Roehl v. American Family Mut. Ins. Co.

• Decision Date: 23 September 1998
• Docket Number: No. 98-1207-FT,98-1207-FT
• Parties: Steven H. ROEHL and Karoline J. Roehl, Plaintiffs-Appellants, d v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Defendant-Respondent, Travis J. Crago and Shawn L. Crago, Defendants, Regal Ware, Inc., Necessary-Party.
• Court: Wisconsin Court of Appeals

Page 893

585 N.W.2d 893

222 Wis.2d 136

Steven H. ROEHL and Karoline J. Roehl Plaintiffs-Appellants, ^d v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Defendant-Respondent Travis J. Crago and Shawn L. Crago, Defendants Regal Ware, Inc., Necessary-Party.

No. 98-1207-FT.

Court of Appeals of Wisconsin.

Submitted on Briefs Aug. 19, 1998.

Opinion Released Sept. 23, 1998.

Opinion Filed Sept. 23, 1998.

On behalf of the plaintiffs-appellants, the cause was submitted on the briefs of Michael J. Ganzer and Frank W. Doster of Hodan, Doster & Ganzer, S.C. of Milwaukee.

On behalf of the defendant-respondent, the cause was submitted on the brief of James T. Murray, Jr. and Molly C. Feldbruegge of Peterson, Johnson & Murray, S.C. of Milwaukee.

On behalf of the Wisconsin Academy of Trial Lawyers an amicus curiae brief was filed by D.J. Weis of Habush, Habush, Davis & Rottier, S.C. of Rhinelander.

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

NETTESHEIM, Judge.

Section 631.36(5), STATS., requires an automobile liability insurer to provide notice to its insured when a policy is renewed on "less favorable terms." The trial court ruled that this statute does not apply where a reduction in coverage is triggered by action of the legislature, not the insurer. The trial court also ruled that the language of the particular policies in this case did not obligate the insurer to provide such notice. As a result, the court ruled at summary judgment that the "drive other car" exclusions in two policies issued to Steven H. and Karoline J. Roehl by American Family Mutual Insurance Company were enforceable even though American Family had not given the Roehls notice that the legislature had validated such exclusions following a judicial decision which had invalidated them. Based on this ruling, the court dismissed the Roehls' claim for underinsured motorist (UIM) benefits under two American Family policies.

We affirm the trial court's grant of summary judgment to American Family.

FACTS

The facts are undisputed. On March 29, 1996, Steven was operating his motorcycle when he was struck by an automobile driven by Travis J. Crago. Steven suffered severe injuries as a result of the accident. It is undisputed that the accident resulted from Crago's negligence.

At the time of the accident, the Roehls held two American Family automobile insurance policies insuring two vehicles which were not involved in the accident. ¹ Each policy provided UIM coverage up to a $50,000 limit. Because Steven's damages exceeded the coverage provided by Crago's insurer, the Roehls sought benefits under the UIM coverage in their American Family policies. American Family denied coverage based on the "drive other car" exclusion contained in each policy. On June 7, 1996, the Roehls filed a complaint against American Family seeking recovery under the UIM provisions of the two insurance policies. ²

American Family moved for summary judgment based on the "drive other car" exclusion in each policy. These provisions excluded coverage for

bodily injury to a person while occupying, or when struck by, a motor vehicle that is not insured under this policy, if it is owned by you or any resident of your household.

American Family requested dismissal because it was undisputed that the motorcycle which Steven was operating at the time of the accident was owned by him and was not insured by American Family. The Roehls The trial court issued a written decision granting summary judgment in favor of American Family. The court held that (1) American Family had not offered or purported to renew the policies on less favorable terms such that notice was required pursuant to § 631.36(5), STATS.; and (2) the plain and unambiguous language of the policies did not require American Family to give the Roehls notice of a change in a policy term "brought about by forces outside the agreements, such as legislation." The court concluded that "regardless of the changes in the terms of the policies in question American Family and Roehl ended up in the position for which they originally bargained."

responded that the "drive other car" exclusion was unenforceable because American Family had not provided them notice that the legislature had validated such exclusions after the supreme court had invalidated them as to uninsured motorist coverage and the court of appeals had invalidated them as to UIM coverage.

The Roehls appeal. The Wisconsin Academy of Trial Lawyers (WATL) has filed an amicus curiae brief in support of the Roehls' claim.

DISCUSSION

A motion for summary judgment may be used to address issues of insurance policy coverage. See Calbow v. Midwest Sec. Ins. Co., 271 Wis.2d 675, 679, 579 N.W.2d 264, 266 (Ct.App.1998). For summary judgment to be granted, there must be no genuine issue of material fact and the movant must be entitled to judgment as a matter of law. See id.; see also § 802.08(2), STATS. Our review of a summary judgment is de novo. See M & I First Nat'l Bank v. Episcopal Homes Management, Inc., 195 Wis.2d 485, 497, 536 N.W.2d 175, 182 (Ct.App.1995).

This case takes us into the realm of statutory construction and the interpretation of an insurance contract. Statutory construction presents a question of law. See Gonzalez v. Teskey, 160 Wis.2d 1, 7, 465 N.W.2d 525, 528 (Ct.App.1990). The purpose of statutory construction is to give effect to the legislative intent. See State ex rel. Angela M.W. v. Kruzicki, 209 Wis.2d 112, 121, 561 N.W.2d 729, 734 (1997). When determining legislative intent, we first examine the language of the statute itself. If the language is clear and unambiguous, we define the language of the statute in accordance with its ordinary meaning. See id. Where a statute is ambiguous, we must ascertain the legislative intent from the language of the statute in relation to its scope, history, context, subject matter and object intended to be accomplished. See id.

The interpretation of an insurance contract also presents a question of law for our independent review. See Tara N. v. Economy Fire & Cas. Ins. Co., 197 Wis.2d 77, 84, 540 N.W.2d 26, 29 (Ct.App.1995). We interpret an insurance contract to mean what a reasonable person in the position of the insured would have understood the words of the contract to mean. See id. at 90-91, 540 N.W.2d at 32.

The American Family insurance policies issued to the Roehls include a "drive other car" exclusion which bars coverage for "bodily injury to a person while occupying, or when struck by, a motor vehicle that is not insured under this policy, if it is owned by you or any resident of your household." The history of this exclusion underlies the issue on appeal.

In 1985, in Welch v. State Farm Mutual Automobile Insurance Co., 122 Wis.2d 172, 178-82, 361 N.W.2d 680, 683-85 (1985), our supreme court invalidated "drive other car" exclusions for uninsured motorist coverage. The court concluded that the "drive other car" exclusion was a reducing clause which violated the statutory prohibition on reducing clauses. See id. at 177-78, 361 N.W.2d at 683. In 1993, in Rodey v. Stoner, 180 Wis.2d 309, 315-16, 509 N.W.2d 316, 318 (Ct.App.1993), this court extended the Welch holding to underinsured motorist coverage. Despite the judicial invalidation of these exclusions, they were included in the American Family policies and in the policy renewals issued by American Family to the Roehls. ³

On June 30, 1995, in response to the Welch and Rodey decisions, the legislature enacted § 632.32(5)(j), STATS., which statutorily validated "drive other car" exclusions. Thus, Welch and Rodey were legislatively overruled. The statute provides:

(j) A policy may provide that any coverage under the policy does not apply to a loss resulting from the use of a motor vehicle that meets all of the following conditions:

1. Is owned by the named insured, or is owned by the named insured's spouse or a relative of the named insured if the spouse or relative resides in the same household as the named insured.

2. Is not described in the policy under which the claim is made.

3. Is not covered under the terms of the policy as a newly acquired or replacement motor vehicle.

Section 632.32(5)(j).

The parties do not dispute this history of the "drive other car" exclusion or the validation of such exclusions by the enactment of § 632.32(5)(j), STATS. Rather, the issue on appeal is whether American Family was obligated by the terms of § 631.36(5), STATS., by the terms of its policies, or by the combination of both, to notify the Roehls of the limitation in coverage occasioned by the legislature's enactment of § 632.32(5)(j).

Section 631.36(5), STATS., provides in relevant part:

(5) RENEWAL WITH ALTERED TERMS. (a) General. Subject to pars. (b) and (d), if the insurer offers or purports to renew the policy but on less favorable terms or at higher premiums, the new terms or premiums take effect on the renewal date if the insurer sent by 1st class mail or delivered to the policyholder notice of the new terms or premiums at least 60 days prior to the renewal date.

Although neither the Roehls nor American Family expressly addresses whether the language of § 631.36(5), STATS., is ambiguous or unambiguous, we begin our discussion by addressing this question. ⁴ The language of the statute is straightforward. It requires notice to the insured when a renewed policy offers coverage on "less favorable terms." Obviously, a renewal which reduces or limits coverage from the preceding coverage qualifies as "less favorable terms." However, statutory language unambiguous on its face can sometimes be rendered ambiguous by the context in which it is sought to be applied. See Brandt v. LIRC, 160 Wis.2d 353, 368, 466 N.W.2d 673, 679 (Ct.App.1991) ("[D]epending on the facts of a given case, the same statute may be found ambiguous in one setting and unambiguous in another."). Here, although the four corners of § 631.36(5) may well be unambiguous, it is not clear from the...