PUBLISHED OPINION
Case No.: 95-2423
†Petition to
review filed
Complete Title
of Case:
WILLIAM HULL,
Plaintiff-Respondent,
v.
HERITAGE MUTUAL
INSURANCE COMPANY,
Defendant-Appellant,†
PAUL SCHWAI, MILWAUKEE
MUTUAL INSURANCE COMPANY,
WHEEL AND TIRE SHOP, INC.,
ABC INSURANCE COMPANY,
AMERICAN RACING EQUIPMENT, INC.,
XYZ INSURANCE COMPANY and
BORDEN, INC.,
Defendants.
Submitted on Briefs: June 13, 1996
COURT COURT
OF APPEALS OF WISCONSIN
Opinion Released: July 24, 1996
Opinion Filed: July 24, 1996
Source of APPEAL Appeal
from a judgment
Full Name JUDGE COURT: Circuit
Lower Court. COUNTY: Washington
(If "Special", JUDGE: LEO F. SCHLAEFER
so indicate)
JUDGES: Anderson,
P.J., Nettesheim and Snyder, JJ.
Concurred:
Dissented:
Appellant
ATTORNEYSOn
behalf of the defendant-appellant, the cause was submitted on the briefs of Arthur
P. Simpson of Simpson & Deardorff of Milwaukee.
Respondent
ATTORNEYSOn
behalf of the plaintiff-respondent, the cause was submitted on the brief of Joseph
G. Doherty of Bunk, Doherty & Griffin, S.C. of West Bend.
|
COURT OF APPEALS DECISION DATED AND RELEASED July 24, 1996 |
NOTICE |
|
A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 95-2423
STATE
OF WISCONSIN IN COURT OF
APPEALS
WILLIAM HULL,
Plaintiff-Respondent,
v.
HERITAGE MUTUAL
INSURANCE COMPANY,
Defendant-Appellant,
PAUL SCHWAI, MILWAUKEE
MUTUAL INSURANCE COMPANY,
WHEEL AND TIRE SHOP, INC.,
ABC INSURANCE COMPANY,
AMERICAN RACING EQUIPMENT,
INC.,
XYZ INSURANCE COMPANY and
BORDEN, INC.,
Defendants.
APPEAL from a judgment
of the circuit court for Washington County:
LEO F. SCHLAEFER, Judge. Affirmed.
Before Anderson, P.J.,
Nettesheim and Snyder, JJ.
SNYDER, J. Heritage
Mutual Insurance Company appeals from a judgment which ordered the company to
pay William Hull $50,000 in underinsured motorist (UIM) benefits for injuries
Hull sustained when the vehicle he was driving lost a rear wheel and
overturned. Heritage contends that Hull
voided his claim for UIM benefits when he settled with American Racing
Equipment, Inc. (the manufacturer of the wheel) and Wheel and Tire Shop, Inc.
(the retailer) without notifying Heritage.
Because we conclude that under its UIM policy language Heritage has no
subrogation rights against any potential tortfeasor who is not also an
underinsured motorist, we affirm.
Hull was driving a
vehicle owned by Paul Schwai when a rear wheel came off and the vehicle
overturned, injuring Hull. Hull
initially asserted claims of negligence against Schwai, alleging that the
vehicle was negligently maintained; against Wheel and Tire for failure to “warn
and instruct in the proper securing of the lug nuts;” and against American
Racing for its failure to warn and instruct.
Heritage was included in the action as Hull's UIM carrier.
Hull ultimately obtained
Pierringer releases from American Racing and Wheel and Tire.[1] See Pierringer v. Hoger,
21 Wis.2d 182, 124 N.W.2d 106 (1963).
The parties dispute whether Heritage was notified of the settlements before
Hull executed the releases.[2] Heritage brought a summary judgment motion,
claiming that Hull's actions were contrary to the notice requirement of Vogt
v. Schroeder, 129 Wis.2d 3, 383 N.W.2d 876 (1986), and failed to
protect the company's subrogation rights.
As a consequence, Heritage refused to pay Hull's UIM benefits. Summary judgment was denied.
After a trial, judgment
was entered against Heritage, requiring the company to pay Hull the $50,000
limit of his UIM coverage.[3] Heritage appeals, renewing its argument that
Hull's actions contravened the subrogation language in its policy and violated
the notice requirement of Vogt.
The issue presented
concerns the respective rights of an insured and insurer under a UIM provision
when the insured has settled with a potential tortfeasor without involving the
insurer. This is a question of law which
we decide without deference to the lower court. See Schulte v. Frazin, 176 Wis.2d 622, 628,
500 N.W.2d 305, 307 (1993). The
application of unambiguous terms in an insurance contract to established facts
presents a question of law which this court reviews de novo. Grotelueschen v. American Family Mut.
Ins. Co., 171 Wis.2d 437, 447, 492 N.W.2d 131, 134 (1992).
It is of primary
importance that an insurance contract be interpreted to mean what a reasonable
person in the position of the insured would have understood it to mean. Sprangers v. Greatway Ins. Co.,
182 Wis.2d 521, 536, 514 N.W.2d 1, 6 (1994).
This requires that policy language be given its common and ordinary
meaning. Dailey v. Secura Ins.
Co., 164 Wis.2d 624, 628, 476 N.W.2d 299, 300 (Ct. App. 1991). When terms of a policy are plain on their
face, the policy must not be rewritten by construction. Schaefer v. General Casualty Co.,
175 Wis.2d 80, 84, 498 N.W.2d 855, 856 (Ct. App. 1993).
The policy of insurance
issued to Hull included a section entitled “UNDERINSURED MOTORISTS.” The provisions of this section include:
We will
pay damages for bodily injury which an insured person
is legally entitled to recover from the owner or operator of an underinsured
motor vehicle. Bodily
injury must be caused by accident and result from the ownership,
maintenance or use of the underinsured motor vehicle.
We will
pay under this coverage only after the limits of liability under any applicable
bodily injury liability policies or bonds have been exhausted by payment of
judgments or settlements.
The plain language of
this section states that the policy will pay damages which the insured is
legally entitled to recover from the owner or operator of an underinsured motor
vehicle. The policy further states
that this coverage will be paid only after the limits of liability under any
applicable bodily injury liability policies have been exhausted. Looking to the plain meaning of the
contract, UIM benefits cover the insured when the liability policy of the owner
or operator of a motor vehicle are not adequate. The supreme court recognized this as the purpose of UIM insurance
when it quoted with approval, “[U]nderinsured motorist coverage protects
against the inadequately insured motorist.”
Vogt, 129 Wis.2d at 8 n.2, 383 N.W.2d at 878 (quoted
source omitted).
American Racing, a
potential tortfeasor, is not the “owner or operator of an underinsured motor
vehicle.” Because Hull's policy states
that Heritage will pay damages that its insured is legally entitled to recover from
an owner or operator of a motor vehicle, we conclude that Hull's settlement
with American Racing has no effect on his allowable recovery under his UIM
coverage. The policy plainly describes
the yardstick for measuring the payment of UIM benefits: damages the insured is entitled to recover
from an owner or operator of a motor vehicle.
Heritage maintains that
this determination ignores the subrogation language included in its policy and
also the clear mandate of the Vogt notice requirement. We address each argument in turn.
Heritage claims that the
following section of its policy, entitled “GENERAL PROVISIONS,” supports the
contention that Hull's actions voided his right to UIM benefits:
6.
OUR RECOVERY RIGHTS
In the event of a payment under this
policy, we are entitled to all the rights of recovery that a
person or organization to whom payment was made has against another. That person or organization must sign and
deliver to us any legal papers relating to that recovery, do
whatever else is necessary to help us exercise those rights and do
nothing after loss to harm our rights. [Emphasis added.]
Interpretation of an
insurance contract is controlled by the same principles as contract
construction. Sprangers,
182 Wis.2d at 536, 514 N.W.2d at 6. Any
ambiguity in exceptions or exclusions is to be strictly construed against the
insurer; reasonable doubts about uncertain language should be resolved against
the insurer. Id. The intended purpose of a particular type of
coverage should be considered when an insurance policy is construed. See Vidmar v. American Family
Mut. Ins. Co., 104 Wis.2d 360, 370, 312 N.W.2d 129, 133 (1981), overruled
on other grounds by Welch v. State Farm Mut. Auto. Ins. Co.,
122 Wis.2d 172, 178-79, 361 N.W.2d 680, 683-84 (1985).
While Heritage's policy
includes a general provision relating to its subrogation rights, our reading of
the UIM policy provisions convinces us that the specific language of that
section is controlling. When there is
an apparent conflict between general and specific provisions of an agreement,
the specific provision controls. Goldmann
Trust v. Goldmann, 26 Wis.2d 141, 148, 131 N.W.2d 902, 906 (1965).
Based on the plain
language of the UIM provisions, the general subrogation language in the policy
is immaterial in the instant case. The
only subrogation right applicable to a payment of UIM benefits is a right of
subrogation against the owner or operator of a motor vehicle. Heritage's policy affords it no right of
subrogation against a nonmotorist tortfeasor when it pays its insured UIM
benefits.
Heritage also contends
that this determination ignores the Vogt requirement that an
insured notify his or her insurance company before executing a release of a
tortfeasor and his or her insurer. See
Vogt, 129 Wis.2d at 17, 383 N.W.2d at 882. Heritage complains that the lack of notice
prevented it from participating in the settlement and that the release Hull
signed “extinguished all subrogation rights that Heritage would have as an
underinsured motorist carrier.”
For the same reasons
that we concluded the general subrogation clause of the policy is not
controlling, the Vogt notice requirement is also not
applicable. The Vogt
requirement of notice does not supersede the provisions of a contract between
an insurer and its insured. Heritage's
policy language abrogated its subrogation rights in this instance.
We conclude that the
plain language of Heritage's UIM provisions defines its subrogation
rights. Under the policy, Heritage's
right exists against any tortfeasor who is also the owner or operator of a
motor vehicle. Since American Racing
and Wheel and Tire are neither “owners” nor “operators” of a motor vehicle,
Hull's settlement with them as potential tortfeasors does not affect his right
to recover under the UIM portion of his policy.
By the Court.—Judgment
affirmed.
[1] Hull executed the release of American Racing in exchange for a $2000 settlement. Wheel and Tire settled for $2500.
[2] Heritage contends that the release of American Racing occurred without the insurance company receiving prior notification; Hull claims that Heritage was notified by letter prior to his execution of the release, but that it did not respond. The timing of the release of Wheel and Tire is also contested.