State Farm Mut. Auto. Ins. Co. v. Langridge

• Decision Date: 13 July 2004
• Docket Number: No. 02-3353-FT.,02-3353-FT.
• Citation: 275 Wis.2d 35,2004 WI 113,683 N.W.2d 75
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff-Respondent, v. Nancy G. LANGRIDGE, Defendant-Appellant-Petitioner.
• Court: Wisconsin Supreme Court

275 Wis.2d 35

2004 WI 113

683 N.W.2d 75

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff-Respondent, v. Nancy G. LANGRIDGE, Defendant-Appellant-Petitioner.

No. 02-3353-FT.

Supreme Court of Wisconsin.

Oral argument February 12, 2004.

Decided July 13, 2004.

For the defendant-appellant-petitioner there were briefs by Thomas M. Devine, JoAnne M. Breese-Jaeck, Christopher A. Geary and Hostak, Henzl & Bichler, S.C., Racine, and oral argument by Thomas M. Devine.

For the plaintiff-respondent there was a brief by Russell M. Ware, Kenneth E. Rusch and O'Hagan, Smith & Amundsen, LLC, Milwaukee and Michael Resis and O'Hagan, Smith & Amundsen, LLC, Chicago, IL, and oral argument by Michael Resis.

¶ 1. DAVID T. PROSSER, J.

This case requires the court to determine underinsured motor vehicle (UIM) coverage in an automobile insurance policy. Nancy Langridge, an insured under the policy, seeks review of an unpublished decision of the court of appeals¹ affirming the circuit court's decision to grant summary judgment to the insurer. For the reasons explained below, we affirm.

FACTS AND PROCEDURAL HISTORY

¶ 2. On June 19, 2000, William Langridge died in a traffic accident caused by a drunk driver. Langridge was the lone rider on a motorcycle that was covered under an automobile insurance policy that he and his wife Nancy had purchased from State Farm Mutual Automobile Insurance Company (State Farm). Both Mr. and Mrs. Langridge were named insureds. The State Farm policy included UIM coverage with limits of $100,000 per person and $300,000 per accident.

¶ 3. The drunk driver had liability coverage under a policy issued by Liberty Mutual Insurance Company. The drunk driver's policy had liability limits of $150,000. Following Mr. Langridge's death, Nancy Langridge—who was not present when the accident occurred—settled with Liberty Mutual for $150,000, while acting as representative of her husband's estate.

¶ 4. On June 7, 2001, Mrs. Langridge filed her own claim with State Farm for the $100,000 UIM coverage. State Farm denied her claim, explaining that she was not involved in the accident giving rise to the claim and had sustained no bodily injury; therefore, she was not entitled to coverage.

¶ 5. On April 25, 2002, State Farm initiated the present action, seeking a declaration that Mrs. Langridge is not entitled to recovery under the policy. Mrs. Langridge counterclaimed, alleging that she was covered by the UIM feature of the policy.² Before the counterclaim was filed, an arbitrator valued Mrs. Langridge's claim at $850,000. This dollar value consisted of $350,000 for the statutory cap on wrongful death damages for loss of society and companionship and $500,000 to compensate for pecuniary loss resulting from her husband's death.

¶ 6. The parties traded motions for summary judgment. The Racine County Circuit Court, Charles H. Constantine, Judge, denied Mrs. Langridge's motion and awarded summary judgment to State Farm, concluding that Mrs. Langridge could not make her own claim under the policy because "the insured attempting to claim underinsured motorist coverage must have suffered a bodily injury." Under the facts presented, the court said William Langridge was the only insured to suffer a bodily injury:

The insured suffering bodily injury (Mr. Langridge) in this case is not entitled to collect underinsured motorist coverage. The derivative claims would be compensable if there were a viable claim for bodily injury ... As Mrs. Langridge did not [have bodily injury], there is no coverage.

¶ 7. Nancy Langridge appealed. The court of appeals affirmed the circuit court's judgment in favor of State Farm. According to the court of appeals,

William Langridge suffered the bodily injury. [Mrs.] Langridge, therefore, recovers only as the survivor of her husband's claim. In other words, for the purposes of this insurance policy, her claim derives from her husband's claim for bodily injury....

Langridge argues that a wrongful death action is not a derivative action but is her own independent action. This is true in the sense that she may bring an independent cause of action for wrongful death. But we are not deciding whether a wrongful death action is an independent action. We are construing an insurance policy which provides that she must have sustained a bodily injury herself. In this sense, her action is derivative because under the policy, only those who have suffered bodily injury may recover. She has not, and consequently, is not entitled to recover.

We subsequently accepted Mrs. Langridge's petition for review.

APPLICABLE POLICY PROVISIONS

¶ 8. The Langridge policy contains the following relevant provisions, some of which are defined terms that are used throughout the policy and which appear in bold face italics:

Bodily Injury—means bodily injury to a person and sickness, disease or death which results from it.

Insured—means the person, persons or organization defined as insureds in the specific coverage.

Person—means a human being.

....

UNDERINSURED MOTOR VEHICLE—COVERAGE W

You have this coverage if "W" appears in the "Coverages" space on the declarations page.

We will pay damages for bodily injury an insured is legally entitled to collect from the owner or driver of an underinsured motor vehicle. The bodily injury must be caused by accident arising out of the operation, maintenance or use of an underinsured motor vehicle.

....

Underinsured Motor Vehicle—means a land motor vehicle 1. the ownership, maintenance or use of which is insured or bonded for bodily injury liability at the time of the accident; and

2. whose limits of liability for bodily injury liability:

a. are less than the limits of liability of this coverage; or

b. have been reduced by payments to persons other than the insured to less than the limits of liability of this coverage.

....

Limits of Liability

Coverage W

1. The amount of coverage is shown on the declarations page under "Limits of Liability-W-Each Person, Each Accident". Under "Each Person" is the amount of coverage for all damages due to bodily injury to one person. "Bodily injury to one person" includes all injury and damages to others resulting from this bodily injury. Under "Each Accident" is the total amount of coverage, subject to the amount shown under "Each Person", for all damages due to bodily injury to two or more persons in the same accident.

¶ 9. As noted above, the UIM limit in the Langridge policy for "Each Person" was $100,000. The UIM limit for "Each Accident" was $300,000. With these provisions at hand, we summarize each party's interpretation of the provisions as they apply to the facts underlying the claim.

¶ 10. Nancy Langridge asserts that her policy defines an "underinsured motor vehicle" to include a vehicle owned by an insured driver whose limits of liability for bodily injury [$150,000] "b. have been reduced by payments to persons [William Langridge] other than the insured [Nancy Langridge] to less than the limits of the coverage." She argues that because she is a named insured under the policy, and the drunk driver's liability limits were paid to persons other than her, the insured drunk driver was underinsured as to her. Therefore, she asserts, she should be able to claim coverage under her policy for her wrongful death claim.

¶ 11. State Farm counters that Mrs. Langridge is attempting to split the claim for her husband's bodily injury into two claims to gain access to coverage to which she is not entitled. It asserts that since the drunk driver was not underinsured as to William Langridge and since Mrs. Langridge's claim under the policy is derivative of her husband's claim, the drunk driver was not underinsured. State Farm's position is that, based upon the context of the whole policy, the only relevant question to ask is whether the drunk driver was underinsured as to William Langridge. In its view, the answer is "no," and consequently there was no "underinsured motor vehicle" and no UIM coverage.

STANDARDS OF REVIEW

¶ 12. In this case, the circuit court granted State Farm's motion for summary judgment. When we review a grant of summary judgment, our review is de novo. Mullen v. Walczak, 2003 WI 75, ¶ 11, 262 Wis. 2d 708, 664 N.W.2d 76 (citing Ahrens v. Town of Fulton, 2002 WI 29, ¶ 15, 251 Wis. 2d 135, 641 N.W.2d 423)); Smith v. Katz, 226 Wis. 2d 798, 805, 595 N.W.2d 345 (1999) (citing Burkes v. Klauser, 185 Wis. 2d 308, 327, 517 N.W.2d 503 (1994)). We rely upon the standard that summary judgment is granted when there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. Mullen, 2003 WI 75, ¶ 11; Smith, 226 Wis. 2d at 805; see also Taylor v. Greatway Ins. Co., 2001 WI 93, ¶ 9, 245 Wis. 2d 134, 628 N.W.2d 916. This is the same standard used by the circuit court and the court of appeals, and accordingly, we benefit from, but need not give deference to, the analyses of both courts. Taylor, 245 Wis. 2d 134, ¶ 9.

¶ 13. This case requires the court to interpret the terms of an insurance policy. The interpretation of an insurance policy is a question of law and is also reviewed de novo. Folkman v. Quamme, 2003 WI 116, ¶ 12, 264 Wis. 2d 617, 665 N.W.2d 857 (citing Danbeck v. Am. Fam. Mut. Ins. Co., 2001 WI 91, ¶ 10, 245 Wis. 2d 186, 629 N.W.2d 150); Mullen, 262 Wis. 2d 708, ¶ 12 (citing same). We construe insurance policies to give effect to the intent of the parties. Folkman, 264 Wis. 2d 617, ¶ 16 (citing Sprangers v. Greatway Ins. Co., 182 Wis. 2d 521, 536, 514 N.W.2d 1 (1994)); Mullen, 262 Wis. 2d 708, ¶ 12.

¶ 14. To do so, we give the words in the insurance policy their common and ordinary meaning, that is, the meaning a reasonable person in the position of the insured would have understood the words to mean. Folkman, 264 Wis. 2d 617, ¶ 17 (citing Arnold P. Anderson, Wisconsin Insurance Law § 1.1(C) (4th ed. 1998)); State Farm Mut. Auto. Ins. Co. v. Gillette, 2002 WI 31, ¶ 28, 251 Wis. 2d 561,...