Court Opinion

ID: 9716970
Source: CourtListenerOpinion
Date Created: 2023-08-26 06:55:10.819582+00
Date Added: 2024-06-11T18:23:50.409640
License: Public Domain

DYKMAN, J.
¶ 19 0concurring). So far, this case is about a straw man. His name is "used up." He doesn't have much to do with this case. But, for what it's worth, I agree with the majority that "to 'use up1 the tortfeasor's liability policy limits, the full $50,000 must be expended in total or exhausted completely." Majority at ¶ 14. The majority's opinion convincingly beats this straw man into submission, and I agree that its conclusion as to "used up" is correct.
¶ 20. But that's not what this case is about. Though the case began as a legal malpractice action, once State Farm intervened, it became, for the purpose of this appeal, an action by Degenhardt-Wallace against State Farm, her underinsured motorist coverage car*470rier.1 This appeal is here because Degenhardt-Wallace wants to recover under her UIM coverage, and State Farm is resisting her efforts. The language of Degenhardt-Wallace's policy that State Farm relies on is:
THERE IS NO COVERAGE UNTIL THE LIMITS OF LIABILITY OF ALL BODILY INJURY BONDS AND POLICIES THAT APPLY HAVE BEEN USED UP BY PAYMENT OF JUDGMENTS OR SETTLEMENTS
¶ 21. The crux of the majority opinion is in ¶ 15, where it concludes: "However, nothing in [the exhaustion clause] requires the limits of liability be 'used up' by receiving that amount under the bodily injury liability bond or policy. Indeed, the exhaustion clause makes no reference to the source of the judgment or settlement funds."
¶ 22. This is not true. The source of the judgment or settlement funds must come from applicable bodily injury policies. The disputed sentence is written in the passive voice, but the operative words are: limits of applicable bodily injury policies are used up by payment or settlement. It is undisputed that malpractice insurance is not found in a bodily injury policy. Whether the limits of other policies are used up is irrelevant.
¶ 23. I do not know whether McCoy's bodily injury policy is applicable because I am not sure of the meaning of the word "apply" in the context of *471Degenhardt-Wallace's policy with State Farm. The pertinent dictionary definition of "apply" is: "to have relevance or a valid connection." Merriam Webster's Collegiate dictionary 57 (10th ed. 1993). If the question is whether Degenhardt-Wallace can recover money from McCoy or his insurance carrier, the answer is, No, McCoy's policy does not have relevance or a valid connection; it does not apply. If the question is whether Degenhardt-Wallace could have recovered from McCoy or his insurer had she timely sued, the answer is, Yes, McCoy's policy is applicable.
¶ 24. Though I believe that "No" is the better answer, it is possible that reasonable people could differ as to the meaning of the phrase "that apply." If McCoy's policy is inapplicable because Degenhardt-Wallace can recover nothing from it, the policy does not "apply" and UIM coverage exists. If McCoy's policy applies because Degenhardt-Wallace could have recovered had she timely sued, the limits of McCoy's policy have not been "used up," and UIM coverage does not exist. The disputed phrase is therefore ambiguous because it "is capable of being understood by reasonably well-informed persons in two or more senses." State ex rel. Kalal v. Circuit Court, 2004 WI 58, ¶ 47, 271 Wis. 2d 633, 681 N.W.2d 110 (citation omitted).2 We are therefore to construe the sentence against State Farm. See Folkman v. Quamme, 2003 WI 116, ¶ 13, 264 Wis. 2d *472617, 665 N.W.2d 857 (citation omitted). The result is UIM coverage exists, whether we accept the first meaning or conclude that the sentence is ambiguous.
¶ 25. UIM coverage is designed to be coverage of last resort, but its context and design is limited to the interaction between two or more automobile liability policies. The designers of this coverage never contemplated more than the disputed policy provision provides.
¶ 26. The problem with the majority's analysis is that it never addresses the real issue, which is whether McCoy's bodily injury policy "applies" to this lawsuit. My conclusion is that the best State Farm can show is that the meaning of "that apply" is ambiguous.3 Accordingly, I would construe those words against State Farm, and conclude that the sentence on which it relies does not prevent Degenhardt-Wallace from recovering under her UIM policy. I therefore respectfully concur.

 State Farm Mutual Automobile Insurance Company begins its brief by asserting that Attorney Kalnins has no standing to challenge a contract to which he is neither a party nor a third party beneficiary. The majority does not address this issue. My conclusion is that Kalnin's standing is irrelevant. This is, for the purposes of this appeal, a dispute between Degenhardt-Wallace and State Farm.

 I recognize that an exhaustion clause that omits the words "that apply" is unambiguous. See Danbeck v. American Family Mut. Ins. Co., 2001 WI 91, ¶ 13 n.3, 245 Wis. 2d 186, 629 N.W.2d 150. The omission of those words distinguishes Danbeck. Even without that distinction, the supreme court has recognized that what is unambiguous in one context may be ambiguous in another. Reyes v. Greatway Ins. Co., 227 Wis. 2d 357, 365, 597 N.W.2d 687 (1999).

 State Farm may have other reasons why it believes Degenhardt-Wallace cannot recover under her UIM coverage. I do not find those reasons, if they exist, in State Farm's brief.