Schwochert v. American Family Mut. Ins. Co.

• Decision Date: 18 June 1987
• Docket Number: No. 86-1538,86-1538
• Citation: 139 Wis.2d 335,407 N.W.2d 525
• Parties: Donald L. SCHWOCHERT, Jr., Shane Schwochert, Jr., by his guardian, Donald L. Schwochert, Jr., and Donel Schwochert, by her guardian, Donald L. Schwochert, Jr., Plaintiffs-Appellants and Cross-Respondents, v. AMERICAN FAMILY MUTUAL INS. CO., Defendant-Respondent and Cross-Appellant, Jeffrey J. Lauth, John E. Lauth, Annetta N. Lauth, Columbia County, a Wisconsin municipal corporation, General Casualty Company, Wisconsin Board of Regents of the University of Wisconsin Systems, d/b/a Wisconsin Hospital and Clinics, Defendants.
• Court: Wisconsin Supreme Court

Page 525

407 N.W.2d 525

139 Wis.2d 335

Donald L. SCHWOCHERT, Jr., Shane Schwochert, Jr., by his guardian, Donald L. Schwochert, Jr., and Donel Schwochert by her guardian, Donald L. Schwochert, Jr. Plaintiffs-Appellants and Cross-Respondents, v. AMERICAN FAMILY MUTUAL INS. CO., Defendant-Respondent and Cross-Appellant Jeffrey J. Lauth, John E. Lauth, Annetta N. Lauth, Columbia County, a Wisconsin municipal corporation, General Casualty Company, Wisconsin Board of Regents of the University of Wisconsin Systems, d/b/a Wisconsin Hospital and Clinics, Defendants.

No. 86-1538.

Supreme Court of Wisconsin.

Argued May 29, 1987.

Decided June 18, 1987.

Douglas W. Kammer (argued), for plaintiffs-appellants & cross-respondents (in the court of appeals); Douglas W. Kammer, S.C., Portage, on brief.

Clyde C. Cross (argued), for defendant-respondent & cross-appellant (in the court of appeals); Cross, Mercer & Maffei, Baraboo, on brief.

Boyd M. McGranaghan, Wisconsin Academy of Trial Lawyers and Kmiec Law Office, Milwaukee, amicus curiae.

Carroll Metzner, Robert J. Kasieta, Wisconsin Insurance Alliance and Bell, Metzner & Gierhart, S.C., Madison, amicus curiae.

STEINMETZ, Justice.

The parties brought a petition to bypass the court of appeals under sec. (Rule) 809.60(2), Stats., which we accepted.

This is an action for the wrongful death of Susan Schwochert by her surviving husband, Donald Schwochert, Jr., and their children, and for injuries to Donald Schwochert, Jr. These damages resulted from an accident on July 27, 1984, when Jeffrey Lauth negligently failed to stop at a stop sign and collided with Schwocherts' 1976 Chevrolet Monte Carlo. Jeffrey's negligence was stipulated to be the sole cause of the accident in exchange for a release of all the personal liability of Jeffrey or John Lauth, his father.

Jeffrey was driving a 1979 three-quarter ton Chevrolet four-wheel drive pickup truck at the time of the accident which belonged to his father. This vehicle was not listed on either Jeffrey's or John's auto insurance policies. Both father and son lived in the same household and were involved in the business of farming. The accident truck was used primarily for farm hauling within the boundaries of the Lauth farm.

Jeffrey personally owned a 1977 Chevrolet pickup truck that was disabled at the time of the accident. At the time of the accident, Jeffrey was on the way to a friend's farm to repair his own disabled pickup truck. He was transferring tools to the friend's farm for that purpose. The disabled pickup was specifically listed on an American Family Mutual Ins. Co. (American Family) auto policy issued solely to Jeffrey with Jeffrey as named insured. John Lauth, the owner of the accident pickup, had at least two other vehicles, a station wagon and a Dodge Aspen, that were insured on liability policies with American Family.

Donald and Susan Schwochert owned two vehicles at the time of the accident, a 1976 Chevrolet Monte Carlo, which was involved in the accident, and a 1974 Chevrolet pickup truck, which was not involved in the accident. Both Schwochert vehicles were insured by American Family under separate policies; the policy on the 1976 Monte Carlo, the accident vehicle, was issued with Susan Schwochert as the named insured, and the policy on the 1974 pickup truck listed both Donald and Susan Schwochert as named insureds. Both Schwochert policies provided liability, medical pay, collision and uninsured motorist coverage, but only the policy on the 1974 truck, which was not involved in the accident, provided underinsured motorist coverage.

Prior to trial, the Schwocherts' counsel filed a motion for summary judgment arguing that Jeffrey Lauth was uninsured as a matter of law. Counsel for American Family defending against the Schwocherts' claims for uninsured and underinsured coverage, made an oral motion for summary judgment just prior to trial urging the court to rule that Jeffrey was insured as a matter of law. The trial court found Jeffrey was insured as a matter of law and that American Family could waive its policy defenses to extend liability coverage. ¹ The trial court further concluded that because Jeffrey was insured, the uninsured motorist coverage was not involved. However, the trial court allowed the underinsured motorist coverage limits to be tapped from the Schwocherts' policy on the 1974 truck.

The issues raised, according to the plaintiffs, are:

(1) Under the facts of this case, was Jeffrey Lauth an insured driver as a matter of law? The trial court answered this question in the affirmative.

(2) Does underinsured coverage "stack" on top of uninsured motorist coverage?

(a) Should the stacking of underinsured motorist coverage be allowed on top of underlying coverage which happens to be afforded by the insured's uninsured motorist policy?

(b) Should the terms of the policy be allowed to defeat recovery and frustrate the stacking of the underinsured motorist coverage?

Because of the trial court's finding that Jeffrey was insured, the court did not reach this question.

(3) As to the underinsured motorist coverage in the Schwocherts' policy, are the limits of liability $200,000 or $300,000 where two people sustain bodily injury and four people sustain damage? The trial court answered this as $200,000.

(4) Given the offers of settlement under sec. 807.01, Stats., are the plaintiffs entitled to prejudgment interest and double costs? The trial court answered this in the negative.

American Family first argues that the judgment entered in this case has been satisfied due to the Schwocherts accepting $100,000 and executing partial satisfactions of judgment. Therefore, there is no need, it argues, to decide whether Jeffrey was an insured under the policy and whether he was driving a substitute vehicle. American Family cites Wyandotte Chemicals Corp. v. Royal Electric Mfg., 66 Wis.2d 577, 592, 225 N.W.2d 648 (1975), which stated: "As a general rule, it has been held that if a benefit received is dependent upon, or was granted as a condition of, the order or judgment attacked, the party ought not to be permitted to carry on his warfare." This limitation on the right to seek appellate review was reiterated in Estreen v. Bluhm, 79 Wis.2d 142, 255 N.W.2d 473 (1977).

However, the judgment in this case dated August 1, 1986, was entered pursuant to the stipulation of the parties of July 17, 1986, and was subject to the limitations of that stipulation. ² The stipulation provided that: "Judgment may be entered herein in favor of plaintiffs against American Family in the amount of the policy limits of its applicable coverages, as finally determined by the court or courts."

The partial satisfaction of judgment in the amount of $100,000 does not state from which policy coverage it was paid. Perhaps American Family's draft shows the policy coverage from which it was paid; however, the draft is not a part of this record. The reference to the stipulation provision does not commit the plaintiffs to accepting the $100,000 and thereby conceding that sum came from Jeffrey's liability policy.

Due to the potential conflict of interest, separate counsel represented Jeffrey on his policy covering his disabled vehicle. John, the father, had separate counsel for his policy. American Family was represented by separate counsel on the applicability of uninsured motorist and underinsured motorist coverages on the Schwocherts' two American Family policies. American Family argues that since Jeffrey admitted in the pleadings to being insured with liability coverage and the Schwocherts also alleged Jeffrey is covered by a liability policy, the issue of Jeffrey having such coverage is foreclosed. However, Jeffrey admitted to having liability coverage but stated: "[T]hat said policy of insurance was and is subject to the terms, conditions and limitations contained therein." In addition, the Schwocherts pled, in the alternative, that if Jeffrey did not have liability coverage, the various uninsured motorist coverages applied. Therefore, the issue of whether Jeffrey was covered by liability insurance was not conclusively resolved by the pleadings.

The forming of the issues in this case is unusual to say the least. The accident was a very unfortunate and serious one. Susan Schwochert died as a result of it. The combined injuries of the Schwochert family members resulted in damages far in excess of $100,000, the amount of Jeffrey's liability coverage. Therefore, the Schwocherts argue that Jeffrey was not covered by his liability coverage in order to present claims against their uninsured motorist coverages of $100,000/$300,000 and another policy of Susan's with uninsured motorist coverage of $25,000/$50,000. The plaintiffs also seek coverage of their policy of $300,000 of underinsured motorist coverage. If the plaintiffs prevailed on all arguments, the coverages could total $750,000. Thus, it is the plaintiffs' unusual but understandable argument that Jeffrey did not have liability coverage. The Schwocherts' argument is not convincing as to why if Jeffrey did not have liability coverage in order to tap the uninsured motorist coverages of their own policies, they were still entitled to the $100,000 liability coverage of Jeffrey's policy.

The trial court determined American Family's motion in limine at the opening of the trial holding there was no jury issue as to Jeffrey's status as an insured motorist under the auto policy issued to him. The court found that construction of insurance policies is for the court and cited Katze v. Randolph & Scott Mut. Fire Ins., 116 Wis.2d 206, 341 N.W.2d 689 (1984).

The trial court found that Jeffrey's policy did not require that he have any form of permission to use his father's truck because he was using it as a substitute for his own listed disabled truck while it was being repaired. The appropriate portion of Jeffrey's policy was general definition 14d which states:

"Your...