Wolfgang Mau and Ena Mau v. North Dakota Insurance Reserve Fund

CERTIFICATION of a question of law from the Supreme Court of North Dakota. Certified question answered and cause remanded.

1. N. PATRICK CROOKS, J. This case is before the court on certification from the Supreme Court of North Dakota pursuant to Wis.Stat.§821.01 (1995-96).1 The parties dispute whether Wolfgang Mau is covered under an underinsured motorist policy. The specific question before the court is: Is Endorsement #1 in the International Extended Protection (IEP) Option valid under Wisconsin law to preclude underinsured motorist coverage to one who rents a car from Alamo, purchases the IEP Option, and is injured while sitting in a different car? Based on our interpretation of language in the excess policy, we find that Mau is a named insured under the excess policy and that the occupancy requirement in Endorsement #1 is not valid under Wis.Stat.§632.32.

I.

2. The facts in this case are not in dispute. Wolfgang Mau and Dieter Jung (Jung), residents of Germany, arranged with a German travel agent to rent a car from Alamo Rent-A-Car, Inc. (Alamo) in Milwaukee, Wisconsin, for three weeks. Wolfgang Mau and Jung arrived in Milwaukee on April 4, 1997, and rented the car from Alamo. The rental voucher specifically names "Mr. Mau/Wolfgang" as "Renter" and Wolfgang Mau signed the rental documents on the line indicated "Renters' Signature." After renting the car from Alamo, Wolfgang Mau and Jung began traveling west across the United States.

3. On April 5, 1997, due to slippery road conditions, Wolfgang Mau lost control of the rental car on I-94 near Casselton, North Dakota. The rental car slid off the road and came to rest with its front wheels over the shoulder.

4. A Cass County deputy sheriff arrived at the scene and parked his squad car on the shoulder of the road, about thirty feet from the rental car. The deputy asked Wolfgang Mau and Jung to get into his patrol vehicle as he was helping them make arrangements to get the rental car pulled out. Jung sat in the front seat of the patrol car and Wolfgang Mau sat in the rear seat of the patrol car.

5. Shortly thereafter, Bette Mashburn (Mashburn) was heading east on I-94 and lost control of her vehicle. Mashburn's vehicle struck the patrol car, pinning Mau up against the security barrier between the front and rear seats of the patrol car. Wolfgang Mau suffered serious injuries.

6. Wolfgang Mau and his wife, Ena Mau, (hereafter collectively referred to as "Mau") settled the liability claim against Mashburn for her insurance policy limit of $100,000. Mau then sued the North Dakota Insurance Reserve Fund ("NDIRF"), which insured the patrol car, and National Union Fire Insurance Company of Pittsburgh (National Union), Alamo's insurer. The NDIRF coverage had underinsured motorist (UIM) policy limits of $1,000,000. Mau settled his claim against NDIRF for $715,000. The certified question in this case relates to Mau's continued claim for UIM coverage against National Union.

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28. The Supreme Court of North Dakota specifically asks this court to determine the validity of the occupancy requirement in Endorsement #1 under Wis.Stat.§632.32.12 Statutory interpretation is a question of law that we decide independently. Blazekovic v. City of Milwaukee, 2000 WI 41, 9, 234 Wis.2d587, 610 N.W.2d467. The primary goal is to discern the intent of the legislature. Id.

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30. To determine the validity of the occupancy requirement for underinsured motorist coverage, we look to Wis.Stat.§632.32, which, except as otherwise provided, applies to all motor vehicle insurance policies issued or delivered in Wisconsin. Clark v. Am. Family Mut. Ins. Co., 218 Wis.2d 169, 173, 577 N.W.2d790 (1998). Some earlier cases suggest that certain provisions of §632.32 apply only to liability policies, not indemnity insurance.13 See Martin v. Milwaukee Mut. Ins. Co., 146 Wis.2d759, 770, 433 N.W.2d 1 (1988); Peabody v. American Family Mut. Ins. Co., 220 Wis.2d340, 350, 582 N.W.2d753 (Ct. App. 1998). However, the plain language of several subsections in §632.32 demonstrate the applicability of those sections to indemnity insurance. See §632.32(4) ("Required Uninsured Motorist...Coverage[s]"); §632.32(4m) ("Underinsured Motorist Coverage"); §632.32(5)(g) ("uninsured or underinsured motorist coverage"); §632.32(5)(i) ("uninsured or underinsured motorist coverage"); §632.32(5)(j) ("any coverage"). Furthermore, this court has applied §632.32 to indemnity insurance. Blazekovic, 2000 WI 41, 42 (applying §632.32(5)(j) to uninsured motorist coverage); see also Brunson v. Ward, 2001 WI 89, 24, 245 Wis.2d163, 629 N.W.2d140 (applying §632.32(4m)(d) to underinsured motorist policy); Dowhower, 2000 WI 73, 20 (applying §632.32(5)(i)1 to underinsured motorist coverage); Theis v. Midwest Sec. Ins. Co., 2000 WI 15, 39, 232 Wis.2d749, 606 N.W.2d162 (applying §632.32(4) to uninsured motorist coverage); Hull v. State Farm Mut. Auto. Ins. Co., 222 Wis.2d627, 648, 586 N.W.2d863 (1998) (applying §632.32(4) to uninsured motorist coverage); Clark v. Am. Family Mut. Ins. Co., 218 Wis.2d169, 173-175, 577 N.W.2d790 (1998) (examining validity of territorial exclusion in uninsured motorist coverage under §632.32(6)). The excess policy was both issued and delivered in Wisconsin; therefore, we are satisfied that it is appropriate to use the provisions in §632.32, discussed herein, to determine the validity of the occupancy requirement for underinsured motorist coverage.

31. Since we have determined that Mau is a named insured, the issue now becomes whether defining a named insured by requiring occupancy of the Alamo vehicle is valid under Wis.Stat.§632.32. We recognize that §632.32 allows insurance companies to provide exclusions in automobile policies. See Wis.Stat.§632.32(5)(e).14 In Clark, 218 Wis.2dat 174, this court found §632.32(5)(e) unambiguous. "[T]he [legislative] intent is to provide that an insurance contract may include exclusions not specifically listed in Wis.Stat.§632.32(6) or prohibited by other applicable law." Id. 32. To determine the validity of the occupancy requirement, we follow the established two-part test. Blazekovic, 2000 WI 41, 12; Clark, 218 Wis.2dat 174. First, we look to Wis.Stat.§632.32(6) and decide whether the occupancy requirement fits the description of any of the enumerated prohibitions.15 Clark, 218 Wis.2dat 174. If it does, the matter is resolved and the occupancy requirement is invalid. Blazekovic, 2000 WI 41, 13. If it does not, we examine any "other applicable law" that may prohibit the provision. Clark, 218 Wis.2dat 174. Absent any other applicable law prohibiting the occupancy requirement, it remains valid. Blazekovic, 2000 WI 41, 13.

33. Before applying the two-part test, we recognize that the occupancy requirement in the excess policy is not couched as an exclusion. Although the occupancy requirement is part of the definition of named insured, for our analysis, we treat the definition the same as an exclusion. The purpose of the occupancy requirement is to exclude coverage for persons not occupying the Alamo rental car. The occupancy requirement, therefore, produces the same result as an exclusion. "To treat the definition differently from the exclusion merely because it is couched in the definition section of the policy would be to exalt form over substance..." Rodey v. Stoner, 180 Wis.2d309, 313, 509 N.W.2d316 (Ct. App. 1993).

34. Although Mau does not argue that the occupancy requirement falls within the enumerated prohibitions under Wis.Stat.§632.32(6), we look closely at the prohibited provision in§632.32(6)(b)2.a. Section 632.32(6)(b)2.a. prohibits an exclusion for "[a]ny person who is a named insured."16 We have already determined that Mau is a named insured under the excess policy. The occupancy requirement, if applied to Mau will exclude coverage for Mau, a named insured. Based on our analysis, we find that the occupancy requirement violates §632.32(6)(b)2.a., because the occupancy requirement excludes coverage for a named insured. Our inquiry, however, does not end. Mau's argument centers on the second part of the test and focuses on why the occupancy requirement is invalid under other applicable law. Because we choose to address Mau's arguments, our analysis continues, to determine whether, in addition to §632.32(6)(b)2.a., other applicable law prohibits the occupancy requirement.

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of the Court's opinion.

¶40. We conclude that Mau is a named insured under the excess policy. Because it is unclear whether the Supreme Court of North Dakota had already decided if Mau was a named insured, we have interpreted relevant portions of the insurance contract to determine that Mau is a named insured. The declarations page and Endorsement #1 are ambiguous in defining named insured, because the policy is susceptible to more than one reasonable construction. Applying canons of interpretation, we find that the declarations page directs the reader to the definitions in Endorsement #1 to determine who is a named insured. Because it is undisputed that Mau is a "rentee/lessee who purchase[d] the ...(IEP) Option," we hold that Mau is a named insured under Endorsement #1 to the excess policy.

¶41. Next, we have examined the question certified by the Supreme Court of North Dakota, specifically, the validity of the occupancy requirement. We conclude that the occupancy requirement violates both Wis.Stat.§§632.32(6)(b)2.a. and 632.32(5)(j). The occupancy requirement violates the prohibited provision in §632.32(6)(b)2.a. because, if applied, the occupancy requirement excludes coverage for a named insured. The occupancy requirement also violates §632.32(5)(j). The occupancy requirement has the same effect as a "drive other car" exclusion and, because it does not meet all three conditions of §632.32(5)(j), the occupancy requirement is invalid under Wisconsin law.

¶42. Our answer to the certified question is definitive without going any further; therefore, there is no need to address additional arguments raised by the parties.18 Endorsement #1 in the excess policy is not valid under Wisconsin law in its attempt to preclude underinsured motorist coverage to Mau.

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