Case Title: James Zarder v. Acuity, A Mutual Insurance Company

Citation: 2010 WI 35

Docket Number: 2008AP000919

State: wisconsin

Court: Wisconsin Supreme Court

Date: 2010-05-14T00:00:00Z

Document:
2010 WI 35 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2008AP919 
COMPLETE TITLE: 
 
 
James Zarder, Glory Zarder and Zachary Zarder , 
by Robert C. Menard, Guardian ad Litem, 
          Plaintiffs-Respondents, 
     v. 
Humana Insurance Company, 
          Defendant, 
Acuity, A Mutual Insurance Company, 
          Defendant-Appellant-Petitioner. 
 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
2009 WI App 34 
Reported at: 316 Wis. 2d 573, 765 N.W.2d 839 
(Ct. App. 2009-Published) 
 
 
OPINION FILED: 
May 14, 2010   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
February 10, 2010   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Waukesha   
 
JUDGE: 
Kathryn W. Foster   
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
        
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
For the defendant-appellant-petitioner there were briefs by 
Lance S. Grady, Daniel K. Miller, and Grady, Hayes & Neary, LLC, 
Waukesha, and oral argument by Lance S. Grady. 
 
For the plaintiffs-respondents there was a brief by Luke M. 
Wagner and the Wagner Law Firm, S.C., Menomonie, and Robert 
Menard and Derzon & Menard, S.C., Milwaukee, and oral argument 
by Luke M. Wagner. 
 
An amicus curiae brief was filed by Timothy M. Barber and 
Axley Brynelson, LLP, Madison, on behalf of the Wisconsin 
Association for Justice. 
 
 
 
 
2010 WI 35
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  2008AP919  
(L.C. No. 
2007CV1146) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
James Zarder, Glory Zarder and Zachary Zarder, 
by Robert C. Menard, Guardian ad Litem, 
 
          Plaintiffs-Respondents, 
 
     v. 
 
Humana Insurance Company, 
 
          Defendant, 
 
Acuity, A Mutual Insurance Company, 
 
          Defendant-Appellant-Petitioner. 
 
 
 
FILED 
 
MAY 14, 2010 
 
David R. Schanker 
Clerk of Supreme Court 
 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Affirmed and 
cause remanded.   
 
¶1 
ANN WALSH BRADLEY, J.   Acuity, A Mutual Insurance 
Company, seeks review of a published court of appeals decision 
affirming the circuit court's denial of Acuity's motion for 
declaratory judgment.1  Acuity sought a declaration that the 
                                                 
1 See Zarder v. Acuity, A Mut. Ins. Co., 2009 WI App 34, 316 
Wis. 2d 573, 765 N.W.2d 839, affirming an order of the Circuit 
Court for Waukesha County, Kathryn W. Foster, Judge.    
No. 
2008AP919   
 
2 
 
accident here was not a hit-and-run accident under the terms of 
the uninsured motorist (UM) policy issued to James and Glory 
Zarder.  The circuit court and court of appeals determined that 
Acuity was not entitled to a declaratory judgment even though 
the occupants of the vehicle that allegedly struck thirteen-
year-old Zachary Zarder stopped to check on his wellbeing before 
departing.       
¶2 Acuity asserts that both the circuit court and the court 
of appeals erred.  It contends that, under the facts of this 
case, the vehicle involved in the accident was not a "hit-and-
run" vehicle because the unidentified driver stopped to check on 
Zarder's wellbeing before leaving the scene of the accident.  
Further, Acuity argues that this court's discussion of the term 
"hit-and-run" in Hayne v. Progressive Northern Insurance Co.2 
controls the outcome of this case.  
¶3 
We conclude that Acuity's focus on the unidentified 
driver's intention when leaving the accident scene is not 
relevant to our determination of whether there is coverage under 
the terms of the insurance policy.  Further, we conclude that 
Hayne does not control the outcome of this case.  We, therefore, 
apply the standard rules of construction to the Zarders' UM 
policy.   
¶4 
Given that the phrase "hit-and-run" in the Zarders' UM 
policy is susceptible to more than one reasonable construction, 
we determine that it is ambiguous.  We therefore construe the 
                                                 
2 115 Wis. 2d 68, 73-74, 339 N.W.2d 588 (1983). 
No. 
2008AP919   
 
3 
 
phrase "hit-and-run" in favor of coverage.  Having concluded 
that there is coverage for this type of accident under the 
policy, we need not examine the requirements of Wis. Stat. 
§ 632.32(4) (2007-08).3  Accordingly, we affirm the court of 
appeals, but we modify the rationale and remand to the circuit 
court for further proceedings.     
I 
¶5 
For the purposes of this interlocutory appeal, the 
facts are undisputed.  Thirteen-year-old Zachary Zarder was 
riding his bicycle on a New Berlin municipal street on a snowy 
evening in December 2005 when his bicycle was struck by an 
unidentified motorist.  The car stopped approximately 100 feet 
from Zarder.  Three occupants got out of the car and approached 
Zarder, who remained at the accident scene.  
¶6 
Sandra 
and 
Edward 
Miller 
were 
walking 
in 
the 
neighborhood when the accident occurred.  Sandra Miller said 
that she heard a young male voice say, "A car is coming."  
Sandra saw a car and heard a crash of metal.   
¶7 
Within seconds, the Millers arrived at the accident 
scene.  They saw Zarder sitting in the snowbank beside his 
bicycle.  They saw three young men exit a car, approach Zarder, 
and ask if he was okay.  Sandra overheard Zarder assure the 
                                                 
3 All subsequent references to the Wisconsin Statutes are to 
the 2007-08 version unless otherwise indicated. 
No. 
2008AP919   
 
4 
 
occupants that he was okay.4  The occupants then returned to 
their car and drove away.  Sandra later signed an affidavit 
stating: "It did not appear that the subject car was fleeing the 
accident scene."  
¶8 
The Millers also asked Zarder if he was injured, and 
he said that he was not.  Later, however, it became apparent 
that he was in fact injured.  The Zarders contacted the New 
Berlin Police Department and reported the accident the same 
evening.   
¶9 
Officer Jeffrey Kuehl investigated the accident.  He 
located car parts in the roadway of the accident scene and 
interviewed witnesses, but he was unable to identify the vehicle 
or its driver.  Kuehl later stated in an affidavit: "[T]he 
December 9, 2005 accident was not investigated as a hit-and-run 
accident because the unidentified vehicle stopped at the scene 
and inquired as to Zachary Zarder's health and well-being[.]"   
¶10 As a result of the accident, Zarder's leg and arm were 
fractured, requiring two surgeries.  His health insurance 
policy, issued by Humana, was insufficient to cover his medical 
bills.  The Zarders therefore sought coverage under their 
automobile insurance policy.   
                                                 
4 According to a New Berlin police report, Zarder "advised 
that after [the occupants] had checked on his wellbeing, he had 
assured them that he was all right and they were released from 
the scene.  Zachary advises that he did not feel that the 
vehicle was driving recklessly or speeding at the time of the 
accident, however, he did advise that the vehicle appeared to 
have taken the corner too short thereby crossing into his lane 
and striking him." 
No. 
2008AP919   
 
5 
 
¶11 As required by Wis. Stat. § 632.32(4), the Zarders' 
policy included uninsured motorist (UM) coverage.  The policy 
provided:  
We will pay damages for bodily injury which an insured 
person is legally entitled to recover from the owner 
or operator of an uninsured motor vehicle.  Bodily 
injury must be sustained by an insured person and must 
be caused by accident and result from the ownership, 
maintenance or use of the uninsured motor vehicle.   
The policy defined "uninsured motor vehicle" in part as "a land 
motor vehicle or trailer which is . . . [a] hit-and-run vehicle 
whose operator or owner is unknown and which strikes [an 
insured]." 
¶12 After Acuity rejected the Zarders' claim, they filed 
suit, claiming UM coverage.5  Acuity answered, denying coverage.  
It asserted "that under the circumstances of this case the 
policy in question [does not] provide[] uninsured motorist 
insurance coverage benefits since the vehicle that allegedly 
struck the Plaintiff, Zachary Zarder, did not constitute a 'hit 
and 
run' 
vehicle 
under 
the 
law[.]" 
 
It 
also 
asserted 
contributory negligence as an affirmative defense.   
¶13 Acuity filed a motion for declaratory judgment in 
circuit court, seeking a no coverage declaration in connection 
with the Zarders' claims.  It did not specifically interpret the 
terms of the UM policy.  Rather, it argued that the policy "does 
not expressly define what qualifies as a 'hit-and-run' vehicle.  
                                                 
5 Zarder's medical insurer, Humana Insurance Company, was 
also listed as a defendant because it may have subrogation 
rights against Acuity.   
No. 
2008AP919   
 
6 
 
Consequently, Wisconsin courts' [statutory] construction of the 
phrase 'hit-and-run' in an insurance coverage context is 
instructive, given the absence of a definition of the same in 
either the policy or [Wis. Stat. § 632.32,] the omnibus 
statute."   
¶14 Acuity cited Hayne v. Progressive Northern Insurance 
Co., a decision by this court, which held that the statutory 
term "hit-and-run" unambiguously requires physical striking.  
115 Wis. 2d 68, 339 N.W.2d 588 (1983).  Hayne concluded: "[T]he 
plain meaning of 'hit-and-run' consists of two elements: a 'hit' 
or striking, and a 'run,' or fleeing from the scene of an 
accident."  Id. at 73-74.  Acuity argued that under Hayne, the 
unidentified vehicle was not a 'hit-and-run' vehicle because the 
driver stopped to check on Zarder rather than "fleeing from the 
scene of [the] accident."   
¶15 After briefs and oral arguments, the circuit court 
denied Acuity's motion for declaratory judgment.  Although the 
court did not specifically interpret the terms of the policy, it 
determined that Zarder was "hit" within the meaning of the term 
"hit-and-run."6  It concluded: "I am very satisfied there isn't a 
hint of fraud here."  The court explained: "Unlike many of the 
cases this court has reviewed, there is no phantom car or 
phantom driver.  There is no issue of contact."  Further, 
"there's no real claim of fraud because this young man has 
very . . . objective injuries."  
                                                 
6 The court commented that the Millers heard the impact and 
that the hit resulted in property damage to the bike.   
No. 
2008AP919   
 
7 
 
¶16 Although the court concluded that the unidentified 
vehicle was not a "hit-and-run" vehicle within the meaning of 
Hayne, it determined that there was coverage under Acuity's 
policy.  The court explained its reasoning in terms of "public 
policy" and the purpose underlying the omnibus statute, which 
mandates a minimum level of UM coverage in all liability 
policies.   
¶17 The court of appeals accepted Acuity's interlocutory 
appeal.  It determined that Hayne's definition of "run" was 
dictum because the Wisconsin supreme court in Hayne "did not 
intentionally take up and decide the 'run' part of 'hit-and-
run'"; the definition of run was not "germane to the outcome of 
Hayne"; and it was an "off-the-cuff statement[], made without 
any careful thought or analysis[.]"  Zarder v. Acuity, A Mut. 
Ins. Co., 2009 WI App 34, ¶12, 316 Wis. 2d 573, 765 N.W.2d 839.  
The court continued: "Without Hayne as the anchor, we are back 
to square one with regard to defining 'run' in 'hit-and-run.'  
We will hereafter analyze the case the way the law says we must 
interpret insurance policy language."  Id., ¶15. 
¶18 The court discussed two reasonable definitions of 
"run" in the context of a hit-and-run vehicle: "the operator 
flees or drives on without stopping," or "the operator stops but 
drives on without providing identification or complying with his 
or her other legal duties."  Id., ¶22.  The court adopted the 
interpretation favorable to the insured and concluded that a 
hit-and-run occurs when a driver leaves the scene of the 
No. 
2008AP919   
 
8 
 
accident without providing identifying information, even though 
the driver stopped to see if there was injury.  Id., ¶23. 
¶19 As an alternative rationale for affirming the circuit 
court, 
the 
court 
of 
appeals 
concluded 
that 
Wis. 
Stat. 
§ 632.32(4)(a)2.b. compels coverage.  Id., ¶24.  It consulted 
the legislative history of the statute and found little 
guidance.  Id., ¶29.  However, it found the criminal hit-and-run 
statute, Wis. Stat. § 346.67, to be helpful.7  Id., ¶30.  That 
statute provides that drivers involved in some accidents must, 
among other obligations, provide their name, address, and 
vehicle registration number before leaving the scene of the 
                                                 
7 Wis. Stat. § 346.67, titled "Duty upon striking person or 
attended or occupied vehicle," provides: 
(1) The operator of any vehicle involved in an 
accident resulting in injury to or death of any person 
or in damage to a vehicle which is driven or attended 
by any person shall immediately stop such vehicle at 
the scene of the accident or as close thereto as 
possible but shall then forthwith return to and in 
every event shall remain at the scene of the accident 
until 
the 
operator 
has 
fulfilled 
the 
following 
requirements:  
(a) The operator shall give his or her name, address 
and the registration number of the vehicle he or she 
is driving to the person struck or to the operator or 
occupant of or person attending any vehicle collided 
with; and 
(b) The operator shall, upon request and if available, 
exhibit his or her operators license . . . ; and  
(c) The operator shall render to any person injured in 
such accident reasonable assistance . . . . 
 
No. 
2008AP919   
 
9 
 
accident.  Wis. Stat. § 346.67.  The court "presume[d] that the 
legislature had full knowledge of the requirements in the 'hit-
and-run' 
statute 
when 
it 
repeated 
that 
phrase 
in 
§ 632.32(4)(a)2.b."  Zarder, 316 Wis. 2d 573, ¶30.   
¶20 The court of appeals also determined that defining 
"run" as leaving an accident scene without providing identifying 
information comported with the legislative purpose of protecting 
insureds against situations where there is no tortfeasor 
insurance available to pay for their injuries.  Id., ¶35.  
Accordingly, it affirmed the circuit court's denial of Acuity's 
motion for declaratory judgment. 
II 
¶21 The granting or denying of declaratory judgment is a 
matter within the discretion of the circuit court.  Theis v. 
Midwest Security Ins. Co., 2000 WI 15, ¶8, 232 Wis. 2d 749, 606 
N.W.2d 162.  An appellate court will reverse the decision of the 
circuit court if it erroneously exercised its discretion.  Id.  
The circuit court has erroneously exercised its discretion if it 
bases its decision on an error of law or an error of fact.  
State v. Ford, 2007 WI 138, ¶28, 306 Wis. 2d 1, 742 N.W.2d 61.   
¶22 In this case, we are required to interpret the terms 
of an insurance policy to determine whether it covers the type 
of accident presented here.  Interpretation of a policy presents 
a question of law, which we review independently of the 
determinations rendered by the circuit court and the court of 
appeals.  Liebovich v. Minn. Ins. Co., 2008 WI 75, ¶17, 310 
Wis. 2d 751, 751 N.W.2d 764. 
No. 
2008AP919   
 
10 
 
III 
¶23 We begin our discussion by setting forth the guiding 
principles for interpreting a provision in an insurance policy.  
Next, we address two arguments advanced by Acuity.  The first 
focuses on the intent of the unidentified driver here, and the 
second is based on our prior decision in Hayne, 115 Wis. 2d 68.  
Finally, we apply the standard principles of construction to the 
Zarders' UM policy.  
¶24 Wisconsin Stat. § 632.32 is Wisconsin's omnibus motor 
vehicle coverage statute.  It provides that every motor vehicle 
insurance policy issued in Wisconsin must contain certain 
mandatory provisions.8  Progressive N. Ins. Co. v. Romanshek, 
2005 WI 67, ¶10, 281 Wis. 2d 300, 697 N.W.2d 417.  One of these 
requirements is set forth in Wis. Stat. § 632.32(4), which 
mandates 
uninsured 
motorist 
(UM) 
coverage. 
 
It 
includes 
"unidentified 
motor 
vehicle[s] involved in [] hit-and-run 
                                                 
8 Wis. Stat. § 632.32 is entitled "Provisions of motor 
vehicle insurance policies."  Section 632.32(1) sets forth: 
"Except as otherwise provided, this section applies to every 
policy of insurance issued or delivered in this state against 
the insured's liability for loss or damage resulting from 
accident caused by any motor vehicle, whether the loss or damage 
is to property or to a person."   
"[A]n insurance policy may expand but not reduce the 
coverage required by the uninsured motorist statute."  Fletcher 
v. Aetna Cas. & Sur. Co., 165 Wis. 2d 350, 357, 477 N.W.2d 90 
(Ct. App. 1991).  Coverage omitted from an insurance policy will 
nevertheless be "compelled and enforced" as a part of the policy 
when the inclusion of such coverage is mandated by statute.  
Progressive N. Ins. Co. v. Romanshek, 2005 WI 67, ¶13, 281 
Wis. 2d 300, 697 N.W.2d 417. 
No. 
2008AP919   
 
11 
 
accident[s]" within the definition of "uninsured motor vehicle."9  
Wis. Stat. § 632.32(4)(a)2.b.       
¶25 When determining whether an insured may recover under 
the terms of his uninsured motorist policy, a court generally 
begins by examining the language of the policy, which is a 
contract for insurance.10  If the court examines the policy and 
concludes that it provides coverage, there may be no need to 
construe 
Wis. Stat. § 632.32(4)(a)2.b. 
to 
determine 
whether 
coverage is mandated by law.11   
¶26 The court's goal in construing an insurance policy is 
to determine and carry out the intentions of the parties.  Mau 
v. N.D. Ins. Reserve Fund, 2001 WI 134, ¶13, 248 Wis. 2d 1031, 
637 N.W.2d 45.  We interpret undefined words and phrases in an 
insurance policy as they would be understood by a reasonable 
insured, giving words and phrases their common and ordinary 
                                                 
9 Wis. Stat. § 632.32 was amended by 2009 Wis. Act 28.  That 
act expanded the statutory requirements.  The amendments do not 
affect this case because they apply to policies issued after 
November 1, 2009.      
10 See, 
e.g., 
Folkman 
v. 
Quamme, 
2003 
WI 
116, 
264 
Wis. 2d 617, 665 N.W.2d 857; Mau v. N.D. Ins. Reserve Fund, 2001 
WI 134, 248 Wis. 2d 1031, 637 N.W.2d 45; Fischer v. Midwest Sec. 
Ins. Co., 2003 WI App 246, 268 Wis. 2d 519, 673 N.W.2d 297; 
Meyer v. City of Amery, 185 Wis. 2d 537, 518 N.W.2d 296 (Ct. 
App. 1994). 
11 See, e.g., Hull v. State Farm Mut. Auto. Ins. Co., 222 
Wis. 2d 627, ¶20 n.7, 586 N.W.2d 863 (1998) ("We recognize that 
we need not determine whether Hull is entitled to UM coverage 
under Wis. Stat. § 632.32(4), since we have already decided that 
Hull is entitled to UM coverage under the terms of her two 
insurance policies."); Fischer, 268 Wis. 2d 519, ¶27.   
No. 
2008AP919   
 
12 
 
meaning.  Acuity v. Bagadia, 2008 WI 62, ¶13, 310 Wis. 2d 197, 
750 N.W.2d 817; Folkman v. Quamme, 2003 WI 116, ¶17, 264 
Wis. 2d 617, 665 N.W.2d 857.  If words or phrases in a policy 
are susceptible to more than one reasonable construction, they 
are ambiguous.  Lisowski v. Hastings Mut. Ins. Co., 2009 WI 11, 
¶9, 315 Wis. 2d 388, 759 N.W.2d 754.   
¶27 If an insurance policy is ambiguous as to coverage, we 
will construe the policy in favor of the insured.  Froedtert 
Mem'l Lutheran Hosp. v. Nat'l States Ins., 2009 WI 33, ¶41, 317 
Wis. 2d 54, 765 N.W.2d 251.  "[B]ecause the insurer is in a 
position to write its insurance contracts with the exact 
language it chooses——so long as the language conforms to 
statutory and administrative law——ambiguity in that language is 
construed in favor of an insured seeking coverage."  Id., ¶43. 
¶28 The Zarders' policy defines "uninsured motor vehicle" 
in part as "a land motor vehicle or trailer which is . . . [a] 
hit-and-run vehicle whose operator or owner is unknown and which 
strikes [an insured]."  Although the term "hit-and-run" is not 
defined in the policy, Acuity asserts that the meaning of "run" 
is not "lacking in clarity."  It asserts that the term means to 
"flee without stopping."   
¶29 Acuity advances two arguments in support of this 
conclusion.  The first is tied to the particular facts of this 
case and focuses on the intent of the unidentified driver.  The 
second is based on our prior decision in Hayne, 115 Wis. 2d 68.  
We address each argument in turn.     
No. 
2008AP919   
 
13 
 
¶30 At oral argument, Acuity's counsel explained: "When 
you look at the facts of this case, we clearly do not have a 
'flee' from a common sense standpoint because the facts show 
that the occupants of the vehicle checked on the wellbeing of 
Zachary Zarder.  There was no attempt by them to shield their 
identity.  There was no attempt by them to run from the scene of 
the accident."  Under these facts, Acuity asserts, there is no 
coverage.   
¶31 From 
this 
explanation, it appears that Acuity's 
definition hinges upon the intent of the unidentified driver and 
whether that driver attempted to evade responsibility by leaving 
the scene of the accident.12  However, we note that a definition 
that focuses on the unidentified driver's intentions in leaving 
the scene of an accident is antithetical to the purpose of UM 
coverage.  As applied here, the purpose is to compensate an 
injured person who is the victim of an unidentified motorist's 
negligence, subject to the terms of the policy.  See Theis, 232 
Wis. 2d 749, ¶¶28-29. 
¶32 The 
intention 
of 
the 
unidentified 
driver——while 
central in the context of a criminal hit-and-run charge under 
Wis. Stat. § 346.67——is not relevant here.  In construing an 
                                                 
12 Considered in isolation, this definition of "run" is 
reasonable.  It is consistent with some dictionary definitions 
of the term "hit-and-run."  The Random House Unabridged 
Dictionary, for example, defines "hit-and-run" as "guilty of 
fleeing the scene of an accident or injury one has caused, esp. 
a 
vehicular 
accident, 
thereby 
attempting 
to 
evade 
being 
identified and held responsible: a hit-and-run driver."  Random 
House Unabridged Dictionary 907 (2d ed. 1993).   
No. 
2008AP919   
 
14 
 
insurance policy, our focus is not on what the unidentified 
driver intended.  Rather, our focus is on what the parties to 
the contract intended.  One of the circumstances that may arise 
under the policy is when the victim sustains injury or damages, 
but the tortfeasor is unknown.      
¶33 Although the court of appeals looked to Wis. Stat. 
§ 346.67 in defining the term hit-and-run, we do not find the 
scope and application of that statute to be helpful to the 
interpretation of this insurance policy.  Insurance coverage for 
a hit-and-run accident involving an unidentified vehicle is not 
coextensive with the criminal culpability of the driver of that 
vehicle under Wis. Stat. § 346.67.  
¶34 Whatever the unidentified driver's motivation for 
leaving the accident scene——good, bad, or indifferent——it has no 
effect 
on 
the 
insured's 
inability 
to 
recover 
from 
that 
unidentified driver's liability policy.  The question here is 
whether the parties contracted for coverage for this accident 
under the terms of the insurance policy.   
¶35 Acuity also relies on the fact that Zarder "inform[ed] 
[the driver] that he was fine" and "indicate[ed] that they 
[could] leave the scene of the accident."  When the unidentified 
driver has been "dismissed from the scene, when the person that 
has been struck says look I'm fine, you guys may take off," 
Acuity contends that there has not been a hit-and-run.  Acuity 
attempts to place an affirmative responsibility on the insured 
to collect identifying information from the driver if possible 
before permitting that driver to leave.     
No. 
2008AP919   
 
15 
 
¶36 This contention, however, is not borne out by the 
provisions in the Zarders' insurance policy.  There is no 
contractual requirement that an insured attempt to obtain this 
type of information.13  Rather, the policy merely sets forth two 
duties of the insured: (1) the insured must cooperate14 with 
Acuity; and (2) "A person claiming Uninsured Motorists coverage 
must notify the police within 24 hours of the accident if a hit-
and-run driver is involved."15 
¶37 Having concluded that the intent of the unidentified 
driver in leaving the scene of the accident is not relevant 
here, we turn next to Acuity's assertion that Hayne controls the 
outcome of this case.  It contends that we need not apply the 
rules of construing an insurance policy here, given that Hayne 
has already examined the term "hit-and-run" in the context of 
the requirements of the omnibus statute, Wis. Stat. § 632.32(4).     
¶38 Acuity 
acknowledges 
that 
with 
respect 
to 
what 
constitutes a run, dictionary definitions of "hit-and-run" are 
"less than identical" and that they "do not mirror one another."  
Nevertheless, it points to the conclusion in Hayne that the 
                                                 
13 Presumably, an insurer could write in such a requirement 
and it would be upheld unless contrary to statute.   
14 This includes providing information about the accident, 
submitting to medical examinations, permitting Acuity to inspect 
the damaged property before it is repaired, and other similar 
obligations. 
15 This requirement likely exists to reduce the likelihood 
of fraudulent claims.  In this case, the Zarders notified the 
New Berlin Police Department on the evening of the accident. 
No. 
2008AP919   
 
16 
 
statutory term "hit-and-run" is "unambiguous" and "clear on its 
face."  115 Wis. 2d at 76.  "Because this Court has ruled the 
term 'hit-and-run' is unambiguous," Acuity contends that finding 
controls "irrespective of whether the discussion concerns the 
Acuity policy or, alternatively, the Omnibus statute."   
¶39 In Hayne, the insured swerved to avoid an oncoming 
car, lost control of his vehicle, and was injured.  115 
Wis. 2d at 69.  There was no contact between Hayne's vehicle and 
the oncoming car, which was never identified.  Id.  Hayne filed 
suit against his insurer, asserting a claim under his UM policy.  
Id. at 69-70.  This court interpreted Wis. Stat. § 632.32(4) and 
determined that it did not mandate UM coverage for an accident 
involving an unidentified motor vehicle when there was no 
physical contact between the insured and the unidentified 
vehicle.  Id. at 69.   
¶40 In reaching this determination, the court consulted 
several 
dictionaries, 
reasoning 
that 
"[t]hese 
definitions 
clearly indicate that the plain meaning of 'hit-and-run' 
consists of two elements: a 'hit' or striking, and a 'run', or 
fleeing from the scene of an accident."  Id. at 73-74.  The 
court 
concluded: 
"The 
clear 
statutory 
language 
of 
sec. 
632.32(4)(a)2.b. reflects a legislative intent that the statute 
No. 
2008AP919   
 
17 
 
apply only to accidents in which there has been physical 
contact."16   Id. at 74.    
¶41 We find Acuity's argument that Hayne controls the 
outcome here unpersuasive for the following three reasons.  
First, although Hayne determined that the term "run" in the 
statutory phrase "hit-and-run" means "fleeing from the scene of 
an accident," this definition leaves unanswered the question 
presented in this case.  The court of appeals correctly 
recognized that the Hayne definition of hit-and-run "begged the 
question" because "while the court seemingly equated 'run' with 
'flee,' it did not define or discuss the circumstances that 
determine when a 'flee' has occurred."  Zarder, 316 Wis. 2d 573, 
¶¶12, 14.  Although Acuity asserts that "run" means "fleeing the 
scene without stopping," the phrase "without stopping" does not 
appear in Hayne's definition of "hit-and-run."     
¶42 Second, even though Hayne pronounced the physical 
contact requirement unambiguous, other aspects of the definition 
of "hit-and-run" may not be unambiguous.  A word or phrase may 
be unambiguous in one situation, and yet be ambiguous in 
another.  Seider v. O'Connell, 2000 WI 76, ¶43, 236 Wis. 2d 211, 
                                                 
16 We later explained the public policy rationale behind the 
holding in Hayne: "One public policy concern is of primary 
relevance to our analysis, that of preventing fraud.  The 
physical contact element unambiguously included in the term 
'hit-and-run' 
in 
Wis. 
Stat. 
§ 632.32(4)(a)2.b. 
prevents 
fraudulent claims from being brought by an insured driver who is 
involved in an accident of his or her own making."  Smith v. 
Gen. Cas. Ins. Co., 2000 WI 127, ¶25, 239 Wis. 2d 646, 619 
N.W.2d 882. 
No. 
2008AP919   
 
18 
 
612 N.W.2d 659.  "Permitting the facts of a case to gauge 
ambiguity simply acknowledges that reasonable minds can differ 
about a statute's application when the text is a constant but 
the 
circumstances 
to 
which 
the 
text 
may 
apply 
are 
kaleidoscopic."  Id.  
¶43 In DeHart v. Wisconsin Mutual Insurance Co., we 
discussed the applicability of the Hayne decision to new factual 
situations.  2007 WI 91, ¶15, 302 Wis. 2d 564, 734 N.W.2d 394 
(citing Smith v. Gen. Cas. Ins. Co., 2000 WI 127, ¶13, 239 
Wis. 2d 646, 619 N.W.2d 882 (discussing Hayne)).  We cited the 
Legislative Council Note to Wis. Stat. § 632.32(4)(a)2.b., which 
provides: "A precise definition of hit-and-run is not necessary 
for in the rare case where a question arises the court can draw 
the line."  Id. (citing Legislative Council Note, ch. 102, Laws 
of 1979).  "Although we have established that the term 'hit-and-
run' unambiguously includes an element of physical contact, we 
recognize that [the statute] does not specifically define 'hit-
and-run.'"  Id.  "Accordingly," we concluded, "the term 'hit-
and-run' has been construed on a case-by-case basis," and 
"[p]rior decisions explaining and interpreting the physical 
contact requirement are instructive to our determination in this 
case."  Id.   
¶44 Third, the court in Hayne was interpreting the 
language of a statute.  Here, however, we interpret the language 
No. 
2008AP919   
 
19 
 
in an insurance policy.17  This distinction is relevant because 
the court applies different rules when construing a statute than 
it does when construing an insurance contract.   
¶45 Most importantly, when there is ambiguity in an 
insurance policy, it is construed in favor of coverage.  By 
contrast, when there is ambiguity in a statute, the court looks 
to the legislature's intent in enacting it.  "[T]he reasonable 
expectation of the insured regarding the language of the policy 
is 
not 
relevant 
to 
[an] 
analysis 
of 
Wis. 
Stat. 
§ 632.32(4)(a)2.b."  Smith, 239 Wis. 2d 646, ¶27.  We conclude 
that Hayne does not control the outcome of this case.  
¶46 Accordingly, we turn to the language of the Zarders' 
policy and apply the standard rules of construction.  The policy 
provides UM coverage for bodily injury which an insured person 
is legally entitled to recover from the owner or operator of 
"[a] hit-and-run vehicle whose operator or owner is unknown and 
which strikes [an insured]."  The policy term "hit-and-run" is 
undefined.   
¶47 A reasonable insured could conclude that a hit-and-run 
vehicle is a vehicle which strikes an insured and then flees the 
scene of the accident without stopping.  However, a reasonable 
                                                 
17  Here, we note, the terms of the policy and the terms of 
the statute differ slightly.  The statute mandates coverage when 
an "unidentified motor vehicle [is] involved in a hit-and-run 
accident."  Wis. Stat. § 632.32(4)(a)2.b.  The Zarders' policy 
provides coverage when an insured is injured by "[a] hit-and-run 
vehicle whose operator or owner is unknown and which strikes 
[the insured]."  
No. 
2008AP919   
 
20 
 
insured might also conclude that a hit-and-run vehicle is one 
that strikes an insured and then leaves the scene of the 
accident without the driver providing identifying information.18     
¶48 Given that the phrase "hit-and-run" in the Zarders' 
policy is susceptible to more than one reasonable construction, 
we conclude that it is ambiguous.  We therefore construe the 
phrase hit-and-run in favor of coverage.  Ambiguous terms in an 
insurance contract are construed in favor of coverage for the 
insured.  Plastics Eng'g Co. v. Liberty Mut. Ins. Co., 2009 WI 
13, ¶31, 315 Wis. 2d 556, 759 N.W.2d 613; Estate of Sustache v. 
Am. Fam. Mut. Ins. Co., 2008 WI 87, ¶21, 311 Wis. 2d 548, 751 
N.W.2d 845; Bagadia, 310 Wis. 2d 197, ¶42; Summers v. Touchpoint 
Health Plan, Inc., 2008 WI 45, ¶31, 309 Wis. 2d 78, 749 
N.W.2d 182.  
¶49 Because we conclude that the policy provides for 
coverage for this type of accident, we need not examine the 
requirements of Wis. Stat. § 632.32(4).  We conclude that the 
court of appeals did not err in affirming the circuit court's 
decision to deny Acuity's motion for declaratory judgment.  
                                                 
18 This definition is consistent with the term's common and 
ordinary meaning, as found in some dictionary definitions.  For 
instance, the American Heritage Dictionary defines "hit-and-run" 
as "[b]eing or involving the driver of a motor vehicle who 
leaves the scene of an accident, especially one in which a 
pedestrian or another vehicle has been struck."  American 
Heritage Dictionary of the English Language 858 (3d ed. 1992). 
No. 
2008AP919   
 
21 
 
IV 
¶50 Likewise, having concluded that ambiguity in the 
policy results in coverage here, we need not address the issue 
of whether the court of appeals can dismiss as dictum a 
statement from an opinion by this court.  Because it is a 
recurring issue and fundamental to the meaning and precedential 
value of our decisions, we nevertheless address it here to 
provide needed guidance to the courts and litigants of this 
state. 
¶51 Acuity contends that by labeling a statement in Hayne 
dictum, the court of appeals effectively withdrew that language, 
exceeding its authority.  It is the supreme court's primary 
function to develop the law, and "[t]he supreme court is the 
only state court with the power to overrule, modify or withdraw 
language from a previous supreme court case."  Cook v. Cook, 208 
Wis. 2d 166, 189, 560 N.W.2d 246 (1997).   
¶52 We recognize that previous decisions written by this 
court have provided inconsistent guidance on the definition and 
effect of dicta in Wisconsin cases.19  Given this court's prior 
                                                 
19 There are two disparate lines of Wisconsin cases defining 
dicta.  Under one line of cases, this court's discussion of a 
question "germane to . . . the controversy" is not dictum, even 
if that discussion is not "decisive of[] the controversy":  
It is deemed the doctrine of the cases is that when an 
appellate court of last resort intentionally takes up, 
discusses, and decides a question germane to, though 
not necessarily decisive of, the controversy, such 
decision is not a dictum but is a judicial act of the 
court which it will thereafter recognize as a binding 
decision.   
No. 
2008AP919   
 
22 
 
inconsistency in defining dicta, it is not surprising that the 
court of appeals would be unclear about whether the statement 
from Hayne was in fact dictum.   
¶53 Nevertheless, resolution of the question of what 
constitutes dicta would not resolve the specific question 
presented in this appeal.  The question here is not the 
definition of dicta.  Rather, the question presented is 
regardless of how it is defined, can the court of appeals 
dismiss a statement from an opinion by this court by concluding 
that it is dictum. 
¶54 In Cook, this court explained that the court of 
appeals may not overrule, modify, or withdraw language from a 
prior supreme court or court of appeals opinion——even if the 
court of appeals believes that the prior precedent is erroneous.  
208 Wis. 2d at 189-90.  Rather, we concluded that this court has 
the exclusive power to overrule, modify, or withdraw language 
from prior Wisconsin cases.  Id. at 189.  The Cook court 
explained that this result upheld principles of predictability, 
                                                                                                                                                             
State v. Picotte, 2003 WI 42, ¶61, 261 Wis. 2d 249, 661 
N.W.2d 381.   
However, a competing line of cases, exemplified by State v. 
Sartin, 200 Wis. 2d 47, 546 N.W.2d 449 (1996), defines dictum as 
"a statement or language expressed in a court's opinion which 
extends beyond the facts in the case and is broader than 
necessary and not essential to the determination of the issues 
before it."  Id. at 60 n.7.   
 
No. 
2008AP919   
 
23 
 
certainty, and finality relied upon by litigants, attorneys, and 
courts alike.  Id. at 189.   
¶55 As observed in Cook, however, the court of appeals is 
not powerless if it concludes that a prior decision of the 
supreme court is erroneous.  Id. at 190.  Rather, the court of 
appeals has two options:   
It may signal its disfavor to litigants, lawyers and 
this court by certifying the appeal to this court, 
explaining that it believes a prior case was wrongly 
decided.  Alternatively, the court of appeals may 
decide the appeal, adhering to a prior case but 
stating its belief that the prior case was wrongly 
decided. 
Id.  
¶56 Since Cook, the court of appeals has declined to 
withdraw language from prior cases decided by this court.20  For 
instance, in State v. Grunke, the court of appeals "recognize[d] 
that the supreme court's statements as to the purpose of [a 
statute] are not 'ascertainable from the text' of the statute 
itself."  2007 WI App 198, ¶8 n.3, 305 Wis. 2d 312, 738 
N.W.2d 137, reversed by 2008 WI 82, 311 Wis. 2d 439, 752 
N.W.2d 769.  Nevertheless, the court said it was "not free to 
disregard language of the supreme court."  Id.  Additionally, in 
Monroe Co. DHS v. Luis R., the court of appeals stated that the 
supreme court had construed the statutory term "custody" in a 
                                                 
20 But see Wieting Funeral Home of Chilton v. Meridian Mut. 
Ins. Co., 2004 WI App 218, ¶14, 277 Wis. 2d 274, 690 N.W.2d 442 
(concluding that it was not bound by the holding of a prior 
supreme court case when that case did not address the entirely 
new and potentially dispositive issue of the effect of a statute 
on the outcome of the case).   
No. 
2008AP919   
 
24 
 
way that was difficult to apply.  2009 WI App 109, ¶23, 320 
Wis. 2d 652, 770 N.W.2d 795.  However, the court explained that 
it could not "modify the supreme court's analysis on this point 
by altering the meaning of 'custody,'" and that such an argument 
"must be addressed to the supreme court."21   
¶57 By concluding that a statement in a supreme court 
opinion is dictum, the court of appeals necessarily withdraws or 
modifies language from that opinion, contrary to our directive 
in Cook.  For example, by concluding that the definition of 
"run" was dictum——rather than inapplicable as precedent for 
interpreting an insurance policy——the court of appeals implied 
that the Hayne definition would never be binding authority, even 
for a court interpreting the omnibus statute.   
¶58 If the court of appeals could dismiss a statement in a 
prior case from this court as dictum, the limitation in Cook 
against overruling, modifying, or withdrawing language would be 
seriously undermined.  We therefore conclude that to uphold the 
principles of predictability, certainty, and finality, the court 
                                                 
21 But see State v. Jahnke, 2009 WI App 4, ¶24, 316 
Wis. 2d 324, 762 N.W.2d 696 (2008) (Dykman, J., dissenting) ("I 
do not join in the majority's opinion because it is an attempt 
to avoid the requirement of Cook v. Cook[.]  The majority 
acknowledges that . . . it cannot use the words 'overrule, 
modify or withdraw.'  Instead, the majority uses the word 
'incomplete' to avoid the meaning we previously gave to the 
statute."); Steiner v. Steiner, 2004 WI App 169, ¶20, 276 
Wis. 2d 290, 687 N.W.2d 740 (Dykman, J., dissenting) ("Faced 
with [the] inability to modify its published opinions, panels 
sometimes distinguished a problematic case on exceedingly fine 
points, or on assumed facts."). 
No. 
2008AP919   
 
25 
 
of appeals may not dismiss a statement from an opinion by this 
court by concluding that it is dictum.   
V 
¶59 In sum, we conclude that Acuity's focus on the 
unidentified driver's intention when leaving the accident scene 
is not relevant to our determination of whether there is 
coverage under the terms of the insurance policy.  Further, we 
conclude that Hayne does not control the outcome of this case.  
We, therefore, apply the standard rules of construction to the 
Zarders' UM policy.   
¶60 Given that the phrase "hit-and-run" in the Zarders' UM 
policy is susceptible to more than one reasonable construction, 
we determine that it is ambiguous.  We therefore construe the 
phrase "hit-and-run" in favor of coverage.  Having concluded 
that there is coverage for this type of accident under the 
policy, we need not examine the requirements of Wis. Stat. 
§ 632.32(4).  Accordingly, we affirm the court of appeals, but 
we modify the rationale and remand to the circuit court for 
further proceedings. 
By the Court.—The decision of the court of appeals is 
modified and affirmed and, as modified, the cause is remanded to 
the circuit court.   
 
 
No. 
2008AP919   
 
 
 
1