Title: Scott Brunson v. Robert L. Ward

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

2001 WI 89 
 
SUPREME COURT OF WISCONSIN 
 
 
Case No.: 
98-3002 & 98-3300 
 
 
Complete Title 
of Case: 
 
Scott Brunson,  
 
Plaintiff-Appellant, 
 
v. 
Robert L. Ward, Debra Czaplewski, State Farm 
Mutual and Continental Casualty Company,  
 
Defendants, 
Progressive Northern Insurance Company,  
 
Defendant-Respondent.  
 
 
ON CERTIFICATION FROM THE COURT OF APPEALS 
 
 
Opinion Filed: 
July 6, 2001 
Submitted on Briefs: 
      
Oral Argument: 
January 4, 2001 
 
 
Source of APPEAL 
 
COURT: 
Circuit 
 
COUNTY: 
Waukesha 
 
JUDGE: 
James R. Kieffer 
 
 
JUSTICES: 
 
Concurred: 
      
 
Dissented: 
BRADLEY, J., dissents (opinion filed). 
 
 
ABRAHAMSON, C.J., joins dissent. 
 
Not Participating:       
 
 
ATTORNEYS: 
For the plaintiff-appellant there were briefs (in 
the court of appeals) by Lynne A. Layber, Milwaukee, and oral 
argument by Lynn A. Layber. 
 
 
For the defendant-respondent there was a brief by 
Rick E. Hills, Michelle M. Stoeck and Hills & Hicks, S.C., 
Brookfield, and oral argument by Rick E. Hills. 
 
2001 WI 89 
 
NOTICE 
This opinion is subject to further editing and 
modification.  The final version will appear 
in the bound volume of the official reports. 
 
 
Nos. 98-3002  & 98-3300 
 
STATE OF WISCONSIN                    :  
  IN SUPREME COURT 
 
 
Scott Brunson,  
 
          Plaintiff-Appellant, 
 
     v. 
 
Robert L. Ward, Debra Czaplewski, State  
Farm Mutual and Continental Casualty  
Company,  
 
          Defendants, 
 
Progressive Northern Insurance Company,  
 
          Defendant-Respondent. 
 
 
APPEAL from an order of the Circuit Court for Waukesha 
County, James R. Kieffer, Circuit Court Judge.    Affirmed in 
part, reversed in part.   
 
¶1 
DIANE 
S. 
SYKES, 
J.   In 
Wisconsin, 
underinsured 
motorist policies written in the amount of $25,000 have been 
held to be illusory contracts, and case law has required 
insurers to pay damages, up to the $25,000 limit of any such 
policy, as a remedy for the issuance of an illusory contract.  
Meyer v. Classified Ins. Co., 192 Wis. 2d 463, 468, 531 N.W.2d 
FILED 
 
JUL 6, 2001 
 
Cornelia G. Clark 
Clerk of Supreme Court 
Madison, WI 
 
 
 
 
 
No. 
98-3002  & 98-3300 
 
 
2 
416 (Ct. App. 1995); see also Kaun v. Indust. Fire & Cas. Ins. 
Co., 148 Wis. 2d 662, 670, 436 N.W.2d 321 (1989); Hoglund v. 
Secura Ins., 176 Wis. 2d 265, 270-71, 500 N.W.2d 354 (Ct. App. 
1993).  The question in this case is the continued viability of 
this 
judicially-created 
remedy 
in 
light 
of 
a 
subsequent 
legislative one——a statute requiring underinsured motorist (UIM) 
policies to provide at least $50,000 in coverage——where the 
policy in question contains a clause conforming the policy to 
the requirements of state statute. 
¶2 
More specifically, the court of appeals in this case 
certified the following question to this court: "Does the remedy 
in Meyer v. Classified Insurance Co., 192 Wis. 2d 463, 531 
N.W.2d 416 (Ct. App. 1995), prohibiting illusory insurance 
coverage, still hold where an insurer fails to update its 
underinsured motorist (UIM) insurance coverage pursuant to Wis. 
Stat. § 632.32(4m) (1995-96),1 but has included a provision 
stating 
that 
the 
policy 
shall 
conform 
to 
the 
Wisconsin 
Statutes?"  We answer the certified question no, and therefore 
affirm the circuit court's dismissal of the UIM insurer from 
this case.  However, we reverse the circuit court's award of 
costs and attorney's fees against the plaintiff on his motion 
for reconsideration, which the circuit court considered to be 
frivolous.  
                     
1 All subsequent references to the Wisconsin Statutes are to 
the 1995-96 version unless otherwise noted.  
No. 
98-3002  & 98-3300 
 
 
3 
I 
¶3 
Plaintiff Scott Brunson was seriously injured in an 
automobile accident in January 1996.  The other driver, 
defendant Robert Ward, had $100,000 in automobile liability 
coverage, and his insurer offered full policy limits to Brunson. 
¶4 
Brunson had UIM insurance through his automobile 
liability 
insurer, 
Progressive 
Northern 
Insurance 
Company 
(Progressive), which he purchased on November 19, 1995, for a 
premium of $23.  The declarations page of the policy stated that 
it provided UIM coverage in the amount of $25,000 per person and 
$50,000 per accident.  The policy provided that Progressive 
would pay "damages . . . which an insured person is legally 
entitled 
to 
recover 
from 
the 
owner 
or 
operator 
of 
an 
underinsured motor vehicle up to the limit of liability as 
defined in this Endorsement . . ." and defined an "underinsured 
motor vehicle" as  
 
a motor vehicle that is an insured motor vehicle but 
for which the sum of the limits under all liability 
bonds, 
insurance, 
policies 
and 
cash 
deposits 
applicable at the time of the accident is less than 
the applicable limits of liability for underinsured 
motorists coverage under this endorsement. 
¶5 
Prior to Brunson's purchase of UIM coverage from 
Progressive, several appellate decisions had concluded that 
$25,000 UIM policies were illusory because of their interaction 
with Wis. Stat. § 344.33(2), which requires all Wisconsin 
drivers to carry at least $25,000 of liability coverage.  See 
Kaun, 148 Wis. 2d at 670; Meyer, 192 Wis. 2d at 468; Hoglund, 
176 Wis. 2d at 270-71.  Because UIM coverage is payable only 
No. 
98-3002  & 98-3300 
 
 
4 
when the tortfeasor's liability limits are less than the 
insured's UIM limits, the statute requiring Wisconsin drivers to 
carry a minimum of $25,000 of liability coverage operated to 
render a $25,000 UIM policy illusory, since under these 
circumstances the insurer would never have to pay UIM benefits.  
¶6 
In Meyer, the court of appeals established a remedy 
for an insurer's issuance of this type of illusory UIM policy, 
requiring the insurer to compensate the insured for damages not 
covered by the third-party liability policy up to the $25,000 
limit of the UIM policy.  Meyer, 192 Wis. 2d at 468.  Subsequent 
to Meyer, but before Brunson purchased his UIM coverage from 
Progressive, the Wisconsin legislature enacted 1995 Wis. Act 21. 
 The act eliminated the illusory contract problem identified in 
Kaun and Hoglund, and remedied in Meyer, by creating Wis. Stat. 
§ 632.32(4m)(d), requiring all UIM policies to provide a minimum 
of $50,000 coverage per person and $100,000 per accident.2  The 
statute provides: 
 
If an insured [on a policy that goes into effect 
after October 1, 1995] accepts underinsured motorist 
coverage, the insurer shall include the coverage under 
the policy just delivered to the insured in limits of 
at least $50,000 per person and $100,000 per accident. 
 For any insured who accepts the coverage after 
notification [on a policy in effect on October 1, 
1995], the insurer shall include the coverage under 
the renewed policy in limits of at least $50,000 per 
person and $100,000 per accident.   
Wis. Stat. § 632.32(4m)(d) (emphasis added). 
                     
2 UIM insurance coverage remains optional, however. 
No. 
98-3002  & 98-3300 
 
 
5 
¶7 
Because it was issued after the effective date of this 
change in the law, Brunson's policy was required to provide at 
least $50,000 of UIM coverage.  On June 25, 1996, Progressive 
notified Brunson by letter that although the declarations page 
of the policy specified $25,000 of UIM coverage, the policy 
actually provided $50,000 of UIM coverage because it was 
required to do so by state law.  The letter also explained that 
Ward was not "underinsured" as defined in the policy, because 
his $100,000 liability limits exceeded Brunson's $50,000 UIM 
limits.  Accordingly, Progressive declined to pay UIM benefits. 
¶8 
On June 6, 1997, Brunson filed a negligence action 
against Ward.  Brunson amended his complaint three times, 
eventually adding a UIM claim against Progressive.  Progressive 
sought a declaratory judgment, asking the circuit court to: (1) 
reform the policy to comply with the requirement in Wis. Stat. 
§ 632.32(4m)(d) of $50,000 in UIM coverage, and (2) dismiss it 
from the suit because Ward was not "underinsured" according to 
the policy definition.  Brunson opposed the motion, arguing that 
the policy was illusory pursuant to Hoglund, and therefore he 
was entitled to the Meyer remedy of $25,000. 
¶9 
The Waukesha County Circuit Court, the Honorable James 
R. 
Kieffer, 
rejected 
Brunson's 
arguments 
and 
granted 
Progressive's motion.  The circuit court reformed the UIM policy 
to provide the statutory minimum of $50,000 of UIM coverage, and 
concluded that it was not illusory at this level of coverage.  
The circuit court also held that Ward was not an underinsured 
No. 
98-3002  & 98-3300 
 
 
6 
motorist as defined by the policy and dismissed Progressive from 
the suit.   
¶10 Subsequently, Progressive notified the Office of the 
Commissioner of Insurance (OCI) by letter that the declarations 
page issued to Brunson mistakenly stated that he had $25,000 of 
UIM coverage instead of the statutorily required $50,000.  Based 
upon this letter, Brunson moved the court pursuant to Wis. Stat. 
§ 806.07(1)(h)3 to reconsider its reformation of the policy, 
arguing that the policy could not be reformed on the basis of 
Progressive's unilateral mistake and that this issue had not 
been briefed before the circuit court's ruling.  Progressive 
opposed the motion, contending it was frivolous and requesting 
costs 
and 
reasonable 
attorney's 
fees. 
 
See 
Wis. 
Stat. 
§ 814.025(1).  The circuit court denied Brunson's motion for 
reconsideration, agreed with Progressive that it was frivolous, 
and awarded Progressive $1,395.75 in costs and attorney's fees. 
¶11 Brunson appealed from both the declaratory judgment 
and the denial of his motion for reconsideration and the award 
of costs and attorney's fees against him.  The appeals were 
consolidated.  The court of appeals certified the case to this 
court to consider the status of Meyer in light of the enactment 
of Wis. Stat. § 632.32(4m)(d). 
                     
3 Wisconsin Statute § 806.07(1)(h) permits a motion for 
reconsideration upon a showing of "any other reason justifying 
relief from the operation of the judgment." 
No. 
98-3002  & 98-3300 
 
 
7 
II 
¶12 This case involves the interpretation of an insurance 
contract, which is a question of law that the court reviews de 
novo.  Katze v. Randolph & Scott Mut. Fire Ins. Co., 116 Wis. 2d 
206, 212, 341 N.W.2d 689 (1984).  We construe an insurance 
policy to give effect to the intent of the parties, as expressed 
in the language of the policy.  Stanhope v. Brown County, 90 
Wis. 2d 823, 848, 280 N.W.2d 711 (1979); Garriguenc v. Love, 67 
Wis. 2d 130, 134, 226 N.W.2d 414 (1975).  If the policy language 
is unambiguous, we apply it as written.  However, if the words 
of the policy are reasonably or fairly susceptible to more than 
one 
construction, 
it 
is 
ambiguous 
and 
we 
construe 
such 
ambiguities against the insurer.  Id. at 135.   
III 
¶13 To resolve the certified question of the applicability 
of the Meyer remedy, we must first decide whether Progressive's 
policy should have been reformed to reflect the statutorily 
required $50,000 of UIM coverage instead of $25,000.  If 
reformation was proper, the policy is not illusory and the Meyer 
remedy does not come into play.   
¶14 Progressive's policy provides that any of its terms 
that 
conflict 
with 
state 
statute 
are 
conformed 
to 
the 
requirements of state statute.  The insurance code itself also 
requires that any policy that violates state statute or rule be 
conformed to the requirements of the statutes and rules.  See 
Wis. Stat. § 631.15(3m). 
No. 
98-3002  & 98-3300 
 
 
8 
¶15 Progressive's policy accounts for the possibility that 
certain of its provisions might conflict with state statute, and 
the insurer agrees in any such instance to be bound by the 
requirements of statute (it could hardly do otherwise), even 
though it has not charged or received a premium for the 
statutorily 
required 
benefits. 
 
Specifically, 
the 
policy 
provides that "[t]erms of this policy which are in conflict with 
the statutes of the state in which this policy is issued are 
hereby amended to conform to the statutes."  This language is 
clear and unambiguous.  By operation of this "conformance to 
law" clause, the endorsement specifying $25,000 of UIM coverage 
was automatically amended to provide the higher level of UIM 
coverage——$50,000——required by Wis. Stat. § 632.32(4m)(d). 
¶16 Upgrading the policy to the higher level of coverage 
was appropriate for reasons separate and apart from the 
"conformance to law" clause in the policy.  The insurance code 
provides that insurance policy provisions inconsistent with 
insurance statutes or rules are enforceable to the extent of the 
requirements contained in the statutes and rules.  Specifically, 
Wis. Stat. § 631.15(3m) provides that "[a] policy that violates 
a statute or rule is enforceable against the insurer as if it 
conformed to the statute or rule."  Here, the policy violated 
the minimum UIM coverage requirements contained in Wis. Stat. 
§ 632.32(4m)(d), and, by virtue of Wis. Stat. § 631.15(3m), is 
enforceable against Progressive as if it conformed to the 
statutorily required $50,000 in UIM coverage. 
No. 
98-3002  & 98-3300 
 
 
9 
¶17 The circuit court's "reformation" of the policy, 
therefore, was not so much a reformation at common law as a 
recognition that, pursuant to Wis. Stat. §§ 631.15(3m) and 
632.32(4m)(d), as well as the agreement of the parties embodied 
in the "conformance to law" provision, the terms of the policy 
were automatically amended to provide the $50,000 in UIM 
coverage required by statute, even though the insurer had not 
received a premium for that amount of coverage.  Thus, in light 
of the legislature's enactment of the $50,000 UIM minimum, 
apparently as a response to the $25,000 UIM illusory contract 
problem, the judicially created remedy in Meyer is obviated and 
has no application here. 
¶18 Wisconsin Statute § 631.15(3m) has been applied in two 
appellate cases, with divergent results.  See Appleton Papers, 
Inc. v. Home Indem. Co., 2000 WI App 104, 235 Wis. 2d 39, 612 
N.W.2d 760; Wis. Patients Comp. Fund v. St. Mary's Hosp. of 
Milwaukee, 209 Wis. 2d 17, 561 N.W.2d 797 (Ct. App. 1997).  
Appleton Papers involved liability policies that contained 
mandatory arbitration clauses that had not been approved by the 
insurance commissioner, despite a requirement in Wis. Stat. 
§ 631.85 
that 
any 
such 
clauses 
must 
receive 
insurance 
commissioner approval.  2000 WI App 104, ¶¶6-8, 40-41.  The 
court of appeals concluded that Wis. Stat. § 631.15(3m) required 
it to strike the nonconforming arbitration provisions and 
enforce the policies as though the arbitration provisions did 
not exist.  Id. at ¶42.  
No. 
98-3002  & 98-3300 
 
 
10
¶19 St. Mary's concerned a hospital's failure to comply 
with the requirements necessary to become a self-insurer under 
Wis. Stat. § 655.23 (1983-84), a prerequisite to obtaining 
reimbursement for excess payments from the Wisconsin Patients 
Compensation Fund.  St. Mary's, 209 Wis. 2d at 30.  The hospital 
argued that it should be entitled to payment because Wis. Stat. 
§ 631.15(2) 
(1983-84), 
the 
predecessor 
to 
Wis. 
Stat. 
§ 631.15(3m), automatically brought its improper self-insurance 
scheme into conformance with Wis. Stat. § 655.23 and qualified 
it for secondary coverage from the fund.  The court of appeals 
refused to apply the statute in this way, concluding that 
"[r]ather obviously . . . [Wis. Stat. § 631.15(2)] is part of 
the statutory structure in place to protect insureds in their 
contractual relationships with providers and insurers, not to 
excuse a provider's or insurer's noncompliance."  Id. at 35.   
¶20 Because of their conflicting results, these cases do 
not provide much guidance here.  In one, the court of appeals 
invoked 
Wis. 
Stat. 
§ 631.15(3m) 
to 
reform 
nonconforming 
policies, and in the other, the court declined to do so.  In 
this case, Brunson would like us to use St. Mary's as authority 
for 
disregarding 
Wis. 
Stat. 
§ 631.15(3m), 
Wis. 
Stat. 
§ 632.32(4m)(d), and the "conformance to law" provision in 
Progressive's policy, in order to take advantage of a judicially 
created remedy that has been replaced by a legislative one.  
This we cannot do. 
¶21 The most that can be said about the applicability of 
St. Mary's here is that it is distinguishable and therefore 
No. 
98-3002  & 98-3300 
 
 
11
limited to its own facts insofar as its interpretation of Wis. 
Stat. § 631.15(3m) is concerned.  The case did not involve a 
policy term that conflicted with statute (as in this case), but, 
rather, the wholesale failure of a self-insuring hospital to 
take the steps necessary to qualify as a self-insurer.  That the 
court of appeals would not allow the hospital to use the statute 
to excuse its misconduct to its own benefit was not unusual 
under the circumstances.  Here, by contrast, the application of 
the statute operates to the insurance company's detriment in 
that the policy is read to supply the higher level of coverage 
although no premium was paid for it.  True, Brunson does not 
recover the Meyer remedy, but this occurs not because of any 
conduct on the part of Progressive, but because the legislature 
effectively supplanted it with Wis. Stat. § 632.32(4m)(d). 
¶22 Appleton Papers is closer to this case, at least to 
the extent that the case applied Wis. Stat. § 631.15(3m) to 
reconcile a conflicting policy term to the requirements of 
statute.  In any event, the statute, by its plain and 
unambiguous language, requires that Progressive's policy be 
enforced against the insurer "as if it conformed" to the new 
statute, that is to say, as if it supplied the higher level of 
UIM coverage. 
¶23 This case is analogous, although not perfectly so, to 
Smith v. National Indemnity Co., 57 Wis. 2d 706, 710, 205 N.W.2d 
365 (1973).  In Smith, an insurer issued a policy providing 
$100,000 per person and $300,000 per accident to the named 
insured and $10,000 per person and $20,000 per accident to 
No. 
98-3002  & 98-3300 
 
 
12
renters of the insured's vehicles.  However, the omnibus 
coverage statute, Wis. Stat. § 204.30(3) (1969), required that 
automobile liability policies include a provision that the 
insured's coverage would apply to any other drivers.  Id.  Thus, 
although the policy provided only $10,000 coverage to renters, 
state statute required it to provide $100,000, the same level of 
coverage provided to the named insured.  The court concluded: 
 
Contrary to its written terms, the policy by 
operation of law must be deemed to afford the renters 
protection to the extent of the higher limits.  This 
view is not remaking the policy.  We are aware the 
parties were not mistaken when they wrote the policy 
and it was written as they intended, but [the insurer] 
should know or be chargeable with knowledge of the 
effect of the omnibus coverage statute and that it 
cannot issue a policy in conflict therewith.  The 
terms required by the statute and which were left out 
of the policy must be read in although the increased 
liability is not reflected in the premium. 
Id. at 714 (citations omitted). 
¶24 We reach a similar conclusion here.  Brunson and 
Progressive contracted for $25,000 of UIM insurance, and Brunson 
paid a premium for that amount of coverage.  However, Wis. Stat. 
§ 632.32(4m)(d), in effect at the time Brunson purchased his 
policy, required UIM coverage of at least $50,000.  By operation 
of law, the higher level of coverage is "read in," even though 
it was not reflected in the premium paid.  At this level of 
coverage, the policy is not illusory, and the remedy in Meyer is 
not applicable. 
¶25 At either $25,000 or $50,000, Brunson's UIM coverage 
limits were less than Ward's $100,000 liability policy limits.  
No. 
98-3002  & 98-3300 
 
 
13
Progressive's policy defined an underinsured motor vehicle as a 
vehicle insured for less than the UIM coverage limits in 
Progressive's policy.  Since Ward's liability limits exceeded 
Brunson's UIM coverage limits, Ward was not an underinsured 
motorist under the policy.  Therefore, UIM benefits were not 
recoverable, and Progressive was properly dismissed from this 
action. 
IV 
¶26 Although we agree with that portion of the circuit 
court's order which dismissed Progressive from this case, we do 
not agree with the award of costs and attorney's fees for the 
filing of a frivolous motion for reconsideration under Wis. 
Stat. § 814.025(3)(b).4  A finding of frivolousness is based upon 
an objective standard: whether the attorney knew or should have 
known that the position taken was frivolous, as determined by 
what a reasonable attorney would have or should have known under 
the same or similar circumstances.  Sommer v. Carr, 99 Wis. 2d 
789, 799, 299 N.W.2d 856 (1981).   
¶27 The inquiry into whether a claim is frivolous involves 
a mixed question of fact and law.  Stern v. Thompson & Coates, 
Ltd., 185 Wis. 2d 220, 241, 517 N.W.2d 658 (1994).  The 
                     
4 Wisconsin Statute § 814.025(3)(b) states that in order to 
find an action, special proceeding, counterclaim, defense or 
cross complaint to be frivolous, the court must find that "[t]he 
party or the party's attorney knew, or should have known, that 
the action, special proceeding, counterclaim, defense or cross 
complaint was without any reasonable basis in law or equity and 
could not be supported by a good faith argument for an 
extension, modification or reversal of existing law."  
No. 
98-3002  & 98-3300 
 
 
14
determination of "what was known or should have been known" is a 
question of fact that is not disturbed "unless [it is] against 
the great weight and clear preponderance of the evidence," in 
other words, clearly erroneous.  Id.  However, "the ultimate 
conclusion about whether what was known or should have been 
known supports a finding of frivolousness" is a question of law, 
which we review independently of the circuit court.  Id.   
¶28 From the outset we note that frivolous claims are an 
especially delicate area of the law.  Radlein v. Indus. Fire & 
Cas. Ins. Co., 117 Wis. 2d 605, 613, 345 N.W.2d 874 (1984).  A 
claim, action, or defense is frivolous if it was brought without 
any reasonable basis in law or equity.  Stern, 185 Wis. 2d at 
235.  We resolve any doubts against a finding of frivolousness. 
 Id.   
¶29 Here, the circuit court found Brunson's motion for 
reconsideration to be frivolous.  The motion centered on the 
issue of the reformation of the insurance policy.  Yet, the 
issues of the applicability of the Meyer remedy after the 
enactment of Wis. Stat. § 632.32(4m)(d), and whether reformation 
of the policy to reflect the statutorily required level of UIM 
coverage would avoid the illusory contract problem, were 
sufficiently in doubt for this court to accept the court of 
appeals' certification in this case. Although in the end 
Brunson's arguments do not carry the day, they were not wholly 
lacking in reasonable basis.  Accordingly, we conclude that the 
motion for reconsideration was not frivolous, and therefore 
No. 
98-3002  & 98-3300 
 
 
15
reverse the circuit court's award of costs and attorney's fees 
against Brunson. 
V 
¶30 In 
sum, 
we 
conclude 
that 
the 
circuit 
court's 
reformation of the UIM policy to provide $50,000 in UIM coverage 
was proper pursuant to the "conformance to law" clause in the 
policy 
and 
Wis. 
Stat. 
§§ 632.32(4m)(d) 
and 
631.15(3m).  
Accordingly, the policy is not illusory, and Brunson is not 
entitled to the Meyer remedy.  Furthermore, because Ward's 
$100,000 
liability 
limits 
exceeded Brunson's 
UIM coverage 
limits, Ward was not an underinsured motorist as defined in the 
policy, and Brunson is not entitled to UIM benefits.  Therefore, 
we affirm the circuit court's dismissal of Progressive from this 
action.  However, because we conclude that Brunson's motion for 
reconsideration was not frivolous, we reverse the circuit 
court's award of costs and attorney's fees against Brunson. 
By the Court.—The order of the Waukesha County Circuit 
Court is affirmed in part and reversed in part. 
 
 
 
 
 
 
98-3002.awb 
 
1 
¶31 ANN WALSH BRADLEY, J. (dissenting).   
 
"against the insurer" 
 
What happened to those words?  The majority opinion in essence 
rewrites Wis. Stat. § 631.15(3m) and deletes those words.  The 
end result: the insurance company wins and the policyholder, who 
was sold illegal illusory coverage, inevitably loses.   
 
¶32 How can this happen?  Not easily.  To reach this 
conclusion the majority must ignore the plain meaning of the 
statute, delete the problematic phrase "against the insurer," 
discard the stated clear and specific legislative intent, and 
misconstrue case law interpreting the statute.  Because I 
disagree with this approach and believe that the majority's 
conclusion effectively transforms the insurance code into a 
safety net for those insurers who issue illegal policies, I 
respectfully dissent.   
¶33 The majority opinion rests to a large degree on its 
misreading and misapplication of Wis. Stat. § 631.15.  It 
apparently reads that statute to require a policy to conform to 
the insurance code in any case where the policy violates a state 
statute or rule.  However, the statute does not command 
conformance to the statute in every case where there is a 
conflict between an insurance policy and a statute.  Section 
631.15(3m), by its plain language, requires conformance of the 
policy and enforcement of the statute only "against the 
insurer": 
98-3002.awb 
 
2 
 
(3m) Enforcement of statute and rule requirements.  A 
policy that violates a statute or rule is enforceable 
against the insurer as if it conformed to the statute 
or rule. 
Wis. Stat. § 631.15(3m) (emphasis added).   
¶34 The statutory language signifies that conformance of 
policies to the statutes under § 631.15(3m) is not a two-way 
street.  The benefits of § 631.15(3m) are to flow in one 
direction only——in the direction of the insured.  If an insurer 
issues a policy inconsistent with the Wisconsin Statutes, it 
cannot seek enforcement of the statute of which it was in 
violation for its own benefit.  However, an insured may seek 
enforcement of a statute where the policy has been issued in 
violation of the statute to the insured's detriment.   
¶35 While this is made clear from the express language of 
the statute, legislative statements of intent remove all doubt 
as to the intended effects of § 631.15.  The legislature 
explained the effects of the statute as follows: 
 
First, insured persons should always be able to 
enforce rights given them under the contract as 
issued . . . . 
 
Second, contracts issued with terms deviating in 
favor of the insurer from those prescribed by a 
specific statute should be, in effect, reformed to 
accord with the statute and then be enforced against 
the insurer.  This is standard common law doctrine.  
Comment to § 41, ch. 375, Laws of 1975, Wis. Stat. Ann. § 631.15 
(West 1995). 
¶36 Today's majority contravenes not only the language of 
the statute, but also the express intent of the legislature.  
98-3002.awb 
 
3 
The majority does not enforce the statute "against the insurer" 
in this case, but against the insured.  If the statutory 
language were followed and the intent of the legislature 
effectuated, Progressive would be obligated to satisfy Brunson's 
reasonable expectations and would be liable for the $25,000 of 
illusory coverage it issued under Meyer v. Classified Insurance 
Co., 192 Wis. 2d 463, 531 N.W.2d 416 (Ct. App. 1995).   
¶37 There is no question that unless the policy is 
reformed to comply with § 632.32(4m)(d) the UIM endorsement 
issued by Progressive is entirely worthless.  It has been 
established that it is impossible to recover in any circumstance 
under a UIM endorsement providing $25,000 of coverage in 
Wisconsin.  Hoglund v. Secura Ins., 176 Wis. 2d 265, 270-71, 500 
N.W.2d 354 (Ct. App. 1993).  As the court of appeals correctly 
explained in Meyer and Hoglund such an endorsement is wholly 
illusory and contrary to public policy.   
¶38 To rectify the wrong committed upon Wisconsin insureds 
by the issuance of such policies, the court of appeals crafted 
the remedy that is at the center of this case.  In Meyer, the 
court explained that an insurer issuing such an illusory policy 
was required to compensate the insured for damages exceeding the 
at-fault driver's liability limits up to the $25,000 limit of 
UIM coverage purchased by the insured.  Meyer, 192 Wis. 2d at 
469.  Thus, Brunson would be entitled to have his reasonable 
expectations fulfilled.  Progressive would be liable for the 
full amount of the $25,000 of worthless UIM coverage it issued. 
 Today's majority lets Progressive off this hook.  
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¶39 The majority curiously asserts that the application of 
the statute actually operates to the insurer's detriment in this 
case because operation of § 631.15(3m) results in higher 
coverage limits.  In another case, higher coverage limits might 
operate against the interest of insurer.  However, this is not 
such a case.   
¶40 In this case, higher coverage limits operate to the 
benefit of the insurer by relieving the insurer of its liability 
and allowing the insurer to hide behind the very statute which 
it violated.  By conveniently ignoring that the benefits of 
statutory conformance are always to inure to the benefit of the 
insured, the majority has effectively read the words "against 
the insurer" out of § 631.15(3m) and has flouted the legislative 
intent.  
¶41 Its misreading of § 631.15(3m) has also caused the 
majority to misconstrue the case law interpreting the provision. 
 The majority opinion discusses court of appeals decisions in 
Appleton Papers, Inc. v. Home Indemnity Co., 2000 WI App 104, 
235 
Wis. 2d 
39, 
612 
N.W.2d 
760, 
and 
Wisconsin 
Patients 
Compensation Fund v. St. Mary's Hospital of Milwaukee, 209 
Wis. 2d 17, 561 N.W.2d 797 (Ct. App. 1997), and concludes that 
they reach "conflicting results," because one conforms an errant 
policy to the statutes while the other does not.  Because the 
majority fails to acknowledge that Wis. Stat. § 631.15(3m) 
requires enforcement only "against the insurer," it fails to see 
that the results of the two decisions, unlike the result of its 
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5 
own decision, are entirely consistent with the language of the 
statute and the legislative purpose.   
¶42 In Appleton Papers the court of appeals required 
statutory conformance over the insurer's objections, where the 
insured sought enforcement of the statutory provisions to avoid 
an arbitration clause included in the policy by the insurer in 
contravention of the statutes.  2000 WI App 104, ¶42.  In doing 
so, the court of appeals simply followed the legislative mandate 
reforming terms of a policy deviating in favor of the insurer to 
comply with the statute and then enforcing it "against the 
insurer."  In St. Mary's the court of appeals read § 631.15(3m) 
to prevent an insurer from invoking that provision to bring a 
policy into conformance with the statutes for its own benefit.  
209 Wis. 2d at 35.  In reaching its conclusion, the court of 
appeals correctly concluded that § 631.15 is intended to operate 
for the benefit of the insured and not to the benefit of the 
insurer.  Id.   
¶43 Finally, I note that the majority also rests its 
decision on the "conformance to law" clause contained in the 
policy.  While we have enforced such provisions in the past, I 
have yet to find a case where we have enforced such a provision 
in a manner that allows an insurer to avoid the consequences of 
issuing an illusory and illegal policy.  The facts before us do 
not suggest that we should begin to do so with this case.  
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6 
¶44 Wisconsin courts had established that UIM coverage of 
$25,000 was illusory as far back as 1989.5  On July 15, 1995, the 
legislature amended the statutes to require an insurer to issue 
minimum UIM coverage of $50,000.  Yet, in November 1995, six 
years after the courts identified UIM coverage of $25,000 as 
illusory, and well after the statutory change was effective, 
Progressive sold Brunson an illegal six-month $25,000 UIM 
policy.   
¶45 Brunson was severely 
and 
permanently 
injured in 
January 1996.  It was not until June of 1996, after the accident 
and even after the policy had already expired, that Progressive 
eventually notified Brunson that it was of the opinion that his 
former policy actually provided him with $50,000 in coverage.  
At no time while the policy was in effect did Progressive ever 
attempt to advise Brunson of a change in his $25,000 policy 
limits.  Finally, two years later, in July 1998, while 
acknowledging that it had erroneously sold a $25,000 UIM policy 
to Brunson, Progressive requested that the trial court reform 
the policy to provide for $50,000 in coverage.   
¶46 Public policy requires that we not allow insurers to 
accept the premium for a policy that is illusory as written and 
then fall back on the "conformance to law" clause of their 
policy when the deceptive nature of the policy they have drafted 
comes to light.  Doing so transforms the insurance code into a 
                     
5 See Wood v. American Family Mut. Ins. Co., 148 Wis. 2d 
639, 653, 436 N.W.2d 594 (1989); Kaun v. Industrial Fire & Cas. 
 Ins. Co., 148 Wis. 2d 662, 670, 436 N.W.2d 321 (1989).   
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7 
safety net for insurers who issue illegal policies.  The 
majority's decision provides no consequences for insurers that 
draft policies in advantageous contravention of the statutes.   
¶47 Insurers now know that the conformance to law clause 
will remedy their statutory violation and save them from a 
judicially created penalty, such as the Meyer remedy, crafted to 
prevent such illegal policies.  Thus, today's majority opinion 
not only fails to provide consequences for issuing a policy that 
violates the law, but instead confers a benefit for doing so.  
In arriving at this anomalous conclusion, the majority ignores 
the mandate of § 631.15(3m): it is only to be enforced "against 
the insured." 
¶48 I am authorized to state that Chief Justice SHIRLEY S. 
ABRAHAMSON joins this dissent. 
 
 
 
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