issue on review is whether the reducing clauses in the two American Family UIM policies issued to Matthiesen apply. Because Matthiesen had two separate UIM policies, we hold that the reducing clauses are invalid as contrary to sec. 631.43(1), Stats. (1993-94),¹the "stacking² statute, except to the extent that they prevent double recoveries. Therefore, the reducing clauses do not apply to the facts of this case, and the decision of the court of appeals is reversed.

On November 6, 1991, Mark A. Matthiesen was involved in an automobile collision with Mr. Edward Wild. Mr. Wild was insured by Continental Casualty Insurance Company for liability up to $300,000. Matthiesen had two automobile insurance policies, both issued by American Family Insurance Company, each of which provided an UIM coverage endorsement with limits of $100,000 per person. The endorsements provided in part:

We will pay compensatory damages for bodily injury which an insured person is legally entitled to recover from the owner or operator of an underinsured motor vehicle.

"Underinsured motor vehicle" was defined in both policies as follows:

Underinsured motor vehicle means a motor vehicle which is insured by a liability bond or policy at the time of the accident which provides bodily injury liability limits less than the damages an insured person is legally entitled to recover.

The American Family policies also both contained a reducing clause that read as follows:

The limits of liability will be reduced by:

1. A payment made or amount payable by or on behalf of any person or organization which may be legally liable, or under any collectible auto liability insurance, for loss caused by an accident with an underinsured motor vehicle.

Matthiesen brought suit against Continental Casualty. He also cross-claimed against American Family for $200,000 of UIM coverage. Continental Casualty paid Matthiesen $300,000. American Family moved for summary judgment. American Family conceded for the purpose of its summary judgment motion that Matthiesen's damages were more than $500,000, but asserted that it owed no benefits because the reducing clauses of the UIM policies were unambiguous, clearly applicable, valid and enforceable. The trial court granted American Family's motion, and the court of appeals affirmed. Matthiesen petitioned this court for review, which was granted.

Matthiesen argues that the reducing clauses in the two insurance policies cannot be enforced against him because (1) the clauses violate the stacking statute, sec. 631.43(1), Stats., (2) given consumer expectations, the policies are ambiguous and must be construed against the insurance company, and (3) the UIM coverage would be illusory if the reducing clause were enforced since the insured would never recover the full amount promised by the policy from the insurer because some amount would always be deducted from the policy limits due to a payment from the underinsured motorist's liability policy. Because we conclude that the unambiguous language of the stacking statute precludes enforcement of the reducing clauses in this case, we reverse the decision of the court of appeals. Therefore, we do not reach issues number two and three.

This case was decided on summary judgment, and there are no material facts in dispute. The case requires the construction of insurance contract provisions and statutes. These are questions of law which this court decides without deference to the decisions of the circuit court or court of appeals. Bindrim v. B. & J. Ins. Agency, 190 Wis. 2d 525, 534, 527 N.W.2d 320 (1995).

2, 3

"In ascertaining the proper scope to be given sec. 631.43(1), Stats., the language of the statute itself must first be considered." Wood v. American Fam. Mut. Ins., 148 Wis. 2d 639, 646, 436 N.W.2d 594 (1989). "Sec. 631.43(1), Stats., by its terms, applies when two policies promise to indemnify an insured against the same loss." Id.

Here, Matthiesen, for the purposes of the statute, had two policies, the two issued by American Family Insurance. West Bend Mut. Ins. Co. v. Playman, 171 Wis. 2d 37, 42, 489 N.W.2d 915 (1992); Carrington v. St. Paul Fire & Marine Ins., 169 Wis. 2d 211, 224-25, 485 N.W.2d 267 (1992). Each of those policies promised to indemnify him against a loss suffered in a collision with an underinsured motor vehicle. There is no dispute that Mr. Wild's vehicle was an underinsured motor vehicle according to the terms of Matthiesen's policy. Further, this court has held that UIM coverage can be stacked. Playman, 171 Wis. 2d at 42; Wood, 148 Wis. 2d at 650. Thus, the stacking statute is applicable to Matthiesen, and the issue becomes whether the reducing clauses violate the statute.

The reducing clauses state that the limit of liability is reduced by amounts received from "any collectible auto liability insurance." American Family's limit of liability "if there were no `other insurance' provisions" is $200,000: $100,000 for each policy, stacked. Continental Casualty paid $300,000. Thus, if enforced, the reducing clauses would result in zero coverage for Mr. Matthiesen from his own insurer. For purposes of this motion, American Family concedes that Mr. Matthiesen's damages are over $500,000. According to the terms of Mr. Matthiesen's policy, American Family insured against "compensatory damages for bodily injury which an insured person is legally entitled to recover from the owner or operator of an underinsured motor vehicle." Thus, the actual insured loss for purposes of this motion is at least $200,000. Therefore, the reducing clauses in the two policies attempt to "reduce the aggregate protection of the insured below the lesser of the actual insured loss suffered by the insured or the total indemnification promised by the policies if there were no `other insurance' provisions." Section 631.43(1), Stats. The clauses do not qualify for the one exception to the prohibition on reducing clauses found in sec. 631.43(1), Stats., in that they do not merely define which coverage is primary and which is excess. Section 631.43(1). As such, we conclude that the reducing clauses are invalid except to the extent that they prevent double recoveries.³

This case is factually similar to two previous appellate decisions in this state, Wood, 148 Wis. 2d 639, and Fairbanks v. American Family Mut. Ins. Co., 181 Wis. 2d 838 (Ct. App. 1994). In both those cases, the insured had multiple UIM coverages issued by the same insurer that purported to reduce UIM coverage where insurance proceeds were received from the tortfeasor's insurance. Wood, 148 Wis. 2d at 650; Fair-banks, 181 Wis. 2d at 840. The courts in both cases held the reducing clause to be invalid except to the extent that they prevented double recovery. Wood, 148 Wis. 2d at 654 (policy language was ambiguous and would be interpreted to provide coverage on both UIM policies); Fairbanks, 181 Wis. 2d at 843-44 (reducing clauses in two UIM policies violated the stacking statute).

However, in Wood, this court stated in dicta that sec. 631.43(1), Stats., did not apply because, since the tortfeasor's liability policy did not "promise to indemnify" the UIM policy holder, there were not two or more policies that promised to indemnify against the same loss. Wood, 148 Wis. 2d at 651. The Wood court did not consider whether the two UIM policies were two policies that promised to indemnify the insured against the same loss. In Fairbanks, the court of appeals directly confronted the question of whether two UIM policies could invoke the protections of sec. 631.43(1), and held that the reducing clauses were invalid attempts to limit the extent of the UIM benefits. Although the court of appeals did not refer to Wood, it stated that its decision was based on this court's more recent decision in Playman, which held that a reducing clause in multiple UIM policies was invalid because UIM coverages could stack. Fairbanks, 181 Wis. 2d at 843.

We conclude that the Fairbanks court correctly interpreted sec. 631.43(1), Stats. As noted by the Fairbanks court, multiple UIM coverages will bring the policyholder within the protections of the stacking statute. Playman, 171 Wis. 2d at 42. Further, although the stacking statute does require the existence...