Thom v. 1st Auto & Cas. Ins. Co.

CourtCourt of Appeals of Wisconsin
Citation961 N.W.2d 79,2021 WI App 33
Docket NumberAppeal No. 2020AP285
Parties Savanah R. THOM, Plaintiff-Appellant-Cross-Respondent, Wisconsin Department of Health Services, Involuntary-Plaintiff, v. 1ST AUTO & CASUALTY INSURANCE COMPANY, Matthew Foerster, Wendy Foerster, Jason Foerster, Janice Foerster, Donald Foerster, Unity Health Plans Insurance Company, Alex Azar Secretary of the U.S. Department of Health & Human Services, Dean Health Plan, Inc., and Cigna-HealthSpring, a division of Cigna Health and Life Insurance Company, Defendants. Rural Mutual Insurance Company, Defendant-Respondent-Cross-Appellant
Decision Date22 April 2021

On behalf of the plaintiff-appellant-cross-respondent, the cause was submitted on the briefs of Jesse B. Blocher and Robert L. Jaskulski of Habush Habush & Rottier S.C., Waukesha.

On behalf of the defendant-respondent-cross-appellant, the cause was submitted on the briefs of Christine M. Rice and Nicole R. Radler of Simpson & Deardorff, S.C., Milwaukee.

Before Fitzpatrick, P.J., Blanchard, and Graham, JJ.


¶1 Savanah Thom was severely injured when her vehicle collided with another vehicle driven by a thirteen-year-old child. Thom brought claims against several of the child's relatives and their insurers. Thom sought, in relevant part, a money judgment against the child's insurers based on his negligent operation of the vehicle and against the child's parents, Jason and Wendy Foerster, for their alleged negligent failure to control and supervise their child.1

¶2 This appeal concerns a single defendant, Rural Mutual Insurance Company, which issued a motor vehicle policy to Jason. The Rural policy has a $300,000 per-accident limit of liability, and it insures Jason, Wendy, and any family member for their use of "any auto." The Foerster child was driving his aunt's vehicle with permission at the time of the collision, and this vehicle is not listed on the declarations page of the Rural policy. The parties dispute whether it is "described" in the Rural policy and, if so, whether Rural's maximum liability is $300,000 or $900,000 based on the requirements of WIS. STAT. § 632.32(3) (2019-20).2 The circuit court determined that Rural's maximum liability is $300,000. The court then granted the motion Thom filed pursuant to WIS. STAT. § 628.46, which requested prejudgment interest dating back nearly eighteen months.

¶3 Thom appeals the circuit court's determination of Rural's maximum liability, and Rural cross-appeals the court's award of prejudgment interest. We affirm the order determining Rural's maximum liability to be $300,000, although we base our decision on a different rationale than that relied on by the circuit court. Specifically, we conclude that WIS. STAT. § 632.32(3) ’s requirements do not supersede the policy's $300,000 limit of liability because the aunt's vehicle is not "a motor vehicle described in the [Rural] policy," as required by § 632.32(3). We also affirm the order requiring Rural to pay statutory prejudgment interest. At the pertinent time, the conditions necessary to trigger interest under WIS. STAT. § 628.46 were satisfied, and the court's finding that Rural lacked reasonable proof that it was not responsible for paying Thom's claim is not clearly erroneous.


¶4 The facts material to this appeal are uncontested. On January 24, 2016, the Foerster child was helping his uncle do some work on the uncle's farm. His parents, Wendy and Jason, were not present. The child's uncle directed him to drive a Chevrolet Tahoe to his grandparents’ house to retrieve a piece of equipment. The Chevy belonged to the child's aunt, and it was covered under a motor vehicle policy issued by 1st Auto & Casualty Insurance Company.

¶5 The Foerster child had to drive across a public highway to get to his grandparents’ house. As he attempted to do so, his vehicle collided with Thom's vehicle. Thom sustained significant injuries as a result of the collision.

¶6 Thom commenced this tort action through her guardian ad litem in January 2017. She amended her complaint several times, adding additional defendants and claims each time. Ultimately, she brought the following claims: direct actions against Rural and 1st Auto for the Foerster child's negligent operation of the Chevy;3 claims against the aunt and uncle alleging negligent entrustment of the Chevy; claims against Jason and Wendy as well as the aunt, uncle, and grandparents alleging negligent control and supervision of the Foerster child; and claims against the uncle and grandfather alleging that they violated Wisconsin's child labor laws.4 This appeal pertains to Thom's direct action against Rural and her claims against Jason and Wendy.

¶7 The parties dispute the maximum amount that Rural can be required to pay under the motor vehicle liability policy that it issued to Jason and Wendy. We refer to this policy as the "Rural policy" throughout this opinion, and we discuss its terms in greater detail below. For background purposes, it suffices to say that the Rural policy promises that Rural will pay damages that an "insured" becomes legally responsible to pay because of an auto accident, and it defines "insured" to mean, in pertinent part, Jason, Wendy, "or any ‘family member’ for the ... use of any auto...." It is undisputed that Jason, Wendy, and the Foerster child are all "insureds" under the Rural policy. It is also undisputed that the Rural policy's "limit of liability" provision expressly limits Rural's liability for "any one auto accident" to $300,000, no matter how many "insureds" are involved, and that there was only one "auto accident" at issue in this case.

¶8 The question in this case is whether the $300,000 per-accident limit of liability provision in the Rural policy is superseded by WIS. STAT. § 632.32(3), commonly referred to as the omnibus statute.5 More specifically, the parties dispute whether the omnibus statute requires Rural to provide three separate limits of liability, one for each insured, based on the interpretation given to the omnibus statute by Wisconsin courts. As discussed in greater detail below, Wisconsin courts have interpreted the omnibus statute to increase an insurance company's liability beyond the limits stated in a policy when a "motor vehicle described in the policy" is involved in an accident in which more than one insured was "actively negligent." Miller v. Amundson , 117 Wis. 2d 425, 429-30, 345 N.W.2d 494 (Ct. App. 1984) ; Iaquinta v. Allstate Ins. Co. , 180 Wis. 2d 661, 666, 510 N.W.2d 715 (Ct. App. 1993) ; see also Folkman v. Quamme, 2003 WI 116, ¶¶63-65, 264 Wis. 2d 617, 665 N.W.2d 857. The omnibus statute's requirements are imputed to every policy and supersede contrary policy terms, including policy language purporting to limit the insurer's per-accident liability to a fixed amount. See LaCount v. General Cas. Co. , 2006 WI 14, ¶12 n.8, 288 Wis. 2d 358, 709 N.W.2d 418 ; see also Reuter v. Murphy , 2000 WI App 276, ¶13, 240 Wis. 2d 110, 622 N.W.2d 464.

¶9 Thom and Rural filed competing motions for declaratory judgment. Thom sought a declaration that, based on the omnibus statute's requirements, Rural's maximum liability is $900,000—one $300,000 limit for Jason, one for Wendy, and one for the Foerster child. Rural sought a declaration that the omnibus statute did not apply, and that, consistent with the policy language, Rural's maximum liability for this accident is $300,000. The circuit court determined that Rural's maximum liability is $300,000 and that Rural is not required to provide separate limits for each insured.6

¶10 Rural had previously tendered $300,000 in insurance proceeds in response to a demand letter that Thom sent in February 2019, several months before the circuit court's ruling. The parties disagreed about whether Rural was also required to pay statutory prejudgment interest under WIS. STAT. § 628.46. According to Thom, Rural should have promptly paid $300,000 for the Foerster child's undisputed liability after receiving Thom's discovery responses in July 2017. The discovery responses showed that Thom's injuries were catastrophic and permanent, and that her medical expenses exceeded $1,000,000 as of that date. Rural disagreed, arguing that the requirements of § 628.46 were not satisfied until Thom demanded a $300,000 payment from Rural in February 2019.

¶11 Thom filed a motion requesting prejudgment interest, and the circuit court concluded that Thom was entitled to such interest under WIS. STAT. § 628.46(1) and Kontowicz v. American Standard Insurance Co. of Wisconsin , 2006 WI 48, ¶47, 290 Wis. 2d 302, 714 N.W.2d 105, clarified on denial of reconsideration , 2006 WI 90, ¶3, 293 Wis. 2d 262, 718 N.W.2d 111. The court's order was final as to Rural's interests in this case, and this appeal and cross-appeal followed while the proceedings relating to the other defendants remain pending in the circuit court. We discuss additional facts as needed below.


¶12 Thom appeals the circuit court's determination that Rural's maximum liability is $300,000. Rural cross-appeals, challenging the court's determination that Thom was entitled to prejudgment interest. We discuss each issue in turn.

I. Rural's Maximum Liability

¶13 We begin by addressing whether the omnibus statute requires Rural to provide separate $300,000 limits of liability for Jason, Wendy, and the Foerster child. This question was raised in competing motions for declaratory judgment. The parties’ requests for declaratory relief present questions of law regarding the interpretation of insurance policies and statutory language. Olson v. Farrar , 2012 WI 3, ¶24, 338 Wis. 2d 215, 809 N.W.2d 1 (citations omitted) (explaining that a request for declaratory judgment that turns upon the interpretation of an insurance policy presents a question of law); American Transmission Co. v. Dane Cnty. , 2009 WI App 126, ¶8 n.5, 321 Wis. 2d 138, 772 N.W.2d 731 (providing that a request...

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