Progressive Northern Ins. Co. v. Hall

• Decision Date: 07 February 2006
• Docket Number: No. 2004AP688.,2004AP688.
• Citation: 709 N.W.2d 46,2006 WI 13
• Parties: PROGRESSIVE NORTHERN INSURANCE COMPANY, Plaintiff-Appellant-Petitioner, v. Edward HALL, Defendant, General Casualty Company of Wisconsin, Defendant-Respondent.
• Court: Wisconsin Supreme Court

Page 46

709 N.W.2d 46

2006 WI 13

PROGRESSIVE NORTHERN INSURANCE COMPANY, Plaintiff-Appellant-Petitioner, v. Edward HALL, Defendant General Casualty Company of Wisconsin, Defendant-Respondent.

No. 2004AP688.

Supreme Court of Wisconsin.

Argued December 1, 2005.

Decided February 7, 2006.

For the plaintiff-appellant-petitioner there were briefs by Rick E. Hills, Michelle M. Stoeck, and Hills Legal Group, Ltd., Waukesha, and oral argument by Rick E. Hills.

For the defendant-respondent there was a brief by Stuart B. Eiche and Eiche & Frakes, S.C., Milwaukee, and oral argument by Stuart B. Eiche.

¶ 1 ANN WALSH BRADLEY, J

The petitioner, Progressive Northern Insurance Company, seeks review of a court of appeals decision affirming the circuit court's judgment dismissing Progressive's action for a declaratory judgment against General Casualty Company of Wisconsin.¹ The insurance companies dispute which of them is primary, that is, which is liable to pay the first $100,000 under the uninsured motorist coverage set forth in their respective policies. The issue before us is whether Progressive's "other insurance" clause, which provides that uninsured motorist coverage is primary for a named insured but excess for certain occupancy insureds, violates Wis. Stat. § 632.32(3)(a) (2003-04).²

¶ 2 Initially, we determine that § 632.32(3)(a) applies to uninsured motorist coverage. Because Progressive cannot save the other insurance clause by casting it as an "exclusion" under subsection (5)(e) of the statute and because Progressive's policy fails to provide uninsured motorist coverage for an occupancy insured in the same manner as the named insured, we further determine that the clause violates § 632.32(3)(a). Accordingly, we affirm the court of appeals.

I

¶ 3 The relevant facts are not in dispute. Edward Hall was a passenger in a vehicle operated by his brother, Richard Hall. They were involved in an accident with another vehicle operated by an uninsured driver. Edward sustained injuries as a result of the accident.

¶ 4 Edward was insured under a policy issued by General Casualty, and Richard was insured under a policy issued by Progressive. Each policy provided uninsured motorist coverage potentially applicable to Edward. In addition, each policy also contained an "other insurance" clause describing when uninsured motorist coverage would be primary and when it would be excess.

¶ 5 The "other insurance" clause in the General Casualty policy stated that "[a]ny insurance we provide with respect to a vehicle you do not own shall be excess over any collectible insurance providing such coverage on a primary basis." The "other insurance" clause in the Progressive policy stated that "[a]ny insurance we provide shall be excess over any other uninsured or underinsured motorist coverage, except for bodily injury to you or a relative when occupying a covered vehicle." (Emphasis added.) Although Edward and Richard are brothers, Edward was not a "relative" under Richard's policy with Progressive because Edward did not reside in Richard's household.

¶6 Progressive filed a declaratory judgment action against Edward and General Casualty, seeking a determination that General Casualty was obligated to provide uninsured motorist coverage to Edward on a primary basis. General Casualty countered that Progressive's "other insurance" clause was unenforceable under § 632.32 because it provided primary coverage for a named insured and driver while providing only excess coverage for a passenger. The circuit court agreed with General Casualty, as did the court of appeals. Progressive petitioned for review.

II

¶7 The parties agree that Edward is potentially entitled to uninsured motorist coverage under both policies. They also agree that if the language of both policies is given full effect, then Progressive's coverage is excess to General Casualty's. The parties disagree, however, on the validity of Progressive's "other insurance" clause under § 632.32.

¶ 8 The policy limits for uninsured motorist coverage under the Progressive policy are $100,000. Under the General Casualty policy, the limits for uninsured motorist coverage are $500,000. Thus, the dispute is over who pays the first $100,000 in coverage for Edward.

¶ 9 The issue we must address is whether Progressive's "other insurance" clause, which provides that uninsured motorist coverage is primary for a named insured but excess for certain occupancy insureds, violates § 632.32(3)(a). This issue requires that we interpret and apply statutory provisions to undisputed facts and that we interpret an insurance policy. These are questions of law subject to independent appellate review. Beerbohm v. State Farm Mut. Auto. Ins. Co., 2000 WI App 105, ¶ 8, 235 Wis.2d 182, 612 N.W.2d 338.

¶ 10 We initially determine that § 632.32(3)(a) applies to uninsured motorist coverage. In addition, we determine that Progressive's "other insurance" clause violates § 632.32(3)(a) because it fails to provide that occupancy insureds are covered in the same manner as the named insured and because Progressive cannot cast its other insurance clause as an "exclusion" under subsection (5)(e) of the statute in order to save the clause from the requirements of subsection (3)(a).

III

¶ 11 We begin with the language of § 632.32(3)(a). It provides:

(3) Required provisions. Except as provided in sub. (5), every policy subject to this section issued to an owner shall provide that:

(a) Coverage provided to the named insured applies in the same manner and under the same provisions to any person using any motor vehicle described in the policy when the use is for purposes and in the manner described in the policy.

"Using," in turn, includes "riding in" a vehicle under § 632.32(2)(c). For purposes of § 632.32(3)(a), Edward was therefore "using" Richard's vehicle when he was riding in it at the time of the accident.

¶ 12 We first address whether the requirements of § 632.32(3)(a) extend to uninsured motorist coverage. Progressive argues that they do not because uninsured motorist coverage is indemnity insurance, not liability insurance, and because § 632.32 does not apply to indemnity insurance. In support of its argument, Progressive cites the following language in § 632.32(1), which delineates the scope of § 632.32's applicability:

Except as otherwise provided, this section applies to every policy of insurance issued or delivered in this state against the insured's liability for loss or damage resulting from accident caused by any motor vehicle....

(Emphasis added.)

¶ 13 We determine that the question of whether § 632.32(3)(a) applies to uninsured motorist coverage does not turn on whether such coverage is categorized as liability insurance or indemnity insurance.

¶ 14 Every policy of insurance insuring against liability under § 632.32 must include uninsured motorist coverage "therein or supplemental thereto" pursuant to § 632.32(4). Thus, § 632.32(4) mandates that "every policy of insurance issued or delivered in this state against the insured's liability for loss or damage resulting from accident caused by any motor vehicle" must include uninsured motorist coverage. Section 632.32(1); see also Blazekovic v. City of Milwaukee, 2000 WI 41, ¶ 10, 234 Wis.2d 587, 610 N.W.2d 467 ("Wisconsin Stat. § 632.32(4)(a) mandates that every policy of automobile insurance issued in the state include uninsured motorist coverage.").

¶ 15 In other words, every policy insuring against liability under § 632.32 must include uninsured motorist coverage. Section 632.32(3)(a) plainly applies to every policy subject to § 632.32. Thus, we conclude that § 632.32(3)(a) applies to uninsured motorist coverage, regardless of whether such coverage is categorized as liability or indemnity insurance.

¶ 16 Progressive relies on Martin v. Milwaukee Mutual Insurance Co., 146 Wis.2d 759, 433 N.W.2d 1 (1988), in arguing that § 632.32(3)(a) cannot apply to uninsured motorist coverage. We determine, however, that Martin is not controlling.

¶ 17 In Martin, this court briefly discussed § 632.32(3)(a) in addressing whether an occupancy insured in a vehicle involved in an accident may benefit from uninsured motorist coverage carried by the named insured on another vehicle not involved in the accident. Martin, 146 Wis.2d at 766, 770-71, 433 N.W.2d 1. The court in Martin questioned the applicability of § 632.32(3)(a) to indemnity insurance, and it characterized uninsured motorist coverage as indemnity insurance. Id. at 770, 433 N.W.2d 1. However, the court did not definitively determine whether § 632.32(3)(a) may apply to uninsured motorist coverage. Rather, the court said:

Section 632.32(3)(a), Stats., has been primarily interpreted as dealing with liability insurance rather than indemnity insurance such as uninsured motorist coverage. Even if § 632.32(3)(a), Stats., did apply to indemnity insurance, it ... would not apply in this case. The policy of an involved auto is applied to both the driver and occupant. Both are able to recover under that uninsured motorist provision. The uninvolved auto's policy, however, is not subject to the statute because the Martins are not covered by it; not being occupants they were not occupancy insureds. The statutes do not state that "occupancy insureds are entitled to all applicable insurance protection the named insured has procured for himself."

Id. at 770-71, 433 N.W.2d 1 (citations omitted).

¶ 18 Thus, the court in Martin observed that § 632.32(3)(a) had been "primarily" interpreted as dealing with liability insurance rather than indemnity insurance but avoided deciding whether § 632.32(3)(a) applied to uninsured motorist coverage in general. Instead, the court reasoned that § 632.32(3)(a) did not apply to the extent that the occupancy insured was not "using" another vehicle that was not involved in the accident. The court concluded that an occupancy insured in a vehicle involved in an accident could not...