Seider v. O'CONNELL
Decision Date | 30 June 2000 |
Docket Number | No. 98-1223.,98-1223. |
Citation | 612 N.W.2d 659,236 Wis.2d 211,2000 WI 76 |
Parties | Richard SEIDER and Jean Seider, Plaintiffs-Appellants, v. Connie O'CONNELL, Commissioner of Insurance, Defendant-Respondent-Petitioner. |
Court | Wisconsin Supreme Court |
For the defendant-respondent-petitioner the cause was argued by Paul L. Barnett, assistant attorney general, with whom on the briefs was James E. Doyle, attorney general.
For the plaintiffs-appellants there were briefs by Andrew J. King and Lutz, Burnett, McDermott, Jahn & King, LLP, Chilton and oral argument by Andrew J. King.
Amicus curiae was filed by Noreen J. Parrett, Kristen E. Crisp and LaFollette Sinykin, LLP, Madison for the Wisconsin Insurance Alliance and Wisconsin Association of Mutual Insurance Companies.
¶ 1.
The Office of the Commissioner of Insurance (OCI) seeks review of a published decision of the court of appeals, Seider v. Musser, 222 Wis.2d 80, 585 N.W.2d 885 (Ct. App. 1998), reversing a decision of the Circuit Court for Dane County, P. Charles Jones, Judge. The circuit court dismissed the declaratory judgment action of the plaintiffs, Richard and Jean Seider (Seiders), who sought a declaration invalidating Wis. Admin. Code § INS 4.01(2)(e).
¶ 2. The issue presented is whether Wis. Admin. Code § INS 4.01(2)(e) (June, 1999), promulgated by the OCI to clarify Wisconsin's "valued policy law," Wis. Stat. § 632.05(2),1 is invalid because it exceeds the rule-making authority of the OCI. The OCI also asks the court to address the threshold standard for analyzing statutory ambiguity.
¶ 3. In 1997, the Seiders sued their insurer, Wilson Mutual Insurance Company (Wilson Mutual), seeking recovery of the balance of their policy limits under the valued policy law. After a fire destroyed a building the Seiders used as both a restaurant and residence, Wilson Mutual paid the Seiders the actual cash value of the property. The valued policy law requires insurers to set the amount of loss at the full policy limits when real property "which is owned and occupied by the insured as a dwelling" is wholly destroyed. Wis. Stat. § 632.05(2). Wilson Mutual did not pay the full limits of the policy. Instead, it relied on Wis. Admin. Code § INS 4.01(2)(e) to reject the Seiders' claim for full payment. The administrative rule excludes from the valued policy law "real property any part of which is used for commercial (non-dwelling) purposes other than on an incidental basis." Wis. Admin. Code § INS 4.01(2)(e) ¶ 4. The Seiders thereafter pursued a declaratory judgment action in Dane County Circuit Court to invalidate the administrative rule. The court dismissed the action. It found the term "dwelling" subject to different applications and in need of clarification. The court reasoned that because the legislature charged the OCI with the administration and enforcement of the valued policy law, the agency had authority to interpret Wis. Stat. § 632.05(2) by promulgating Wis. Admin. Code § INS 4.01(2)(e).
¶ 5. The court of appeals reversed. Like the circuit court, the court of appeals found Wis. Stat. § 632.05(2) unambiguous. The court relied on the plain language of the valued policy law and rejected the circuit court's conclusion that a term within an unambiguous statute might require further clarification.
¶ 6. We hold that Wis. Admin. Code § INS 4.01(2)(e) exceeds the statutory authority of the OCI because the administrative rule contradicts Wis. Stat. § 632.05(2). Accordingly, we affirm the decision of the court of appeals.
¶ 7. For purposes of this review, the facts are not in dispute. In April 1995 the Seiders acquired a building and real estate in Kiel, Wisconsin. They used the property to operate a restaurant, the Steinthal Valley Lodge. The Seiders simultaneously occupied part of the building as their residence. They lived at the property continuously and exclusively.
¶ 8. On November 28, 1995, a fire wholly destroyed the building. The fire did not result from any criminal fault on the part of the Seiders or their assigns. Apparently, a crack in the flexible tubing of the building's gas supply caused the blaze. At the time of the loss, the Seiders carried a Commercial Package Policy issued by Wilson Mutual. The monthly payment amount for the policy was $324.35. The declaration page of the policy identified the insureds as "Richard R. Seider & Jean M. Seider, d/b/a Steinthal Lodge." The policy described the insured premises as a "restaurant located at 22124 Town Line Road, Town of Kiel, Manitowoc County." The policy did not characterize the building as a dwelling, home, or residence.
¶ 9. The Wilson Mutual policy provided a $150,000 limit of liability, subject to all terms of the policy. The policy also indicated that valuation at the time of loss would be based on the actual cash value of the property. After the fire, the Seiders filed a Proof of Loss for the full $150,000 limit, citing Wis. Stat. § 632.05 and describing the building as a "residence and restaurant." Wilson Mutual rejected that claim and instead paid the Seiders $129,053.39, a sum equivalent to the actual cash value of the destroyed property after application of the Seiders' deductible.
¶ 10. Initially, the Seiders filed suit against Wilson Mutual in Manitowoc County, seeking recovery of the policy limits under the valued policy law. The Seiders relied on the valued policy law because they owned and occupied the real property as their dwelling at the time it was wholly destroyed, and the destruction occurred without any criminal fault. Wilson Mutual invoked Wis. Admin. Code § INS 4.01(2)(e), asserting that the administrative rule made the statute inapplicable to the loss because the Seiders used the property for commercial purposes on a regular basis. The trial court stayed the proceedings pending resolution of the Seiders' anticipated challenge to the rule.
¶ 11. In April 1997, the Seiders filed a declaratory judgment action in Dane County Circuit Court against the Commissioner of Insurance. The Seiders relied on Wis. Stat. § 227.40(4)(a) to seek the invalidation of Wis. Admin. Code § INS 4.01(2)(e).2 They asserted that the OCI had exceeded its statutory authority by promulgating a rule that denies some owner-occupants the legal rights and benefits created under Wis. Stat. § 632.05(2).
¶ 12. The circuit court dismissed the Seiders' complaint and upheld the validity of the rule. The court reasoned that because the OCI was charged with administering and enforcing the valued policy law to achieve legislative intent, the OCI had authority to interpret Wis. Stat. § 632.05(2). Although the court found "that the statute as a whole is clear and unambiguous and the term dwelling should be given its plain meaning," it observed that:
¶ 13. The valued policy law applied to all real property before its repeal in 1975. In 1979, the legislature reenacted the law in a modified form so that it covered only "real property which is owned and occupied by the insured as a dwelling." Wis. Stat. § 632.05(2). The legislature, the circuit court concluded, intended to apply the valued policy law to properties used as dwellings, not to properties that combined commercial and residential purposes. Thus, the administrative rule's restrictive features matched the legislature's intent "to limit the scope of the statute to dwellings."
¶ 14. The circuit court also remarked that the terms of the insurance policy spoke to the commercial nature of the property. The policy referred to the building repeatedly as a "restaurant" and failed to describe the premises as a dwelling. The court concluded that if the Seiders had planned to use the restaurant as their dwelling, they should have explained that use when the policy was issued.
¶ 15. The court of appeals reversed. Seider, 222 Wis.2d at 80. The court, like the circuit court, found the valued policy law unambiguous. Noting that the ambiguity of a statute hinges on the factual context, the court reasoned that the facts of this case presented no ambiguities because the Seiders occupied part of the insured building as a dwelling, and they did not own or occupy any other structure as a dwelling during the time the policy was in effect. Id. at 86. Judge Vergeront's opinion relied on the plain language of Wis. Stat. § 632.05(2) and held that the dictionary meaning of "dwelling" as a "building or construction used for residence" was not ambiguous when applied to the facts of the Seiders' claim. Id. at 87 (citing WEBSTER'S THIRD NEW INT'L DICTIONARY, 706 (Unabr. 1993)).
¶ 16. Unlike the circuit court, the court of appeals declined to review the valued policy law's legislative history. Statutory interpretation, the court said, begins by determining whether the language of the statute conveys legislative intent. If the language is not ambiguous, courts do not look beyond the statute for other meanings. Id. at 88.
¶ 17. After finding Wis. Stat. § 632.05(2) unambiguous in the context of this case, the court of appeals held that Wis. Admin. Code § INS 4.01(2)(e) conflicts...
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