Oelhafen v. Tower Ins. Co., 92-0462

• Decision Date: 02 September 1992
• Docket Number: No. 92-0462,92-0462
• Citation: 171 Wis.2d 532,492 N.W.2d 321
• Parties: Sean OELHAFEN, Thomas Kuck and Mary Kuck, Plaintiffs, v. TOWER INSURANCE COMPANY, Transamerica Insurance Company, and Commercial Union Insurance Company, Defendants-Joint-Appellants, Boston Old Colony Insurance Company, Defendant-Respondent. d
• Court: Wisconsin Court of Appeals

Page 321

492 N.W.2d 321

171 Wis.2d 532

Sean OELHAFEN, Thomas Kuck and Mary Kuck, Plaintiffs, v. TOWER INSURANCE COMPANY, Transamerica Insurance Company, and Commercial Union Insurance Company,

Defendants-Joint-Appellants,

Boston Old Colony Insurance Company, Defendant-Respondent.

d

No. 92-0462.

Court of Appeals of Wisconsin.

Submitted on Briefs July 21, 1992.

Opinion Released Sept. 2, 1992.

Opinion Filed Sept. 2, 1992.

On behalf of the defendants-joint-appellants, the cause was submitted on the briefs of William J. Ewald of Denissen, Kranzush, Mahoney & Ewald, S.C. of Green Bay; John M. Swietlik of Kasdorf, Lewis & Swietlik, S.C. of Milwaukee; and John M. Thompson of Everson, Whitney, Everson & Brehm, S.C. of Green Bay.

On behalf of defendant-respondent, the cause was submitted on the brief of Ronald P. Huntley of Ronald P. Huntley & Associates of Brown Deer.

Before NETTESHEIM, P.J., and BROWN and ANDERSON, JJ.

ANDERSON, Judge.

Tower Insurance Company (Tower), Transamerica Insurance Company (Transamerica) and Commercial Union Insurance Company (Commercial) appeal from a judgment ordering a $925,000 settlement to be paid $300,000 by Tower, $100,000 by Transamerica, $100,000 by Commercial and $425,000 by Boston Old Colony Insurance Company (BOC). The amounts paid by Tower, Transamerica and Commercial are equal to the maximum liabilities under their respective policies. Tower, Transamerica and Commercial (appellants) argue that BOC contracted to be liable for all sums above $300,000 by the terms of its umbrella policy. Because we conclude that BOC's policy is a true umbrella policy for which BOC is liable for only any excess liability not paid by other insurers, we affirm.

The plaintiffs commenced this action against Richard and Carol Dahnke to recover for personal injuries caused when the Dahnkes' boat, operated by Abraham Vallejo and Charles Imig, Jr., struck Sean Oelhafen. The defendants were covered by insurance policies issued as follows: Tower and BOC to the Dahnkes, Transamerica to Vallejo, and Commercial to Imig. In the course of the proceedings, the plaintiffs settled their claims with all of the defendants for $925,000. Language in the settlement agreement expressly reserved the right to have a judicial determination of the obligations owed by each insurance company. The only issue on appeal is whether the trial court properly apportioned these obligations.

The interpretation of insurance contracts presents a question of law. Keane v. Auto-Owners Ins. Co., 159 Wis.2d 539, 547, 464 N.W.2d 830, 833 (1991). We review questions of law without deference to the trial court. See id.

Each of the insurance policies contain an "other insurance" clause. These clauses attempt to limit the insurer's liability to the insured in the event that other insurance policies also provide coverage. The clauses within the Transamerica and Commercial homeowner's policies are identical and read as follows:

Other Insurance--Coverage E--Personal Liability. This insurance is excess over other valid and collectible insurance except insurance written specifically to cover as excess over the limits of liability that apply in this policy.

The limits for both the Transamerica and Commercial policies were $100,000.

Tower's watercraft liability policy reads as follows:

Other Insurance. If at the time of loss or damage there is available any other insurance which would apply in the absence of this policy, the insurance under this policy shall apply only as excess insurance over other insurance.

The limit for Tower's policy was $300,000.

BOC's homeowner's policy's "other insurance" clause is slightly different from the other three Other Insurance. Our coverage is excess over any other insurance. This applies whether the other insurance is primary, contributing, excess or contingent. If the other insurance provides coverage only in excess of a stated amount of liability for each accident, we shall pay that part of the Net Loss covered by this policy. In such cases we will pay only our share. Our share is the proportion that our Limit of Coverage bears to the total of all limits of all other excess indemnity policies applicable to the loss.

BOC's policy was an umbrella policy, which provided coverage only in the event that the insured (the Dahnkes) obtained a primary underlying policy of at least $300,000 for watercraft liability. BOC then would provide additional coverage for losses up to $2,000,000. The primary policy which the Dahnkes obtained was the Tower policy.

All parties agree that the "other insurance" clauses of Transamerica, Commercial and Tower are directly repugnant to each other. No single clause could be given effect without violating the terms of the other two contracts. The rule in Wisconsin is that when insurance contract clauses are directly conflicting and cannot be read to give effect to each of the contracts involved, none of the clauses will be given effect. Schoenecker v. Haines, 88 Wis.2d 665, 672, 277 N.W.2d 782, 785 (1979). Therefore, neither insurer is given priority over the other and each contributes toward the loss pro rata. See id. at 672-73, 277 N.W.2d at 785. The proportion usually is based on their respective policy limits. Id. at 671, 277 N.W.2d at 785.

The appellants argue that although their policies are primary policies and BOC's policy is a true excess or umbrella policy, BOC specifically contracted to indemnify any loss over $300,000 regardless of how many policies contributed to the first $300,000. Appellants also point out that BOC's policy did not require that the limits of any underlying policies be exhausted before BOC would indemnify. Implicitly, appellants wish us to consider BOC's policy to be the primary policy for all amounts above $300,000.

In support of their argument, appellants rely on Reetz v. Werch, 8 Wis.2d 388, 98 N.W.2d 924 (1959), and Faltersack v. Vanden Boogaard, 39 Wis.2d 64, 158 N.W.2d 322 (1968). They read these cases to state a "rule" that in Wisconsin

the court examines the language of the policy, and pays no attention to any other criteria for granting effect to the "excess" other insurance clause of one policy and not the other, including the fact that the policies may be of a different type or the named insureds may be differently related to the activities which allegedly give rise to the liability.

Applying that "rule" in the present situation, appellants argue that the umbrella language distinction in a policy is one of form and not substance in Wisconsin; therefore, by examining the language within the policy, BOC has limited its liability only to the first $300,000 and has assumed liability for the remainder up to its policy limits.

Appellants' reliance on Reetz and Faltersack is misplaced. Both Reetz and Faltersack involved the priority between two primary insurers, while in this case the appellants concede that BOC is a true "excess" or umbrella insurer and appellants are primary insurers. In Reetz and Faltersack the court's concern was that, as between two primary policies, of which either would apply in the absence of the other, it would be completely arbitrary to rely upon one or two criteria to designate one policy as primary and one policy as secondary. That concern is not present when comparing priority between a primary insurer and an umbrella insurer. In the latter situation it is not arbitrary to examine the overall pattern...