Rural Mutual Ins. Co. v. Welsh

• Decision Date: 26 July 2001
• Docket Number: No. 00-2699.,00-2699.
• Parties: RURAL MUTUAL INSURANCE COMPANY, Plaintiff-Respondent, v. Tracy WELSH and Wayne Sheffield, Defendants-Appellants, Keith WELSH and Betty Welsh, Defendants-Co-Appellants.
• Court: Wisconsin Court of Appeals

247 Wis.2d 417

2001 WI App 183

633 N.W.2d 633

RURAL MUTUAL INSURANCE COMPANY, Plaintiff-Respondent, v. Tracy WELSH and Wayne Sheffield, Defendants-Appellants, Keith WELSH and Betty Welsh, Defendants-Co-Appellants.

No. 00-2699.

Court of Appeals of Wisconsin.

Submitted on briefs April 18, 2001.

Decided July 26, 2001.

On behalf of the defendants-appellants, the cause was submitted on the briefs of Michael Riley and Alexander S. Kammer of Atterbury & Riley, S.C., Madison.

On behalf of the defendants-co-appellants, the cause was submitted on the briefs of Thomas T. Schrader, Bloomington.

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

Before Roggensack, Deininger and Lundsten, JJ.

¶ 1. DEININGER, J.

Tracy Welsh, Wayne Sheffield, and Keith and Betty Welsh appeal an order granting summary judgment to Rural Mutual Insurance Company. The order declared that insurance policies which Rural had issued to Keith and Betty do not provide liability coverage for their alleged negligence leading to the death of Skylar Sheffield, Tracy's and Wayne's son. On this de novo review, we conclude that the policies do not unambiguously exclude coverage for the occurrence at issue,¹ and that a reasonable insured would expect coverage on the present facts under the terms of the policy. Accordingly, we reverse the appealed order and remand for the entry of judgment in favor of Keith and Betty Welsh, declaring coverage for the claim relating to Skylar's death.

BACKGROUND

¶ 2. The parties filed cross-motions for summary judgment, and the facts relevant to this appeal are undisputed. Eleven-year-old Skylar Sheffield died while operating a forklift on or near a roadway in the vicinity of a farm owned by Keith and Betty Welsh. Keith Welsh owned the forklift and allowed Skylar to operate it without supervision. Rural had issued both a Farmowners and a Homeowners insurance policy to the Welshes, and liability coverages under both policies were in effect on the date of Skylar's fatal accident.

¶ 3. Rural filed a declaratory judgment action, naming its insureds and Skylar's parents as defendants. Rural sought a determination that the Homeowners and Farmowners policies it issued to the Welshes did not provide coverage for their alleged negligence related to Skylar's death. Skylar's parents filed a counterclaim against Rural and a cross-claim against the Welshes, who in turn counterclaimed against Rural, seeking a declaration of coverage. Both Rural and the Welshes moved for summary judgment. The court granted Rural's motion and denied the Welshes'. The Welshes and Skylar's parents appeal.²

ANALYSIS

[1, 2]

¶ 4. We review a circuit court's grant of summary judgment de novo, using the same methodology as the trial court. M&I First Nat'l Bank v. Episcopal Homes Mgt., Inc., 195 Wis. 2d 485, 496, 536 N.W.2d 175 (Ct. App. 1995). Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Id. at 496-97; see also WIS. STAT. § 802.08(2) (1999-2000).³

[3-6]

¶ 5. The issue is whether Rural's policies provide coverage for an occurrence involving a "motorized vehicle" on the present facts. The interpretation of an insurance contract presents a question of law which we decide de novo. Oaks v. American Family Mut. Ins. Co., 195 Wis. 2d 42, 47, 535 N.W.2d 120 (Ct. App. 1995). Our goal in interpreting the language of the policy is to ascertain and carry out the intention of the parties. Sprangers v. Greatway Ins. Co., 182 Wis. 2d 521, 536, 514 N.W.2d 1 (1994). Policy provisions tending to limit coverage are generally construed against the insurer. Bartel v. Carey, 127 Wis. 2d 310, 314, 379 N.W.2d 864 (Ct. App. 1985). However, "a policy may not be construed to bind the insurer to a risk which it did not contemplate and for which it received no premium." Id. at 314-15.

¶ 6. The supreme court has very recently summarized the proper approach for a court to take when it is called upon to interpret language in an insurance policy:

An insurance policy is construed to give effect to the intent of the parties, expressed in the language of the policy itself, which we interpret as a reasonable person in the position of the insured would understand it. . . . Where the language of the policy is plain and unambiguous, we enforce it as written, without resort to rules of construction or principles in case law.

Danbeck v. American Family Mut. Ins. Co., 2001 WI 91, ¶ 10, 245 Wis. 2d 186, 629 N.W.2d 150 (citations omitted). The court has also provided guidance regarding ambiguities which may arise from the language of a policy:

We construe ambiguities in coverage in favor of the insured and narrowly construe exclusions in coverage against the insurer. . . . The language of an insurance policy is ambiguous when it is "susceptible to more than one reasonable construction." . . . If the language in an insurance policy is ambiguous, we interpret that language by trying to determine "what a reasonable person in the position of the insured would have understood the words of the policy to mean." . . . In addition, the interpretation of language in an insurance policy should advance the insured's reasonable expectations of coverage.

Taylor v. Greatway Ins. Co., 2001 WI 93, ¶ 10, 245 Wis. 2d 134, 628 N.W.2d 916 (citations omitted).

¶ 7. We thus begin by examining the policy language relevant to the coverage dispute. The parties agree that the forklift at issue is a "motorized vehicle," which is defined in the policies as "[a]ny self-propelled vehicle (assembled or unassembled, regardless of horse-power, number of wheels or method of surface contact) including parts and equipment." Two subsets of "motorized vehicles" are also defined by the policies: "motor vehicle," and "recreational motor vehicle." There is no dispute that the forklift involved in Skylar's death is neither a "motor vehicle" nor a "recreational motor vehicle," as those terms are defined in the policies.⁴ ¶ 8. Both Rural policies begin their liability coverage sections with the following broad grant of liability coverage:

We will pay, up to our limit of liability, all sums for which an insured is legally liable because of bodily injury or property damage caused by an occurrence to which this coverage applies. . . .

In the Farmowners Policy, this grant of liability coverage is set forth under the heading, "PRINCIPAL LIABILITY AND MEDICAL EXPENSE COVERAGES," followed by the designation "Coverage A, Farm Public Liability and Personal Liability." In the Homeowners policy, the same granting language appears as "Coverage E—Personal Liability." It is undisputed that: (1) none of the exclusions specifically applicable to Coverage A or Coverage E relate to the use of "motorized vehicles"; (2) there is no exclusion for "motorized vehicles" under the General Exclusions applicable to all liability coverages in the Farmowners Policy; and (3) the only reference to "motorized vehicles" in the General Exclusions from liability coverage in the Homeowners Policy is a provision precluding payment if the motorized vehicle is being "used for racing," which is not at issue in this case.

¶ 9. Given the foregoing, we conclude that, absent any other provisions in the policies to the contrary, the "principal" liability coverage of each policy plainly encompasses the Welshes' potential liability for the circumstances surrounding Skylar's death. Rural does not contend otherwise, but argues that "the general terms of the policy must give way so as to give meaning to the specific provisions" contained in each policy under the heading "SUPPLEMENTAL LIABILITY AND MEDICAL EXPENSE COVERAGES." In other words, although Rural does not explicitly concede that coverage would exist under the principal liability coverage provisions if the "supplemental coverages" were absent, its argument effectively does so by omission.

¶ 10. We must next examine, therefore, the policy language which Rural argues impliedly excludes coverage in this case. It is the following:

SUPPLEMENTAL LIABILITY AND MEDICAL EXPENSE COVERAGES

This policy provides the following Supplemental Coverages. They are subject to the terms of the Principal Liability and Medical Payments coverages. . . .

. . . .

4. Incidental Motorized Vehicle Coverage: We will pay for bodily injury or property damage which:

a. occurs on the insured premises and results from the ownership, maintenance, use, loading or unloading of:

1) motorized vehicles not subject to motor vehicle registration because of their type of use; or

. . . .

3) except we will not pay for bodily injury or property damage which occurs on approaches and access ways immediately adjoining the insured premises.

. . . .

c. occurs anywhere and results from:

. . . .

3) motorized vehicles not subject to motor vehicle registration because of their type or use, but only while used in the insured's own farming operations. . . .

¶ 11. These paragraphs specifically grant liability coverage for bodily injury or property damage resulting from the use of motorized vehicles when injury or damage occurs (1) on the insured's premises, or (2) when the vehicle is used in the insured's own farming operations. The Welshes concede that these "supplemental coverage" provisions do not provide coverage for the accident at issue, but argue that they are, at the very least, inconsistent with the broad grant of "primary" liability coverage, from which the use of "motorized vehicles" is neither generally nor specifically excluded. The question we must decide, then, is whether the "supplemental coverage" of certain occurrences involving motorized vehicles creates an exclusion from principal liability coverage for all other occurrences involving motorized vehicles. We conclude that it does not.

¶ 12. Rural asserts, correctly, that, in construing and interpreting these insurance...