Court Opinion

ID: 9676904
Source: CourtListenerOpinion
Date Created: 2023-08-24 05:37:31.909888+00
Date Added: 2024-06-11T18:16:52.293599
License: Public Domain

DYKMAN, P.J.
¶ 25. (concurring). The majority makes a formidable attempt to reconcile: Smith v. Atlantic Mut. Ins. Co., 155 Wis. 2d 808, 456 N.W.2d 597 (1990); Wood v. American Family Mut. Ins. Co., 148 *721Wis. 2d 639, 436 N.W.2d 594 (1989), overruled on other grounds by Matthiesen v. Continental Cas. Co., 193 Wis. 2d 192, 532 N.W.2d 729 (1995); Allstate Ins. Co. v. Gifford, 178 Wis. 2d 341, 504 N.W.2d 370 (Ct. App. 1993); Hoglund v. Secura Ins., 176 Wis. 2d 265, 500 N.W.2d 354 (Ct. App. 1993); and Krech v. Hanson, 164 Wis. 2d 170, 473 N.W.2d 600 (Ct. App. 1991). But the difficulty is that these cases are not reconcilable, with the result being that the case we decide today can only add to the confusion.
¶ 26. Though it is not the oldest case, I conclude that the starting place for underinsured motorist (UIM) issues is Smith. Smith has two virtues. It was decided by the supreme court, and therefore must be followed in any conflict with a court of appeals opinion. See State v. Lossman, 118 Wis. 2d 526, 533-40, 348 N.W.2d 159 (1984). It is also the latest supreme court case to address the issue, and the court of appeals follows the supreme court's practice of relying on the supreme court's latest pronouncement if decisions of that court are inconsistent. See Bruns Volkswagen, Inc. v. DILHR, 110 Wis. 2d 319, 324, 328 N.W.2d 886 (Ct. App. 1982).
¶ 27. Smith is important because it holds that UIM issues are, first of all, a matter of contract. Smith, 155 Wis. 2d at 810. Therefore, the language of the insurance policy in any UIM case is the predominant factor. Smith is also important because it holds that if a vehicle in an accident is unambiguously defined in an insurance policy as not an "underinsured motor vehicle," a court goes no further. Id. at 814.
¶ 28. Smith involved an accident in which the driver at fault carried liability limits of $50,000 and the injured person carried UIM coverage with policy limits of $50,000. Id. at 809-10. Thus, Smith did not consider *722issues which arise when the tortfeasor has the lowest permitted Wisconsin liability limits, $25,000, and the injured person is covered by a policy with a UIM policy limit of $25,000. That case is Hoglund. In Hoglund, we acknowledged that the UIM clause in the relevant insurance policy was unambiguous, and that following Smith, the tortfeasor's vehicle was not underinsured. Hoglund, 176 Wis. 2d at 269.
¶ 29. But the injured person in Hoglund argued that the policy's definition of underinsured motor vehicle, read in conjunction with WlS. Stat. § 344.33, the statute which requires auto policies issued in Wisconsin to have at least $25,000 liability coverage, resulted in illusory UIM coverage. Id. We agreed with that argument and concluded that the trial court should reform the policy to provide for whatever coverage the injured person reasonably expected. See id. at 272. That is where the trouble started.
¶ 30. First, contractual language is ambiguous if it is susceptible to more than one reasonable interpretation. See id. at 268. By concluding that a UIM provision in an auto policy is unambiguous, we acknowledge that reasonable persons would not differ as to its meaning, and if that meaning excludes UIM coverage, no-one could have a reasonable expectation that coverage existed. Thus, our conclusion in Hoglund that the auto policy unambiguously precluded UIM coverage but the injured person had a reasonable expectation of coverage is illogical. It is an unreachable conclusion. It is the equivalent of an injured person asserting: "Had I read the policy, I would have known that coverage for underinsured motorists is often excluded, but I didn't read the policy, I expected more, and therefore I am entitled to more."
*723¶ 31. Second, our conclusion in Hoglund was prefaced on the assumption that the injured person could never recover under the auto policy's UIM coverage. Id. at 271. That assumption is untrue. In Hoglund, we considered accidents involving auto policies written in Wisconsin and the possibility of an accident occurring in Wisconsin involving a tortfeasor minimally insured under the law of another state. I agree with Hoglund's conclusion that where all participants in an accident in Wisconsin are insured under policies written in Wisconsin, and the injured person's UIM coverage is $25,000, the injured person can never recover under his or her UIM coverage.1 But not all states mandate minimum auto policy liability limits of $25,000. For instance, Alabama's liability limit is $20,000, see Ala. Code § 32-7-6.1(b)(2) (2000), Arizona's limit is $15,000, see Ariz. Rev. Stat. Ann. § 28 — 4009(A)(2)(a) (West 2000), Connecticut's limit is $20,000, see CONN. Gen. Stat. Ann. § 14-112(a) (West 2000), Florida's limit is $10,000, see Fla. Stat. Ann. § 324.021(7) (West 2000), and Illinois' and Iowa's limit is $20,000, see 625 III. Comp. Stat. Ann. 5/7 — 317(b)(3) (West 1999); IOWA Code Ann. § 321A.21(2)(b) (West 2000). In all, eighteen states require minimum liability coverage of less than Wisconsin's $25,000 minimum limit. It is certainly possible that a Wisconsin motorist carrying $25,000 of UIM coverage would be involved in an accident in Wisconsin or elsewhere, where the tortfeasor was from one of these eighteen states, and carried liability insurance in the minimum required amount. The possibility of this occurring while travel-ling in one of these eighteen states is significant, and *724cannot be ignored in considering whether UIM coverage is illusory.
¶ 32. The Hoglund court was faced with this problem. Its solution was to examine the injured party's insurance policy and conclude that it defined an uninsured motor vehicle by comparing the liability limits of the tortfeasor's vehicle with the minimum required under Wisconsin law. See Hoglund, 176 Wis. 2d at 271. The court concluded: "This language renders an out-of-state vehicle with a liability policy limit less than $25,000 an uninsured vehicle. Therefore, [the injured party] cannot recover under the UIM provisions if the tortfeasor is an insured or uninsured out-of-state driver." Id.
¶ 33. Our conclusion in Hoglund is logically flawed. A particular policy can define both underin-sured and «reinsured motor vehicles in a myriad of ways. Because a policy defines an uninsured motor vehicle in a way that includes motor vehicles with some liability coverage does not mean that the UIM coverage must follow suit. It makes no sense to look to the definition of an «reinsured motor vehicle when looking at the coverage for rere&erinsured motor vehicles. The UIM coverage in the policy under consideration in Hoglund defined an underinsured motor vehicle as a vehicle "to which a bodily injury bond or policy applies at the time of the accident; however, its limit for bodily injury is less than the limit of liability for this coverage." That definition fits hand-in-glove the situation where an out-of-state tortfeasor with a liability policy limit of $10,000 injures a Wisconsin motorist with $25,000 of UIM coverage.
¶ 34. We could have concluded in Hoglund that the definitions of «reinsured and rere&erinsured vehicles in the policy led to a conclusion that the tortfeasor was *725both an uninsured and an underinsured driver, thus necessitating the conclusion that the injured person was entitled to coverage under both sections of his policy. Though an unusual conclusion, it is required by the policy's language, and we have followed policy language where stranger conclusions resulted. In Engstrom v. MSI Ins. Co., 198 Wis. 2d 195, 203, 542 N.W.2d 481 (Ct. App. 1995), we recognized that where a tortfeasor was covered by two policies with different liability limits, the injured person was entitled to UIM coverage even though only one of the tortfeasor's policies had liability limits less than that of the injured person's UIM coverage. We acknowledged that our decision meant that had the tortfeasor been covered only by the policy with liability limits greater than the injured person's UIM coverage, the injured person could not have recovered UIM benefits. See id. Instead, because the tortfeasor had an additional policy with liability limits less than the UIM coverage, the injured person could recover UIM benefits. See id. We concluded that such a result was "required by the language of the policy." Id.
¶ 35. Thus, when we concluded in Hoglund that the injured party's UIM coverage was illusory, what we were really holding was that the motorist was not getting much for his premium dollar, and that we would remedy that problem. We refused, however, to consider that despite UIM coverage's usual inapplicability, there was no premium for the coverage. See Hoglund, 176 Wis. 2d at 271 n.2. I conclude that Hoglund violates Smith's holding that where UIM coverage unambiguously excludes coverage, a court is to go no further. Lossman tells us the result is that Hoglund is without precedential value. In any event, Hoglund applies only to insurance policies with language simi*726lar to the policy in Hoglund. It cannot be applied where policy language is different.
¶ 36. Gifford concluded that Hoglund governed its decision. Gifford, 178 Wis. 2d at 349. Accordingly, Gifford suffers from the same logical fault as Hoglund, and is also at variance with Smith. It too is without precedential value, for the same reason Hoglund is without precedential value.
¶ 37. Wood is of lesser significance here because it involved reducing clauses in auto policies, an area we do not reach here. Wood, 148 Wis. 2d at 650. And Wood involved an ambiguous provision in an auto policy, another fact we do not face here. Id. at 652. Wood, however, does discuss the nature of UIM coverage. When reducing clauses are used in connection with UIM coverage, even if an unambiguous definition of "underinsured motorist" is used in an auto policy, the concept of policy limits does not fit the concept of UIM coverage with reducing clauses. One cannot ever recover the full policy limits of UIM coverage in an auto policy where some reducing clauses exist. Yet reducing clauses, like deductible provisions in property damage sections of auto policies, permit a motorist to lessen the cost of the policy by taking on some of the risk. They do so by making UIM coverage "last chance" coverage. Because Wood concludes that a reducing clause in the UIM provision of an auto policy is valid, id. at 651, this leaves open the possibility of drafting a policy which unambiguously contains a reducing clause yet still retains the concept of policy limits while accurately informing the motorist of the coverage purchased. And Wood, decided in 1989, must be read in light of statutory changes made by 1995 Wis. Act 21.
¶ 38. I therefore conclude, as does the majority, that because each of the Taylors’ American Family pol*727icies contained UIM coverage which was not greater than Hermanson's liability coverage limit, Hermanson was not an underinsured motorist, and the Taylors cannot recover under the UIM provision of their policies. In dicta, the majority concludes that had Hermanson had $25,000 of liability coverage and had both of the Taylors' policies had UIM coverage of $25,000, the Taylors could have recovered under their UIM coverages. I do not agree with this dicta, for the reasons I have previously given. The majority did not need to discuss the reducing clauses in the Taylors' policies, nor do I. And I need not discuss whether the Taylors are entitled to additional accidental death benefits, because I agree with the majority's discussion of that issue.
¶ 39. Because I agree with the majority's conclusion, but disagree with some of its reasoning, I concur.

 This is true if, as usual in UIM policies, the policy defines an underinsured motorist as a motorist whose liability limit is less than the limit of the UIM coverage.