Taylor v. Greatway Ins. Co., No. 99-1329.

CourtUnited States State Supreme Court of Wisconsin
Citation628 N.W.2d 916,2001 WI 93,245 Wis.2d 134
Decision Date06 July 2001
PartiesTrisha A. TAYLOR, Plaintiff-Respondent-Petitioner, v. GREATWAY INSURANCE COMPANY and Ross H. Hermanson, Defendants, AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Defendant-Appellant.
Docket NumberNo. 99-1329.

245 Wis.2d 134
2001 WI 93
628 N.W.2d 916

Trisha A. TAYLOR, Plaintiff-Respondent-Petitioner,
v.
GREATWAY INSURANCE COMPANY and Ross H. Hermanson, Defendants,
AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Defendant-Appellant

No. 99-1329.

Supreme Court of Wisconsin.

Oral argument November 28, 2000.

Decided July 6, 2001.


245 Wis.2d 137
For the plaintiff-respondent-petitioner there were briefs by James H. Fowler, III, Janesville, and oral argument by James H. Fowler, III.

For the defendant-appellant there was a brief by David J. Pliner and Corneille Law Group, L.L.C., Madison, and oral argument by David J. Pliner.

An amicus curiae brief was filed by Robert L. Jaskulski and Domnitz, Mawicke & Goisman, S.C., Milwaukee, on behalf of the Wisconsin Academy of Trial Lawyers.

¶ 1. N. PATRICK CROOKS, J.

The petitioner, Trisha A. Taylor, (Taylor) seeks review of a published decision by the court of appeals, Taylor v. Greatway Insurance Co., 2000 WI App 64, 233 Wis. 2d 703, 608 N.W.2d 722. The court of appeals reversed a Rock County Circuit Court decision that denied a motion for summary judgment brought by American Family Mutual Insurance Company (American Family). The circuit court, Judge Richard T. Werner presiding, held that Taylor was entitled to underinsured motorist (UIM) coverage under her two automobile insurance policies with American Family for damages sustained when her husband was killed in an automobile accident with a vehicle driven by Ross Hermanson (Hermanson). The circuit court determined that Taylor's reasonable expectations required UIM coverage, even though Hermanson's vehicle was not an underinsured vehicle as defined by American Family's policies. It held that the reducing clause1 in American Family's

245 Wis.2d 138
policies created illusory coverage and was therefore against public policy. The court of appeals reversed, holding that Taylor was not entitled to UIM coverage because the vehicle driven by Hermanson was not an underinsured vehicle as defined by American Family's policies. Taylor, 2000 WI App 64, ¶ 1. The court of appeals did not address whether the reducing clause in American Family's policies created illusory UIM coverage. Id. at ¶ 16.2

¶ 2. We affirm and hold that Taylor is not entitled to UIM coverage under her policies with American Family because the vehicle driven by Hermanson was not an underinsured vehicle as defined by American Family's policies. Consequently, there is no need for us to address whether the reducing clause in those policies created illusory coverage.

I

¶ 3. The facts of the instant case are not in dispute. In September of 1993, a vehicle driven by Hermanson struck a vehicle driven by Taylor's husband, Paul Taylor. Paul Taylor died as a result of the accident. At the time of the accident, Hermanson had an automobile liability policy issued by Greatway Insurance Company (Greatway) with a $50,000 liability coverage limit. Taylor settled with Greatway for

245 Wis.2d 139
$50,000. It was stipulated that Taylor's damages exceeded $160,000

¶ 4. Taylor filed a complaint against American Family seeking UIM coverage under her two automobile insurance policies. Each policy contains UIM coverage with a $50,000 limit. Each policy defines an underinsured vehicle as:

a motor vehicle which is insured by a liability bond or policy at the time of the accident which provides bodily injury liability limits less than the limits of liability of this Underinsured Motorists coverage.

In addition, each policy contains a reducing clause stating that:

[t]he limits of liability of this coverage will be reduced by: A payment made or amount payable by or on behalf of any person or organization which may be legally liable, or under any collectible auto liability insurance, for loss caused by an accident with an underinsured motor vehicle.

¶ 5. American Family moved for summary judgment claiming that Taylor was not entitled to UIM coverage. American Family argued that the vehicle driven by Hermanson was not an underinsured vehicle as defined by its policies. It pointed out that Hermanson's automobile liability policy contained a $50,000 coverage limit — one that was not less than the $50,000 limit in each of its policies.

¶ 6. In response to American Family's motion, Taylor argued that she was entitled to UIM coverage. Taylor claimed that American Family's UIM coverage of $50,000 was illusory because of the reducing clause. According to Taylor, the reducing clause created illusory coverage because she could never recover $25,000

245 Wis.2d 140
of the $50,000 in UIM coverage under each policy, due to the requirement in Wis. Stat. § 344.33(2) (1993-94)3 that drivers have at least $25,000 in liability insurance.4 Therefore, Taylor argued that the fact that she could recover only $25,000 under each policy runs contrary to her reasonable expectations of $50,000 in UIM coverage under each policy

¶ 7. The circuit court denied American Family's motion. The court held that Taylor was entitled to UIM coverage under her policies with American Family even though the vehicle driven by Hermanson did not satisfy the unambiguous definition of underinsured vehicle in American Family's policies. The court determined that the reducing clause in American Family's policies created illusory UIM coverage and was therefore against public policy. The court also determined that Taylor's expectations of $50,000 in UIM coverage under each policy were reasonable and that she was entitled to the coverage she expected.

¶ 8. As noted, the court of appeals reversed the circuit court. The court held that Taylor was not entitled to UIM coverage because the vehicle driven by Hermanson was not an underinsured vehicle as defined by American Family's policies. Taylor, 2000 WI App 64, ¶ 16. Since it found that Taylor was not entitled to UIM coverage, the court did not address whether the reducing clause in the policies created illusory UIM coverage. Id. The court of appeals stated that it would not review whether a reducing clause creates illusory UIM coverage under the circumstances

245 Wis.2d 141
presented in this case. Here the policies compared the insured's UIM coverage limit to the other driver's liability limit, and the other driver's liability coverage limit was greater than the minimum amount of liability coverage required by Wis. Stat. § 344.33(2) and was not less than the insured's UIM coverage limit. Id. at ¶ 15

II

[1, 2]

¶ 9. We review the circuit court's denial of American Family's motion for summary judgment in the same manner as the circuit court, using the standards for summary judgment set forth in Wis. Stat. § 802.08.5 Smith v. Katz, 226 Wis. 2d 798, 805, 595 N.W.2d 345 (1999). We benefit from the analysis of the circuit court and the court of appeals, however. The issue presented by the instant case is whether Taylor is entitled to UIM coverage under the American Family policies. To resolve this issue, we must interpret the language in American Family's insurance policies. The interpretation of language in an insurance policy presents a question of law that we review de novo. Smith v. Atlantic Mut. Ins. Co., 155 Wis. 2d 808, 810, 456 N.W.2d 597 (1990).

[3-8]

¶ 10. We apply the same rules of construction to the language in insurance policies as to the language in any other contract. Kremers-Urban Co. v. American

245 Wis.2d 142
Employers Ins. Co., 119 Wis. 2d 722, 735, 351 N.W.2d 156 (1984). We construe ambiguities in coverage in favor of the insured and narrowly construe exclusions in coverage against the insurer. Smith v. Atlantic Mut. Ins. Co., 155 Wis. 2d at 811. The language of an insurance policy is ambiguous when it is "susceptible to more than one reasonable construction." Id. If the language in an insurance policy is ambiguous, we interpret that language by trying to determine "what a reasonable person in the position of the insured would have understood the words of the policy to mean." Dowhower v. West Bend Mut. Ins. Co., 2000 WI 73, ¶ 35, 236 Wis. 2d 113, 613 N.W.2d 557. In addition, the interpretation of language in an insurance policy should advance the insured's reasonable expectations of coverage. Kremers-Urban, 119 Wis. 2d at 735. However, we will apply the language of the policy and not engage in construction when the language of the policy is unambiguous. Id.

¶ 11. The result in the instant case is governed by our decision in Smith v. Atlantic Mutual Insurance Co. The facts of Smith v. Atlantic Mutual Insurance Co. were almost identical to the facts presented by the instant case. Smith was involved in an automobile accident with another driver. Smith v. Atlantic Mut. Ins. Co., 155 Wis. 2d at 809-10. The other driver had an automobile liability policy with a liability coverage limit of $50,000. Id. Smith had a UIM policy with a coverage limit of $50,000. Id. at 810. Smith's UIM policy defined underinsured vehicle as a vehicle "to which a bodily injury liability bond or policy applies at the time of the accident but its limit for bodily injury liability is less than the limit of liability for this coverage." Id. at 811. Smith settled with the other driver's liability insurance for $50,000. Id. at 810. Smith then submitted

245 Wis.2d 143
a claim for UIM coverage. Id. Smith's insurer denied UIM coverage. Id. Smith then filed a lawsuit against her insurer. Id. The circuit court granted Smith's insurer's motion for summary judgment holding that the vehicle driven by the other driver was not an underinsured vehicle as defined by the insurer's policy. Id. The court of appeals affirmed and Smith appealed. Id.

¶ 12. We concluded that Smith was not entitled to UIM coverage. Id. at 809. The starting point of our inquiry was the definition of underinsured vehicle in Smith's UIM policy. Id. at 811. We determined that the definition of underinsured vehicle in Smith's UIM policy was unambiguous. Id. Because the definition was unambiguous, we applied the plain terms of the policy. Id....

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  • Fontana Builders, Inc. v. Assurance Co. of Am., No. 2014AP821.
    • United States
    • United States State Supreme Court of Wisconsin
    • June 29, 2016
    ...builders exposed to such uninsured risk of loss would thoroughly frustrate their reasonable expectations. See Taylor v. Greatway Ins. Co., 2001 WI 93, ¶ 10, 245 Wis.2d 134, 628 N.W.2d 916 (“[I]nterpretation of language in an insurance policy should advance the insured's reasonable expectati......
  • State Farm Mut. Auto. Ins. Co. v. Gillette, No. 00-0637.
    • United States
    • United States State Supreme Court of Wisconsin
    • March 29, 2002
    ...policies. 11. See, e.g., Sahloff v. Western Cas. & Surety Co., 45 Wis. 2d 60, 69, 171 N.W.2d 914 (1969). 12. Taylor v. Greatway Ins. Co., 2001 WI 93, ¶ 9, 245 Wis. 2d 134, 628 N.W.2d 13. Sahloff, 45 Wis. 2d at 70. See Abraham v. General Cas. Co., 217 Wis. 2d 294, 307, 576 N.W.2d 46 (1998) (......
  • Blum v. 1st Auto & Cas. Ins. Co., Case No. :2008ap1324
    • United States
    • United States State Supreme Court of Wisconsin
    • July 14, 2010
    ...ambiguous, the court construes terms that limit coverage against the drafter of the policy, e.g., the insurer. Taylor v. Greatway Ins. Co., 2001 WI 93, ¶10, 245 Wis. 2d 134, 628 N.W.2d 916. The terms of a policy are ambiguous if they are "susceptible to more than one reasonable construction......
  • State Farm Mut. Auto. Ins. Co. v. Langridge, No. 02-3353-FT.
    • United States
    • Wisconsin Supreme Court
    • July 13, 2004
    ...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 ......
  • Request a trial to view additional results
51 cases
  • Fontana Builders, Inc. v. Assurance Co. of Am., No. 2014AP821.
    • United States
    • United States State Supreme Court of Wisconsin
    • June 29, 2016
    ...builders exposed to such uninsured risk of loss would thoroughly frustrate their reasonable expectations. See Taylor v. Greatway Ins. Co., 2001 WI 93, ¶ 10, 245 Wis.2d 134, 628 N.W.2d 916 (“[I]nterpretation of language in an insurance policy should advance the insured's reasonable expectati......
  • State Farm Mut. Auto. Ins. Co. v. Gillette, No. 00-0637.
    • United States
    • United States State Supreme Court of Wisconsin
    • March 29, 2002
    ...policies. 11. See, e.g., Sahloff v. Western Cas. & Surety Co., 45 Wis. 2d 60, 69, 171 N.W.2d 914 (1969). 12. Taylor v. Greatway Ins. Co., 2001 WI 93, ¶ 9, 245 Wis. 2d 134, 628 N.W.2d 13. Sahloff, 45 Wis. 2d at 70. See Abraham v. General Cas. Co., 217 Wis. 2d 294, 307, 576 N.W.2d 46 (1998) (......
  • Blum v. 1st Auto & Cas. Ins. Co., Case No. :2008ap1324
    • United States
    • United States State Supreme Court of Wisconsin
    • July 14, 2010
    ...ambiguous, the court construes terms that limit coverage against the drafter of the policy, e.g., the insurer. Taylor v. Greatway Ins. Co., 2001 WI 93, ¶10, 245 Wis. 2d 134, 628 N.W.2d 916. The terms of a policy are ambiguous if they are "susceptible to more than one reasonable construction......
  • State Farm Mut. Auto. Ins. Co. v. Langridge, No. 02-3353-FT.
    • United States
    • Wisconsin Supreme Court
    • July 13, 2004
    ...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 ......
  • Request a trial to view additional results

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