Ruenger v. Soodsma

• Decision Date: 31 March 2005
• Docket Number: No. 04-1795.,04-1795.
• Citation: 2005 WI App 79,695 N.W.2d 840,281 Wis.2d 228
• Parties: Jeanna M. RUENGER, Plaintiff-Appellant, v. Seymour C. SOODSMA, Defendant, RURAL MUTUAL INSURANCE COMPANY, Defendant-Respondent.
• Court: Wisconsin Court of Appeals

281 Wis.2d 228

2005 WI App 79

695 N.W.2d 840

Jeanna M. RUENGER, Plaintiff-Appellant, v. Seymour C. SOODSMA, Defendant, RURAL MUTUAL INSURANCE COMPANY, Defendant-Respondent.

No. 04-1795.

Court of Appeals of Wisconsin.

Submitted on briefs December 16, 2004.

Decided March 31, 2005.

On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Virginia M. Antoine, Habush Habush & Rottier, S.C., Milwaukee.

On behalf of the defendant-respondent, the cause was submitted on the brief of Robert G. Wixson, Winner, Wixson & Pernitz, Madison.

Before Deininger, P.J., Dykman and Vergeront, JJ.

¶ 1. VERGERONT, J.

Jeanna Ruenger appeals the circuit court order determining that the reducing clause in the underinsured motorist (UIM) endorsement of her personal auto policy was valid and also determining that there was no UIM coverage under her business auto policy for the injuries she sustained while operating her skid loader. With respect to the personal auto policy, we agree with the circuit court that the reducing clause is valid because it complies with WIS. STAT. § 632.32(5)(i)¹ and is not ambiguous when read in the context of the entire policy. With respect to the business auto policy, we agree with Ruenger that it does provide UIM coverage for her injuries. Our primary ruling on this issue is that both the insurer's proposed construction of the introductory language in the UIM endorsement and the occupancy exclusion are prohibited by § 632.32(6)(b)2. as construed and applied in Mau v. North Dakota Ins. Reserve Fund, 2001 WI 134, 248 Wis. 2d 1031, 637 N.W.2d 45. Finally, we conclude the reducing clause in the UIM endorsement to the business auto policy is valid because it complies with § 632.32(5)(i) and is not ambiguous when read in the context of the entire policy.

¶ 2. We therefore affirm in part, reverse in part, and remand for further proceedings consistent with this decision and the specific instructions in paragraphs 56-57.

BACKGROUND

¶ 3. Ruenger was operating her skid loader to clear snow from around her mailbox when an automobile driven by Seymour Soodsma struck the skid loader and caused injury to Ruenger. Soodsma was insured under a policy issued by Wisconsin American Mutual Insurance. After Ruenger initiated this action, Wisconsin American Mutual paid its policy limits—$250,000—to Ruenger.

¶ 4. Rural Mutual Insurance Company had issued two policies to Ruenger—a private passenger auto policy (personal policy) and a business automobile policy. Both policies contained UIM coverage—with a limit of $300,000 under the personal policy and $500,000 under the business policy—and the UIM endorsements² in both policies contained reducing clauses. ¶ 5. Rural moved for a declaratory ruling that the UIM reducing clause in the personal policy was valid and reduced its obligation to $50,000, which it had already paid Ruenger. Ruenger responded with a motion asking the court to declare the reducing clause unenforceable because it did not comply with WIS. STAT. § 632.32(5)(i) and, alternatively, because it was ambiguous when considered in the context of the entire policy. The court disagreed with Ruenger and declared the reducing clause valid.

¶ 6. Rural subsequently moved for a declaratory ruling that Ruenger was not entitled to UIM benefits under the business policy because of the exclusion for bodily injuries sustained by the named insured when occupying an owned vehicle that is not a covered auto (occupancy exclusion). In the alternative, Rural asked the court to declare that the reducing clause was valid and therefore its obligation was $200,000—the $500,000 limit less the $250,000 Ruenger received under Soodsma's policy and the $50,000 she had received from Rural under the UIM coverage in her personal policy.

¶ 7. In response, Ruenger asked the court to declare that there was UIM coverage under the business policy and that the occupancy exclusion did not apply because it violated WIS. STAT. § 632.32(6)(b)2.a. and (5)(j). Ruenger also asked the court to declare that the reducing clause was unenforceable because it did not comply with § 632.32(5)(i) and, alternatively, because it was ambiguous in the context of the entire policy. The circuit court concluded that the occupancy exclusion was valid and, because of its application, there was no UIM coverage under the business policy. In the alternative, the court ruled that if there were UIM coverage under that policy, the UIM reducing clause would be valid.

DISCUSSION

¶ 8. On appeal, Ruenger renews her arguments on the reducing clauses in both policies, the occupancy exclusion, and other language in the business policy. Resolution of these issues requires the construction and application of statutes and insurance policy provisions to undisputed facts, both questions of law, which we review de novo. Van Erden v. Sobczak, 2004 WI App 40, ¶¶ 11, 22, 271 Wis. 2d 163, 677 N.W.2d 718.

¶ 9. When we construe insurance policy provisions, our goal is to give effect to the intent of the parties as expressed in the language of the policy. Folkman v. Quamme, 2003 WI 116, ¶ 12, 264 Wis. 2d 617, 665 N.W.2d 857. We first inquire whether the language regarding the disputed coverage issue is ambiguous, that is, susceptible to more than one reasonable interpretation. Id., ¶ 13. If there is no ambiguity, we apply the language as written, without resort to rules of construction or principles of case law. Id. On the other hand, if there is ambiguity, we construe the clause in favor of the insured. Id.

¶ 10. A provision that is unambiguous in itself may be ambiguous in the context of the entire policy. Id., ¶ 19. The test for determining contextual ambiguity is the same as that for determining whether a particular clause is ambiguous: is the language of the particular provision, "when read in the context of the policy's other language, reasonably or fairly susceptible to more than one construction ... measured by the objective understanding of an ordinary insured." Id., ¶ 29 (citations omitted). In determining whether there is contextual ambiguity, we inquire whether "the organization, labeling, explanation, inconsistency, omission, and text" of other relevant provisions in the policy create an "objectively reasonable alternative meaning and, thereby, disrupt an insurer's otherwise clear policy language." Id., ¶¶ 19, 30.

I. UIM Reducing Clause in Personal Policy

A. Compliance with WIS. STAT. § 632.32(5)(i)

¶ 11. The reducing clause in the UIM endorsement of the personal policy provides:

B. The limit of liability shall be reduced by all sums:

1. Paid because of the "bodily injury" by or on behalf of persons or organizations who may be legally responsible. This includes all sums paid under Part A; and

2. Paid or payable because of the "bodily injury" under any of the following or similar law:

a. Workers' compensation law; or

b. Disability benefits law.

¶ 12. Under WIS. STAT. § 632.32(5)(i),

(i) A policy may provide that the limits under the policy for uninsured or underinsured motorist coverage for bodily injury or death resulting from any one accident shall be reduced by any of the following that apply:

1. Amounts paid by or on behalf of any person or organization that may be legally responsible for the bodily injury or death for which the payment is made.

2. Amounts paid or payable under any worker's compensation law.

3. Amounts paid or payable under any disability benefits laws.

¶ 13. Ruenger contends that the reducing clause in her personal policy is broader than that authorized by the statute in three ways and is thus invalid: (1) when referring to the reduction for sums paid or payable under worker's compensation law or disability benefits law, the clause contains the phrase "under any ... similar law," which the statute does not; (2) the reduction in the reducing clause for "sums ... [p]aid because of the `bodily injury' by or on behalf of persons or organizations who may be legally responsible" does not expressly require that the legal responsibility be for the bodily injury, as does the statute; and (3) the second declarations page provides for reduction "as a result of your receiving amounts from other sources . . .," instead of limiting sources to the three mentioned in the statute.

¶ 14. We have specifically rejected the first argument in Van Erden, 271 Wis. 2d 163, and our reasoning in Remiszewski v. American Family Ins. Co., 2004 WI App 175, 276 Wis. 2d 167, 687 N.W.2d 809, resolves all three arguments against Ruenger. In Van Erden, we concluded that the phrase "or any similar law" following the words "workers' compensation or disability benefits law" in that reducing clause was not an impermissible broadening of the statute, but was simply a "catchall phrase for jurisdictions that may call their disability benefits law by another name." 271 Wis. 2d 163, ¶¶ 24-25. We also observed that the challenged phrase did not affect the insured, because the insured had received worker's compensation benefits, not disability benefits. Id., ¶ 25.

¶ 15. We reaffirmed this latter principle in Remiszewski, where the insured challenged the phrase "[a] payment made or amount payable" in that reducing clause because the statute permitted a reduction only for "[a]mounts paid." 276 Wis. 2d 167, ¶¶ 14, 15. The insurer had attempted to reduce the UIM limit based only on the amount actually paid and argued, citing Folkman, that "`inconsistencies in the context of the policy must be material to the issue in dispute and be of such a nature that a reasonable insured would find an alternative meaning.'" Id., ¶ 16 (citing Folkman, 264 Wis. 2d 617, ¶ 32). We agreed with the insurer:

Here, [the insured] is challenging American Family's right to reduce her payment by the amount already paid to her from [the tortfeasor's] policy. While the "amount payable" provision would arguably permit further reductions, it would not cause a reasonable insured to believe that

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