Olson v. Wis. Mut. Ins. Co.

• Decision Date: 02 October 2018
• Docket Number: Appeal No. 2017AP1567
• Citation: 384 Wis.2d 632,922 N.W.2d 314 (Table),2018 WI App 71
• Parties: Bethany H. OLSON a/k/a Bethany H. Reischel, Gunner J. Olson and Emmajean T. Olson, Plaintiffs-Respondents, State of Wisconsin Department of Health Services and Spring Valley Health Care Services, Involuntary-Plaintiffs-Respondents, v. WISCONSIN MUTUAL INSURANCE COMPANY, Defendant-Respondent, Jeffrey J. Keyes, Defendant-Third-Party Plaintiff-Appellant, v. Rural Mutual Insurance Company and Lon Truax, Sr., Third-Party Defendants-Respondents.
• Court: Wisconsin Court of Appeals

384 Wis.2d 632

922 N.W.2d 314 (Table)

2018 WI App 71

Bethany H. OLSON a/k/a Bethany H. Reischel, Gunner J. Olson and Emmajean T. Olson, Plaintiffs-Respondents,

State of Wisconsin Department of Health Services and Spring Valley Health Care Services, Involuntary-Plaintiffs-Respondents,

v.WISCONSIN MUTUAL INSURANCE COMPANY, Defendant-Respondent,Jeffrey J. Keyes, Defendant-Third-Party Plaintiff-Appellant,

v.Rural Mutual Insurance Company and Lon Truax, Sr., Third-Party Defendants-Respondents.^†

Appeal No. 2017AP1567

Court of Appeals of Wisconsin.

DATED AND FILED October 2, 2018

HRUZ, J.

¶ 1 Jeffrey Keyes appeals a judgment dismissing his third-party claims against Rural Mutual Insurance Company (Rural) and its agent, Lon Truax, Sr. Keyes asserts he is entitled to coverage for the claims of Bethany, Gunner and Emmajean Olson, all of whom were injured by Keyes’s operation of a personal automobile on a public road. Keyes also appeals an order denying his motion for reconsideration. Keyes seeks coverage under a farm umbrella endorsement attached to a farmowners policy he obtained from Rural through Truax. However, the endorsement contains an exclusion that specifically precludes coverage for the off-farm use of Keyes’s personal automobiles.

¶ 2 On appeal, Keyes asserts the circuit court improperly dismissed his claims for reformation of the farm umbrella endorsement and for agent negligence. He also asserts he is entitled to coverage because the umbrella endorsement is contextually ambiguous. We conclude the endorsement, and its applicable exclusion, unambiguously preclude coverage for the accident here. We also conclude Keyes’s reformation and agent negligence claims were properly dismissed because no reasonable fact-finder could conclude, on this record, that Keyes asked Truax to provide him with umbrella coverage for the off-farm use of his personal automobiles. Importantly, Keyes admitted at his deposition that he made no specific request for such coverage at any time. Accordingly, we affirm.

BACKGROUND

¶ 3 The Olsons filed a complaint alleging that Keyes negligently caused their injuries resulting from an automobile collision on May 23, 2014. The accident occurred near the intersection of County Roads B and N in St. Croix County, and it involved Keyes’s use of his GMC Sierra pickup truck, which he was using to tow a gooseneck trailer containing cattle.¹

¶ 4 At the time of the accident, Keyes’s personal automobiles were covered by an automobile policy issued by Wisconsin Mutual Insurance Company. Keyes also had a farmowners policy in effect with Rural that included liability and property coverage related to Keyes’s family farm in Knapp, Wisconsin.² Further, Keyes had purchased $1 million in farm umbrella liability coverage, which was attached to the farmowners policy as endorsement FO-312. However, umbrella coverage for the off-farm use of personal automobiles was specifically excluded by form F-782, which stated:

The Farm Umbrella Liability Endorsement does not apply to personal injury or property damage arising out of the ownership, maintenance, operation, use, loading or unloading of any automobile while away from premises owned by, rented to, or controlled by you. This limitation does not apply to FO-70 [an endorsement not at issue here].

All other terms of your policy remain the same.

Rural denied Keyes’s claim for coverage under the farm umbrella endorsement. As justification for the denial, it cited the F-782 exclusion and the fact that the accident occurred off of Keyes’s farm.

¶ 5 Keyes subsequently filed a third-party complaint against Rural and Truax seeking coverage under the farm umbrella endorsement. Keyes sought reformation of the umbrella, alleging that at the time he purchased the policy in January 2013, Truax, as Rural’s agent, had assured him that "there would be coverage for the kind of claim" the Olsons asserted. Keyes alleged he was unaware that Rural would place the F-782 exclusion on his farm umbrella endorsement in the event Keyes did not purchase underlying personal automobile insurance from Rural. Keyes sought to have the endorsement reformed to delete the F-782 exclusion, and for a declaration that the Olsons’ claims were covered by the umbrella endorsement. Keyes subsequently filed an amended third-party complaint that added a claim for insurance agent negligence if the umbrella was not susceptible to reformation.

¶ 6 Rural successfully moved to bifurcate the coverage issue and stay the underlying liability action until the coverage issue was resolved. Following some discovery, Rural and Truax moved for summary judgment on Keyes’s claims for reformation and agent negligence. They argued the farm umbrella endorsement, as written, excluded umbrella coverage for the accident involving the Olsons. They also argued that Keyes’s reformation claim failed because Keyes failed to present any evidence he had made a specific request that the farm umbrella cover the off-farm use of his personal automobiles. For similar reasons, they argued Keyes’s negligence claim failed because Truax had no duty to procure such coverage.

¶ 7 The circuit court granted Rural and Truax’s motion for summary judgment and dismissed Keyes’s third-party claims. The court emphasized the plain language of the F-782 exclusion in concluding that the farm umbrella endorsement did not provide coverage for the Olsons’ injuries. It also rejected Keyes’s argument that the umbrella policy was contextually ambiguous because the F-782 exclusion conflicted with language in the "UNDERLYING INSURANCE REQUIREMENT" section of the endorsement.

¶ 8 With respect to policy reformation, the circuit court concluded it was "unable to find in the record any facts showing that Mr. Keyes had a discussion with Mr. Truax about the coverage different than that expressed in the written policy." The court acknowledged that Keyes and Truax had discussed underlying automobile coverage through Rural, but it observed that Keyes had elected to keep his automobile coverage with Wisconsin Mutual throughout 2013 and 2014 and that, during his deposition, Keyes had acknowledged he did not request umbrella coverage for off-farm automobile accidents. Finally, the court concluded Keyes’s agent negligence claim was unsupported by any facts of record suggesting that Truax had failed to act with reasonable care, skill and diligence in procuring the coverage that he and Keyes had discussed.

¶ 9 Keyes filed a motion for reconsideration, reasserting his claim that the farm umbrella endorsement was "vague and ambiguous" and arguing there were genuine issues of material fact that precluded summary judgment on the reformation and agent negligence claims. Following a hearing, the circuit court denied the motion.³ Keyes now appeals.⁴

DISCUSSION

¶ 10 Summary judgment presents a question of law that we review de novo. Fortier v. Flambeau Plastics Co. , 164 Wis. 2d 639, 651-52, 476 N.W.2d 593 (Ct. App. 1991). Summary judgment is appropriate if the record demonstrates there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. WIS. STAT . § 802.08(2) (2015-16).⁵ The summary judgment methodology is well-established, and we need not restate it here. See Tews v. NHI, LLC , 2010 WI 137, ¶ 4, 330 Wis. 2d 389, 793 N.W.2d 860.

¶ 11 Keyes presents three theories to argue he is entitled to coverage under the farm umbrella endorsement. First, he contends that because he maintained underlying automobile insurance equivalent to or better than that required in the endorsement’s "UNDERLYING INSURANCE REQUIREMENT" section, he should receive the benefit of umbrella coverage. Second, Keyes asserts the farm umbrella endorsement is subject to reformation because there was a "mutual mistake" when the endorsement was issued with the F-782 exclusion, or, at a minimum, there exists a factual dispute necessitating a trial concerning whether such a mistake occurred. Finally, Keyes argues he may maintain an agent negligence claim against Truax. We reject each of these arguments.

I. Coverage by virtue of underlying insurance

¶ 12 Keyes argues the farm umbrella endorsement, by its plain terms, should be construed to afford coverage for the accident here. We interpret insurance policies with the goal of ascertaining and giving effect to the parties’ intentions. Wilson Mut. Ins. Co. v. Falk , 2014 WI 136, ¶ 23, 360 Wis. 2d 67, 857 N.W.2d 156. "To that end, we interpret policy language according to its plain and ordinary meaning as understood by a reasonable person in the position of the insured." Hirschhorn v. Auto-Owners Ins. Co. , 2012 WI 20, ¶ 22, 338 Wis. 2d 761, 809 N.W.2d 529. The interpretation of an insurance policy is a question of law that we review de novo. Wilson Mut. , 360 Wis. 2d 67, ¶ 20.

¶ 13 Rural does not refute Keyes’s assertion that, but for the F-782 exclusion, the farm umbrella endorsement would provide coverage for the claims at issue here. Meanwhile, Keyes does not argue the F-782 exclusion is itself ambiguous. We agree with the circuit court that any such claim would be meritless. The exclusion plainly eliminates umbrella coverage for losses arising out of the circumstances present here—that is, the operation of a personal automobile while away from the farm premises. The exclusion is unambiguous, and we apply unambiguous policy language as written. Folkman v. Quamme , 2003 WI 116, ¶ 13, 264 Wis. 2d 617, 665 N.W.2d 857.

¶ 14 Keyes nonetheless asserts coverage should be afforded because he complied with the underlying insurance requirements contained in FO-312. The farm umbrella endorsement states as follows:

UNDERLYING INSURANCE REQUIREMENT

This endorsement requires that the named insured have and maintain the types and limits of liability insurance shown on the Declarations Page. This is referred to as the Schedule of Underlying Insurance Requirement.

Failure to maintain the underlying insurance will not void this endorsement. We will only be

...