Sass v. Acuity

• Decision Date: 25 February 2009
• Docket Number: No. 2007AP2943.,2007AP2943.
• Citation: 2009 WI App 32,765 N.W.2d 582
• Parties: Diane SASS, Plaintiff-Appellant, Aurora Health Care, Inc., Subrogated-Plaintiff, v. ACUITY, a Mutual Insurance Company, Defendant-Respondent.
• Court: Wisconsin Court of Appeals

765 N.W.2d 582

2009 WI App 32

Diane SASS, Plaintiff-Appellant Aurora Health Care, Inc., Subrogated-Plaintiff, v. ACUITY, a Mutual Insurance Company, Defendant-Respondent.

No. 2007AP2943.

Court of Appeals of Wisconsin.

Submitted on Briefs September 19, 2008.

Opinion Filed February 25, 2009.

On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Michael I. Tarnoff of Warshafsky, Rotter, Tarnoff & Bloch, S.C., Milwaukee.

On behalf of the defendant-respondent, the cause was submitted on the brief of Arthur P. Simpson and Christine M. Rice of Simpson & Deardorff, S.C., Milwaukee.

Before BROWN, C.J., ANDERSON, P.J., and SNYDER, J.

¶ 1 ANDERSON, P.J

This case arises out of an automobile accident in which Diane Sass was a passenger in a vehicle owned and operated by Todd Johnson.¹ Sass was allegedly injured during the accident when Johnson's boat came loose from the trailer of his automobile and struck the cab of the vehicle. Sass made bodily injury claims against Johnson's insurance carrier Acuity, a Mutual Insurance Company, including a declaratory judgment action claiming coverage under a watercraft endorsement attached to Johnson's homeowner's policy. Acuity acknowledged coverage under Johnson's automobile liability policy and paid the policy limit to Sass. It denied coverage under the homeowner's policy and moved for summary judgment. The trial court held that Sass was barred from receiving coverage under the language of the homeowner's policy and its watercraft rider and granted Acuity's motion. We agree with the trial court's thorough and well-reasoned decision and affirm.

¶ 2 The facts are not in dispute and are succinct; there was no testimony taken, and the trial court's decision was based on the pleadings and the insurance policy. On April 1, 2006, in Titusville, Florida, Sass was a passenger in a 1996 Dodge automobile owned and operated by Acuity's insured, Johnson. The Dodge was towing a trailer onto which Johnson had loaded a boat. An accident occurred, and Sass was allegedly injured when the boat came loose from the trailer and struck the cab of the vehicle.

¶ 3 At the time of the accident, Johnson carried both an automobile liability policy and a homeowner's insurance policy with Acuity. Sass sought recovery under both policies. With regard to the homeowner's policy, Sass moved for a declaratory judgment that Acuity provide coverage because of the attached watercraft liability endorsement. First, Sass alleged that Johnson was negligent in the manner in which he loaded his boat onto the trailer and that her injuries resulted from the negligence of Johnson in the ownership, maintenance, use and loading of his watercraft. Second, she alleged that the homeowner's insurance policy is contextually ambiguous in that a reasonable person would conclude that the policy provided coverage for Johnson's negligence in failing to properly secure the boat onto his vehicle trailer. Acuity acknowledged coverage under the automobile liability policy and paid the policy limit to Sass. It denied coverage under the homeowner's policy. Acuity moved for summary judgment. The trial court held there was no coverage under the homeowner's policy and granted Acuity's motion for summary judgment. Sass appeals.

¶ 4 Our review of a grant of summary judgment is de novo. Summary judgment methodology is well understood and will not be repeated here except to note that it is appropriate when there are no genuine issues of material fact and one party is entitled to a judgment as a matter of law. Walker v. Tobin, 209 Wis.2d 72, 76, 568 N.W.2d 303 (Ct.App.1997); WIS. STAT. § 802.08(2). The parties agree that no material facts are in dispute. This appeal requires the interpretation of an insurance policy, for which our review is likewise de novo. Folkman v. Quamme, 2003 WI 116, ¶ 12, 264 Wis.2d 617, 665 N.W.2d 857.

¶ 5 Insurance policy interpretation requires a three-step process. American Family Mut. Ins. Co. v. American Girl, Inc., 2004 WI 2, ¶ 24, 268 Wis.2d 16, 673 N.W.2d 65. First, the court must examine the facts to determine whether the policy's insuring agreement makes an initial grant of coverage. Id. Second, if there is an initial grant of coverage, the court is to examine the exclusions to determine whether any of them preclude coverage. Id. Third, the court looks to whether any exception to the applicable exclusions reinstate coverage. Id. The policy should be construed so as to give effect to the parties' intentions. Folkman, 264 Wis.2d 617, ¶ 12, 665 N.W.2d 857. "[W]hen the terms of an insurance policy are plain on their face, the policy must not be rewritten by construction." Smith v. Atlantic Mut. Ins. Co., 155 Wis.2d 808, 811, 456 N.W.2d 597 (1990).

¶ 6 If, however, policy language is reasonably susceptible of more than one construction, it is ambiguous. Varda v. Acuity, 2005 WI App 167, ¶ 8, 284 Wis.2d 552, 702 N.W.2d 65. Such ambiguities are resolved against the insurer who chooses the language and in favor of the insured. Id. Whether ambiguities exist is, however a question of law. Id. To determine whether coverage exists under a particular policy, we examine the facts of the insured's claim to ascertain whether the insuring agreement makes an initial grant of coverage. Id., ¶ 9. If an initial grant is triggered, we then look to see if any exclusions apply; exclusions are narrowly or strictly construed against the insurer and any ambiguities are resolved in favor of coverage. Id. "Generally, language present in an insurance policy must be interpreted to mean what a reasonable person in the position of the insured would understand that language to mean." Balz v. Heritage Mut. Ins. Co., 2006 WI App 131, ¶ 9, 294 Wis.2d 700, 720 N.W.2d 704.

¶ 7 We begin with the language of the homeowner's insurance policy in effect at the time of the accident. This policy provides in pertinent part:

COVERAGE—PERSONAL LIABILITY

If a claim is made or a suit is brought against an insured for damages because of bodily injury or property damage caused by an occurrence which this coverage applies, we will:

1. Pay up to our limit of liability for damages for which the insured is legally liable....

¶ 8 The policy excludes coverage for the following relevant exclusions:

1. Coverage E—Personal Liability and Coverage F—Medical Payments to Others do not apply to bodily injury or property damage:

....

(e) Arising out of:

(1) The ownership, maintenance, use, loading or unloading of motor vehicles or all other motorized land conveyances, including trailers, owned or operated by or rented or loaned to an insured....

(f) Arising out of:

(1) The ownership, maintenance, use, loading or unloading of a watercraft described below....

....

This exclusion does not apply while the watercraft is stored.

¶ 9 The policy has an "Additional Forms Information" section which attaches a "Watercraft Liability" form to the policy. An additional premium was paid for this coverage and it provides, in pertinent part:

The following form is attached to this policy:

SF-356 (8-02) WATERCRAFT LIABILITY

For an additional premium, Coverage E—Personal Liability and Coverage F— Medical Payments to Others Apply to BODILY INJURY or PROPERTY DAMAGE Arising out of:

a. The ownership, maintenance, use, loading or unloading of a watercraft described below....

All other provisions of this policy apply.

¶ 10 It is undisputed that Acuity's homeowner's policy makes an initial grant of coverage for Sass's bodily injury claim under the "Coverage E—Personal Liability" provision. It is also undisputed that the policy contains a motor vehicle exclusion— "Coverage E—Personal Liability and Coverage F—Medical Payments to Others do not apply to bodily injury or property damage"—which excludes from the initial grant of coverage, coverage for: bodily injury to others arising out of the insured's "ownership, maintenance, use, loading or unloading of motor vehicles or all other motorized land conveyances, including trailers, owned or operated by or rented or loaned to an insured."

¶ 11 Sass rests her argument for coverage on the separate "Watercraft Liability" endorsement that Johnson carried under his Acuity homeowner's policy. Sass argues that the watercraft coverage includes the causal negligence of Acuity's insured, in the manner in which the boat in question was loaded onto the insured's trailer, resulting in the injuries sustained by Sass.

¶ 12 Specifically, Sass argues the following: first, that the watercraft coverage, for which Johnson paid an additional premium, applies to the accident because the accident arose out of the "use" of Johnson's boat; second, that the watercraft coverage applies to the accident because the accident arose out of the "loading or unloading" of Johnson's boat; third, that an insured would have a reasonable expectation that his coverage would include injuries caused by his negligent loading of his boat; and fourth, that Acuity's reliance on the words "[a]ll other provisions of this policy apply" as an exclusion from coverage is not valid, because the phrase is both vague and contextually ambiguous.

¶ 13 The parties acknowledge that Wisconsin appellate courts have not addressed coverage disputes over the language of watercraft liability endorsements. The cases which they have cited from foreign jurisdictions suggest differing conclusions on the issue of whether towing a boat on a trailer constitutes using the boat.

¶ 14 In Vann v. United Farm Family Mutual Insurance Co., 790 N.E.2d 497 (Ind.App.2003), which is relied upon by Acuity, the court of appeals of Indiana gave effect to a motor vehicle exclusion provision and found that there was no coverage under a Rural Guardian insurance policy issued by Farm Bureau,² even though the insured had purchased a watercraft liability endorsement. We agree with the trial court that this case is readily distinguishable.

¶ 15 The Vanns' claim against the insured was...