Court Opinion

ID: 9674407
Source: CourtListenerOpinion
Date Created: 2023-08-24 04:28:15.891661+00
Date Added: 2024-06-11T18:16:27.487468
License: Public Domain

ANN WALSH BRADLEY, J.
¶ 61. {dissenting). The majority holds here that "no insured would reasonably expect liability coverage for damages arising out of an act of sexual assault premised upon intentional sexual contact." Majority op., ¶ 4. The cases that the majority cites as informing this holding are also cases involving intentional acts of sexual assault. Id.; see Jessica M.F. v. Liberty Mut. Fire Ins. Co., 209 Wis. 2d 42, 561 N.W.2d 787 (Ct. App. 1997); Taryn E.F. v. Joshua M.C., 178 Wis. 2d 719, 505 N.W.2d 418 (Ct. App. 1993).
¶ 62. I write separately to emphasize that the majority holding today is limited to cases involving the intentional act of sexual assault. As the court of appeals in Jessica M.F. explained, cases involving sexual assault differ from cases involving harms from other sorts of intentional acts. 209 Wis. 2d at 58.1 The majority follows Jessica M.F. in precluding separate coverage only in cases involving intentional sexual assault.
¶ 63. I also write separately because of a problem in the majority's interpretation of the severability clause and the relation of that clause to the intentional *362acts exclusion.2 The majority's interpretation of the severability clause contradicts its express language and our precedent, which require that coverage apply "separately to each insured." (Emphasis added.) As a result of its erroneous interpretation, the majority concludes that the intentional acts exclusion trumps the sever-ability clause.
¶ 64. I conclude instead that the express language of the severability clause applying the policies separately to each insured directly contradicts the intentional acts exclusion. This contradiction renders the Wangards' policy contextually ambiguous. Because we construe ambiguous insurance contracts in favor of the insured, Deborah is entitled to coverage. Accordingly, I respectfully dissent.
¶ 65. This case centers on two provisions in the Wangards' insurance policies. One is the intentional acts exclusion:
We do not cover any damages arising out of an act intended by any covered person to cause personal injury ... even if the injury or damages is of a different degree or type than actually intended or expected. An intentional act is one whose consequences could have been foreseen by a reasonable person ....
¶ 66. The majority's analysis focuses on the phrase "any covered person." Because Steven Wangard is a covered person, the intentional acts exclusion applies to his intentional acts. Majority op., ¶ 32. Looking at the *363language of the exclusion in isolation, coverage would not extend to damages arising out of Steven's actions here.
¶ 67. The other provision at issue is the severability clause. It requires that coverage be applied "separately" to each insured:
Coverage applies separately to each covered person. However this provision does not increase the amount of coverage for any one occurrence.
¶ 68. The majority determines that because Steven Wangard is a named insured on each of the Wangards' policies Deborah cannot receive coverage, despite the promise of the severability clause that "[c]overage applies separately to each covered person." Majority op., ¶ 52. It maintains that this case is distinguishable from a more recent decision, Gulmire,3 where the court of appeals determined that a severability clause required coverage despite the presence of an exclusion in the policy. Majority op., ¶¶ 53-54.
I
¶ 69. The majority misinterprets the severability clause. To begin, the language of the severability clause is clear on its face: "Coverage applies separately to each covered person." Deborah is a covered person, and coverage must apply to her separately from each other covered person, including Steven. Applying coverage to Deborah separately from Steven would require that Steven's actions not bear upon Deborah's coverage. Otherwise, coverage is linked, not separate.
¶ 70. The majority seeks to circumvent the express language of the severability clause by arguing *364that even if the Wangards' policies were applied separately, "as if they were distinct contracts, [they] would include Steven Wangard, either explicitly by name or implicitly by status in their Coverage Summary." Majority op., ¶ 47. The argument appears to confuse the notion of separate coverage with the existence of separate contracts. Whether there are separate contracts, each with Steven Wangard as a named insured, tells us nothing about what it means for coverage to be separate. Having a "coverage" summary that includes Steven conflicts with the claim that Deborah's coverage is applied separately from Steven.
¶ 71. More importantly, the majority's argument contradicts the language of the severability clause. How can coverage apply "separately to each insured" when Deborah's coverage is, as the majority requires, inextricably connected to Steven Wangard's coverage?
¶ 72. The majority's interpretation of the sever-ability clause also conflicts with our precedent. In Gulmire v. St. Paul Fire & Marine Insurance Co., the court of appeals examined the relationship between a severability clause and a fellow employee exclusion. 2004 WI App 18, 269 Wis. 2d 501, 674 N.W.2d 629. The severability clause at issue had two parts. The first part stated that coverage applied "to each protected person named in the Introduction as if that protected person was the only one named there . . ." Id., ¶ 24. The second part of the clause had almost identical language to the clause at issue here, stating that coverage was to apply "separately to each other protected person." Id.
¶ 73. The court of appeals focused on the second part of the clause. It determined that "separately" means applying "independently" or "individually." Id., ¶ 28. Accordingly, the court concluded that the party *365causing injury must be "treated in an independent manner such that he is detached from all other protected persons." Id.
¶ 74. The majority seeks to distinguish Gulmire from the present case by focusing on the court of appeals' discussion of the fellow employee exclusion. Majority op., ¶ 55. The problem with the majority's argument is that the court of appeals' discussion of the fellow employee exclusion is independent of its interpretation of the severability clause, and it is the interpretation of the severability clause that is relevant to the present case.
¶ 75. In other words, in Gulmire the court of appeals interpreted language almost identical to the language in the severability clause here to mean that each covered person must be treated independently, "such that [the insured] is detached from all other protected persons." Gulmire, ¶ 28. Treating Deborah as detached from Steven would require providing coverage, regardless of Steven's intentional actions. Basing a coverage decision for Deborah on Steven's actions is incompatible with treating Deborah independently and detached from all other protected persons.
II
¶ 76. The insurance policies in this case have one provision that excludes coverage for Deborah for damages arising out of Steven's intentional acts. The policies also have a different provision requiring that Deborah's coverage must be provided without consideration of Steven. The provisions directly contradict each other.
¶ 77. Insurance provisions cannot be read in isolation. State Farm Mut. Auto. Ins. Co. v. Bailey, 2007 WI 90, ¶ 31, 302 Wis. 2d 409, 734 N.W.2d 386. Rather, the intentional acts exclusion must be read in conjunction with the severability clause.
*366¶ 78. Reading the two provisions here in conjunction, the Wangards' policies are susceptible to more than one reasonable interpretation. An ordinary insured could reasonably interpret the policies here such that (1) the intentional acts exclusion trumps the express language of the severability clause or (2) the severability clause trumps the express language of the intentional acts exclusion. Where provisions in an insurance policy are reasonably susceptible to more than one interpretation, they are contextually ambiguous. Folkman v. Quamme, 2003 WI 116, ¶ 29, 264 Wis. 2d 617, 665 N.W.2d 857.
¶ 79. In Folkman, this court determined that in order to avoid contextual ambiguity, policies "should avoid inconsistent provisions, provisions that build up false expectations, and provisions that produce reasonable alternative meanings." Id., ¶ 31. The policies here failed to follow our admonition.
¶ 80. By misinterpreting the severability clause and failing to apply coverage separately, the majority concludes that the intentional acts exclusion trumps the severability clause. However, when the severability clause is interpreted according to its express language and our precedent, a different conclusion is required.
¶ 81. It is a longstanding principle that courts will interpret policies in favor of the insured (that is, in favor of coverage) where the policy is contextually ambiguous. Id., ¶ 13. Because the policy provisions here are contextually ambiguous, we must construe them in favor of coverage. That is, we must apply the severability clause as worded: coverage applies to Deborah separately from Steven.4
*367¶ 82. In sum, the express language of the sever-ability clause and Wisconsin precedent require that coverage be applied to Deborah independently from Steven, regardless of Steven's intentional acts. The sev-erability clause directly contradicts the intentional acts exclusion, rendering the policies contextually ambiguous. Because we construe contextually ambiguous insurance policies in favor of coverage, Deborah should receive coverage here. Accordingly, I respectfully dissent.
¶ 83. I am authorized to state that Chief Justice SHIRLEY S. ABRAHAMSON and Justice LOUIS B. BUTLER, JR. join this dissent.

 As the majority notes, there are two different insurance policies involved. The language of the relevant portions of the policies is identical. In order to simplify, I refer to the severability clauses and the intentional acts exclusions in the singular.

 Gulmire v. St. Paul Fire & Marine Ins. Co., 2004 WI App 18, 269 Wis. 2d 501, 674 N.W.2d 629.

 This is the approach taken in a number of jurisdictions. See Premier Ins. Co. v. Adams, 632 So. 2d 1054 (Fla. App. 1994); *367West Bend Mut. Ins. Co. v. Salemi, 158 N.E.2d 785 (Ill. App. 1987); Brumley v. Lee, 963 P.2d 1224 (Kansas 1998).