United Fire & Cas. Co. v. Kleppe, No. 91-1231-FT

• Court: United States State Supreme Court of Wisconsin
• Writing for the Court: BABLITCH; STEINMETZ
• Citation: 174 Wis.2d 637,498 N.W.2d 226
• Parties: UNITED FIRE & CASUALTY COMPANY, Plaintiff-Appellant, v. Gayle L. KLEPPE and Beau Wold, Defendants-Respondents-Petitioners, Employers Insurance of Wausau, State of Wisconsin Department of Industry, Labor and Human Relations, Workers' Compensation Division, Defendants.
• Docket Number: No. 91-1231-FT
• Decision Date: 24 March 1993

Page 226

498 N.W.2d 226 174 Wis.2d 637 UNITED FIRE & CASUALTY COMPANY, Plaintiff-Appellant,
v.
Gayle L. KLEPPE and Beau Wold, Defendants-Respondents-Petitioners,
Employers Insurance of Wausau, State of Wisconsin Department
of Industry, Labor and Human Relations, Workers'
Compensation Division, Defendants. No. 91-1231-FT. Supreme Court of Wisconsin. Submitted on Briefs Nov. 4, 1992.
Opinion Decided March 24, 1993.

For the plaintiff-appellant there was a brief by William M. Gabler and Garvey, Anderson, Johnson, Gabler & Geraci, S.C., Eau Claire.

BABLITCH, Justice.

Gayle Kleppe and Beau Wold (collectively Kleppe) seek review of a court of appeals' decision which held that the Kleppe's monetary recovery from their uninsured motorist (UM) coverage could be reduced by sums paid or payable to the Kleppes from Gayle Kleppe's employer's worker's compensation carrier. The United Fire and Casualty Company's (UF & C's) insurance policy issued to Kleppe contained a reducing clause to this effect which the company sought to enforce. Kleppe argues that this court's prior case law mandates that clauses seeking to reduce compensation available to an insured under a UM policy are void and unenforceable if such reductions would be unavailable to [174 Wis.2d 639] a tortfeasor. We

Page 227

agree. Accordingly, the judgment of the court of appeals is reversed.

The relevant facts are undisputed. Kleppe was injured as a result of a motor vehicle accident with an uninsured motorist. Kleppe and her husband made a claim for all of their damages under a UF & C motor vehicle insurance policy that provides uninsured motorist benefits with a limit of $300,000 per accident. The amount of Kleppe's damages has not been established. Kleppe was in the course of her employment at the time of the accident, so she is collecting and will continue to collect worker's compensation benefits from her employer's insurance carrier.

UF & C sought a declaratory judgment to enforce the "limit of liability" provision in its policy. The reducing provision appears in the uninsured motorist section of the policy (Part C) under the heading "Limit of Liability." The policy provides in relevant part:

B. Any amounts otherwise payable for damages under this coverage [uninsured motorist] shall be reduced by all sums:

1. Paid ... by or on behalf of persons ... who may be legally responsible. This includes all sums paid under Part A [liability coverage]; and

2. Paid or payable because of the 'bodily injury' under any of the following or similar law:

a. workers' compensation law

....

C. Any payment under this coverage will reduce any amount that person is entitled to recover for the same damages under Part A [liability coverage].

The circuit court concluded that according to this court's case law interpreting sec. 632.32(4)(a), Stats., the [174 Wis.2d 640] reducing clause is invalid because it violates the legislative mandate expressed in sec. 632.32(4)(a). ¹ The court of appeals reversed. It concluded that UF & C's reducing clause is not invalid as long as it does not reduce the UM coverage below the minimum amounts required by sec. 632.32(4)(a). In other words, the court of appeals held that Kleppe's damages, after subtraction of her worker's compensation benefits, must not fall below the statutory minimums for UM coverage, ($25,000 per person and $50,000 per accident) or the reducing clause is invalid. Because Kleppe's damages are undetermined, the court of appeals further concluded that it was premature to decide whether enforcement of UF & C's reducing clause has the effect of violating the mandatory UM coverage statute. See United Fire & Casualty Co. v. Kleppe, 166 Wis.2d 844, 480 N.W.2d 537 (Ct.App.1992). The court of appeals also concluded that the collateral source rule has no application in this case. We granted Kleppe's petition for review.

The granting or denying of relief in a declaratory judgment action is a matter within the sound discretion of the circuit court. WEAC v. State Elections Board, 156 Wis.2d 151, 161, 456 N.W.2d 839 (1990). An...