Sukala v. Heritage Mut. Ins. Co.

• Decision Date: 09 November 2000
• Docket Number: No. 99-1339.,99-1339.
• Citation: 240 Wis.2d 65,622 N.W.2d 457,2000 WI App 266
• Court: Wisconsin Court of Appeals
• Parties: Dawn SUKALA and John Sukala, Plaintiffs-Appellants, v. HERITAGE MUTUAL INSURANCE COMPANY and Western National Mutual Insurance Company, Defendants-Respondents.

240 Wis.2d 65

2000 WI App 266

622 N.W.2d 457

Dawn SUKALA and John Sukala, Plaintiffs-Appellants,¹ v. HERITAGE MUTUAL INSURANCE COMPANY and Western National Mutual Insurance Company, Defendants-Respondents.

No. 99-1339.

Court of Appeals of Wisconsin.

Submitted on briefs August 24, 2000.

Decided November 9, 2000.

On behalf of the plaintiff-appellant, the cause was submitted on the briefs of D. J. Weis of Habush, Habush, Davis & Rottier, S.C., Rhinelander. There was oral argument by D. J. Weis.

On behalf of the defendant-respondent, Western National Mutual Insurance Company, the cause was submitted on the brief of Nadine I. Davy of Anderson, Shannon, O'Brien, Rice & Bertz, Stevens Point. There was oral argument by Thomas W. Bertz.

On behalf of the defendant-respondent, Heritage Mutual Insurance Company, the cause was submitted on the brief of Mark A. Klinner and Michael J. Roman of Sandfort, Zalewski & Klinner, LLP, Wausau. There was oral argument by Michael J. Roman.

Before Dykman, P.J., Vergeront, J., and William Eich, Reserve Judge.

¶ 1. DYKMAN, P.J.

Dawn and John Sukala appeal from a judgment declaring underinsured motorist (UIM) reducing clauses in two auto insurance policies valid and enforceable. Heritage Mutual Insurance Company and Western National Mutual Insurance Company issued the policies. The Sukalas argue that the Heritage reducing clause is invalid because Heritage failed to comply with statutory notice requirements when the clause became enforceable under new legislation. We conclude that the statutory notice requirements do not apply because the change in coverage was not initiated by Heritage, but instead resulted from a change in statutory law. The Sukalas also argue that the UIM reducing clauses in both policies are unconstitutional. We conclude that Dowhower v. West Bend Mut. Ins. Co., 2000 WI 73, ¶ 36, 236 Wis. 2d 113, 613 N.W.2d 557, disposes of the Sukalas' constitutional argument. We further conclude that the UIM provisions in both policies are unambiguous and therefore enforceable. Accordingly, we affirm.

I. Background

¶ 2. On October 2, 1996, John Sukala was seriously injured in a two-vehicle automobile accident, while driving a truck for his employer, Haessly & Haessly. The other vehicle was driven by Bruce Hasenohrl. Haessly was insured by Heritage Mutual Insurance Company, as was Hasenohrl. John was insured by Western National Mutual Insurance Company. Haessly's Heritage policy and the Western policy included UIM coverage. The Heritage policy UIM maximum was $1,000,000, and the Western policy maximum was $250,000 per person or $500,000 per accident. Both policies' UIM terms contained a reducing clause, a provision that limited the maximum UIM coverage. Among other limitations, the reducing clauses provided that UIM coverage would be reduced by any amount (1) paid for bodily injury under another insured's liability insurance, and (2) paid or payable as worker's compensation benefits. Since the time of the accident, Heritage has paid $100,000 to the Sukalas² under the liability portion of Hasenohrl's policy, and John has received about $612,000 in worker's compensation benefits.³ ¶ 3. The action leading to this appeal originated in February 1997, when Dawn sued Western, Heritage, and Hasenohrl⁴ for any compensatory damages to which she was entitled. The circuit court granted Heritage's motion that John be compelled to join Dawn's action. The Sukalas then moved the court for a declaration that the UIM reducing clause in Haessly's Heritage policy was invalid because Heritage did not comply with notice requirements set out in WIS. STAT. § 631.36(5) (1997-98).⁵ The Sukalas also moved for a declaratory judgment that WIS. STAT. § 632.32(5)(i),⁶ the statutory section that allows for UIM reducing clauses, violated both the federal and state constitutions, and that both the Heritage and Western policies' reducing clauses were therefore invalid. The court denied both motions and incorporated its decision on the motions into a final judgment disposing of the case.⁷ The Sukalas appeal.

II. Analysis

A. Wis. Stat. § 631.36(5) Notice Requirements

[1]

¶ 4. The Sukalas first argue that the reducing clause in the Heritage policy was invalid because when Heritage notified Haessly of changes in UIM coverage, Heritage failed to comply with notice requirements in WIS. STAT. § 631.36(5). This presents a question involving statutory construction and the application of a statute to a particular set of facts. These are questions of law that we decide de novo. See Hanson v. Prudential Property & Cas. Ins. Co., 224 Wis. 2d 356, 363, 591 N.W.2d 619 (Ct. App. 1999), review denied, 225 Wis. 2d 490, 594 N.W.2d 384 (1999). We conclude that Heritage was not required to comply with § 631.36(5).

[2]

¶ 5. WISCONSIN STAT. § 631.36(5) requires that when an insurer "offers or purports to renew the policy but on less favorable terms," the insurer must notify the policyholder of the new terms sixty days prior to the renewal date. In addition, the notice must include a statement of the policyholder's right to cancel. See WIS. STAT. § 631.36(5)(a). If the insurer fails to follow the notice requirements, then as a general rule it must "continue the policy for an additional period of time equivalent to the expiring term and at the same premiums and terms of the expiring policy...." Id. In Hanson, 224 Wis. 2d at 368, and Roehl v. American Family Mut. Ins. Co., 222 Wis. 2d 136, 146, 585 N.W.2d 893 (Ct. App. 1998), we held that § 631.36(5) does not apply when the change in a renewed policy is a result of statutory changes, and not a change initiated by the insurance company.

¶ 6. The Sukalas acknowledge that the applicability of the reducing clause in the Heritage policy was triggered by a statutory change as occurred in Hanson and Roehl. Nevertheless, they attempt to distinguish their case from Hanson and Roehl, arguing that in those cases the insurance companies had not actually sent any notice of altered terms, whereas Heritage elected to include information about changes in UIM coverage when it sent a renewal notice to Haessly. The Sukalas argue that once Heritage chose to send some notice regarding UIM coverage, it should have complied with the timing and content requirements of WIS. STAT. § 631.36(5). They ask us to adopt a "voluntarily undertaken duty" rule from negligence cases such as Wulf v. Rebbun, 25 Wis. 2d 499, 131 N.W.2d 303 (1964). This rule states that, "[a]lthough one may have no duty to perform an act, if the attempts to do something to another even although gratuitously he must exercise reasonable care." Wulf, 25 Wis. 2d at 503.

¶ 7. We decline to adopt such a rule. Neither Hanson nor Roehl suggests any basis for the distinction the Sukalas make. Moreover, the effect of the distinction is to establish liability for those insurance companies who do more than what is statutorily required of them, while insurance companies who meet only the legal minimum standards remain protected under Hanson and Roehl. We conclude that WIS. STAT. § 631.36(5) does not apply to changes related to insurance policy reducing clauses that are not initiated by the insurance company but instead come into effect by a statutory change, even where the insurance company gratuitously sends a renewal notice discussing altered UIM terms. Heritage was not required to give notice that complied with § 631.36(5), and the UIM reducing clause was not rendered inoperative because of Heritage's failure to do so.

B. Validity of UIM Reducing Clauses

¶ 8. When the Sukalas initiated this appeal, the parties disputed whether WIS. STAT. § 632.32(5)(i), the statute permitting UIM reducing clauses like those at issue here, was unconstitutional in violation of substantive due process. The Sukalas' position was that if § 632.32(5)(i) were unconstitutional, then the reducing clauses in the Heritage and Western policies would necessarily be invalidated. After the parties filed their briefs, the supreme court decided Dowhower v. West Bend Mut. Ins. Co., 2000 WI 73, ¶ 36, 236 Wis. 2d 113, 613 N.W.2d 557, holding that § 632.32(5)(i) does not violate substantive due process because it does not deprive policy holders of any constitutionally protected right.⁸ We conclude that Dowhower disposes of the Sukalas' constitutional argument. The Dowhower court addressed the same statute at issue here, Dowhower, 2000 WI 73 at ¶ 33, and the language in the Heritage and Western policies is nearly identical to the language in that statute.

[3]

¶ 9. In their briefs, the parties did not address whether the UIM provisions were ambiguous. However the issue arose at oral argument. Because the question of whether an insurance policy is ambiguous is a question of law, see Wisconsin Label Corp. v. Northbrook Property & Cas. Ins. Co., 2000 WI 26, ¶ 24, 233 Wis. 2d 314, 607 N.W.2d 276,⁹

we may consider it even though the trial court did not and the parties did not brief the issue, see Bartus v. DHSS, 176 Wis. 2d 1063, 1071, 501 N.W.2d 419 (1993); Wirth v. Ehly, 93 Wis. 2d 433, 443-44, 287 N.W.2d 140 (1980).¹⁰ We choose to do so because the parties had the opportunity to address the issue at oral argument.

[4-6]

¶ 10. The terms of an insurance policy are ambiguous only when they are fairly susceptible to more than one construction. See Maas v. Ziegler, 172 Wis. 2d 70, 79, 492 N.W.2d 621 (1992)

. Policy language may still be unambiguous even when it is complex or cumbersome. See Heater v. Fireman's Fund Ins. Co., 30 Wis. 2d 561, 565, 141 N.W.2d 178 (1966). We will not rewrite an insurance policy to bind an insurer to a risk it did not contemplate unless the terms are ambiguous. See Maas, 172 Wis. 2d at 79.

¶ 11. It is true that if an insured were only to read the declarations section of the Heritage or Western policies, she or he would simply see a dollar figure representing the maximum UIM coverage, an amount that is not fully available under the circumstances...