Teschendorf v. State Farm Ins. Companies

• Decision Date: 07 July 2006
• Docket Number: No. 2003AP3521.,2003AP3521.
• Citation: 717 N.W.2d 258,2006 WI 89
• Parties: Earl J. TESCHENDORF and Linda Teschendorf, Plaintiffs, v. STATE FARM INSURANCE COMPANIES, Reliance National Indemnity Co. and American Family Mutual Insurance Co., Defendants. Bernard J. Shira and Maria Shira, Plaintiffs-Appellants, v. Reliance National Indemnity Co., Defendant, American Family Insurance Co., Defendant-Respondent-Petitioner.
• Court: Wisconsin Supreme Court

717 N.W.2d 258

2006 WI 89

Earl J. TESCHENDORF and Linda Teschendorf, Plaintiffs, v. STATE FARM INSURANCE COMPANIES, Reliance National Indemnity Co. and American Family Mutual Insurance Co., Defendants.

Bernard J. Shira and Maria Shira, Plaintiffs-Appellants, v. Reliance National Indemnity Co., Defendant, American Family Insurance Co., Defendant-Respondent-Petitioner.

No. 2003AP3521.

Supreme Court of Wisconsin.

Argued November 8, 2005.

Decided July 7, 2006.

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For the defendant-respondent-petitioner there were briefs by Terry J. Booth and Piper & Schmidt, Milwaukee, and oral argument by Terry J. Booth.

For the plaintiffs-appellants there was a brief by Eric S. Darling and Schmidt, Darling & Erwin, Milwaukee, and oral argument by Eric S. Darling.

An amicus curiae brief was filed by Martha H. Heidt and Doar, Drill & Skow, S.C., Baldwin, on behalf of the Wisconsin Academy of Trial Lawyers.

¶ 1 DAVID T. PROSSER, J

American Family Mutual Insurance Company (American Family) seeks review of a published decision of the court of appeals,¹ which reversed a summary judgment granted to American Family by the Milwaukee County Circuit Court, Jeffrey Kremers, Judge. The issue presented is whether an insurer may reduce the uninsured motorist coverage limits in its policy by amounts paid under a worker's compensation law, where the amounts paid go to the State of Wisconsin Work Injury Supplemental Benefit Fund (the Fund) rather than the insured or any person related to the insured.

¶ 2 We conclude that Wis. Stat. § 632.32(5)(i)2. (2001-02)² does not allow an insurer to reduce uninsured motorist policy limits by worker's compensation payments that are not made to or on the behalf of the insured, the insured's heirs, or the insured's estate. Accordingly, we affirm the court of appeals and hold that American Family cannot reduce its uninsured motorist policy limits by worker's compensation payments made to the Fund.

I. BACKGROUND

¶ 3 The facts are undisputed. Scott Shira (Scott) died in the course of his employment when an uninsured motorist's vehicle struck the car in which he and his passenger, Earl Teschendorf, were riding.³ The accident occurred January 16, 1999, in Woodbury, Minnesota. Scott was 33 years old. Because he was unmarried and had no dependents, his worker's compensation death benefit was paid to the Fund as required by Wis. Stat. § 102.49(5)(b) instead of Scott's estate.⁴ Of the $173,448.00 in worker's compensation benefits paid because of Scott's death, $159,900.00 was paid to the Fund; $12,500 was paid to Scott's parents for funeral and other expenses; and $1048 was paid to medical providers.

¶ 4 Scott had purchased an automobile insurance policy from American Family with uninsured motorist coverage limits of $150,000. After his death, Scott's parents Bernard and Maria Shira (the Shiras), brought a wrongful death action, based on Minnesota law, against American Family to recover the uninsured motorist benefits under Scott's policy. They sought $8000 in funeral expenses plus damages for loss of society and companionship.

¶ 5 Relying upon the reducing clause in the policy,⁵ American Family moved for summary judgment, claiming the uninsured motorist policy limits were reduced to $0 by the amount of worker's compensation benefits paid to the Fund.

¶ 6 Wisconsin Stat. § 632.32(5)(i) authorizes reducing clauses like the one in the American Family policy. Paragraph (i) states:

A policy may provide that the limits under the policy for uninsured or underinsured motorist coverage for bodily injury or death resulting from any one accident shall be reduced by any of the following that apply:

1. Amounts paid by or on behalf of any person or organization that may be legally responsible for the bodily injury or death for which the payment is made.

2. Amounts paid or payable under any worker's compensation law.

3. Amounts paid or payable under any disability benefits laws.

Wis. Stat. § 632.32(5)(i) (emphasis added).

¶ 7 The circuit court granted American Family summary judgment. It held that (1) Minnesota law governs the wrongful death action; (2) Wisconsin law governs the interpretation of the insurance policy; and (3) Wis. Stat. § 632.32(5)(i)2. unambiguously permits reducing clauses that reduce uninsured motorist limits by the amount of worker's compensation benefits paid to the Fund. The Shiras appealed.

¶ 8 The court of appeals reversed. In a split decision, the court of appeals concluded that both Wis. Stat. § 632.32(5)(i)2. and the reducing clause in the policy unambiguously allow a reduction in policy limits only for those worker's compensation payments made or payable to the insured, the insured's heirs, or the insured's estate. Teschendorf v. State Farm Ins. Co., 2005 WI App 10, ¶ 1, 278 Wis.2d 354, 691 N.W.2d 882. The court of appeals held that the phrase "to the insured" is implicit in sub. (5)(i)2. based on the context of the overall statutory scheme. Id., ¶ 13, 691 N.W.2d 882. In dissent, Judge Ralph Adam Fine contended that both sub. (5)(i)2. and the policy unambiguously allow for coverage limits to be reduced by any worker's compensation payment made, regardless of the recipient. Id., ¶ 20, 691 N.W.2d 882 (Fine, J., dissenting). We granted American Family's petition for review.

II. STANDARD OF REVIEW

¶ 9 We review a decision on summary judgment using the same methodology as the circuit court. Green Spring Farms v. Kersten, 136 Wis.2d 304, 315, 401 N.W.2d 816 (1987). Summary judgment is appropriate where the record demonstrates "that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Wis. Stat. § 802.08(2). Since the facts are not in dispute, only questions of law remain. Statutory interpretation and the interpretation of an insurance policy present questions of law that we review de novo. Mau v. N.D. Ins. Reserve Fund, 2001 WI 134, ¶¶ 12, 28, 248 Wis.2d 1031, 637 N.W.2d 45.

III. THE STATUTE

¶ 10 We first examine Wis. Stat. § 632.32(5)(i)2. to determine whether it permits an insurer to reduce uninsured motorist limits by amounts paid by a worker's compensation carrier to the Fund. If sub. (5)(i)2. does not permit reducing clauses to function in the manner American Family suggests, then the policy must conform to the statute and our inquiry ends. See Theis v. Midwest Sec. Ins. Co., 2000 WI 15, ¶ 13, 232 Wis.2d 749, 606 N.W.2d 162.

¶ 11 It has often been said that the goal of statutory interpretation "is to discern and give effect to the intent of the legislature." State v. Morford, 2004 WI 5, ¶ 21, 268 Wis.2d 300, 674 N.W.2d 349. In State ex rel. Kalal v. Circuit Court for Dane County, 2004 WI 58, 271 Wis.2d 633, 681 N.W.2d 110, the court recognized and discussed the tension between "legislative intent" and "statutory meaning" and acknowledged that "legislative intent" is sometimes at odds with a methodology that gives primacy to "intrinsic sources of statutory meaning." Id., ¶ 43, 681 N.W.2d 110.

¶ 12 The debate over statutory interpretation will surely continue. But this court adheres to the proposition that statutory interpretation begins with the language of the statute, and if the meaning there is plain, the inquiry ordinarily ends. Id., ¶ 45, 681 N.W.2d 110. In examining the statutory text, however, we emphasize that ascertaining plain meaning requires us to do more than focus on "a single, isolated sentence or portion of a sentence[.]" Landis v. Physicians Ins. Co. of Wis., Inc., 2001 WI 86, ¶ 16, 245 Wis.2d 1, 628 N.W.2d 893. We are expected to look to "the role of the relevant language in the entire statute." Id.; see Wis. Citizens Concerned for Cranes & Doves v. DNR, 2004 WI 40, ¶ 6, 270 Wis.2d 318, 677 N.W.2d 612. Accordingly, we consider the context in which words appear, the structure of the statute, and the purpose of the statute where it is evident from the statutory text. Kalal, 271 Wis.2d 633, ¶¶ 48, 49, 681 N.W.2d 110.

¶ 13 There are three situations in which the court looks outside the statute. First, if the meaning of a statute is ambiguous after considering all intrinsic sources, we look to extrinsic sources such as legislative history to find legislative intent. Id., ¶ 50, 681 N.W.2d 110. This methodology is thoroughly familiar.

¶ 14 Second, if the meaning of the statute is plain, we sometimes look to legislative history to confirm the plain meaning. Id., ¶ 51, 681 N.W.2d 110; Seider v. O'Connell, 2000 WI 76, ¶¶ 51-52, 236 Wis.2d 211, 612 N.W.2d 659. Our purpose in doing this is merely to contribute to an informed explanation that will firm up statutory meaning.

¶ 15 Third, if the meaning of the statute appears to be plain but that meaning produces absurd results, we may also consult legislative history. The purpose in this situation is to verify that the legislature did not intend these unreasonable or unthinkable results. See Green v. Bock Laundry Mach. Co., 490 U.S. 504, 527, 109 S.Ct. 1981, 104 L.Ed.2d 557 (1989) (Scalia J., concurring);⁶ Kalal, 271 Wis.2d 633, ¶ 52 n. 9, 681 N.W.2d 110; see also Public Citizen v. United States Dep't of Justice, 491 U.S. 440, 465, 109 S.Ct. 2558, 105 L.Ed.2d 377 (1989) (invoking the Supreme Court's absurdity exception to the plain language of the statute); Robbins v. Chronister, 402 F.3d 1047, 1050 (10th Cir. 2005) (collecting federal circuit court and Supreme Court cases applying the absurdity exception). Because our purpose in these situations is grounded in open disbelief of what a statute appears to require, we are bound to limit our off-statute investigations to obvious aberrations.

¶ 16 The parties sharply disagree over the meaning of Wis. Stat. § 632.32(5)(i)2. American Family contends that sub. (5)(i)2. is plain and unambiguous. American Family emphasizes that sub. (5)(i)2. allows a policy to reduce the limits for uninsured motorist coverage by "[a]mounts paid or payable under any worker's...