Leicht Transfer & Storage Company v. Pallet Central Enterprises, Inc. ( 2019 )

2019 WI 61
SUPREME COURT OF WISCONSIN
CASE NO.: 2016AP2334
COMPLETE TITLE: Leicht Transfer & Storage Company,
Plaintiff-Appellant-Petitioner,
v.
Pallet Central Enterprises, Inc.,
Defendant,
Travelers Property Casualty Company, Acuity, A
Mutual Insurance Company and Hiscox Insurance
Company Inc.,
Defendants-Respondents.
REVIEW OF DECISION OF THE COURT OF APPEALS
Reported at 382 Wis. 2d 270,915 N.W.2d 729
(2018 – unpublished)
OPINION FILED: May 31, 2019
SUBMITTED ON BRIEFS:
ORAL ARGUMENT: February 1, 2019
SOURCE OF APPEAL:
COURT: Circuit
COUNTY: Brown
JUDGE: Marc A. Hammer
JUSTICES:
CONCURRED:
DISSENTED: A.W. WALSH, J. dissents (opinion filed).
NOT PARTICIPATING:
ATTORNEYS:
For the plaintiff-appellant-petitioner, there were briefs
filed by George Burnett and Conway, Olejniczak & Jerry, S.C.,
Green Bay. There was an oral argument by George Burnett.
For the defendant-respondent Hiscox Insurance Company,
Inc., there was a brief filed by Kris Bartos, and Jeffrey
Leavell, S.C., Racine. There was an oral argument by Jeffrey
Leavell.
2019 WI 61
NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2016AP2334
(L.C. No. 2015CV878)
STATE OF WISCONSIN : IN SUPREME COURT
Leicht Transfer & Storage Company,
Plaintiff-Appellant-Petitioner,
v.
Pallet Central Enterprises, Inc.,
FILED
Defendant,
May 31, 2019
Travelers Property Casualty Company, Acuity, A
Mutual Sheila T. Reiff
Clerk of Supreme Court
Insurance Company and Hiscox Insurance Company
Inc.,
Defendants-Respondents.
REVIEW of a decision of the Court of Appeals. Affirmed.
¶1 DANIEL KELLY, J. Pallet Central Enterprises, Inc.,
("Pallet Central") forged certain delivery tickets and used them
to bill Leicht Transfer & Storage Company ("Leicht") for the
sale and delivery of pallets that Pallet Central never sold or
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No. 2016AP2334
delivered. This case followed, and in the piece of it we
address today, Leicht sought coverage for its losses under the
Commercial Crime Insurance Policy issued to it by Hiscox
Insurance Company, Inc. ("Hiscox"). Specifically, Leicht
asserts that the forged delivery tickets comprise "directions to
pay" within the meaning of the "Forgery or Alteration" insuring
agreement of the Hiscox policy. We disagree, and so we affirm
the court of appeals.1
I. BACKGROUND
¶2 Leicht provides warehousing services in the Green Bay
area. It uses pallets to assist in the storage and shipment of
warehoused items. Between January 2013 and February 2015,
Leicht purchased pallets from Pallet Central. The companies
followed a standard practice for documenting these transactions
for the purpose of inventory control and billing. Part of that
standard practice involved Pallet Central's preparation of a
delivery ticket describing the shipment, including the type of
pallets, the number to be delivered, the delivery date, and the
identification number of the trailer conveying them. The
delivery ticket would accompany the truck driver making the
shipment. Upon delivery, a Leicht employee would verify the
shipment and sign the delivery ticket. The truck driver would
1 This is a review of an unpublished per curiam opinion of
the court of appeals, Leicht Transfer & Storage Co. v. Pallet
Cent. Enter., No. 2016AP2334, unpublished slip op. (Wis. Ct.
App. Apr. 25, 2018) (per curiam), which affirmed the Brown
County Circuit Court, the Honorable Marc A. Hammer, presiding.
3
No. 2016AP2334
then return a copy of the delivery ticket to Pallet Central,
after which Pallet Central would prepare an invoice package.
The package comprised an invoice, a copy of the signed delivery
ticket, and a voucher.2 Pallet Central would then submit the
invoice package to Leicht for payment. Leicht would pay the
invoice only if the package contained a copy of the signed
delivery ticket. Leicht would then bill its customers for,
inter alia, the pallets it used in storing and shipping their
goods.
¶3 Eventually, Leicht became aware that the number of
invoice packages Pallet Central was submitting had dramatically
increased. Leicht's internal investigation revealed that many
of the delivery tickets bore the apparent signatures of Leicht
employees who could not possibly have executed the documents.
Ultimately, Leicht concluded that the signatures were forged,
and that it had consequently paid Pallet Central for pallets it
never received.3 Leicht says Pallet Central submitted fraudulent
2 Leicht did not describe the voucher, and the sole invoice
package in the Record contains only an invoice and delivery
ticket. Therefore, our analysis does not rely on the nature or
content of the voucher. We have included the invoice package as
an appendix to our opinion. We assume this invoice package is
representative of all invoice packages submitted by Pallet
Central to Leicht (aside from the question of forgery and the
absence of the voucher).
3 Leicht reported its findings to the DePere Police
Department. The investigating officer concluded that Leicht had
been the victim of theft by use of fraudulent invoices. Whether
the delivery tickets at issue actually were forged is not before
us, and we express no opinion on that question.
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No. 2016AP2334
invoice packages worth approximately $751,000.00, of which it
paid approximately $505,000.00.
¶4 Leicht submitted its loss to Hiscox pursuant to the
terms of its Commercial Crime Insurance Policy (the "Policy").
The relevant language, found in the "Forgery or Alteration"
insuring agreement, states the following:
(1) Checks
We will pay for loss resulting directly from Forgery
or alteration of checks, drafts, promissory notes,
convenience checks, HELOC checks, or similar written
promises, orders or directions to pay a sum certain in
Money that are:
(i) Made or drawn by or drawn upon You; or
(ii) Made or drawn by one acting as Your
agent; or that are purported to have been so
made or drawn.[4]
(Emphasis added). Hiscox denied coverage, and Leicht sued. It
alleged Hiscox breached its contract, and asked the circuit
court to declare that the Policy covers its losses from the
forged delivery tickets.5
¶5 Hiscox moved for summary judgment, arguing that the
Policy's "Forgery or Alteration" insuring agreement did not
4The Policy emphasizes certain words to indicate they are
defined terms. We have omitted the emphasis to avoid a
suggestion we are assigning particular importance to those
words.
5Leicht also named two of its other insurers, as well as
Pallet Central, as defendants. However, Hiscox is the only
defendant currently before the court, and so we do not address
claims made against any other party.
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No. 2016AP2334
provide coverage because the forged delivery tickets were
neither "checks" nor any of the other types of documents
identified by the Policy. Hiscox also argued that the forged
delivery tickets were not "drawn upon" Leicht, which it said is
a prerequisite to coverage. Leicht disagreed. It said the
Policy covers the delivery tickets because Pallet Central used
them as a means of directing payment. Therefore, it concluded,
the Policy covers the delivery tickets as "directions to pay a
sum certain in Money."6
¶6 The circuit court granted Hiscox's motion, concluding
that the Policy's "Forgery or Alteration" insuring agreement did
not provide coverage. The court of appeals affirmed, explaining
that the Policy "enumerate[s] specific covered instruments,
including checks, drafts and promissory notes, and 'similar
written promises, orders or directions to pay a sum certain' in
money" and that "[t]he delivery tickets Leicht relies upon were
not written promises, orders or directions to pay 'similar' to
the enumerated documents covered under the polic[y]." Leicht
Transfer & Storage Co. v. Pallet Cent. Enter., No. 2016AP2334,
unpublished slip op., ¶11 (Wis. Ct. App. Apr. 25, 2018) (per
curiam). The court of appeals said the forged delivery tickets
6
To the extent Leicht previously argued that coverage
exists under other portions of the Hiscox policy, those
arguments are not before this court and we therefore consider
only the coverage question presented. See, e.g., A.O. Smith
Corp. v. Allstate Ins. Cos., 222 Wis. 2d 475, 491, 588
N.W.2d 285 (Ct. App. 1998) ("[A]n issue raised in the trial
court, but not raised on appeal, is deemed abandoned.").
6
No. 2016AP2334
"were merely evidence of a claim that pallets were delivered by
Pallet Central to Leicht." Id., ¶¶12-13.
¶7 Leicht's petition for review asserted that the
Policy's coverage of "similar written promises, orders or
directions to pay a sum certain" is a "recipe for ambiguity"
because "[n]othing in the policy alerts the policyholder how or
why other forged documents might be similar." We granted
Leicht's petition and now hold that the Policy does not afford
the coverage Leicht seeks because Pallet Central's delivery
tickets are not "written . . . directions to pay a sum certain
in Money."
II. STANDARD OF REVIEW
¶8 We review the disposition of a motion for summary
judgment de novo, applying the same methodology the circuit
courts apply. Green Spring Farms v. Kersten, 136 Wis. 2d 304,
315, 401 N.W.2d 816 (1987). While our review is independent
from the circuit court and court of appeals, we benefit from
their analyses. See Preisler v. Gen. Cas. Ins. Co., 2014
WI 135, ¶16, 360 Wis. 2d 129, 857 N.W.2d 136. Summary judgment
is appropriate only "if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to
judgment as a matter of law." Wis. Stat. § 802.08(2) (2017-18);
see also Columbia Propane, L.P. v. Wis. Gas Co., 2003 WI 38,
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No. 2016AP2334
¶11, 261 Wis. 2d 70, 661 N.W.2d 776 (quoting and applying Wis.
Stat. § 802.08(2) (2001-02)).
¶9 The interpretation of an insurance policy presents a
question of law. Water Well Sols. Serv. Grp. Inc. v. Consol.
Ins. Co., 2016 WI 54, ¶12, 369 Wis. 2d 607, 881 N.W.2d 285. We
review such questions de novo. Id.
III. ANALYSIS
¶10 The Policy contains three relevant requirements that
Leicht must satisfy before it is entitled to coverage for its
losses. First, it must demonstrate that a "delivery ticket" is
the type of document encompassed by the Policy's insuring
agreement. Second, it must show that the delivery tickets were
"[m]ade or drawn by or drawn upon [Leicht]; or [m]ade or drawn
by one acting as [Leicht's] agent; or that are purported to have
been so made or drawn." And third, it must establish that the
payments it made to Pallet Central constitute a "loss resulting
directly" from the forgery. To evaluate these requirements, we
must discern the meaning of the Policy's insuring agreement, and
how its terms apply to the facts of this case.
¶11 Our goal in interpreting and applying an insurance
policy's terms is the same as it is in addressing any other
contract: To "effectuate the intent of the contracting
parties." Estate of Sustache v. Am. Family Mut. Ins. Co., 2008
WI 87, ¶19, 311 Wis. 2d 548, 751 N.W.2d 845 (citations omitted).
In doing so, we construe insurance contracts "as they would be
understood by a reasonable person in the position of the
8
No. 2016AP2334
insured[,]" yet we will "not interpret insurance policies to
provide coverage for risks that the insurer did not contemplate
or underwrite and for which it has not received a premium." Am.
Family Mut. Ins. Co. v. Am. Girl, Inc., 2004 WI 2, ¶23, 268
Wis. 2d 16, 673 N.W.2d 65 (citations omitted). We will
interpret undefined words and phrases as they would be
understood by a reasonable insured, Bethke v. Auto-Owners Ins.
Co., 2013 WI 16, ¶22, 345 Wis. 2d 533, 825 N.W.2d 482, and "[w]e
give undefined words and phrases their common and ordinary
meaning." Day v. Allstate Indem. Co., 2011 WI 24, ¶28, 332
Wis. 2d 571, 798 N.W.2d 199. "If the undefined language is
ambiguous, we will construe it in favor of the insured to afford
coverage." Bethke, 345 Wis. 2d 533, ¶22. A term or phrase is
ambiguous only if it is "'fairly susceptible to more than one
reasonable interpretation.'" Wilson Mut. Ins. Co. v. Falk, 2014
WI 136, ¶24, 360 Wis. 2d 67, 857 N.W.2d 156 (citation omitted).
¶12 We begin our analysis with Leicht's position that
"delivery tickets," when combined with corresponding invoices,
are included in the type of documents the Policy covers. The
insuring agreement describes covered documents as "checks,
drafts, promissory notes, convenience checks, HELOC checks, or
similar written promises, orders or directions to pay a sum
certain in Money." Because Leicht says the delivery tickets are
covered as "directions to pay a sum certain in Money," this part
of the inquiry actually involves two steps. First, we must
determine whether a delivery ticket is, in fact, a direction to
9
No. 2016AP2334
pay a sum certain in money (alone or in conjunction with an
invoice). If it is, then we must consider whether it is
"similar" to "checks, drafts, promissory notes, convenience
checks, [or] HELOC checks." It is a covered document only if it
meets both criteria.
¶13 Neither party has suggested the phrase "directions to
pay a sum certain in Money" is ambiguous. And as the following
analysis will demonstrate, we espy no ambiguity in it either.
Therefore, we "interpret the policy according to its plain and
ordinary meaning to avoid imposing contract obligations that the
parties did not undertake." Frost ex rel. Anderson v. Whitbeck,
2002 WI 129, ¶17, 257 Wis. 2d 80, 654 N.W.2d 225. The plain and
ordinary meaning of the phrase unmistakably indicates that, by
themselves, the delivery tickets are not "directions to pay a
sum certain in Money." The documents' most obvious defect in
this regard is that they contain no directions to pay. They
are, instead, simple statements that Pallet Central delivered a
certain type and number of pallets on a particular day. To the
extent the delivery tickets contain any directions at all, they
are as follows:
[Leicht] [m]ust notify us of any quantity disputes
and/or quality matters within 72 hours of delivery or
credit will not be issued.
Please use our tickets for DELIVERIES and PLEASE make
three (3) copies, one for you, one for the customer
and one for the driver. Have the driver fill out the
ticket (truck #, trailer # and driver signature).
Then PLEASE fax the filled out ticket back to me at
[###-###-####].
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No. 2016AP2334
With respect to payment, they are entirely inert, and contain no
motive force whatsoever by which to direct anyone to pay
anything.
¶14 The delivery tickets also conspicuously lack any
reference to a "sum certain." In fact, they do not reference an
amount due, or even a calculation by which one may arrive at an
amount due. Indeed, they say nothing about currency, payment,
or anything else one might associate with money, much less a
"sum certain." Leicht conceded this point at oral argument, and
further admitted it would not have paid Pallet Central if it had
presented nothing but a delivery ticket. The unavoidable
conclusion, therefore, is that a delivery ticket——by itself——is
not a direction to pay a sum certain in money.
¶15 Nor does a delivery ticket become a direction to pay
when bundled with a corresponding invoice. Leicht acknowledged
that an invoice is a request for payment, not a direction to
pay. So if the delivery ticket becomes a direction to pay when
attached to an invoice, the combination must be capable of
making the invoice package greater than the sum of its parts.
But Leicht did not explain how combining the two would turn one
of them (or both) into a direction to pay a sum certain in
money. The best it could offer was this: "Without the signed
ticket Pallet Central could not be paid. Indeed, that is why
Pallet Central forged those tickets in the first place." That
is likely so, and we accept Leicht's reasoning for the purpose
of this analysis. But it cannot carry the weight of its
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No. 2016AP2334
argument. Leicht's explanation describes a document evidencing
Pallet Central's satisfaction of a condition precedent to
payment. Just because the signed delivery ticket is a
prerequisite to payment, however, does not transform it (or the
combined documents) into a direction to pay a sum certain in
money. The delivery ticket does not affect the invoice's nature
(it is still a request), and the invoice does not create terms
in the delivery ticket that were not there before (it still
directs no payment, much less a sum certain). Combined, the
documents retain the same characteristics that defined them
separately: A request for payment, and proof of delivery.
Consequently, the delivery ticket——whether taken on its own
terms or in conjunction with an invoice——is not a direction to
pay a sum certain in money.
¶16 That, however, does not address Leicht's position in
full. A close examination of its arguments reveals that Leicht
did not explicitly claim that a delivery ticket is a direction
to pay. Instead, it said "the delivery ticket[s] represented a
direction to pay," and that "the parties used these delivery
tickets to direct payment from Leicht's finance department," and
that the "tickets served as a written direction to Leicht's
bursar to pay Pallet Central's invoices." That is to say,
Leicht asserts that delivery tickets function as a direction to
pay.
¶17 The distinction is subtle, but no less real for that.
And that distinction helps illustrate why there can be no
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No. 2016AP2334
coverage for the forged delivery tickets. It is a commonplace
that what something "is" can differ from the function to which
it is put. An object might be a chair, and at times function as
a very short ladder. But that does not mean the chair is a
ladder. And if an insurance policy insures only against the
loss of ladders, the chair owner will be disappointed. Here,
the Policy applies to forgery of "directions to pay a sum
certain in Money." As discussed above, the delivery tickets are
unquestionably not that. Therefore, there can be no coverage
unless the Policy applies to writings that are not "directions
to pay," but which are nonetheless used for that purpose. We
see nothing in the Policy, however, that grants coverage to
documents not covered by its terms, but which are used as
functional proxies for documents that are covered by its terms.
So when Leicht says "the delivery tickets functioned as a
direction to make payment, just as the policies required," it is
mistaken. The Policy required a direction to pay, not a stand-
in for a direction to pay.7
7
For a similar reason, the dissent's analysis cannot reach
Leicht's preferred end. The author says: "Examining the policy
language in light of the parties' habitual practice, and
consistent with this court's precedent, I arrive at the opposite
conclusion." Dissent, ¶22. The insurance policy, of course,
does not insure against loss caused by "Forgery or alteration"
of Leicht and Pallet Central's "habitual practice." It insures
against loss from "Forgery or alteration" of specifically
described documents, of which a delivery ticket is not one.
The key explanation the dissent offers for its contrary
conclusion is this:
(continued)
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No. 2016AP2334
*
¶18 If we had concluded that the delivery tickets, alone
or in conjunction with corresponding invoices, constituted
"directions to pay," we then would have needed to consider
whether the Policy's insuring agreement covered only those
"directions to pay" that are similar to the specifically
identified documents (i.e., checks, drafts, promissory notes,
convenience checks, or HELOC checks). We also would have needed
to determine whether they had been "[m]ade or drawn by or drawn
upon" Leicht, or were "[m]ade or drawn by one acting as
[Leicht's] agent; or that [were] purported to have been so made
or drawn." And finally, we would have needed to determine
whether the payments induced by the forged delivery tickets
comprised losses "resulting directly from" the forgery. But all
of these issues are contingent on having discerned a "direction
"[I]f it looks like a duck, swims like a duck, and quacks
like a duck, then it probably is a duck." This test
suggests that something can be identified by its habitual
characteristics, i.e. how it routinely functions.
Id., ¶34.
The point of the "duck" exercise is not to equate two
things that are not the same. It is to identify what something
really is. That is, one does not build an animatronic duck, set
it afloat in a puddle with a quack soundtrack, and conclude it
is an actual member of the Anatidae family. But that is what
the dissent proposes here. Leicht and Pallet Central may have a
private understanding that they will act as though the delivery
ticket is a direction to pay a sum certain. But that does not
mean we (and Hiscox) must conclude it is such a document any
more than an ornithologist must conclude the floating
fabrication actually is a duck.
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No. 2016AP2334
to pay" in the forged delivery tickets. Because we did not, we
have no need to examine these additional issues. Am. Girl,
Inc., 268 Wis. 2d 16, ¶24 ("If it is clear that the policy was
not intended to cover the claim asserted, the analysis ends
there."). The Policy's insuring agreement does not encompass the
forged delivery tickets, and we may not add coverage for which
the parties did not bargain. Id., ¶23 (citations omitted)
("[W]e do not interpret insurance policies to provide coverage
for risks that the insurer did not contemplate or underwrite and
for which it has not received a premium."). Consequently,
Leicht's quest for coverage must end.
IV. CONCLUSION
¶19 We conclude that the Policy unambiguously demonstrates
that the delivery tickets at issue in this case, either alone or
in combination with corresponding invoices, do not qualify as
"written . . . directions to pay a sum certain in Money."
Further, we conclude that the Policy does not provide coverage
for forged documents that are not themselves "directions to
pay," but which are used as proxies for such documents. Summary
judgment for Hiscox was, therefore, appropriate. We affirm the
court of appeals.
By the Court.—The decision of the court of appeals is
affirmed.
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No. 2016AP2334
1
No. 2016AP2334
2
No. 2016AP2334.awb
¶20 ANN WALSH BRADLEY, J. (dissenting). This case arose
after Pallet Central Enterprises, Inc. submitted fraudulent
invoices to Leicht Transfer & Storage Company for nonexistent
pallets that were never delivered. Majority op., ¶3. Leicht
purchased a crime insurance policy to protect itself against
precisely this type of fraudulent activity. Nevertheless, the
majority denies coverage, sticking Leicht with a half million
dollar bill for losses that resulted from Pallet Central
Enterprises, Inc.'s fraudulent scheme.
¶21 The majority can reach its conclusion only by
disregarding long-held principles of insurance policy
interpretation——which we call precedent. It is firmly
established that an insurance policy's terms are to be
interpreted as they would be understood from the perspective of
a reasonable person in the position of the insured. Shugarts v.
Mohr, 2018 WI 27, ¶20, 380 Wis. 2d 512, 909 N.W.2d 402 (citation
omitted). Likewise, it is well-settled that ambiguity in an
insurance policy is construed in favor of an insured seeking
coverage. Olson v. Farrar, 2012 WI 3, ¶42, 338 Wis. 2d 215, 809
N.W.2d 1 (citation omitted).
¶22 Casting these principles aside, the majority
determines that Leicht is not entitled to insurance coverage for
losses incurred due to the fraudulent actions of Pallet Central.
Examining the policy language in light of the parties' habitual
practice, and consistent with this court's precedent, I arrive
at the opposite conclusion.
¶23 Accordingly, I respectfully dissent.
1
No. 2016AP2334.awb
I
¶24 For a period of over two years, Leicht purchased
pallets for its warehouse from Pallet Central. Majority op.,
¶2. As the majority accurately details, Leicht and Pallet
Central "followed a standard practice for documenting these
transactions for the purpose of inventory control and billing."
Id.
¶25 Pursuant to this practice, each time Pallet Central
made a delivery of pallets, it would give to Leicht a delivery
ticket. Id. The delivery ticket described the shipment of
pallets, identified the number of pallets delivered, specified
the delivery date, and provided the identification number of the
trailer on which the pallets arrived. Id. A Leicht employee
would then sign the delivery ticket, indicating the pallets had
been received. Id.
¶26 After the delivery ticket had been signed, Pallet
Central would prepare an invoice package that included the
signed delivery ticket. Id. Leicht would then pay Pallet
Central for the delivery, but only if the invoice was
accompanied by a signed delivery ticket. Id.
¶27 When it came to light that Pallet Central submitted
invoices to Leicht for nonexistent pallets that were never
delivered, an investigation ensued. It revealed that Leicht
employees' signatures on the delivery tickets had been forged.
Id., ¶3. This caused Leicht to suffer a loss of approximately
$505,000 from paying the fraudulent invoices. Id.
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No. 2016AP2334.awb
¶28 Leicht carried a crime insurance policy. As relevant
here, the policy provides:
(1) Checks
We will pay for loss resulting directly from Forgery
or alteration of checks, drafts, promissory notes,
convenience checks, HELOC checks, or similar written
promises, orders or directions to pay a sum certain in
Money that are:
(i) Made or drawn by or drawn upon You; or
(ii) Made or drawn by one acting as Your agent;
or that are purported to have been so made or
drawn.
¶29 The majority determines that Leicht is not entitled to
coverage under this provision of the policy. It concludes that
a "delivery ticket——whether taken on its own terms or in
conjunction with an invoice——is not a direction to pay a sum
certain in money." Majority op., ¶15. In the majority's view,
the delivery ticket contains no direction to pay and no
reference to a sum certain. Id., ¶14. Further, it opines that
coverage does not attach to a signed delivery ticket that
functions as a direction to pay, but is not itself a direction
to pay. Id., ¶¶16-17.
II
¶30 As I see it, the language of the policy creates
several conditions that the signed delivery ticket at issue in
this case must fulfill in order for coverage to attach. First,
the signed delivery ticket must be a written promise, order or
direction to pay a sum certain in money. Second, it must be
similar to a check, draft, promissory note, convenience check,
3
No. 2016AP2334.awb
or HELOC checks. Finally, as provided in the crime insurance
policy, the signed delivery ticket must be "[m]ade or drawn by
or drawn upon [Leicht], [m]ade or drawn by one acting as
[Leicht's] agent; or [was] purported to have been so made or
drawn."1
A
¶31 I address first whether a signed delivery ticket is,
as interpreted by reasonable person in the position of the
insured, a "direction to pay" a sum certain in money.
¶32 It is imperative that our review of the language of an
insurance policy be through the lens of a reasonable insured.
Shugarts, 380 Wis. 2d 512, ¶20. The insured, Leicht, was
engaged in a repeated and specific process by which payment was
directed by the submission of certain documents, namely a signed
delivery ticket and invoice.
¶33 Given the habitual practice the parties followed in
their transactions, a reasonable insured in Leicht's position
would understand that a signed delivery ticket serves as a
"direction to pay." Indeed, the record reflects that an
unsigned delivery ticket would not be paid, unlike a signed
ticket that would be paid. Accompanying a signed delivery
ticket is an invoice containing a sum certain for payment. The
parties' habitual routine was that this package of documents
would direct that payment be made.
1Because it determines that a signed delivery ticket is not
a direction to pay a sum certain in money, the majority does not
address the second and third issues I raise.
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No. 2016AP2334.awb
¶34 The majority departs from the language as viewed by a
reasonable insured engaging in the habitual practice of these
parties. Simply put, its technical and theoretical distinction
between what a signed delivery ticket "is" and its "function"
not only discards our precedent on insurance policy
interpretation, but it also fails an elementary test. See
majority op., ¶¶16-17. Namely, "if it looks like a duck, swims
like a duck, and quacks like a duck, then it probably is a
duck." This test suggests that something can be identified by
its habitual characteristics, i.e. how it routinely functions.
¶35 The bottom line is that the habitual practice of the
parties established that a signed delivery ticket directed
payment. It is from this perspective that we must examine the
policy's language. Viewing the parties' habitual practice from
Leicht's point of view, I determine that a signed delivery
ticket fulfills the policy's requirement of a "direction to pay"
a sum certain in money.
B
¶36 I turn next to address whether a signed delivery
ticket is "similar" to the instruments listed in the policy:
checks, drafts, promissory notes, convenience checks, or HELOC
checks.
¶37 In addressing this question, another maxim of
insurance policy interpretation must be considered. Namely,
ambiguous terms must be construed in favor of coverage, and
against the drafter. Olson, 338 Wis. 2d 215, ¶42; see Maryland
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No. 2016AP2334.awb
Arms Ltd. P'ship v. Connell, 2010 WI 64, ¶44, 326 Wis. 2d 300,
786 N.W.2d 15 (citation omitted).
¶38 The policy uses the term "similar." Inherent in the
term "similar" is a certain amount of ambiguity. It begs the
question, how similar is similar enough? The text of the policy
provides no guidance.
¶39 As Leicht aptly argued in its brief, "[n]o
policyholder can know with certainty what documents are similar
to a check, to a draft, or to a promissory note, and conversely,
no policyholder can surmise what written 'promises, orders, or
directions for payment' are too dissimilar for coverage to
apply."
¶40 I agree with Leicht. As analyzed above, a reasonable
insured would believe that a signed delivery ticket "directs
payment" within the language of the policy. But under the
language of this policy, a policyholder is left guessing whether
such a "direction to pay" is covered if it is not explicitly
listed. Construing the ambiguity in favor of coverage, as our
precedent requires, I determine that a signed delivery ticket
fulfills the policy's "similarity" requirement.
C
¶41 The next inquiry raised by the policy language is
whether the signed delivery ticket is "[m]ade or drawn by or
drawn upon [Leicht], [m]ade or drawn by one acting as [Leicht's]
agent; or [was] purported to have been so made or drawn."
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No. 2016AP2334.awb
¶42 Leicht alleges that the signatures of Leicht employees
on delivery tickets were forged. That is, the signatures were
"purported to have been" made by Leicht employees.
¶43 Further, the forged signatures were purportedly made
by Leicht employees acting as Leicht's agents. "Agent" is not a
defined term in the policy, meaning that we interpret it as it
would be understood by a reasonable insured. Acuity v. Bagadia,
2008 WI 62, ¶13, 310 Wis. 2d 197, 750 N.W.2d 817 (citation
omitted).
¶44 An employee acting on behalf of an employer is the
employer's agent. See Romero v. West Bend Mut. Ins. Co., 2016
WI App 59, ¶39, 371 Wis. 2d 478, 885 N.W.2d 591 (citation
omitted). By forging signatures on delivery tickets, Pallet
Central employees purported to be acting as Leicht employees,
thereby confirming receipt of pallets that were never delivered
and directing Leicht to pay for them.
¶45 In sum, properly examining the policy as would a
reasonable person in the position of the insured, I conclude
that all conditions for coverage are fulfilled. Specifically, a
forged signed delivery ticket is a similar written promise,
order or direction to pay a sum certain that was purported to
have been made by Leicht's agent.
¶46 Accordingly, I respectfully dissent.
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No. 2016AP2334.awb
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