Secura Supreme Ins. Co. v. Estate

Docket Number2020AP1078-FT
Decision Date22 March 2023
Citation406 Wis.2d 297,2023 WI 21,986 N.W.2d 810
Parties SECURA SUPREME INSURANCE COMPANY, Plaintiff-Appellant-Petitioner, v. The ESTATE OF Daniel Keith HUCK, Defendant-Respondent.
CourtWisconsin Supreme Court

For the plaintiff-appellant-petitioner, there were briefs filed by Barbara A. O'Brien, Erik M. Gustafson, and Borgelt, Powell, Peterson & Frauen, S.C., Milwaukee. There was an oral argument by Patryk Silver.

For the defendant-respondent, there was a brief filed by Susan R. Tyndall, Tony M. Dunn, Angela Komp, and Habush, Habush & Rottier, S.C., Racine. There was an oral argument by Tony M. Dunn.

An amicus curiae brief was filed by Edward E. Robinson and Cannon & Dunphy, S.C., Brookfield, for the Wisconsin Association for Justice. There was an oral argument by Edward E. Robinson.

An amicus curiae brief was filed by James A. Friedman, Daniel C.W. Narvey, and Godfrey & Kahn, S.C., Madison, for the Wisconsin Insurance Alliance, the American Property Casualty Insurance Association, and the Wisconsin Defense Counsel.

ROGGENSACK, J., delivered the majority opinion of the Court with respect to ¶¶1-2, 4-16, and 29, in which ZIEGLER, C.J., ANN WALSH BRADLEY, DALLET, HAGEDORN, and KAROFSKY, JJ., joined, and an opinion, in which ZIEGLER, C.J., joined. DALLET, J., filed a concurring opinion, in which ANN WALSH BRADLEY, HAGEDORN, and KAROFSKY, JJ., joined. REBECCA GRASSL BRADLEY, J., filed a dissenting opinion.


¶1 Petitioner Secura Supreme Insurance Company (Secura), which insured Daniel Keith Huck, seeks review of a published court of appeals decision1 that affirmed an order granting judgment to the Estate of Daniel Keith Huck (Estate).2 We affirm the court of appeals.

¶2 We interpret Secura's policy as precluding Secura from reducing its liability to the Estate by the total amount of payments the Estate initially received. The Estate first received worker's compensation from Huck's employer's worker's compensation insurer (WC insurer), and then a settlement from the tortfeasor's insurer. Wisconsin Stat. § 102.29(1)(b) (2021-22)3 obligated the Estate to reimburse the WC insurer with a portion of the settlement it received from the tortfeasor. Secura's underinsured motorist (UIM) policy contemplated payments made in accordance with worker's compensation law in its reducing clause, and obligated the Estate to reimburse the WC insurer. The policy also required the Estate to exhaust any other bodily injury liability bonds or policies and to receive payment from them before Secura would pay UIM benefits. Accordingly, we conclude the policy's plain language required its payment of UIM benefits based on the Estate's recovery after reimbursements to the WC insurer and collection of the tortfeasor's liability payment had occurred.

¶3 However, Secura argues its policy "substantially incorporates" the statutory language of Wis. Stat. § 632.32(5)(i), which permits it to reduce payment by the amount the Estate initially received. We conclude the plain language of § 632.32(5)(i) establishes that an insurer may reduce its liability by the recovery of the insured at the time the insurer enforces its reducing clause. The Estate's obligatory reimbursement was made pursuant to "worker's compensation law," which § 632.32(5)(i)2. recognizes. For these reasons, we conclude that Secura is not statutorily authorized to reduce its liability limits by the total worker's compensation and tortfeasor settlement payments the Estate initially received but was obligated to reimburse in part. Accordingly, Secura's policy and § 632.32(5)(i) require Secura to provide an additional $9,718.73 to the Estate.


¶4 The facts are undisputed. Mr. Huck was struck and killed by a motorist while he performed his job duties for the Village of Mount Pleasant. Since the fatal accident occurred in the course of Mr. Huck's employment, the Village's WC insurer initially provided $35,798.04 to the Estate.

¶5 The motorist that struck Mr. Huck was insured for $25,000 in liability coverage, which also was provided to Mr. Huck's Estate. However, by receiving the $25,000 settlement from the tortfeasor, the Estate was obligated to reimburse the WC insurer from the settlement based on Wis. Stat. § 102.29(1)(b). As required, the Estate reimbursed the WC insurer $9,718.73 so that the Estate ultimately retained $26,079.31 from worker's compensation. This dispute centers on the importance of the $9,718.73 reimbursement (the "Disputed Amount") that the Estate was required to return to the WC insurer.

¶6 Mr. Huck had purchased an automobile insurance policy from Secura that included UIM coverage with a liability limit of $250,000 for "each person." The Estate's recovery from worker's compensation and the tortfeasor were insufficient to cover Mr. Huck's damages, which exceeded $250,000. The Estate submitted a claim under the Secura UIM policy. The policy's reducing clause allowed Secura to reduce its UIM liability limits by the amounts paid by a tortfeasor, and by "amounts paid or payable under any worker's compensation law."4 Therefore, Secura reduced its liability limit to the Estate by the $25,000 settlement with the tortfeasor. Secura also reduced its liability limit by the total worker's compensation benefit of $35,798.04, "even [though] some of that money (the Disputed Amount) return[ed] to the [worker's compensation] Payor." Based on these reductions, Secura tendered $189,201.96 to the Estate.5

¶7 Secura filed a declaratory judgment complaint and moved for judgment on the pleadings pursuant to Wis. Stat. § 802.06(3). Secura sought a declaration that its UIM reducing clause applies to the total "amount paid" pursuant to the worker's compensation payment, notwithstanding any reimbursement under Wis. Stat. § 102.29. The circuit court denied Secura's motion and granted the Estate judgment on its counterclaim, ordering Secura to tender the Disputed Amount to the Estate. Secura appealed.

¶8 The court of appeals affirmed, relying on our statutory analysis of Wis. Stat. § 632.32(5)(i) in Teschendorf v. State Farm Ins. Cos., 2006 WI 89, 293 Wis. 2d 123, 717 N.W.2d 258. In Teschendorf, we held that § 632.32(5)(i) "does not allow an insurer to reduce uninsured motorist [UM] policy limits by worker's compensation payments that are not made to or on the behalf of the insured, the insured's heirs, or the insured's estate." Id., ¶2. The court of appeals reviewed our statutory analysis and public policy rationales in Teschendorf before concluding that Secura is "permitted to reduce its [UIM] coverage limits ... [only] by the total amount of worker's compensation actually received by the Estate." Secura Supreme Ins. Co. v. Est. of Huck, 2021 WI App 69, ¶20, 399 Wis. 2d 542, 966 N.W.2d 124. Accordingly, the court of appeals determined Secura must provide the Estate the Disputed Amount.

¶9 Secura petitioned us for review, which we granted. Secura renews its argument that the plain language of "amounts paid" and "payment" settles this matter. Secura argues it may reduce its liability by the "amounts paid" to the Estate regardless of what happened after those amounts were provided because the Estate was paid those amounts, notwithstanding its obligation to reimburse the WC insurer.6 The Estate contends the Disputed Amount cannot be considered an "amount paid" because the Estate did not retain possession of it. It argues that Secura impermissibly reduced its UIM liability limits by the Disputed Amount, and that Secura owes it the Disputed Amount for a total recovery of $198,920.69 under the policy.

A. Standard of Review

¶10 Our task is to interpret an insurance policy and Wis. Stat. § 632.32(5)(i) based on undisputed facts. The interpretation of an insurance policy presents a question of law that we review independently. Smith v. Atl. Mut. Ins. Co., 155 Wis. 2d 808, 810, 456 N.W.2d 597 (1990). Statutory interpretation also presents a question of law that we review independently. Mau v. N.D. Ins. Rsrv. Fund, 2001 WI 134, ¶28, 248 Wis. 2d 1031, 637 N.W.2d 45.

B. Secura's Policy

¶11 We first review the UIM policy Mr. Huck purchased from Secura. The Declarations page provides that Mr. Huck purchased UIM coverage with a liability limit of $250,000 for "each person." The policy includes an "Underinsured Motorist Coverage" endorsement. The UIM endorsement establishes that Secura "will pay under this coverage only after the limits of liability under any bodily injury liability bonds or policies have been exhausted by payment of judgments or settlements." The policy also includes a reducing clause, which provides in pertinent part:

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 ....
(2) Paid or payable because of the bodily injury under any of the following or similar law:
a. Worker[’s] compensation law;
This coverage, when combined with any amounts paid by liability policies or bonds applicable to the owner or driver of an underinsured motor vehicle, will provide coverage up to the amount stated in the Declarations.

This is the contract language we interpret to determine whether Secura's policy permits the insurer to reduce its UIM liability limit to the Estate by the total payments it initially received, rather than by the Estate's recovery after reimbursement to the WC insurer had occurred.

¶12 We begin by revisiting the rules that guide our analysis. Our interpretation of an insurance policy is controlled by the same rules of construction that we apply to interpret a contract.

Kremers-Urb. Co. v. Am. Emps. Ins. Co., 119 Wis. 2d 722, 735, 351 N.W.2d 156 (1984). 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. Language in an insurance contract "is to be...

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