Van Pelt v. Ever Green Growers, Inc.

Decision Date16 October 1996
Docket NumberNo. 95-1686,95-1686
Citation205 Wis.2d 735,557 N.W.2d 255
PartiesNOTICE: UNPUBLISHED OPINION. RULE 809.23(3), RULES OF CIVIL PROCEDURE, PROVIDE THAT UNPUBLISHED OPINIONS ARE OF NO PRECEDENTIAL VALUE AND MAY NOT BE CITED EXCEPT IN LIMITED INSTANCES. Diana R. VAN PELT, Dirk S. Van Pelt and American Medical Security, Plaintiffs-Respondents, EMPLOYERS INSURANCE OF WAUSAU, a mutual company, Involuntary-Plaintiff-Respondent, v. EVER GREEN GROWERS, INC., Rural Mutual Insurance Co. and American Family Mutual Insurance Company, Defendants-Respondents, James E. ZIMMERMAN, Defendant-Third Party Plaintiff-Respondent, v. GENERAL CASUALTY COMPANY OF WISCONSIN, Third Party Defendant-Appellant.
CourtWisconsin Court of Appeals

APPEAL from orders of the circuit court for Fond du Lac County: PETER L. GRIMM, Judge.


ANDERSON, Presiding Judge.

General Casualty Company of Wisconsin (General Casualty) appeals from an order denying its summary judgment motion and from an order granting James E. Zimmerman's motion for declaratory judgment. General Casualty argues that it acted within its contractual rights by denying coverage to Zimmerman in accordance with the policy's "regular use" exclusion. We conclude that the General Casualty policy is a second policy agreeing to defend and indemnify Zimmerman against a loss from the operation of the accident vehicle, rendering the "regular use" exclusion invalid under § 631.43(1), Stats. Consequently, the General Casualty policy can be stacked on the Rural Mutual Insurance Co. (Rural Mutual) policy. We further conclude that General Casualty breached it duty to defend Zimmerman and is therefore liable for expenses incurred by Zimmerman in defending this suit. Accordingly, we affirm the trial court's orders.

The facts are undisputed. On October 21, 1992, Zimmerman was operating a pickup truck, in the course of his employment for Ever Green Growers, Inc. (Ever Green), when he collided with two vehicles and several people were injured. At the time of the accident the pickup truck was insured under a policy issued to Ever Green by Rural Mutual. Zimmerman also owned a Ford Aerostar van that was insured under a personal automobile policy issued by General Casualty.

One of the injured parties commenced suit against Zimmerman, Ever Green and Rural Mutual. Because the demands of the complaint were in excess of the $250,000 limit of the Rural Mutual policy, Zimmerman retained his own counsel. Zimmerman tendered the defense of the action to General Casualty on April 14, 1994. On June 9, 1994, General Casualty declined to defend based upon a recorded statement Zimmerman gave that the truck was owned by Ever Green and was provided to him for business and personal use. General Casualty concluded that the "regular use" exclusion in its policy precluded coverage for the accident. Consequently, Zimmerman filed a third-party action against General Casualty alleging a breach of the contractual duty to defend. The circuit court heard competing motions; Zimmerman filed a motion for declaratory judgment on his third-party complaint and General Casualty asked for summary judgment on the question of the existence of insurance coverage.

The circuit court initially held that General Casualty waived the right to contest coverage because it had breached its duty to defend Zimmerman. After additional argument, the circuit court concluded that General Casualty had not waived its right to contest coverage. On the merits of the summary judgment motion, the court found that General Casualty had established a prima facie case for summary judgment because Zimmerman's use of his employer's truck fell under the "regular use" exclusion in the General Casualty policy. However, the court concluded that the "regular use" exclusion violates § 631.43(1), Stats., and held that Zimmerman was entitled to coverage under the General Casualty policy.

The court also considered portions of Zimmerman's motion for declaratory judgment. First, the court, reaffirming its conclusion that General Casualty had breached its duty to defend Zimmerman, held that General Casualty would be liable for the expenses Zimmerman incurred in the defense of the action. In the alternative, the court found that General Casualty failed to timely comply with the requirements of Mowry v. Badger State Mut. Casualty Co., 129 Wis.2d 496, 385 N.W.2d 171 (1986), and whether or not it had breached the duty to defend, it would still be liable for the attorney's fees and expenses incurred by Zimmerman under the reasoning of Elliott v. Donahue, 169 Wis.2d 310, 318, 485 N.W.2d 403, 405 (1992). General Casualty sought leave to appeal the circuit court's nonfinal order which this court granted on July 31, 1995.

General Casualty contends on appeal that § 631.43(1), Stats., does not invalidate the applicability of the "regular use" exclusion in its policy with Zimmerman and that it "acted wholly within its contractual rights by denying coverage to Zimmerman" and complied with the requirements of Mowry and Elliott.

"Regular Use" Exclusion

General Casualty first argues that the trial court erred by denying its motion for summary judgment. We review a motion for summary judgment using the same methodology as the trial court. M & I First Nat'l Bank v. Episcopal Homes, 195 Wis.2d 485, 496, 536 N.W.2d 175, 182 (Ct.App.1995); § 802.08(2), Stats. That methodology is well known, and we will not repeat it here except to observe that summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. M & I First Nat'l Bank, 195 Wis.2d at 496-97, 536 N.W.2d at 182. Summary judgment presents a question of law which we review de novo. Id. at 497, 536 N.W.2d at 182. As the material facts are not contested, only issues of law remain to be determined.

General Casualty contends that the "regular use" exclusion in Zimmerman's policy does not violate § 631.43(1), Stats. Instead, General Casualty maintains that Agnew v. American Family Mut. Ins. Co., 150 Wis.2d 341, 441 N.W.2d 222 (1989), demonstrates the inapplicability of § 631.43(1) to this case. While we agree that "regular use" exclusions do not necessarily violate § 631.43(1), we conclude that General Casualty's exclusion is invalid because there are two policies which provided coverage for the accident vehicle.

Section 631.43(1), Stats., known as the "stacking statute," provides:

When 2 or more policies promise to indemnify an insured against the same loss, no 'other insurance' provisions of the policy may reduce the aggregate protection of the insured below the lesser of the actual insured loss suffered by the insured or the total indemnification promised by the policies if there were no 'other insurance' provisions. The policies may by their terms define the extent to which each is primary and each excess, but if the policies contain inconsistent terms on that point, the insurers shall be jointly and severally liable to the insured on any coverage where the terms are inconsistent, each to the full amount of coverage it provided. Settlement among the insurers shall not alter any rights of the insured.

General Casualty's policy with Zimmerman has two relevant provisions. The Insuring Agreement, Part A--Liability Coverage provides, "We will pay damages for 'bodily injury' or 'property damage' for which any 'insured' becomes legally responsible because of an auto accident." "Insured" is defined as "You or any 'family member' for the ownership, maintenance or use of any auto or 'trailer.' " However, the "regular use" exclusion states that General Casualty "do[es] not provide Liability Coverage for the ownership, maintenance or use of: ... [a]ny vehicle, other than 'your covered auto,' which is owned by you; or furnished or available for your regular use."

The policy's insuring agreement provides coverage for any vehicle used by the insured, not just the vehicle described in the Declarations. The policy's "regular use" exclusion attempts to reduce this coverage to only the vehicle in the Declarations. The legislature has "indicated its intent to invalidate attempts by insurers to avoid their statutory obligations to compensate the insured up to the aggregated policy limits of the insured's coverage by enacting the stacking doctrine." Welch v. State Farm Mut. Auto. Ins. Co., 122 Wis.2d 172, 178, 361 N.W.2d 680, 683 (1985). We interpret General Casualty's "regular use" exclusion as an attempt to avoid the stacking doctrine's prohibition of reducing clauses, and we therefore agree with the circuit court that the exclusion is invalid.

We also view Rodey v. Stoner, 180 Wis.2d 309, 509 N.W.2d 316 (Ct.App.1993), as directly on point. 1 In Rodey, the insured had four policies covering vehicles that were not involved in the accident. Id. at 311, 509 N.W.2d at 317. The policies contained a definitional exclusion (uninsured motorist vehicle) and a coverage exclusion (drive-other-car exclusion) 2 which contained similar language and both precluded coverage. Id. at 313, 509 N.W.2d at 317-18. This court concluded that because there were two or more policies promising to indemnify Rodey against the same loss, the drive-other-car and the uninsured motorist provisions were invalid under § 631.43, Stats. Rodey, 180 Wis.2d at 318, 509 N.W.2d at 320; see also Link v. General Casualty Co., 185 Wis.2d 394, 403, 518 N.W.2d 261, 264 (Ct.App.1994), and Patraw v. American Family Mut. Ins. Co., 185 Wis.2d 757, 761, 519 N.W.2d 643, 644 (Ct.App.1994).

Similarly, Zimmerman was covered by two policies promising to indemnify him against the same loss--an accident while he used Ever Green's truck. 3 Accordingly, General Casualty's "regular use" exclusion is invalid under § 631.43, STATS. This is true, irrespective of the fact that the policies are provided by two separate insurance companies. See Tahtinen v. MSI Ins. Co., 122 Wis.2d 158,...

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