Zarder v. Humana Ins. Co.

• Decision Date: 14 May 2010
• Docket Number: No. 2008AP919.,2008AP919.
• Citation: 782 N.W.2d 682,2010 WI 35,324 Wis.2d 325
• Parties: James ZARDER, Glory Zarder and Zachary Zarder, by Robert C. Menard, Guardian ad Litem, Plaintiffs-Respondents,v.HUMANA INSURANCE COMPANY, Defendant,Acuity, A Mutual Insurance Company, Defendant-Appellant-Petitioner.
• Court: Wisconsin Supreme Court

324 Wis.2d 325

782 N.W.2d 682

2010 WI 35

James ZARDER, Glory Zarder and Zachary Zarder, by Robert C. Menard, Guardian ad Litem, Plaintiffs-Respondents,v.HUMANA INSURANCE COMPANY, Defendant,Acuity, A Mutual Insurance Company, Defendant-Appellant-Petitioner.

No. 2008AP919.

Supreme Court of Wisconsin.

Argued Feb. 10, 2010.

Decided May 14, 2010.

COPYRIGHT MATERIAL OMITTED

For the defendant-appellant-petitioner there were briefs by Lance S. Grady, Daniel K. Miller, and Grady, Hayes & Neary, LLC, Waukesha, and oral argument by Lance S. Grady.

For the plaintiffs-respondents there was a brief by Luke M. Wagner and the Wagner Law Firm, S.C., Menomonie, and Robert Menard and Derzon & Menard, S.C., Milwaukee, and oral argument by Luke M. Wagner.

An amicus curiae brief was filed by Timothy M. Barber and Axley Brynelson, LLP, Madison, on behalf of the Wisconsin Association for Justice.

¶ 1 ANN WALSH BRADLEY, J.

Acuity, A Mutual Insurance Company, seeks review of a published court of appeals decision affirming the circuit court's denial of Acuity's motion for declaratory judgment.¹ Acuity sought a declaration that the accident here was not a hit-and-run accident under the terms of the uninsured motorist (UM) policy issued to James and Glory Zarder. The circuit court and court of appeals determined that Acuity was not entitled to a declaratory judgment even though the occupants of the vehicle that allegedly struck thirteen-year-old Zachary Zarder stopped to check on his wellbeing before departing.

¶ 2 Acuity asserts that both the circuit court and the court of appeals erred. It contends that, under the facts of this case, the vehicle involved in the accident was not a “hit-and-run” vehicle because the unidentified driver stopped to check on Zarder's wellbeing before leaving the scene of the accident. Further, Acuity argues that this court's discussion of the term “hit-and-run” in Hayne v. Progressive Northern Insurance Co.² controls the outcome of this case.

¶ 3 We conclude that Acuity's focus on the unidentified driver's intention when leaving the accident scene is not relevant to our determination of whether there is coverage under the terms of the insurance policy. Further, we conclude that Hayne does not control the outcome of this case. We, therefore, apply the standard rules of construction to the Zarders' UM policy.

¶ 4 Given that the phrase “hit-and-run” in the Zarders' UM policy is susceptible to more than one reasonable construction, we determine that it is ambiguous. We therefore construe the phrase “hit-and-run” in favor of coverage. Having concluded that there is coverage for this type of accident under the policy, we need not examine the requirements of Wis. Stat. § 632.32(4) (2007-08).³ Accordingly, we affirm the court of appeals, but we modify the rationale and remand to the circuit court for further proceedings.

I

¶ 5 For the purposes of this interlocutory appeal, the facts are undisputed. Thirteen-year-old Zachary Zarder was riding his bicycle on a New Berlin municipal street on a snowy evening in December 2005 when his bicycle was struck by an unidentified motorist. The car stopped approximately 100 feet from Zarder. Three occupants got out of the car and approached Zarder, who remained at the accident scene.

¶ 6 Sandra and Edward Miller were walking in the neighborhood when the accident occurred. Sandra Miller said that she heard a young male voice say, “A car is coming.” Sandra saw a car and heard a crash of metal.

¶ 7 Within seconds, the Millers arrived at the accident scene. They saw Zarder sitting in the snowbank beside his bicycle. They saw three young men exit a car approach Zarder, and ask if he was okay. Sandra overheard Zarder assure the occupants that he was okay.⁴ The occupants then returned to their car and drove away. Sandra later signed an affidavit stating: “It did not appear that the subject car was fleeing the accident scene.”

¶ 8 The Millers also asked Zarder if he was injured, and he said that he was not. Later, however, it became apparent that he was in fact injured. The Zarders contacted the New Berlin Police Department and reported the accident the same evening.

¶ 9 Officer Jeffrey Kuehl investigated the accident. He located car parts in the roadway of the accident scene and interviewed witnesses, but he was unable to identify the vehicle or its driver. Kuehl later stated in an affidavit: “[T]he December 9, 2005 accident was not investigated as a hit-and-run accident because the unidentified vehicle stopped at the scene and inquired as to Zachary Zarder's health and well-being[.]”

¶ 10 As a result of the accident, Zarder's leg and arm were fractured, requiring two surgeries. His health insurance policy, issued by Humana, was insufficient to cover his medical bills. The Zarders therefore sought coverage under their automobile insurance policy.

¶ 11 As required by Wis. Stat. § 632.32(4), the Zarders' policy included uninsured motorist (UM) coverage. The policy provided:

We will pay damages for bodily injury which an insured person is legally entitled to recover from the owner or operator of an uninsured motor vehicle. Bodily injury must be sustained by an insured person and must be caused by accident and result from the ownership maintenance or use of the uninsured motor vehicle.

The policy defined “uninsured motor vehicle” in part as “a land motor vehicle or trailer which is ... [a] hit-and-run vehicle whose operator or owner is unknown and which strikes [an insured].”

¶ 12 After Acuity rejected the Zarders' claim, they filed suit, claiming UM coverage.⁵ Acuity answered, denying coverage. It asserted “that under the circumstances of this case the policy in question [does not] provide [ ] uninsured motorist insurance coverage benefits since the vehicle that allegedly struck the Plaintiff, Zachary Zarder, did not constitute a ‘hit and run’ vehicle under the law[.]” It also asserted contributory negligence as an affirmative defense.

¶ 13 Acuity filed a motion for declaratory judgment in circuit court, seeking a no coverage declaration in connection with the Zarders' claims. It did not specifically interpret the terms of the UM policy. Rather, it argued that the policy “does not expressly define what qualifies as a ‘hit-and-run’ vehicle. Consequently, Wisconsin courts' [statutory] construction of the phrase ‘hit-and-run’ in an insurance coverage context is instructive, given the absence of a definition of the same in either the policy or [Wis. Stat. § 632.32,] the omnibus statute.”

¶ 14 Acuity cited Hayne v. Progressive Northern Insurance Co., a decision by this court, which held that the statutory term “hit-and-run” unambiguously requires physical striking. 115 Wis.2d 68, 339 N.W.2d 588 (1983). Hayne concluded: “[T]he plain meaning of ‘hit-and-run’ consists of two elements: a ‘hit’ or striking, and a ‘run,’ or fleeing from the scene of an accident.” Id. at 73-74, 339 N.W.2d 588. Acuity argued that under Hayne, the unidentified vehicle was not a ‘hit-and-run’ vehicle because the driver stopped to check on Zarder rather than “fleeing from the scene of [the] accident.”

¶ 15 After briefs and oral arguments, the circuit court denied Acuity's motion for declaratory judgment. Although the court did not specifically interpret the terms of the policy, it determined that Zarder was “hit” within the meaning of the term “hit-and-run.” ⁶ It concluded: “I am very satisfied there isn't a hint of fraud here.” The court explained: “Unlike many of the cases this court has reviewed, there is no phantom car or phantom driver. There is no issue of contact.” Further, “there's no real claim of fraud because this young man has very ... objective injuries.”

¶ 16 Although the court concluded that the unidentified vehicle was not a “hit-and-run” vehicle within the meaning of Hayne, it determined that there was coverage under Acuity's policy. The court explained its reasoning in terms of “public policy” and the purpose underlying the omnibus statute, which mandates a minimum level of UM coverage in all liability policies.

¶ 17 The court of appeals accepted Acuity's interlocutory appeal. It determined that Hayne's definition of “run” was dictum because the Wisconsin supreme court in Hayne “did not intentionally take up and decide the ‘run’ part of ‘hit-and-run’ ”; the definition of run was not “germane to the outcome of Hayne ”; and it was an “off-the-cuff statement[ ], made without any careful thought or analysis[.]” Zarder v. Acuity, A Mut. Ins. Co., 2009 WI App 34, ¶ 12, 316 Wis.2d 573, 765 N.W.2d 839. The court continued: “Without Hayne as the anchor, we are back to square one with regard to defining ‘run’ in ‘hit-and-run.’ We will hereafter analyze the case the way the law says we must interpret insurance policy language.” Id., ¶ 15.

¶ 18 The court discussed two reasonable definitions of “run” in the context of a hit-and-run vehicle: “the operator flees or drives on without stopping,” or “the operator stops but drives on without providing identification or complying with his or her other legal duties.” Id., ¶ 22. The court adopted the interpretation favorable to the insured and concluded that a hit-and-run occurs when a driver leaves the scene of the accident without providing identifying information, even though the driver stopped to see if there was injury. Id., ¶ 23.

¶ 19 As an alternative rationale for affirming the circuit court, the court of appeals concluded that Wis. Stat. § 632.32(4)(a)2.b. compels coverage. Id., ¶ 24. It consulted the legislative history of the statute and found little guidance. Id., ¶ 29. However, it found the criminal hit-and-run statute, Wis. Stat. § 346.67, to be helpful.⁷ Id., ¶ 30. That statute provides that drivers involved in some accidents must, among other obligations, provide their name, address, and vehicle registration number before leaving the scene of the accident. Wis. Stat. § 346.67. The court “presume[d] that the legislature had full knowledge of the...