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

• Decision Date: 21 June 2016
• Docket Number: No. 2015AP528.,2015AP528.
• Citation: 882 N.W.2d 870 (Table),370 Wis.2d 787
• Parties: Joann PECHACEK, Plaintiff–Respondent, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant–Appellant, Travis M. Hazelton and Memorial Health Center, Defendants.
• Court: Wisconsin Court of Appeals

370 Wis.2d 787

882 N.W.2d 870 (Table)

Joann PECHACEK, Plaintiff–Respondent,

v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant–Appellant,Travis M. Hazelton and Memorial Health Center, Defendants.

No. 2015AP528.

Court of Appeals of Wisconsin.

June 21, 2016.

¶ 1 PER CURIAM.

State Farm Mutual Automobile Insurance Company appeals a summary judgment in this dispute regarding uninsured motorist (UM) coverage. Joann Pechacek has three motor vehicle insurance policies with State Farm, one for each vehicle she owns. Following the accident at issue, State Farm paid Pechacek an amount equal to the per-person limit of UM coverage available under the policy describing the vehicle in which Pechacek was riding at the time of the accident. State Farm contends the circuit court erred when it determined Pechacek was entitled to “stack” UM coverages provided by the other two motor vehicle policies. Because a “drive other car” exclusion in these two policies precludes coverage for the accident at issue (and therefore precludes stacking of the three policies' coverage limits), we agree with State Farm and reverse.

BACKGROUND

¶ 2 Pechacek was injured on July 20, 2012. She was riding as a passenger in her 2001 Lexus RX 300 automobile when the vehicle was struck by an uninsured motorist. The Lexus was described in an insurance policy State Farm issued to Pechacek. That policy provided $100,000 per person in UM coverage. State Farm has paid Pechacek the per-person UM limit under the Lexus policy.

¶ 3 At the time of the accident, Pechacek was the named insured on two other State Farm policies, one describing a 2004 Chevrolet Classic and one describing a 2008 Mercedes E350. Like the Lexus policy, the Chevrolet and Mercedes policies each provided up to $100,000 per person in UM coverage.¹ It is undisputed that Pechacek sustained injuries in the accident exceeding $300,000, which is the aggregate amount of UM coverage provided by the three policies.

¶ 4 State Farm denied Pechacek's claim that she was entitled to “stack” UM coverage under the three policies, which would have provided Pechacek with an additional $200,000 in UM benefits.² Pechacek then commenced this action and filed a motion seeking a declaratory judgment that she was entitled to UM coverage under the Chevrolet and Mercedes policies. State Farm countered with a motion for summary judgment, arguing the “drive other car” exclusion in the relevant policies precluded coverage and those policies also expressly prohibited stacking.³

¶ 5 The circuit court, characterizing the case as a “close call,” concluded Pechacek was entitled to coverage under the Chevrolet and Mercedes policies because a series of endorsements State Farm issued reflecting legislative changes between 2009 and 2011 produced ambiguity regarding the ability to stack policy benefits. Prior to 2009, state law authorized anti-stacking provisions, which prohibited insureds from adding the limits of insurance policies covering other motor vehicles to determine the limit applicable to any one accident. See Wis. Stat. § 632.32(5)(f)

(2007–08). In 2009, the legislature prohibited insurers from including anti-stacking provisions regarding UM coverage in automobile insurance policies.⁴

See Wis. Stat . § 632.32(6)(d) (2009–10); see also 2009 Wis. Act 28, § 3168. In 2011, the legislature reversed course to once again permit anti-stacking provisions. See Wis. Stat. § 632.32(5)(f) (2011–12); see also 2011 Wis. Act 14, § 23. The circuit court determined that, following the 2011 legislation, State Farm's “attempt to reinstate the anti-stacking provision of the original contract was ineffectual.”

¶ 6 The circuit court declined to issue a definitive ruling on State Farm's arguments regarding whether the Chevrolet and Mercedes policies' “drive other car” exclusion precluded coverage. The court asserted the exclusion “wasn't really the main thrust of ... this case,” and it noted Pechacek had “paid insurance on all of these vehicles” and “the other car [for purposes of the exclusion] really is intended to be an ‘other’ car that you're not insuring.” However, because Pechacek's Lexus was “in traffic for its intended use,” the court rejected Pechacek's argument that the “drive other car” exclusion was inapplicable because she was merely a passenger.

DISCUSSION

¶ 7 We review a grant of summary judgment de novo. Chapman v. B.C. Ziegler & Co., 2013 WI App 127, ¶ 2, 351 Wis.2d 123, 839 N.W.2d 425

. Summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Wis. Stat. § 802.08(2).⁵ In this case, neither party contends there are any disputed issues of material fact precluding summary judgment.

¶ 8 This case also requires that we interpret the Chevrolet and Mercedes insurance policies to determine whether they provide coverage for Pechacek's injuries resulting from the underlying accident. Insurance policy interpretation presents a question of law that we review de novo. See Folkman v. Quamme, 2003 WI 116, ¶ 12, 264 Wis.2d 617, 665 N.W.2d 857

. “An insurance policy is construed to give effect to the intent of the parties as expressed in the language of the policy.” Id.

¶ 9 By addressing stacking issues regarding the three separate policies prior to determining whether Pechacek was entitled to coverage under the Chevrolet and Mercedes policies, the circuit court placed the metaphorical cart before the horse. “There is an established framework for determining whether coverage is provided under the terms of an insurance policy.” Olson v. Farrar, 2012 WI 3, ¶ 40, 338 Wis.2d 215, 809 N.W.2d 1

. We first examine whether the policy makes an initial grant of coverage. Advanced Waste Servs., Inc. v. United Milwaukee Scrap, LLC, 2015 WI App 35, ¶ 10, 361 Wis.2d 723, 863 N.W.2d 634. If so, we then examine the policy's exclusions to determine whether they preclude coverage. Id. If an exclusion would preclude coverage, we must determine whether there is an exception to the exclusion that reinstates coverage. Id.

¶ 10 In this case, the relevant insuring language of both the Chevrolet and Mercedes policies provides:

Insuring Agreement

We will pay compensatory damages for bodily injury an insured is legally entitled to recover from the owner or driver of an uninsured motor vehicle. The bodily injury must be:

1. sustained by an insured; and

2. caused by an accident that involves the ownership, maintenance, or use of an uninsured motor vehicle as a motor vehicle.

There is no dispute that, if no exclusion applies, this provision would grant coverage for Pechacek's injuries, as she is an insured who is legally entitled to recover personal injury damages caused by an accident involving an uninsured motor vehicle.⁶

¶ 11 We therefore turn to examine whether any exclusions in the policies preclude coverage. State Farm argues the “drive other car” exclusion located in the UM provisions of each policy is applicable here. The “drive other car” policy provision, which consists of both an exclusion and an exception to the exclusion, states there is no coverage

FOR AN INSURED WHO SUSTAINS BODILY INJURY RESULTING FROM THE USE OF A MOTOR VEHICLE OWNED BY YOU OR ANY RESIDENT RELATIVE IF IT IS NOT YOUR CAR OR A NEWLY ACQUIRED CAR. This exclusion does not apply to the first person shown as a named insured on the Declarations Page and that named insured's spouse who resides primarily with that named insured, for bodily injury resulting from the use of a motor vehicle not owned by one or both of them[.⁷ ]

¶ 12 Pechacek is a named insured on both the Chevrolet and Mercedes policies. On appeal, she does not appear to dispute that she was “using” the Lexus while riding as a passenger.⁸ Moreover, Pechacek does not dispute that she owned the Lexus or that the Lexus did not qualify as “your car” under either the Chevrolet or Mercedes policy.⁹ As a result, the only real issue regarding the applicability of the “drive other car” exclusion pertains to the phrase “resulting from the use of a motor vehicle owned by you.”

¶ 13 Pechacek contends this phrase is ambiguous. “Insurance policy language is ambiguous ‘if it is susceptible to more than one reasonable interpretation.’ “ Folkman, 264 Wis.2d 617, ¶ 13, 665 N.W.2d 857

(quoting Danbeck v. American Family Mut. Ins. Co., 2001 WI 91, ¶ 10, 245 Wis.2d 186, 629 N.W.2d 150 ). We enforce an insurance policy as written, “without resort to rules of construction or applicable principles of case law,” if the relevant policy language is unambiguous. Id. However, ambiguities in policy language are construed in favor of the insured. Id. The logic of this rule is that the insurer, as the drafter of the policy, presumably could have drafted an unambiguous policy. See

Hirschhorn v. Auto–Owners Ins. Co., 2012 WI 20, ¶ 23, 338 Wis.2d 761, 809 N.W.2d 529.

¶ 14 Pechacek argues the policy is ambiguous because her injuries “result[ed] from” (i.e., were caused by) the negligence of an uninsured driver. In Pechacek's view, her “occupancy as a passenger in her own vehicle did not have any effect in producing the accident or her injuries.” She invokes the notion of an insured's reasonable expectations, arguing that, upon reading the “drive other car” exclusion, an insured would believe that injuries sustained under the circumstances of this case did not “result from” the insured's use of a motor vehicle, and were therefore within the scope of coverage. We reject Pechacek's arguments in this regard.

¶ 15 The “drive other car” exclusion is a common exclusion in motor vehicle policies. In 1985, our supreme court stated such provisions “serve [ ] to prohibit stacking of uninsured motorist benefits against the same insurer.” Welch v. State Farm Mut. Auto. Ins. Co., 122 Wis.2d 172, 176, 361 N.W.2d 680 (1985)

. Accordingly, the court held that “drive other...