Court Opinion

ID: 9684576
Source: CourtListenerOpinion
Date Created: 2023-08-24 14:02:17.776321+00
Date Added: 2024-06-11T18:17:56.928109
License: Public Domain

LOUIS B. BUTLER, JR., J.
¶ 101. (concurring in part, dissenting in part). I concur with the majority's conclusions that Acuity violated the notice provisions of Wis. Stat. § 632.32(4m) when it failed to provide notice of the availability of UIM coverage, and that the Stones' recovery for that violation is potentially set by the stipulation they entered into with Acuity. See majority op., ¶¶ 2-3, 77-78. Consequently, I join that part of the opinion.
¶ 102. However, I dissent from that part of the majority opinion establishing the remedy for other cases in which Wis. Stat. § 632.32(4m) is violated but where, unlike this case, a stipulation does not set the remedy for the parties. In its analysis, the majority goes *601beyond the facts and issues of the present case. Not only does the majority address questions which need not be resolved in this case, but I also disagree with the answer the majority chose: the creation of a new rule that when an insurer fails to provide notice of the availability of UIM coverage in an umbrella insurance coverage policy, the remedy is to reform the policy to automatically read into the policy primary coverage amounts of $50,000 per person and $100,000 per accident. See id., ¶ 64.
¶ 103. The majority fails to recognize that an insurance policy "that violates a statute or rule is enforceable against the insurer as if it conformed to the statute or rule." Rebernick v. Wausau Gen. Ins. Co., 2006 WI 27, ¶ 57, 289 Wis. 2d 324, 711 N.W.2d 621 (quoting Wis. Stat. § 631.15(3m)). Thus, in my view, a determination of the appropriate reformation remedy for Wis. Stat. § 632.32(4m) violations generally requires a prerequisite factual determination of whether an insured would have purchased a UIM policy in the first place, and at what amount. Moreover, capping available umbrella coverage at the levels established in Wis. Stat. § 632.32(4m) (d) conflicts with the meaning and purpose of "umbrella" insurance policies, which set the minimum coverage at $1,000,000. Wis. Admin. Code § INS 6.77(3)(c)(June 2007).
I
¶ 104. Wisconsin Stat. § 632.32(4m) clearly provides that:
An insurer writing policies that insure with respect to a motor vehicle registered or principally garaged in this state against loss resulting from liability imposed by law for bodily injury or death suffered by a person *602arising out of the ownership, maintenance or use of a motor vehicle shall provide to one insured ... written notice of the availability of underinsured motorist coverage, including a brief description of the coverage. . ..
Wis. Stat. § 632.32(4m)(a)l. (emphasis added). In Rebernick, 289 Wis. 2d 324, ¶¶ 22-23, we explained that notice of the availability of UIM coverage must be provided under umbrella policies in addition to the notice provided with underlying primary policies. In Rebernick, this court did not determine the appropriate remedy for violations of § 632.32(4m) because the majority concluded that the insurer had given the statutorily required notice. Id., ¶¶ 34-37.
¶ 105. In the present case, because'the required notice was clearly not given, the issue of determining the appropriate remedy is back on the table. However, the remedy in this case may have been already predetermined by the parties1 stipulation. The majority acknowledges that the stipulation between the parties in this case reflects a clear and explicit agreement by Acuity to pay the Stones $500,000 in the event that insurance coverage from Acuity was found on appeal to exist. Majority op., ¶¶ 3, 66.
¶ 106. Our conclusion that Acuity failed to give statutorily required notice is only the first step in determining whether insurance coverage exists in this case. Under Wis. Stat. § 631.15(3m), an insurance policy "that violates a statute or rule is enforceable against the insurer as if it conformed to the statute or rule." Thus, § 631.15(3m) provides, in effect, for reformation of an insurance policy that violates a statute. Yet, we do not know if the Stones would have purchased an umbrella policy had they known of its availability, and at what amount. Lack of such notice will not always translate into payment of insurance proceeds. In short, *603the remedy question in this case involves factual issues that cannot be resolved based on the current record.
¶ 107. If, on remand, the circuit court concludes that the Stones would have purchased an umbrella policy if they had been provided with the requisite notice, the terms of the unambiguous stipulation would then be met in this case, triggering Acuity's responsibility to compensate the Stones in the amount of $500,000 and resolving the issue of the appropriate remedy.
II
¶ 108. Even if this case did not involve such a stipulation and it were necessary to determine a different remedy for an insurer's failure to provide notice of the availability of UIM coverage under an umbrella policy, I strongly disagree with the majority's proposed solution of reading into an umbrella policy a level of coverage in the amount of $50,000 per person and $100,000 per accident, which is well below the minimum coverage provided for an umbrella policy.
¶ 109. In addition to deciding an issue not squarely before it, this judicially constructed remedy is flawed for two other reasons: it fails to take into account the necessity of remanding such cases for required factual determinations, and the amount established for violating notice provisions for UIM in umbrella insurance policies contravenes the purpose and nature of umbrella insurance policies.
A
¶ 110. Acuity's failure to comply with the requirements of Wis. Stat. § 632.32(4m) involves the interpretation and application of a statute to undisputed facts, *604which is a question of law subject to independent review. Phelps v. Physicians Ins. Co., 2005 WI 85, ¶ 25, 282 Wis. 2d 69, 698 N.W.2d 643. Wisconsin Stat. § 631.15 (3m), which provides that an insurance policy "that violates a statute or rule is enforceable against the insurer as if it conformed to the statute or rule," authorizes reformation of insurance policies which are not in compliance with statutory requirements. See also Brunson v. Ward, 2001 WI 89, ¶ 16, 245 Wis. 2d 163, 629 N.W.2d 140.
¶ 111. However, determination of the appropriate reformation is not a straightforward determination which may be made absent further factual inquiries. A recitation of Wis. Stat. § 632.15(3m) does not answer the question of whether, had Acuity provided the required notice, the Stones would have purchased UIM coverage in their umbrella policy and at what amount.
¶ 112. In this case, the majority concedes that whether the Stones would have purchased UIM coverage remains a genuine issue of fact. Majority op., ¶ 40. Findings of whether a particular policy would have been purchased, and at what amount, are questions of fact reserved for the circuit court. Should the circuit court find, on remand, that coverage exists, then the terms of the stipulation clearly govern.
¶ 113. Even if there were no such stipulation in this case, we would exceed the scope of our authority were we to determine the amount of coverage the Stones' UIM policy should provide before first remanding the case for the factual determination of whether the Stones would have purchased such a policy in the first place, as well as how much insurance they would have purchased. Any remedy beyond that clearly provided by the unambiguous stipulation between the parties is a determination involving factual issues that *605is within the province of the circuit court, not this court. I therefore consider the majority's consideration of this issue to be unnecessary and beyond the scope of this court's authority.
B
¶ 114. Finally, even if it were appropriate for us to determine the appropriate default amount of coverage for future cases involving Wis. Stat. § 632.32(4m) violations, I would nevertheless reject the default remedy proposed by the majority opinion for failure to offer UIM coverage with an umbrella policy. Setting the remedy for failure to offer UIM coverage for an umbrella policy at a primary insurance policy default coverage level of $50,000 per person and $100,000 per accident does not make sense in light of the underlying nature, purpose, and policy mínimums of umbrella policies.
¶ 115. Unlike primary insurance policies, umbrella policies are meant to cover large expenses which may vastly exceed those covered by primary insurance. The coverage provided by umbrella policies " 'gives a financial security, as well as peace of mind, to the individual purchasing such coverage who is hopeful that he will never be involved in any substantial claim or lawsuit, but, if he is, is desirous of not losing the security it may have taken a lifetime to acquire.'" Oelhafen v. Tower Ins. Co., 171 Wis. 2d 532, 538-39, 492 N.W.2d 321 (Ct. App. 1992)(quoting 8A J.A. Appleman & J. Appleman, Insurance Law & Practice, § 4909.85 at 452-53 (rev. ed. 1981)).
¶ 116. Setting the levels established in Wis. Stat. § 632.32(4m)(d) as the appropriate level of coverage for violations which fail to give notice of the availability of *606umbrella policies is in direct contravention of the clear intent of the Wisconsin Insurance Commissioner to set the minimum coverage for umbrella policies at $1,000,000. Wisconsin Admin. Code § INS 6.77(3)(c) defines an umbrella liability policy as "an insurance contract providing at least $1,000,000 of liability coverage per person or per occurrence in excess of certain required underlying liability insurance coverage or a specified amount of self-insured retention."
¶ 117. It is well established that although this court may not
ex post facto compel the performance of conditions in a contract which the parties did not contemplate or bargain for, coverages omitted from an insurance contract may nevertheless be compelled and enforced as though a part thereof where the inclusion of such coverage is required by a properly enacted statute. In such case a policy of insurance omitting a required coverage will be enforced as though it had been written in accordance with the legislative prescription.
Amidzich v. Charter Oak Fire Ins. Co., 44 Wis. 2d 45, 53, 170 N.W.2d 813 (1969)(citing 44 C.J.S. Insurance, § 302 at 1215-16; Zippel v. Country Gardens, Inc., 262 Wis. 2d 567, 55 N.W.2d 903 (1952); Sandstrom v. Estate of Clausen, 258 Wis. 534, 46 N.W.2d 831 (1951)). In this case, the applicable legislative prescription includes both the Wis. Stat. § 632.32(4m) requirement that coverage be offered and the clear language of Wis. Admin. Code § INS 6.77(3)(c) setting the minimum amount of umbrella coverage at $1,000,000. Consequently, the omission of required umbrella coverage should be enforced as though the coverage in the amount of at least $1,000,000 had been offered. In the absence of any legal authority requiring or explicitly authorizing this court to lower the umbrella policy *607coverage levels in favor of a new judicially created statutory violation remedy, the majority goes too far and fails to accommodate the difference between umbrella insurance policies and primary insurance policies.
¶ 118. In Rebernick, this court stated that the central purpose of Wis. Stat. § 632.32(4m) is to ensure that insureds are informed both of the availability of UIM coverage, as well as the nature and amount of coverage. See Rebernick, 289 Wis. 2d 324, ¶ 30. The contradictory result of the majority opinion would be to require that insureds be told that they could receive $1,000,000 UIM umbrella coverage, but then be given only a fraction of that upon a statutory or rule violation.
¶ 119. As such, if a policy were reformed to provide the kind of coverage that would have been available had the Stones opted for UIM umbrella coverage, that amount would more appropriately be set at $1,000,000 (or more, if upon remand the Stones could establish they would have purchased more coverage), not the lower statutory minimum set by § 632.32(4m)(d) for primary policies.
HH HH hH
¶ 120. In conclusion, the stipulation between the parties in this case makes the majority's analysis of other potential remedies for Wis. Stat. § 632.32(4m)(d) violations unnecessary. What is necessary is a remand to determine whether the stipulation should take effect. Even if this case were not resolved through the application of the stipulation, however, I still disagree with the majority's new rule adopting the statutory minimum coverage for primary insurance policies as the required statutory minimum for umbrella insurance *608policies as well, where there is a violation of § 632.32(4m)(d), particularly where the finder of fact has not determined whether and at what amount umbrella UIM coverage would have even been purchased, and in light of the minimum umbrella insurance amount of $1,000,000. I therefore respectfully concur in part and dissent in part.