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

• Decision Date: 24 May 2001
• Docket Number: No. 00-0637.,00-0637.
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff-Respondent, v. Franklin GILLETTE and V. Thomas Ostlund, Defendants-Appellants.
• Court: Wisconsin Court of Appeals

246 Wis.2d 561

2001 WI App 123

630 N.W.2d 527

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff-Respondent,¹ v. Franklin GILLETTE and V. Thomas Ostlund, Defendants-Appellants.

No. 00-0637.

Court of Appeals of Wisconsin.

Oral argument November 30, 2000.

Decided May 24, 2001.

On behalf of the defendants-appellants, the cause was orally argued by and submitted on the briefs of Gregory J. Egan of Parke O'Flaherty, Ltd., La Crosse.

On behalf of the plaintiff-respondent, the cause was orally argued by and submitted on the brief of Claude J. Covelli of Boardman, Suhr, Curry & Field, LLP, Madison.

Before Roggensack, Deininger and Hue, JJ.²

¶ 1. HUE, J.

The issue on appeal is whether, as a matter of law, the appellants, Gillette and Ostlund, are entitled to uninsured or underinsured motorist benefits pursuant to policies of motor vehicle insurance issued by State Farm Mutual Automobile Insurance Company (State Farm). The trial court, in granting summary judgment, held that the tortfeasor's vehicle was not uninsured under the language of the policy, and that Gillette and Ostlund had not used up the limits of liability of the tortfeasor's policy, a prerequisite for claiming the underinsured benefits of the insurance policy. The trial court also concluded that because Manitoba's "no-fault" automobile liability law precludes recovery of noneconomic damages, Ostlund and Gillette could not utilize the underinsured motor vehicle coverage in State Farm's policy to recover noneconomic damages from State Farm. The trial court thus concluded that Gillette and Ostlund are not entitled, as a matter of law, to either uninsured or underinsured motorist benefits under the State Farm policies.

¶ 2. We agree that Gillette and Ostlund are not entitled to uninsured benefits and affirm that portion of the trial court's ruling. However, we conclude that Gillette and Ostlund are entitled to underinsured benefits and, therefore, we reverse that portion of the trial court's ruling.

BACKGROUND

¶ 3. The relevant facts are not in dispute. On October 11, 1995, V. Thomas Ostlund, a Wisconsin resident, was driving his mother's Chevrolet pickup truck in Manitoba, Canada. Franklin Gillette was a passenger in Ostlund's vehicle. While legally stopped, Ostlund's truck was struck by another truck driven by Norman Unrau, a resident of Manitoba. The parties agree that Unrau was responsible for the accident and that the accident caused physical injuries to both Gillette and Ostlund.

¶ 4. Unrau's vehicle was registered in Manitoba and, consistent with Manitoba's "no-fault" automobile liability legislation, insured by the Manitoba Public Insurance Corporation (MPIC). Both Gillette and Ostlund submitted claims to MPIC for bodily injuries. MPIC paid Ostlund's subrogated health insurance carrier $20,000 and paid Ostlund, himself, $6,833.51 for impairment and health care expenses. Gillette has filed a claim but has received no payment for the twenty physiotherapy sessions he attended.

¶ 5. On the date of the accident, Ostlund's mother had a State Farm insurance policy on the Chevrolet pickup driven by Ostlund. That policy included medical payments coverage with limits of $5,000 per person, and uninsured motorist provisions with limits of $25,000 per person and $50,000 per accident. There is no underinsured motorist coverage in that policy.

¶ 6. Ostlund, the driver of the Chevrolet truck, had two automobile policies in effect, also issued by State Farm. These policies provided both uninsured and underinsured motorists coverage, with identical liability limits of $100,000 per person and $300,000 per accident. The uninsured motorist provisions of Ostlund's and his mother's insurance policies contain identical language.

¶ 7. The policy language relevant to an uninsured motor vehicle is as follows:

Uninsured Motor Vehicle — Coverage U

. . . .

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

Uninsured Motor Vehicle — means:

1. a land motor vehicle, the ownership, maintenance or use of which is:

a. not insured or bonded for bodily injury liability at the time of the accident; or

b. insured or bonded for bodily injury liability at the time of the accident; but

(1) the limits of liability are less than required by the financial responsibility act of the state where your car is mainly garaged . . . .

¶ 8. Section III of Mr. Ostlund's policies define Underinsured Motor Vehicle — Coverage W, in material part, as follows:

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.

THERE IS NO COVERAGE UNTIL THE LIMITS OF LIABILITY OF ALL BODILY INJURY LIABILITY BONDS AND POLICIES THAT APPLY HAVE BEEN USED UP BY PAYMENT OF JUDGMENTS OR SETTLEMENTS.

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 amount of the insured's damages; or

b. have been reduced by payments to persons other than the insured to less than the amount of the insured's damages.

. . . .

Limits of Liability

Coverage W

. . . .

5. The most we pay will be the lesser of:

a. the difference between the amount of the insured's damages for bodily injury, and the amount paid to the insured by or for any person or organization who is or may be held legally liable for the bodily injury; or

b. the limits of liability of this coverage.

¶ 9. The parties agree that Gillette and Ostlund qualify as insureds under the uninsured motorists coverage of Ostlund's mother's policy and under the uninsured motorist and underinsured motorist coverages of the policies issued to Mr. Ostlund.

¶ 10. State Farm has paid Ostlund $4,400.20 and Gillette $2,408.80 in medical payment benefits under Ostlund's mother's policy.

DISCUSSION

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¶ 11. Our review of summary judgment is de novo. The same standards apply at both the trial and appellate levels. Brownelli v. McCaughtry, 182 Wis. 2d 367, 372, 514 N.W.2d 48 (Ct. App. 1994). Summary judgment is available where, as here, no material facts are in dispute and one party is entitled to judgment as a matter of law. WIS. STAT. § 802.08(2) (1999-2000).³ Generally, interpretation of an insurance contract is a question of law subject to de novo review. Katze v. Randolph & Scott Mut. Fire Ins. Co., 116 Wis. 2d 206, 212, 341 N.W.2d 689 (1984).

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¶ 12. The words in an insurance contract are construed as a reasonable person in the position of an insured would understand them. Garriguenc v. Love, 67 Wis. 2d 130, 134-35, 226 N.W.2d 414 (1975). If a word or phrase in an insurance contract is susceptible to more than one reasonable construction, it is ambiguous. Id. at 135. Any ambiguity that exists is resolved against the insurer, because the insurer drafted the documents and thus was in the best position to address, with clarity, the terms applicable. Id. However, clear, unambiguous policy terms may not be rewritten by the courts. Id.

¶ 13. The parties disagree whether Unrau's vehicle was uninsured as defined in the policies at the time of the accident. Gillette and Ostlund argue that Manitoba's "no-fault" automobile liability legislation,⁴ which precludes accident victims from recovering noneconomic damages (such as pain, suffering and emotional distress), renders the term "uninsured motor vehicle" in the policies ambiguous. Appellants cite Hull v. State Farm Mutual Automobile Insurance Co., 222 Wis. 2d 627, 586 N.W.2d 863 (1998), where the supreme court found the term "uninsured motor vehicle" in a State Farm policy to be ambiguous and required coverage, as support for their contention that the term is similarly ambiguous on the present facts.

¶ 14. State Farm argues that because Unrau was covered by liability insurance, and because that policy provided coverage in excess of the minimum required under Wisconsin's Financial Responsibility Act,⁵ his vehicle was not uninsured. We agree with State Farm's analysis.

[8]

¶ 15. WISCONSIN STAT. § 632.32(4)(a)1 requires every automobile liability policy issued in Wisconsin to include uninsured motorist coverage "[f]or the protection of persons injured who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death resulting therefrom, in limits of at least $25,000 per person and $50,000 per accident." As the supreme court explained:

[T]he purpose of uninsured motorist coverage "`is to compensate an insured who is the victim of an uninsured motorist's negligence to the same extent as if the uninsured motorist were insured.'". . . .

Stated another way, the legislative purpose of § 632.32(4) is to place the insured in the same position as if the uninsured motorist had been insured.

Hull, 222 Wis. 2d at 644-45 ¶ 24 (citations omitted).

¶ 16. State Farm's policy defines "uninsured motor vehicle" to include a vehicle insured for liability if "the limits of liability are less than required by the financial responsibility act of the state where your car is mainly garaged." Consequently, in order to resolve whether Unrau's vehicle was uninsured as that term is used in State Farm's policy, it is necessary to compare the liability limits of Unrau's policy to the limits of liability required in Wisconsin, the state where Ostlund's vehicles were garaged, under Wisconsin's Financial Responsibility Act.

¶ 17. Unrau's insurer, MPIC, provided liability coverage for Unrau's vehicle. The tort damages available under...