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Pierce v. Mid-Century Insurance Co.

Court of Appeals of Wisconsin, District IV

September 29, 2016

Jessica Pierce, Brenden Pepper, a minor by his Guardian ad Litem, James P. Scoptur and Zachary Pierce, a minor by his Guardian ad Litem, James P. Scoptur, Plaintiffs-Appellants,
v.
Mid-Century Insurance Company, Defendant-Respondent, Amanda Swedlund, Defendant, Mid-Century Insurance Company, Third-Party Plaintiff,
v.
Briliey Swedlund, Mason Swedlund, Christopher Swedlund, Wendy Burris, George Burris, Wilson Mutual Insurance Company and Sylvia Mathews Burwell, Third-Party Defendants. JOANN K. KOHN, INDIVIDUALLY, AND AS THE EXECUTOR OF THE ESTATE OF JOHN G. KOHN, DECEASED, PLAINTIFF,
v.
FARMERS UNION MUTUAL INSURANCE COMPANY, MID-CENTURY INSURANCE COMPANY AND AMANDA SWEDLUND, DEFENDANTS.

         APPEAL from an order of the circuit court for Green County: Nos. 2014CV68, 2014CV71, THOMAS J. VALE, Judge.

          Before Lundsten, Sherman and Blanchard, JJ.

          LUNDSTEN, J.

         ¶1 This appeal relates to the enforceability of an automobile insurance policy provision that is part of the policy's definition of an underinsured motor vehicle. As pertinent here, this provision has the effect of excluding passengers of an insured's vehicle from the policy's underinsured motorist (UIM) coverage when the insured driver was at fault and was operating a vehicle insured by the policy's liability coverage. The main purpose of this exclusion, as explained below, is to prevent a policy's UIM coverage from acting as supplementary liability coverage under the same policy.

         ¶2 The appellants here were injured while passengers in a vehicle insured by a policy containing this exclusion. The insurer, Mid-Century Insurance Company, denied UIM coverage based on the exclusion. The issue here is whether provisions in Wisconsin's omnibus automobile insurance statute, WIS. STAT. § 632.32(5)(e) and (6)(b)2.a., prohibit or allow the exclusion.[1] Like the circuit court, we resolve this issue against the appellant passengers. Accordingly, we affirm the court's order dismissing the passengers' claims for UIM coverage.

         Background

         ¶3 The pertinent facts are not in dispute. Appellants Jessica Pierce, Zachary Pierce, and Brenden Pepper (collectively "the passengers") were passengers in a vehicle driven by Amanda Swedlund. The vehicle was involved in a multi-vehicle accident resulting in a fatality and serious injuries to numerous individuals, including the passengers.

         ¶4 Swedlund was insured under an automobile policy underwritten by Mid-Century Insurance Company. The policy included liability coverage and UIM coverage, with limits of $500, 000 on each.

         ¶5 The passengers filed a lawsuit against Swedlund and Mid-Century, alleging that Swedlund's negligence played a role in the accident and seeking coverage under her policy. Others involved in the accident also made claims against Swedlund and Mid-Century.

         ¶6 Mid-Century paid out the $500, 000 liability limit, which was apportioned among the passengers and others. The passengers' share of the $500, 000 liability payment was insufficient to compensate them for all of their alleged injuries, however, so they made additional claims for UIM coverage under Swedlund's policy. Looking solely to the policy's grant of UIM coverage, the passengers appeared to be eligible for UIM coverage:

We will pay all sums which an insured person is legally entitled to recover as damages from the owner or operator of an underinsured motor vehicle because of bodily injury sustained by the insured person.

(Bold type in policy.)[2]

         ¶7 Mid-Century, however, contended that the exclusion at issue here barred the passengers' UIM coverage claims. The exclusion is part of the policy definition of an underinsured motor vehicle. The definition provides, as most pertinent here:

An underinsured motor vehicle does not include a land motor ...

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