ACUITY v. Estate of Michael Shimeta

2023 WI 28SUPREME COURT OF WISCONSIN
CASE NO.: 2020AP189
COMPLETE TITLE: ACUITY, a Mutual Insurance Co.,
Plaintiff-Respondent-Petitioner,
v.
Estate of Michael Shimeta and Terry Scherr,
Defendants-Appellants,
Partners Mutual Insurance Co.,
Intervening Defendant.
REVIEW OF DECISION OF THE COURT OF APPEALS
Reported at 399 Wis. 2d 375, 965 N.W.2d 78PDC No: 2021 WI App 64 - Published
OPINION FILED: April 7, 2023
SUBMITTED ON BRIEFS:
ORAL ARGUMENT: September 30, 2022
SOURCE OF APPEAL:
COURT: Circuit
COUNTY: Milwaukee
JUDGE: Jeffrey A. Conen
JUSTICES:
KAROFSKY, J., delivered the majority opinion of the Court, in
which ANN WALSH BRADLEY, ROGGENSACK, and DALLET, JJ., joined.
ZIEGLER, C.J., filed a dissenting opinion, in which REBECCA
GRASSL BRADLEY, J., joined. HAGEDORN, J., filed a dissenting
opinion, in which REBECCA GRASSL BRADLEY, J., joined.
NOT PARTICIPATING:
ATTORNEYS:
For the plaintiff-respondent-petitioner, there were briefs
filed by Christine M. Rice, Nicole R. Radler, and Simpson &
Deardorff, S.C., Milwaukee. There was an oral argument by
Christine M. Rice.
For the defendants-appellants, there was a brief filed by
Brett A. Eckstein and Cannon & Dunphy, S.C., Brookfield. There
was an oral argument by Brett A. Eckstein.
An amicus curiae brief was filed by James A. Friedman,
Daniel C.W. Narvey, and Godfrey & Kahn, S.C., Madison, for the
Wisconsin Insurance Alliance.
An amicus curiae brief was filed by Mark L. Thomsen, Lynn
R. Laufenberg, and Gingras, Thomsen, & Wachs, LLP, Madison, for
the Wisconsin Association for Justice.
2
2023 WI 28NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2020AP189
(L.C. No. 2019CV5402)
STATE OF WISCONSIN : IN SUPREME COURT
ACUITY, a Mutual Insurance Co.,
Plaintiff-Respondent-Petitioner,
v.
FILED
Estate of Michael Shimeta and Terry Scherr, APR 7, 2023
Defendants-Appellants, Sheila T. Reiff
Clerk of Supreme Court
Partners Mutual Insurance Co.,
Intervening Defendant.
KAROFSKY, J., delivered the majority opinion of the Court, in
which ANN WALSH BRADLEY, ROGGENSACK, and DALLET, JJ., joined.
ZIEGLER, C.J., filed a dissenting opinion, in which REBECCA
GRASSL BRADLEY, J., joined. HAGEDORN, J., filed a dissenting
opinion, in which REBECCA GRASSL BRADLEY, J., joined.
REVIEW of a decision of the Court of Appeals. Affirmed.
¶1 JILL J. KAROFSKY, J. This case arises from a tragic
automobile accident that occurred when Douglas Curley lost
control of his vehicle, crossed the center line, and hit another
vehicle, killing Michael Shimeta and seriously injuring his
passenger, Terry Scherr. As a result of the accident, Curley's
No. 2020AP189
insurer paid Shimeta's estate (Shimeta) and Scherr $250,000
each. Shimeta and Scherr sought additional recovery under a
policy that Acuity had issued to Shimeta prior to the accident.
The policy included underinsured motorist (UIM) coverage with a
$500,000 limit for "each person" and a $500,000 limit for "each
accident." At issue in this case is whether Acuity's UIM
coverage entitles Shimeta and Scherr to an additional $250,000
each from Acuity, or whether the payments Shimeta and Scherr
received from Curley's insurer reduced their recovery to
nothing. To resolve this issue, we must interpret the UIM
policy's reducing clause, which states that "[t]he limit of
liability shall be reduced by all sums . . . [p]aid because of
the bodily injury by or on behalf of persons . . . who may be
legally responsible."
¶2 We conclude that the reducing clause operates on an
individual basis to reduce the $500,000 "each person" limit of
liability by the $250,000 payment that Shimeta and Scherr each
received from Curley's insurer. Consequently, Acuity owes
Shimeta and Scherr $250,000 each. Accordingly, we affirm the
court of appeals' reversal of the circuit court's1 grant of
declaratory judgment for Acuity.
I. BACKGROUND
¶3 Michael Shimeta was tragically killed and Terry Scherr
was severely injured on November 22, 2018 when Douglas Curley
1 The Honorable Jeffrey A. Conen of the Milwaukee County
Circuit Court presiding.
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No. 2020AP189
lost control of his pickup truck on Highway 10 in Portage
County, crossed the center line, flipped in the air, and landed
on top of Shimeta's Jeep. It is undisputed that Shimeta and
Scherr's injuries met or exceeded $1 million in damages.
¶4 Curley was insured under an automobile liability
insurance policy issued by Farmers Insurance Company. The
policy provided coverage up to a $250,000 "per person" limit of
liability, and a $500,000 "per accident" limit of liability. In
accordance with this policy, Farmers paid Shimeta and Scherr
$250,000 each.
¶5 Shimeta and Scherr were also covered under a UIM
policy that Acuity issued to Shimeta. The policy's liability
limits for UIM coverage are $500,000 for "each person" and
$500,000 for "each accident." The policy includes a reducing
clause that states: "[t]he limit of liability shall be reduced
by all sums . . . [p]aid because of the bodily injury2 by or on
behalf of persons . . . who may be legally responsible."
¶6 The parties do not dispute that both Shimeta and
Scherr were insured under the UIM policy. Nor do they dispute
that Curley's truck was an "underinsured motor vehicle" as
defined by the policy. In dispute is whether Acuity must still
pay $250,000 each to Shimeta and Scherr, or whether the $500,000
in combined payments from Farmers reduced Acuity's policy limits
to zero.
In Acuity's policy, defined terms are in bold font.
2 Those
terms are underlined in this opinion.
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No. 2020AP189
¶7 Acuity filed an action for declaratory judgment,
asking the circuit court to find that Acuity was not obligated
to pay Shimeta and Scherr any UIM benefits under its policy
because Shimeta and Scherr had already received a total of
$500,000 from Farmers. The circuit court granted Acuity's
motion, reasoning that Acuity's $500,000 maximum limit for "each
accident" was reduced to zero by Farmers' combined payments to
Shimeta and Scherr. The court of appeals reversed, concluding
that the reducing clause operates on an individual basis to
reduce the limit of liability for "each person" by the payment
that "each person" insured under the policy received. We agree
with the court of appeals and conclude that the clause reduces
the "each person" limit by the payments an individual insured
received for his or her injuries.
II. ANALYSIS
¶8 This case requires the court to interpret the language
of an insurance policy, which presents a question of law that we
review de novo. Mau v. N.D. Ins. Rsrv. Fund, 2001 WI 134, ¶12,
248 Wis. 2d 1031, 637 N.W.2d 45.
¶9 Analyzing Acuity's UIM policy requires us to put the
disputed UIM policy language in context. To do so, we first
provide a brief overview of the purpose of UIM coverage and the
principles we use when interpreting UIM policies. Next, we
review the UIM policy language at issue in this case. We then
conclude that the policy's reducing clause, when read in the
context of the whole policy, reduces the limit of liability for
"each person" by the payments received by each individual
4
No. 2020AP189
insured. We further determine that the policy's "each accident"
limit of liability serves as an additional backstop,
establishing the maximum amount that Acuity will pay out for any
one accident.
A. UIM Background
¶10 As a general matter, the purpose of UIM coverage is to
protect "persons insured under that coverage who are legally
entitled to recover damages for bodily injury, death, sickness,
or disease from owners or operators of underinsured motor
vehicles." Wis. Stat. § 632.32(2)(d) (2019-20).3 This court has
identified two approaches to UIM coverage, both of which are
permissible under Wis. Stat. § 632.32(4m). Welin v. Am. Fam.
Mut. Ins. Co., 2006 WI 81, ¶¶24-27, 292 Wis. 2d 73, 717
N.W.2d 690. Policies that follow the "separate fund" approach
provide a set amount of coverage for the insured's damages that
exceed the amount the insured recovers from the responsible
party. State Farm Mut. Auto. Ins. Co. v. Langridge, 2004 WI
113, ¶16, 275 Wis. 2d 35, 683 N.W.2d 75. Policies that follow
the "limits-to-limits" approach——like Acuity's policy——provide
"a predetermined, fixed level of UIM recovery that is arrived at
by combining payments from all sources" legally responsible for
the insured's damages. Welin, 292 Wis. 2d 73, ¶49. To that
end, Wis. Stat. § 632.32(5)(i) allows insurers to write UIM
policies that "provide that the limits under the policy" shall
All subsequent references to the Wisconsin Statutes are to
3
the 2019-2020 version unless otherwise indicated.
5
No. 2020AP189
be reduced by "[a]mounts paid by or on behalf of any person or
organization that may be legally responsible for the bodily
injury or death for which the payment is made."
¶11 While our UIM cases provide a helpful framework for
interpreting policy language, we pause to note that a UIM policy
is a contract, and "[w]here the language of the policy is plain
and unambiguous, we enforce it as written . . . . This is to
avoid rewriting the contract by construction and imposing
contract obligations that the parties did not undertake."
Danbeck v. Am. Fam. Mut. Ins. Co., 2001 WI 91, ¶10, 245
Wis. 2d 186, 629 N.W.2d 150 (internal citations omitted). We
interpret the policy language as a reasonable insured would
understand it, and if the language is ambiguous, we construe it
in favor of the insured. Id. With these principles in mind, we
turn to the language of the contract at issue in this case.
B. Policy Language
¶12 We begin our review of the insurance policy by
examining the Declarations page. We next look to the UIM grant
of coverage, then we examine the definition of "underinsured
motor vehicle," and finally we analyze the Limits of Liability
section, which contains the reducing clause at issue in this
case.
¶13 The policy's Declarations page lists the types of
coverage the policy provides, including "Underinsured Motorists"
coverage for "$500,000 Each Person" and "$500,000 Each
Accident." The Declarations page does not provide any
additional information about "Underinsured Motorists" coverage
6
No. 2020AP189
or what "Each Person" or "Each Accident" mean, so we turn next
to the Underinsured Motorists Coverage section in Part IV of the
policy for further clarification.
¶14 The Underinsured Motorists Coverage section first
includes the following grant of coverage:
We [Acuity] 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 sustained by an
insured person and must be caused by accident and
result from the ownership, maintenance, or use of the
underinsured motor vehicle.
Acuity does not dispute that: (1) Shimeta and Scherr were
legally entitled to recover at least $1 million in damages for
bodily injury from Curley; (2) Shimeta and Scherr were both
"insured persons" under Acuity's policy; and (3) Shimeta and
Scherr sustained injuries that were caused by the accident.
Having established that both Shimeta and Scherr meet the initial
requirements set out in the grant of coverage, we next examine
the policy's definition of "underinsured motor vehicle."
¶15 The policy defines "underinsured motor vehicle" as a
vehicle covered by an insurance policy with a "limit for bodily
injury liability" that is "less than the limit of liability for
this coverage." Acuity does not dispute that Curley operated an
"underinsured motor vehicle." Curley's automobile liability
insurance provided coverage up to a $250,000 "per person" limit
of liability and a $500,000 "per accident" limit of liability.
7
No. 2020AP189
Under a split-limits policy4 like Curley's, "an insured's
objectively reasonable expectation is that the phrase 'limit for
bodily injury liability' means the per person limit of a
tortfeasor's liability policy." Filing v. Com. Union Midwest
Ins. Co., 217 Wis. 2d 640, 650, 579 N.W.2d 65 (Ct. App. 1998).
¶16 Although Acuity does not dispute that Curley is
underinsured, it maintains that Shimeta and Scherr are not
entitled to recover under the policy because, under the Limits
of Liability section, the $500,000 in combined payments they
received from Farmers reduced the policy limits to zero. The
relevant portion of the Limits of Liability section is as
follows:
Limits of Liability
1. The Limit of Liability shown in the Declarations
for each person for Underinsured Motorists coverage is
our maximum limit of liability for all damages,
including damages for care, loss of services or death,
arising out of bodily injury sustained by any one
person in any one accident. Subject to this limit per
person, the Limit of Liability shown in the
Declarations for each accident for Underinsured
Motorists coverage is our maximum limit of liability
for all damages for bodily injury resulting from any
one accident.
This is the most we will pay regardless of the number
of:
a. Insured persons;
b. Claims made;
4 Policies with different per person and per accident limits
are sometimes referred to as "split-limits" policies. See
Folkman v. Quamme, 2003 WI 116, ¶7, 264 Wis. 2d 617, 665
N.W.2d 857.
8
No. 2020AP189
c. Vehicles or premiums shown in the Declarations; or
d. Vehicles involved in the accident.
2. The limit of liability shall be reduced by all
sums:
a. Paid because of the bodily injury by or on behalf of
persons or organizations who may be legally
responsible. This includes all sums paid under Part
I – Liability; and
b. Paid or payable because of the bodily injury under
any of the following or similar law:
(1) Workers' compensation law; or
(2) Disability benefits law.
¶17 Paragraph 1 of this section defines the "each person"
and "each accident" limits set out in the Declarations page,
establishing that those limits are the maximum that Acuity will
pay for any one person in an accident, and for any one accident,
respectively. Paragraph 1 also states that the "each accident"
limit is subject to the "each person" limit. Paragraph 2
includes a reducing clause providing that "the limit of
liability" will be reduced by payments from those legally
responsible for the insured's damages.
¶18 The parties agree that, under paragraph 1 and the
limits set in the Declarations page, Acuity will never pay more
than $500,000 to any individual insured for any one accident.
Additionally there is agreement that Acuity will never pay more
than $500,000 total for any one accident, regardless of the
number of insureds. The parties' sole dispute is over the
reducing clause in paragraph 2.
C. The Reducing Clause
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No. 2020AP189
¶19 The parties dispute the meaning of two separate, but
related parts of the reducing clause: (1) "the limit of
liability" and (2) "all sums . . . [p]aid because of the bodily
injury."
¶20 Shimeta and Scherr argue that "the limit of liability"
is the "each person" limit of liability. Alternatively, they
argue that "the limit of liability" is ambiguous because it does
not specify which limit applies, and the court construes
ambiguity in favor of the insured. See Danbeck, 245
Wis. 2d 186, ¶10. Acuity argues that "the limit of liability"
could refer to either the "each person" or "each accident"
limit, "depending on the facts of the case," and in this case it
is the "each accident" limit.
¶21 Regarding the phrase, "all sums . . . [p]aid because
of the bodily injury . . ." Shimeta and Scherr argue that it
means all sums paid because of the bodily injury suffered by the
individual insured making the claim. Acuity argues that the
phrase means all sums paid for all injuries suffered by any
insureds injured in a single accident.
¶22 We agree with Shimeta and Scherr's interpretations and
conclude that the reducing clause operates to reduce recovery on
an individual basis. That is, the reducing clause reduces the
"each person" limit for an insured by all payments for the
10
No. 2020AP189
insured's injury. To explain why, we will analyze the two
phrases in turn.5
1. "The Limit of Liability"
¶23 We start with the phrase "the limit of liability." On
first inspection, this phrase appears to be ambiguous. The
policy has two limits of liability——indeed, this section is
called "Limits of Liability," and paragraph 1 refers to the
"each person" and "each accident" limit separately and in turn.
But, unlike paragraph 1, the reducing clause does not specify
whether "the limit of liability" refers to the "each person"
limit or the "each accident" limit. Therefore, it is not
immediately clear what "the limit of liability" means.
¶24 Ambiguity, as we have noted, is to be construed in
favor of the insured. However, a phrase can seem ambiguous in
isolation, but become unambiguous from the perspective of a
reasonable insured when viewed within the context of a policy.
See Badger Mut. Ins. Co. v. Schmitz, 2002 WI 98, ¶49, 255
Wis. 2d 61, 647 N.W.2d 223. Here, there are four possible
interpretations of "limit of liability"——the phrase could mean:
5Although we analyze the two disputed phrases separately,
we note that the phrases are interrelated and there are only two
proposed readings of the clause as a whole. The first, favored
by Shimeta and Scherr, is that the clause reduces the "each
person" limit for an insured by all payments for the insured's
injury. The second, favored by Acuity, is that the clause
reduces the "each accident" limit by all payments made for all
insureds' injuries. Neither party argues that the "each person"
limit should be reduced by payments made on behalf of all
insureds, or that the "each accident" limit should be reduced by
payments made on behalf of just one insured.
11
No. 2020AP189
(1) both the "each person" and the "each accident" limit; (2)
either the "each person" or the "each accident" limit depending
on the facts of the case; (3) only the "each person" limit; or
(4) only the "each accident" limit. We analyze each of these
four possible interpretations and conclude that the phrase
unambiguously refers to only the "each person" limit.
¶25 We first consider whether "the limit of liability"
could mean both the "each person" and the "each accident" limit.
In doing so we immediately see that "the limit of liability"
(emphasis added) is phrased in the singular, rather than plural.
The "common and ordinary meaning" of the singular term "the
limit of liability" is one particular limit, rather than more
than one. See Danbeck, 245 Wis. 2d 186, ¶10, ("The words of an
insurance policy are given their common and ordinary meaning");
see also Filing, 217 Wis. 2d at 650 (holding that an unspecified
"limit for bodily injury liability" in an Underinsured Motorist
definition referred to the "per person" limit, rather than both
limits). From a reasonable insured's point of view, the limit
would refer to a singular limit of "each person" or "each
accident," not both.
¶26 If Acuity meant to refer to more than one limit, it
could use the word "limits," as it did in the title of the
section ("Limits of Liability"). Wisconsin Stat.
§ 632.32(5)(i), which authorizes insurers to use reducing
clauses in their UIM policies, also uses the plural form
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No. 2020AP189
"limits."6 Because Acuity did not refer to the plural form
"limits," an insured is likely to understand that the reducing
clause is referring to only one limit.
¶27 We next consider whether "the limit of liability" in
the reducing clause refers to either the "each person" limit or
"each accident" limit depending on the facts of the case.
Acuity argues, "[w]hen there is more than one injured insured,
paragraph 1 dictates that the 'limit of liability' to be reduced
is the each accident limit." But neither paragraph 1 nor the
reducing clause actually say that the limit of liability to be
reduced changes depending on the number of injured insureds, and
Acuity has not pointed us to anywhere else in the policy that
does so.7
6 Wisconsin Stat. § 632.32(5)(i) states that "A policy may
provide that the limits under the policy for uninsured motorist
coverage or underinsured motorist coverage for bodily injury or
death resulting from any one accident shall be reduced by any of
the following that apply" (emphasis added).
7 The dissenting opinions assert that paragraph 1 of the
Limits of Liability section establishes that the "limit of
liability" is used in the singular to denote the most Acuity
will pay depending on the number of insureds and chosen
coverages. See Chief Justice Ziegler's dissent, ¶50; Justice
Hagedorn's dissent, ¶61. But paragraph 1 does not do so——as
stated previously, paragraph 1 uses "limit of liability" in the
singular to describe the each person and each accident limit
separately and in turn. Paragraph 1 simply sets out the rules
we all agree on: (1) the each person "Limit of Liability" is the
"maximum limit of liability . . . arising out of bodily injury
sustained by any one person in any one accident," and (2) the
each accident "Limit of Liability" is the "maximum limit of
liability for all damages for bodily injury resulting from any
one accident." Paragraph 1 reinforces that there are two limits
of liability and does not answer the relevant question: which
"limit of liability" is the reducing clause referring to?
13
No. 2020AP189
¶28 Given the language of the reducing clause, it is
unclear how a reasonable insured would understand that "the
limit" is different depending on the facts of the case, much
less figure out how the facts of a particular case would
determine which limit would be reduced. As we have reasoned in
previous UIM cases, "reducing clauses must be crystal clear in
the context of the whole policy. Otherwise, insureds are not
likely to understand what they are purchasing." Badger Mut.
Ins. Co., 255 Wis. 2d 61, ¶46. There may, of course, be some
variation in recovery depending on the facts of a particular
case, but if the insurer intends for the coverage rules and
definitions to vary, the insurer must make the rules governing
that variation clear in its policy language so that the insured
understands what coverage he or she is actually purchasing. See
id.¶29 Because the term "limit of liability" is undefined in
the policy, it is given its plain and ordinary meaning.
Hirschhorn v. Auto-Owners Ins. Co., 2012 WI 20, ¶28, 338
Wis. 2d 761, 809 N.W.2d 529. The reducing clause refers to "the
limit" as opposed to "either limit" or "a limit," and it does
not indicate in any way that the limit may vary. Therefore, the
common, ordinary meaning of "the limit" is one single,
particular limit.
¶30 Having decided that a reasonable insured would
understand "the limit of liability" to refer to one particular
limit of liability, rather than both limits or either limit, the
next question is whether the phrase unambiguously refers to the
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No. 2020AP189
"each person" limit, the "each accident" limit, or whether the
phrase is ambiguous. We conclude that a reasonable insured
would understand "the limit of liability" to unambiguously refer
to the "each person" limit.
¶31 Reading "the limit of liability" to mean the "each
person" limit harmonizes the reducing clause and the
underinsured motor vehicle definition. The policy defines an
underinsured motor vehicle as one whose "limit for bodily injury
liability is . . . less than the limit of liability for this
coverage." Both the definition and the reducing clause refer to
"the limit of liability," and both compare the insured's limit
of liability with the limit of the responsible party——the
definition compares each limit in order to determine whether
there is coverage, and the reducing clause compares each limit
in order to determine the amount of recovery. Neither section
clearly refers to the each person limit, the each accident
limit, or both. Importantly, Acuity concedes that the "limit"
in the UIM definition refers to the "each person" limit of
liability——otherwise, Curley would not be underinsured as his
policy had equal "each accident" limits and lower "each person"
limits than Acuity's policy.
¶32 An insured would reasonably expect "the limit"
referred to in both sections to mean the same limit. If these
sections referred to different limits, an insured would be
understandably confused. It makes little sense that a vehicle
could be "underinsured" when its policy limits are compared to
Acuity's UIM policy limits in the definitions section, yet
15
No. 2020AP189
treated as equally insured when those same limits are compared
in the reducing clause.8 In the absence of more specificity, an
insured would reasonably expect that when similar terms are
similarly used to compare policy limits, those terms refer to
the same limit. Therefore, we read the reducing clause's "limit
of liability" to mean the "each person" limit, consistent with
the UIM definition and consistent with what a reasonable insured
would expect.9
8 Justice Hagedorn's dissent claims we put "too much stock"
in harmonizing the underinsured motor vehicle definition with
the reducing clause. See Justice Hagedorn's dissent, ¶70.
However, it is well established that when the same or similar
language is used in a contract or insurance policy, the language
should be applied consistently. See Day v. Allstate Indem. Co.,
2011 WI 24, ¶57, 332 Wis. 2d 571, 798 N.W.2d 199 (explaining
that the insurer's proposed definition of a term is
"inconsistent with how the term is used in the context of
another policy provision"). Although both sections as a whole
may perform different functions, they both use the same phrase,
"limit of liability," in answering the same question——how do the
insured's limits of liability compare with those of the
responsible party? A reasonable insured would read these
phrases consistently.
Similarly, Chief Justice Ziegler's dissent asserts that by
interpreting the phrases consistently, we are creating a
"requirement that a vehicle qualifying as 'underinsured'
automatically means the insured receives payment." See Chief
Justice Ziegler's dissent, ¶50. We implement no such
requirement. There will still be situations in which an
underinsured vehicle may not automatically qualify the insured
for payment——when the insured's recovery is reduced by payments
received from other sources, for instance.
9 This interpretation is also consistent with Filing v.
Com. Union Midwest Ins. Co., 217 Wis. 2d 640, 579 N.W.2d 65 (Ct.
App. 1998), in which the court of appeals interpreted a UIM
policy's underinsured motor vehicle definition. Like the court
of appeals in Filing, which determined that the "limit for
bodily injury liability" referenced in the definition was the
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No. 2020AP189
¶33 The dissenting opinions' reading of the reducing
clause as referring to the maximum amount that Acuity will pay
depending on the number of insureds and nature of the coverage
is a logical way that an insurance policy could work. However,
the language of this particular policy does not connect the
dots. At best, the dissenting opinions provide us with an
alternative reasonable interpretation of "limit of liability."
When policy language is "susceptible to more than one reasonable
interpretation," it is ambiguous. Danbeck, 245 Wis. 2d 186,
¶10. Ambiguity is resolved in favor of the insured, id., so the
result is the same regardless.
2. "All Sums Paid Because of the Bodily Injury"
¶34 We now turn to the second disputed phrase in the
reducing clause and conclude that "all sums . . . [p]aid because
of the bodily injury" means payments made because of the bodily
injury suffered by the individual insured, rather than aggregate
payments for all bodily injuries suffered by all insureds. The
clause states that the limit shall be reduced "by all sums"
"[p]aid because of the bodily injury by or on behalf of persons
or organizations who may be legally responsible." At first
glance, "by all sums" appears to be expansive, but it is
immediately qualified by the phrase "because of the bodily
injury." The policy defines "bodily injury" as "bodily injury
tortfeasor's "per person limit," we read the policy "from the
perspective of what the insured as an individual, not insureds
as a whole, could recover from the tortfeasor's liability
carrier," and similarly conclude that the reducing clause refers
to the "each person" limit. See Filing, 217 Wis. 2d at 649.
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No. 2020AP189
to or sickness, disease or death of a person" (emphasis added).
This definition uses the singular——referring to one person——
rather than the plural, which would encompass multiple injured
people. Although (despite the singular phrasing) "bodily
injury" does appear to be used elsewhere in the policy to refer
to injuries suffered by multiple insureds,10 the reducing clause
further uses an additional singular term, "the bodily injury"
(as opposed to, for example "bodily injuries" or "any bodily
injury"). Based on the singular word choice in the reducing
clause, we conclude that "all sums . . . [p]aid because of the
bodily injury" means all sums paid because of the bodily injury
to a singular insured.11
¶35 Like with the phrase "limit of liability," if we were
to accept that an insured could also read "the bodily injury"
broadly so that it referred to any injury sustained by all
insureds, then the phrase would be ambiguous. We construe
ambiguous language in favor of the insured, so the result here
would be the same. Danbeck, 245 Wis. 2d 186, ¶10.
¶36 When reading the reducing clause as a whole, the most
reasonable interpretation is that the "each person" limit shall
Paragraph 1 of the Limits of Liability section defines
10
the each accident limit as the "maximum limit of liability for
all damages for bodily injury resulting from any one accident."
We are not the first state high court to come to this
11
conclusion. See, e.g., Buell v. Am. Universal Ins. Co., 224
Conn. 766, 771, 621 A.2d 262 (1993) (determining that "the"
bodily injury in a reducing clause "refers only to the
claimant's bodily injury and not to the bodily injury of
others").
18
No. 2020AP189
be reduced by payments made because of the bodily injury to the
insured making the claim. This reading does not make the "each
accident" limit superfluous. The "each accident" limit remains
a cap on what Acuity itself will ever pay for bodily injury
resulting from any one accident. Here, Acuity will pay no more
than that $500,000 limit.
III. CONCLUSION
¶37 We affirm the court of appeals because we agree that
the policy's reducing clause operates on an individual basis to
reduce the "each person" limit of liability by the payment each
insured individually received from Curley's insurance.
By the Court.—The decision of the court of appeals is
affirmed.
19
No. 2020AP189.akz
¶38 ANNETTE KINGSLAND ZIEGLER, C.J. (dissenting). I
dissent because the majority reads Acuity's policy as no
reasonable insured would, creating coverage out of thin air that
was never agreed upon. Acuity's UIM insurance policy is simple.
Acuity agrees to pay up to a certain limit in the event its
insured is injured in an accident with a driver whose vehicle is
underinsured: up to $500,000 per person, but no more than
$500,000 for any one accident. This is one among five limits,
each listed in the "Limits of Liability" section of Acuity's
policy. The per person and per accident limits work together as
one collective limit to Acuity's liability. But this limit is
reduced "by all sums" paid by or on behalf of the legally
responsible party (the "tortfeasor") so the insured does not
receive duplicate payments. Because the insureds in this case
received from the tortfeasor a combined amount equal to Acuity's
limit, the insureds received exactly the amount they would have
gotten from Acuity if the tortfeasor had no insurance at all,
and Acuity's liability is reduced to zero. Simple as that.
¶39 But the majority complicates this simple policy.
Though Acuity's policy discusses the per person and per accident
limits collectively as one singular "limit of liability," the
majority reads them separately, ignoring the structure and
organization of the "Limits of Liability" section. The majority
then continues to overcomplicate Acuity's policy, imposing an
atextual requirement that a vehicle qualifying as "underinsured"
means the insured will receive payment under Acuity's policy in
1
No. 2020AP189.akz
every instance. This is not how Acuity's policy operates. I
respectfully dissent.
I
¶40 "We interpret the provisions of an insurance policy
using the same principles applicable to contracts generally."
Kemper Independence Ins. Co. v. Islami, 2021 WI 53, ¶16, 397
Wis. 2d 394, 959 N.W.2d 912. "Where the language of a contract
is unambiguous and the parties' intentions can be ascertained
from the face of the contract, we give effect to the words they
employed." Steadfast Ins. Co. v. Greenwich Ins. Co., 2019 WI 6,
¶21, 385 Wis. 2d 213, 922 N.W.2d 71. "Where the language of the
policy is plain and unambiguous, we enforce it as written,
without resort to rules of construction or principles in case
law." Fontana Builders, Inc. v. Assurance Co. of Am., 2016 WI
52, ¶37, 369 Wis. 2d 495, 882 N.W.2d 398 (quoting Danbeck v. Am.
Fam. Mut. Ins. Co., 2001 WI 91, ¶10, 245 Wis. 2d 186, 629
N.W.2d 150).
¶41 We must read policy language in context, not in
isolation. "Sometimes it is necessary to look beyond a single
clause or sentence to capture the essence of an insurance
agreement." Folkman v. Quamme, 2003 WI 116, ¶21, 264
Wis. 2d 617, 665 N.W.2d 857. This may require examining a
policy's organization and structure. Gohde v. MSI Ins. Co.,
2004 WI App 69, ¶12, 272 Wis. 2d 313, 679 N.W.2d 835 ("We first
look at the organization and structure of the policy.");
Remiszewski v. Am. Fam. Ins. Co., 2004 WI App 175, ¶24, 276
Wis. 2d 167, 687 N.W.2d 809 ("We further conclude that neither
2
No. 2020AP189.akz
the structure and organization of American Family's policy, nor
any provision therein, renders the reducing clause contextually
ambiguous.").
¶42 The entire "Limits of Liability" section from Acuity's
policy, including the reducing clause, is reproduced below:
Limits of Liability
1. The Limit of Liability shown in the Declarations
for each person for Underinsured Motorists
coverage is our maximum limit of liability for
all damages, including damages for care, loss of
services or death, arising out of bodily injury
sustained by any one person in any one accident.
Subject to this limit for each person, the Limit
of Liability shown in the Declarations for each
accident for Underinsured Motorists coverage is
our maximum limit of liability for all damages
for bodily injury resulting from any one
accident.
This is the most we will pay regardless of the
number of:
a. Insured persons;
b. Claims made;
c. Vehicles or premiums shown in the
Declarations; or
d. Vehicles involved in the accident.
2. The limit of liability shall be reduced by all
sums:
a. Paid because of the bodily injury by or on
behalf of persons or organizations who may
be legally responsible. This includes all
sums paid under Part I – Liability; and
b. Paid or payable because of the bodily injury
under any of the following or similar law:
(1) Workers' compensation law; or
3
No. 2020AP189.akz
(2) Disability benefits law.
3. No one will be entitled to receive duplicate
payments for the same elements of loss under this
coverage and Part I – Liability, Part II –
Expenses for Medical Services or Part III –
Uninsured Motorists coverage provided by this
policy.
4. We will not make a duplicate payment under this
coverage for any element of loss for which
payment has been made by or on behalf of persons
or organizations who may be legally responsible.
5. We will not make a duplicate payment to the
extent amounts are paid or payable because of the
bodily injury under any of the following or
similar law:
a. Workers' compensation law; or
b. Disability benefits law.
Accounting for the structure and organization of the entire
"Limits of Liability" section in Acuity's UIM policy, it becomes
clear that the reducing clause reduces both the per person limit
and the per accident limit.
¶43 The section is labeled "Limits of Liability" and
contains five paragraphs. Each paragraph in some way limits
Acuity's liability to the insured. The first paragraph does so
with reference to the per person and per accident limits; the
second paragraph being the reducing clause; and the last three
limit liability for various forms of duplicate payments. Each
one of these paragraphs thus operates as a limit to Acuity's
liability, explaining why the section title uses the plural
"Limits." Each paragraph counts as one individual "limit of
liability." This also explains why the reducing clause states
4
No. 2020AP189.akz
"[t]he limit of liability," in the singular, "shall be reduced."
It is because everything described in the first paragraph is one
singular "limit of liability" for purposes of the "Limits of
Liability" section.
¶44 Paragraph 1.'s own language confirms this reading.
Immediately after the subparagraph describing both the per
person limit and the per accident limit, there is a break
followed by the statement, "This is the most we will
pay . . . ." The break indicates that "the most [Acuity] will
pay" is everything described in the preceding
subparagraph: both the per person limit and per accident limit,
which the policy describes collectively. Together, they form
one singular "limit of liability" listed among other limits in
the "Limits of Liability" section. Because the per person limit
and per accident limit constitute one "limit of liability," the
reducing clause requires that both of them be reduced "by all
sums" "[p]aid because of the bodily injury."
II
¶45 Nowhere does the majority grapple with the "Limits of
Liability" section's structure and organization. Its analysis
never even acknowledges the fact that the "Limits of Liability"
section contains three additional paragraphs after the reducing
clause. This leads the majority to instead rely on a myopic
reading of the policy that in no way reflects how a reasonable
insured would understand it.
¶46 The majority distorts Acuity's policy to maximize the
insureds' recovery beyond what was bargained for. After
5
No. 2020AP189.akz
incorrectly concluding that the reducing clause reduces either
the per person or the person accident limit, but not both, the
majority determines that "the limit" in "the limit of liability"
must be the same both in the reducing clause and in the
underinsured motor vehicle definition. Majority op., ¶31. The
majority reasons, "It makes little sense that a vehicle could be
'underinsured' when its policy limits are compared to Acuity's
UIM policy limits in the definitions section, yet treated as
equally insured when those same limits are compared in the
reducing clause." Id., ¶32.
¶47 The majority conflates status as "underinsured" with
the need for payment.1 Under Acuity's policy, a tortfeasor's
vehicle is "underinsured" when the associated liability
insurance policy's limit is "[l]ess than the limit of liability
for this coverage." A vehicle being "underinsured" does not
mean the UIM policyholder automatically must receive some
payment from his insurer. All it means is that the tortfeasor's
policy provides less coverage than the insured's policy.
Whether the tortfeasor's policy will ultimately pay the same
amount as an insured would receive under his own UIM policy is a
different question entirely. After a limits-to-limits
comparison, it may appear that there is some set of
circumstances where a tortfeasor's policy limit will not provide
the same amount of coverage as the insured's UIM policy. But,
as is the case here, the insured may still receive from the
Justice Hagedorn also identifies this error, a criticism
1
on which I expand here. See Justice Hagedorn's dissent, ¶¶70-
71.
6
No. 2020AP189.akz
tortfeasor the same amount he would have received under his own
UIM policy even if the tortfeasor's policy limit is "[l]ess than
the limit of liability for" the insured's UIM coverage. The
majority rather, equates insurance with payment even where such
payment is unnecessary.2
¶48 The correct result is straightforward. Acuity's
liability is limited to $500,000 for any one insured, but no
more $500,000 for any one accident. A singular, tragic accident
caused "bodily injury" to two people insured under Acuity's
policy. Each insured's damages from their injuries exceed
$500,000. The injuries were caused by a tortfeasor whose
insurer had a liability limit of $250,000 per person and
$500,000 per accident. Thus, both of the insureds in this case
received only $250,000 because total payments reached the
tortfeasor's per accident limit. Under Acuity's policy, because
the reducing clause treats the per person and per accident
limits as one collective "limit of liability," they are both
reduced. Both insureds received a combined total of $500,000
because of a single accident, so the per accident limit is
reduced to zero, meaning there is no coverage remaining for this
accident.
2The majority adds more confusion by attempting to ease
this concern with the fact that payment may still be unnecessary
"when the insured's recovery is reduced by payments received
from other sources." Majority op., ¶32 n.8. Following the
majority's logic, no payment is necessary when the insured
receives a full recovery from the tortfeasor plus "other
sources," but payment is somehow required when the insured
receives the same amount from the tortfeasor alone. Again, no
reasonable insured would understand Acuity's policy to operate
this way.
7
No. 2020AP189.akz
¶49 The fact that the tortfeasor's per person limit caused
his vehicle to qualify as "underinsured" under Acuity's policy
does not change this result. The vehicle was underinsured
because, due to Acuity's limits-to-limits comparison approach,
it was possible that the insureds might not receive an amount
equivalent to the amount they would have received under Acuity's
UIM policy. If one insured suffered more than $250,000 in
damages and the other suffered less, this would mean that the
insured with more damages would recover less from the tortfeasor
than he would from Acuity under its UIM policy. In this
situation, the tortfeasor's vehicle would be underinsured, and
payment by Acuity would be necessary. It is possible that the
tortfeasor's liability insurance would not have paid the
insureds the same amount the insureds would receive under
Acuity's policy, but that is not the case here, so payment by
Acuity is not necessary. There is no need to read in confusion
to reach this sensible result.
III
¶50 Acuity's policy is simple and straightforward. The
per accident and per person limits operate together as one
collective "limit of liability" to establish the most Acuity
might pay. Because the reducing clause reduces "the limit of
liability" "by all sums" paid to the insureds by the tortfeasor,
each component part of that collective limit likewise reduces.
In this case, the insureds received from the tortfeasor the
exact amount they would have under Acuity's policy, meaning
Acuity has no remaining liability. But the majority eschews
8
No. 2020AP189.akz
this simple reading in favor of a complex one that no reasonable
insured would understand. It also unwittingly creates a
requirement that a vehicle qualifying as "underinsured"
automatically means the insured receives payment. This is
simply not how Acuity's policy operates.
¶51 For the foregoing reasons, I respectfully dissent.
¶52 I am authorized to state that Justice REBECCA GRASSL
BRADLEY joins this dissent.
9
No. 2020AP189.bh
¶53 BRIAN HAGEDORN, J. (dissenting). Before his
unfortunate passing, Michael Shimeta purchased underinsured
motorist (UIM) coverage from Acuity. In that policy, Acuity
agreed to pay claims up to a maximum limit of liability:
$500,000 per person, but no more than $500,000 total per
accident. The operative language and design of these policies
is standard. And basic logic tells us that the per accident
limit will reduce the amount individuals can recover in multi-
person accidents. In practice, this means that the recovery for
any individual under Shimeta's policy with Acuity may not be the
full $500,000 if multiple insureds are injured. Everyone agrees
that this is how the policy works.
¶54 The UIM policy also has a standard reducing clause.
The whole concept of this kind of UIM coverage combined with a
reducing clause is for an insured to obtain "a predetermined,
fixed level of UIM recovery that is arrived at by combining
payments" "from all legally responsible sources." Welin v. Am.
Fam. Mut. Ins. Co., 2006 WI 81, ¶49-50, 292 Wis. 2d 73, 717
N.W.2d 690 (quoting another source). In other words, the
insured has agreed to be paid a specific amount——first from
other legally responsible parties, with any remaining amounts
due coming from Acuity. So the reducing clause functions
consistent with the rest of the policy.
¶55 But the majority somehow finds that payments from the
tortfeasor's insurer should count as a reduction against only
the per person limit. In so doing, the majority creates
complexity where none is found, leading it to misread the
1
No. 2020AP189.bh
policy. In the end, the insureds here do not receive a fixed
level of UIM recovery arrived at by combining payments from all
legally responsible sources. Instead, they receive double what
Shimeta's policy promises as a total payout for any one
accident. This may be good for Shimeta's estate and his injured
passenger, but it is not what the policy provides. I
respectfully dissent.1
I. THE POLICY
¶56 We begin with the policy language.2 The declarations
page of the policy summarizes the coverage Shimeta purchased.
Multiple coverages are listed in the standard way, as providing
a certain payout for "Each Person" and a second amount for "Each
Occurrence" or "Each Accident." For example, Shimeta purchased
uninsured motorist coverage for bodily injury in the amount of
$500,000 per person and $500,000 per accident. And as relevant
here, the UIM coverage is "$500,000 Each Person" and "$500,000
Each Accident."
1 I understand Chief Justice Ziegler's dissent to make
largely the same arguments I present here, and therefore I
substantially agree with it.
2 Because insurance policies are contracts, our primary goal
in interpreting them is "to give effect to the intentions of the
parties." Wadzinski v. Auto-Owners Ins. Co., 2012 WI 75, ¶11,
342 Wis. 2d 311, 818 N.W.2d 819. "The parties' intentions are
presumed to be expressed in the language of the policy." Id.We therefore begin the inquiry with the policy's language. See,
e.g., Secura Ins. v. Lyme St. Croix Forest Co., LLC, 2018
WI 103, ¶17, 384 Wis. 2d 282, 918 N.W.2d 885. "Generally, we
interpret a policy's terms as they would be understood from the
perspective of a reasonable person in the position of the
insured." Id.2
No. 2020AP189.bh
¶57 The relevant policy language in the UIM endorsement
comes under the bolded3 heading "Limits of Liability" and
provides in relevant part:
1. The Limit of Liability shown in the Declarations
for each person for Underinsured Motorists coverage is
our maximum limit of liability for all damages,
including damages for care, loss of service or death,
arising out of bodily injury sustained by any one
person in any one accident. Subject to this limit for
each person, the Limit of Liability shown in the
Declarations for each accident for Underinsured
Motorists coverage is our maximum limit of liability
for all damages for bodily injury resulting from any
one accident.
This is the most we will pay regardless of the number
of:
a. Insured persons;
b. Claims made;
c. Vehicles or premiums shown in the
Declarations; or
d. Vehicles involved in the accident.
2. The limit of liability shall be reduced by all
sums:
a. Paid because of the bodily injury by or on
behalf of persons or organizations who may be
legally responsible. This includes all sums paid
under Part I – Liability; and
b. Paid or payable because of the bodily injury
under any of the following or similar law:
(1) Workers' compensation law; or
(2) Disability benefits law.
3 Following our style guide, bolded terms in the policy are
underlined in this dissent.
3
No. 2020AP189.bh
¶58 Several observations are in order. This entire
section uses the phrase "limit of liability" throughout.
Paragraph 1 uses that phrase four times, and refers back to the
amount itemized in the declarations. The policy explains that
the most an insurer will pay, called the "maximum limit of
liability," will turn on the policy coverages purchased and the
number of insureds entitled to payment for a single accident.
One limit is governed by the "each person" coverage amount
purchased. And the "each accident" limit is the maximum limit
Acuity will pay for bodily injury "resulting from any one
accident." This means that when two or more persons are injured
in one accident, the "each accident" limit could, depending on
the policy purchased, operate as a cap that limits the recovery
for any one insured. And if that wasn't plain enough——because
that pattern is how this whole policy operates——the paragraph
doubles down and declares that no matter how many insured
persons are injured, claims are made, or vehicles are involved
or covered, the per accident limit is "the most we will pay
regardless."
¶59 This UIM coverage, then, works together as a seamless,
integrated, perfectly understandable whole. If this were a
$100,000 per person, $300,000 per accident policy, for example,
the per person limit might be the more commonly applicable
limit, and the per accident limit reached less often. But this
is a $500,000 per person and $500,000 per accident policy. So
here, the per accident limit may come into play more often than
a policy with a different mix of coverages. While the coverage
4
No. 2020AP189.bh
purchased and nature of an accident will dictate how the math
works, the policy will always have a definitive maximum limit of
liability——a dollar figure that serves as a cap on Acuity's
liability. This limit need not be one or the other. For
example, in this $500,000 per person and per accident policy,
where one insured is injured in the same accident, the "limit of
liability" is $500,000. There's no need to choose between the
two limits. The point is, there will always be a fixed dollar
amount that is the most Acuity will pay, however it is
calculated.
¶60 This can be seen in a straightforward way in the same
page of the policy as the "Limits of Liability" section. The
UIM policy provides that other applicable insurance coverage
could likewise reduce the amount owed. Under paragraph 3 of the
"Other Insurance" section, the policy says its obligation to pay
primary or excess coverage will extend to "our limit of
liability" under the policy. In other words, the policy
understands there will always be a fixed dollar "limit"——phrased
in the singular——that will be owed to the insured. Whether that
limit will be established by the per person limit or the per
accident limit will again depend on the coverages purchased and
the number of insureds that are injured in any one accident.
¶61 Turning to the reducing clause in paragraph 2 of the
"Limits of Liability" section, it too employs the same language
as paragraph 1. It refers to the "limit of liability." And we
already know what that phrase means: it is the most Acuity will
pay, whether determined by the per person or per accident limit
5
No. 2020AP189.bh
(or both if identical), depending on the chosen coverages and
number of injured persons. And the reducing clause says that
this limit "shall be reduced by all sums" paid by someone or
some entity "who may be legally responsible"——like the
tortfeasor who caused the accident in this case.4
¶62 Applying the policy is straightforward. The reducing
clause operates to reduce Acuity's liability under its policy,
whatever that limit might be. In this case, the tortfeasor's
insurer paid $500,000 in combined payments to Shimeta's estate
and the passenger in his car; both are insureds under the policy
seeking coverage for bodily injury resulting from one accident.
And since Acuity agreed to pay no more than $500,000 for any one
accident under the terms of this particular policy, Acuity's
"limit of liability" is reduced per the reducing clause to zero.
¶63 A reasonable insured would not be confused by any of
this. It is exactly how this UIM policy is designed to work.
Shimeta bargained and paid for this precise level of coverage.
Once again, the whole point of this type of "limits-to-limits"
UIM policy is to "put the insured in the same position he or she
would have occupied had the tortfeasor's liability limits been
the same as the UIM limits purchased by the insured."5 Welin,
The policy further says that it shall be reduced by
4
anything paid or payable under workers compensation law,
disability benefits law, or any similar law.
If the tortfeasor in this case had the liability limits
5
Shimeta purchased——$500,000 per person and $500,000 per
accident——then Shimeta and his passenger would have received the
same thing they were given here: $500,000 total. That's why
Shimeta's estate already received exactly what he originally
bargained for.
6
No. 2020AP189.bh
292 Wis. 2d 73, ¶26. The policy self-consciously offers "a
predetermined, fixed level of UIM recovery that is arrived at by
combining payments from all sources." Id., ¶49. The reducing
clause ensures that the insureds receive only the fixed sum they
bargained for. Nothing more, nothing less. It does this by
promising to pay up to the limit of liability, minus payments
from other responsible parties or under other relevant laws
providing compensation.6
II. THE MAJORITY'S MISTAKES
¶64 The majority, however, misses all of this and designs
a more generous insurance policy than the one Shimeta bargained
for. The majority begins its analysis of the reducing clause by
rightly focusing on the phrase "limit of liability." Majority
op., ¶23. But instead of interpreting that phrase consistent
with the rest of the policy, the majority proclaims itself
stumped. So it hypothesizes four possibilities for what it
could mean. The majority reasons "Limit of liability" could
refer to: "(1) both the 'each person' and the 'each accident'
limit; (2) either the 'each person' or the 'each accident' limit
depending on the facts of the case; (3) only the 'each person'
limit; or (4) only the 'each accident' limit." Id., ¶24.
In fact, the policy provides that Acuity "will not make a
6
duplicate payment under this coverage for any element of loss
for which payment has been made by or on behalf of
persons . . . who may be legally responsible." The majority's
conclusion results in exactly the type of duplicate payment the
policy prohibits.
7
No. 2020AP189.bh
¶65 The majority first rejects the idea that both limits
are referred to because the reducing clause uses the singular
"limit of liability." Id., ¶¶25-26. Moving on to option two,
the majority explains that it can't be right either because
"neither paragraph 1 nor the reducing clause actually say that
the limit of liability to be reduced changes depending on the
number of injured insureds." Id., ¶27. Except that it does.
Paragraph 1 immediately preceding the reducing clause uses
"limit of liability" in the singular for both, and explicitly
says that the "maximum limit of liability for all
damages . . . resulting from any one accident" supersedes the
per person limit. The per accident limit is the maximum Acuity
"will pay regardless of the number of . . . Insured persons" who
are injured and entitled to recovery.
¶66 The majority then postulates a reasonable insured is
simply not going to understand which limit applies. Majority
op., ¶28. I suppose it's true that few insureds truly grasp how
their policies work. Insurance policies tend not to be evening
reading material for most people. But this isn't rocket
science, and a reasonable insured wouldn't be confused. Shimeta
bargained for a maximum recovery defined as $500,000 per person,
and at most, $500,000 per accident regardless of the number of
injured persons. The entire policy issued to Shimeta, including
standard liability insurance, uninsured motorist coverage, and
the UIM endorsement contain the same structure. Under the
majority's logic, reasonable people just can't understand what
it means for a policy to have a maximum dollar limit (the "limit
8
No. 2020AP189.bh
of liability") that can vary depending on coverages purchased
and the facts of a case.
¶67 The majority compounds its errors by positing that
since the "limit of liability" in the reducing clause is
singular, it can only refer to "one particular limit of
liability, rather than both limits or either limit." Id., ¶30.
It then concludes we must choose the "each person" limit because
that harmonizes the definition with the definition of
underinsured motor vehicles. Id., ¶31. Since caselaw, rather
than a definition in the policy, establishes that a vehicle is
underinsured, the majority concludes we must read it the same
way. Id., ¶32. Finally, the majority misconstrues the policy
further by saying that because the reducing clause uses the
phrase "the bodily injury" in the singular, it should be
understood as reducing payments only for a singular insured's
per person coverage. Any other proposed reading of "limit of
liability" or "the bodily injury" would be ambiguous, the
majority reasons, and therefore read in favor of the insured.
Id., ¶¶33, 35. None of this correct.
¶68 First, neither basic grammar nor logic dictate that
because "limit of liability" is used in the singular, only one
of the two possible limits must be referred to. Rather, the
policy is consistent that there will always be a maximum dollar
limit to Acuity's liability depending on the coverages purchased
for per person and per accident, and depending on the facts of
the case.
9
No. 2020AP189.bh
¶69 Second, the majority's emphasis on "the bodily injury"
is likewise atextual. The policy always uses "bodily injury" in
the singular and bolded. This is because "bodily injury" is a
defined term in the policy referring to a type of damage that
triggers liability and coverage. The policy does the same thing
with "property damage"——another type of damage that may be
covered in the policy and is separately defined. Both here and
throughout the rest of the policy, even where two or more
insured persons are injured, the phrase "bodily injury" is
always bolded and used in the singular. The majority's emphasis
on the definite article "the" does not transform this standard
definition-invoking language into a clue that the reducing
clause is meant to operate in a way totally divorced from the
entire operation of this fixed coverage UIM policy.
¶70 Finally, the majority puts too much stock in the fact
that whether underinsurance is triggered looks only to the per
person limit. Acuity agrees based on a court of appeals
decision that the tortfeasor's limit should be compared with the
policy's per person limit for purposes of answering the initial
question of whether the policy is triggered. See Filing v. Com.
Union Midwest Ins. Co., 217 Wis. 2d 640, 649-50, 579 N.W.2d 65(Ct. App. 1998) (holding that the tortfeasor's liability limits
should be compared with the per person limits under the policy).
But that means little here. The reasoning of the court of
appeals in Filing rested less on a careful interpretation of the
language than on its sense that the insured expected potential
coverage apart from how many are injured in an accident. Id.10
No. 2020AP189.bh
It also discussed the many "absurd results" that would be
occasioned by interpreting the policy the other way. Id. at 647
& n.3. While I am not suggesting the outcome was incorrect,
Filing has little to say analytically about the question
presented here.
¶71 Whether Acuity must pay and in what amount is a
different question altogether from whether UIM coverage is
triggered in the first instance. To determine if any portion of
the coverage is reduced, we must look to the relevant policy
language. And as we've explained, paragraph 1——directly before
the reducing clause in paragraph 2——specifically references both
limits. "[A] reasonable insured would understand that the
reducing clause in [paragraph 2] of the Limit of Liability
section of the UIM endorsement qualifies the insurer's
obligation to pay the maximum limit of liability as described
in . . . [paragraph 1]." Ruenger v. Soodsma, 2005 WI App 79,
¶23, 281 Wis. 2d 228, 695 N.W.2d 840. Thus, whether UIM
coverage is triggered in the first instance isn't doing the
analytical work the majority thinks it is.
III. CONCLUSION
¶72 While insurers can draft policies moving forward that
satisfy the majority's perplexity, the language the majority
misinterprets today will impact current policies across the
state. The majority misses the mark by trying to figure out
which limit the phrase "limit of liability" in the reducing
clause applies to. The answer is apparent: The policy
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No. 2020AP189.bh
consistently describes itself as having one maximum dollar
limit, a "limit of liability," which could be triggered by
either of the two limits depending on the coverages purchased
and the facts of the case. And the reducing clause provides
that Acuity's liability limit must be reduced when other
responsible parties provide compensation.
¶73 Here, Shimeta purchased UIM coverage in the amount of
$500,000 per person and $500,000 per accident. An unfortunate
accident occurred, leaving Shimeta dead and his passenger
injured, both insureds under the policy. Collectively,
Shimeta's estate and his injured passenger received $500,000
from the tortfeasor's insurance. The reducing clause requires
that this $500,000 be deducted from Acuity's limit of liability,
which under these facts and this coverage is $500,000 for this
one accident. Therefore, the predetermined, fixed sum Shimeta
bargained for was paid out, and Acuity has no further liability
under the policy. I respectfully dissent.
¶74 I am authorized to state that Justice REBECCA GRASSL
BRADLEY joins this dissent.
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No. 2020AP189.bh
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