Stubbe v. Guidant Mut. Ins. Co.

• Decision Date: 25 July 2002
• Docket Number: No. 01-2509.,01-2509.
• Citation: 651 N.W.2d 318,257 Wis.2d 401,2002 WI App 203
• Parties: Brent J. STUBBE, Plaintiff-Appellant, v. GUIDANT MUTUAL INSURANCE COMPANY, Guidant Insurance Group, formerly known as Preferred Risk Mutual Insurance Company/Preferred Risk Group, Defendant-Respondent.
• Court: Wisconsin Court of Appeals

257 Wis.2d 401

2002 WI App 203

651 N.W.2d 318

Brent J. STUBBE, Plaintiff-Appellant, v. GUIDANT MUTUAL INSURANCE COMPANY, Guidant Insurance Group, formerly known as Preferred Risk Mutual Insurance Company/Preferred Risk Group, Defendant-Respondent.¹

No. 01-2509.

Court of Appeals of Wisconsin.

Submitted on briefs March 14, 2002.

Decided July 25, 2002.

On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Michael Riley of Atterbury & Riley, S.C. of Madison.

On behalf of the defendant-respondent, the cause was submitted on the brief of Richard G. Niess of Coyne, Niess, Schultz, Becker & Bauer, S.C. of Madison.

Before Vergeront, P.J., Roggensack and Deininger, JJ.

¶ 1. ROGGENSACK, J.

In the course of his employment, Brent Stubbe was injured in an automobile accident that was caused by an underinsured driver. Stubbe sought underinsured motorist benefits from his personal insurer, Guidant Mutual Insurance Company (Guidant), under both his automobile policy and his personal umbrella policy. An arbitration panel determined that Stubbe's accident-related damages were $436,332, with the parties reserving coverage issues. The underinsured motorist paid $50,000, worker's compensation paid $33,939.37 and Guidant paid $166,060.63 under Stubbe's automobile policy, but Guidant contested coverage under Stubbe's personal umbrella policy. When Stubbe sued for the balance of the arbitration award, Guidant raised its coverage defenses and counterclaimed, alleging that its initial payment to Stubbe erroneously included future medical expenses that it should not have paid. The circuit court granted summary judgment to Guidant on all issues. We conclude that Stubbe's umbrella policy is ambiguous and therefore, we construe it in favor of the insured to provide underinsured motorist protection for damages in excess of the automobile policy's limit. We further conclude that Stubbe's automobile policy is ambiguous in regard to its treatment of future medical expenses, and therefore, Stubbe is entitled to retain any payment for future medical expenses already paid by Guidant. Accordingly, we reverse the judgment of the circuit court and direct it to enter judgment in Stubbe's favor on remand in the amount of $186,332, the balance of the arbitration award that remains unpaid.

BACKGROUND

¶ 2. On June 9, 1997, Stubbe sustained severe personal injuries in an automobile accident caused by the negligence of Terry Thielmann. Thielmann carried an automobile insurance policy with a $50,000 liability limit, and Stubbe settled his claim against Thielmann and Thielmann's insurer for $50,000. Stubbe then sought additional damages from his own insurer, Guidant. Stubbe had two policies with Guidant relevant to this appeal: (1) a "Personal Car Policy," which provides $250,000 of underinsured motorist protection for claims involving bodily injury; and (2) a $1,000,000 "Personal Excess Liability Policy," or "umbrella" policy.

¶ 3. Pursuant to the requirements of the automobile policy, Stubbe and Guidant arbitrated the amount of damages, reserving coverage issues. The arbitration panel found total damages of $436,332, comprised of past medical expenses ($26,104); future medical expenses ($22,500); past lost earnings ($6,364); future lost earnings ($6,364); and general damages ($375,000).

¶ 4. Guidant remitted $166,060.63 to Stubbe, asserting that the payment satisfied its obligations. Guidant calculated this amount by off-setting from the automobile policy's $250,000 underinsured motorist limit the $50,000 paid by Thielmann's insurer and the $33,939.37 paid by worker's compensation. Guidant contended that the umbrella policy provided no coverage for injuries caused by an underinsured motorist.

¶ 5. Stubbe sued Guidant to obtain additional payments, and Guidant counterclaimed for $22,500, asserting that its $166,060.63 payment to Stubbe erroneously included the amount the arbitration panel awarded for future medical expenses, which were subject to an exclusion and a reducing clause for medical expenses paid or payable as worker's compensation benefits. The parties agreed to a stipulated statement of facts and filed cross-motions for summary judgment. The circuit court decided all issues in favor of Guidant. Stubbe appeals.

DISCUSSION

Standard of Review.

[1, 2]

¶ 6. We review a circuit court's decision to grant summary judgment de novo, using the same standard applied by the circuit court. Guenther v. City of Onalaska, 223 Wis. 2d 206, 210, 588 N.W.2d 375, 376 (Ct. App. 1998). We first examine the complaint to determine whether it states a claim, and then we review the answer to determine whether it joins a material issue of fact or law. Smith v. Dodgeville Mut. Ins. Co., 212 Wis. 2d 226, 232, 568 N.W.2d 31, 34 (Ct. App. 1997). If we conclude that the complaint and answer are sufficient to join issue, we examine the moving party's affidavits to determine whether they establish a prima facie case for summary judgment. Id. at 232-33, 568 N.W.2d at 34. If they do, we look to the opposing party's affidavits to determine whether there are any material facts in dispute that entitle the opposing party to a trial. Id.

[3]

¶ 7. The primary issues on appeal involve policy defenses which require us to construe the insurance policies. The construction and interpretation of a written insurance policy is a question of law, which we review without deference to the decision of the circuit court. Guenther, 223 Wis. 2d at 210, 588 N.W.2d at 377.

Policy Defenses.

[4-9]

¶ 8. When construing an insurance policy, we first look to the language of the written agreement. See Kremers-Urban Co. v. American Employers Ins. Co., 119 Wis. 2d 722, 735, 351 N.W.2d 156, 163 (1984)

. We construe the language used in the policy from the perspective of a reasonable insured, giving the words used their common and ordinary meanings. Wisconsin Label Corp. v. Northbrook Prop. & Cas. Ins. Co., 2000 WI 26, ¶ 25, 233 Wis. 2d 314, 607 N.W.2d 276. If the policy language is clear on its face, we will simply apply the policy terms. Id. at ¶ 24. However, if the policy language is susceptible to more than one reasonable construction, it is ambiguous. Smith v. Atlantic Mut. Ins. Co., 155 Wis. 2d 808, 811, 456 N.W.2d 597, 598-99 (1990). Ambiguities are resolved in favor of the insured. Donaldson v. Urban Land Interests, Inc., 211 Wis. 2d 224, 230, 564 N.W.2d 728, 731 (1997). In addition, our interpretation of ambiguous language should advance the insured's reasonable expectations of coverage. Taylor v. Greatway Ins. Co., 2001 WI 93, ¶ 10, 245 Wis. 2d 134, 628 N.W.2d 916.

1. Umbrella policy.

¶ 9. Guidant's view of the umbrella policy focuses almost exclusively on the policy's statement of coverage, which provides:

We will pay the ultimate net loss² that any covered person becomes legally obligated to pay because of personal injury or property damage to which the insurance applies occurring during the policy period. We will pay only that part of the ultimate net loss which is in excess of the applicable underlying limit or retained limit.

(Footnote added.) Guidant argues that this language, including its defined terms, unambiguously shows that the exclusive purpose of the policy is to provide excess liability coverage for third-party claims brought against the insured; therefore, there is no coverage for first-party claims. In particular, Guidant emphasizes that Stubbe is a "covered person" under the policy and that he is not "legally obligated to pay" the damages awarded by the arbitration panel. Rather, he is entitled to receive those damages. Stubbe asserts that the policy must be read as a whole and further contends that other policy provisions affect the scope of coverage. [10]

¶ 10. We agree that the policy must be read as a whole. See D'Angelo v. Cornell Paperboard Prods. Co., 59 Wis. 2d 46, 50-51, 207 N.W.2d 846, 848-49 (1973)

("[T]he contract should be construed whenever possible so that . . . none of the language [is] discarded as superfluous or meaningless."). Additionally, we conclude that three prominent references to underinsured motorist protection appearing in the policy create an ambiguity in the insuring agreement.

¶ 11. The first time that Stubbe's umbrella policy refers to underinsured motorist protection is on the declarations page, which provides a table titled "SCHEDULE OF UNDERLYING INSURANCE LIMITS."³ The schedule of underlying limits expressly lists "AUTOMOBILE LIABILITY," and five subheadings appear under that heading. The schedule indicates that a subheading is "Included only if marked by an X." "Underinsured Motorist" is clearly marked with an "X" as "included."

¶ 12. Although the importance of the schedule of underlying limits is not immediately apparent from the declarations page itself, the insured is told in a section of the policy titled "MAINTENANCE OF UNDERLYING INSURANCE" that:

You must maintain in full effect the insurance afforded by each policy described in the Declarations. This does not apply to any reduction in limits of those policies caused by payment of claims in accordance with their terms, if such reduction occurs during the period of this policy.

If you fail to comply with this provision, we will be liable only to the extent that we would have been liable if the underlying policies had been maintained in force.

It is reasonable to read the schedule of underlying limits (which lists underinsured motorist coverage as "included") and the policy's requirement that the insured "maintain in full effect the insurance afforded by each policy described in the Declarations" to indicate that underinsured motorist protection is available as part of the umbrella policy. In particular, we conclude that a reasonable insured would believe that if underinsured motorist coverage were not available under the umbrella policy, the insured would not be required to maintain the underinsured motorist portion of their automobile...