In Brey v. State Farm Mutual Automobile Insurance Company,[1] a unanimous Wisconsin Supreme Court held that an auto insurer may properly exclude underinsured motorist (UIM) coverage for damages arising out of injury or death to a non-insured person. In doing so, the supreme court held that the court of appeals improperly broadened the definition of UIM coverage under Wisconsin’s omnibus statute, Wis. Stat. § 632.32.
I. Procedural History
Elliot Brey, a minor, sought to recover damages for the death of his father.[2] At the time of his father’s death, Brey was insured by State Farm under a policy issued to his mother.[3] At the time of his death, Brey’s father was a passenger in a vehicle being operated by Channing Mathews.[4] Neither Brey’s father nor Mr. Mathews was insured under State Farm’s policy.[5] Nor was the vehicle being operated by Mr. Mathews an insured vehicle under the policy.[6] Despite no insured person or vehicle having been involved in the accident and no insured having sustained any bodily injury, Brey sought UIM benefits from State Farm.[7]
State Farm’s policy included UIM coverage. It provided that State Farm “will pay compensatory damages for bodily injury an insured is legally entitled to recover from the owner or driver of an underinsured motor vehicle.”[8] It further stated, however, that the “bodily injury must be … [s]ustained by an insured.”[9]
State Farm argued that its policy did not provide coverage for Brey’s UIM claim because the person who sustained injury—his father—was not an insured under the policy.[10] Brey argued that State Farm’s policy language violated the omnibus statute, Wis. Stat. § 632.32, which “sets the minimum requirements all motor vehicle insurance policies in Wisconsin must satisfy.”[11]
The circuit court granted summary judgment to State Farm citing the language of the policy, the history of the omnibus statute, and the Wisconsin Court of Appeals’ decision in Ledman v. State Farm Mutual Automobile Insurance Co.[12] In Ledman, the court of appeals held that an insured person could not recover UIM damages from State Farm for the wrongful death of their adult daughter who died in an automobile accident.[13] The Ledman court reasoned that the insurance policy, when considered as a whole, “showed an ‘expected nexus of bodily injury to the insured as part of the overall general scheme and intent’ of the policy” and to read it differently would lead to an “unreasonable result.”[14]
On review, the court of appeals reversed the circuit court’s decision in Brey, holding that the Ledman decision was distinguishable, and that Wis. Stat. §§ 632.32(1) and (2)(d) “bar an insurer from limiting UIM coverage to only those insureds who suffer bodily injury or death.”[15] State Farm appealed.
II. The Wisconsin Supreme Court’s Decision
Reversing the court of appeals, the Wisconsin Supreme Court undertook a lengthy analysis of the omnibus statute. First, the court noted that Wis. Stat. § 632.32(5)(g)—which permits insurers to implement anti-stacking policy provisions preventing insureds from increasing the total coverage limit—states that “underinsured motorist coverage [is] available for bodily injury or death suffered by a person” and refers specifically to “the person … insured.”[16] The court reasoned that this language presumes that the omnibus statute’s reference to “a person” means an insured. [17]
Similarly, the court noted that Wis. Stat. § 632.32(5)(f)—which also allows for anti-stacking policy provisions—states that “insurance coverage [is] available for bodily injury or death suffered by a person in any one accident,” and thus limits UIM coverage to the person injured in an accident.[18] Extending UIM coverage to a person not injured in the accident or for damages arising out of injuries to a non-insured would be illogical.[19]
Next, the court considered how subparagraph (5)(j) supports State Farm’s interpretation of Wis. Stat. § 632.32(2)(d) and a lack of coverage under the policy for Brey.[20] Section (5)(j), the Court explained, targets the “free rider” problem and “keeps an insured from using insurance coverage of one car to provide coverage on another vehicle the insured owns but has not insured.”[21] In light of paragraph (5)(j), which permits an insurer to exclude UIM coverage for an insured injured in a vehicle not covered by the policy, the court reasoned that “[t]o interpret § 632.32(2)(d) to require an insurer to extend UIM coverage for an accident involving neither an insured nor a covered vehicle” would be a utterly inconsistent.[22]
Fourth, the court considered Wis. Stat. § 632.32(5)(e), which permits an insurer to include exclusion not permitted under § 632.32(6), even if the provision excludes “persons, uses or coverages that could not be directly excluded under sub. (6)(b).”[23] In Vieau v. American Family Mutual Insurance Company,[24] the Supreme Court of Wisconsin “upheld a definitional exclusion denying an injured insured UIM coverage under his mother’s policy.”[25] While under Wis. Stat. § 632.32(6)(b) the injured insured was covered as a relative, he was not covered in that instance because he owned his own car and the court declined to set a precedent allowing “resident relatives who own their own vehicles from piggyback[ing] … on the UIM coverage of a single insured.”[26] The court determined that if an otherwise injured insured could be denied UIM coverage under a policy’s “own-other-car” exclusion, it would be irreconcilable to hold that the same statutory scheme requires an insurer to extend UIM coverage to an individual not insured under any policy.[27]
Finally, the court considered the definition of “underinsured motorist coverage” under Wis. Stat. § 632.32(2)(d), which provides:
“Underinsured motorist coverage” means coverage for the protection of persons insured under that coverage who are legally entitled to recover damages for bodily injury, death, sickness, or disease from owners or operators of underinsured motor vehicles.[28]
Interpreting the plain meaning of Wis. Stat. § 632.32(2)(d), the Wisconsin Supreme Court noted that “ascertaining the plain meaning of a statute requires more than focusing on a single sentence or portion thereof.”[29] The supreme court rejected the Court of Appeals’ “hyper-literal” interpretation of the statute, finding it clashed “with parts of the same statute.”[30] It held that the court of appeals incorrectly interpreted the statue “by strictly construing the statutory definition in isolation rather than interpreting it in the context of the Omnibus Statute’s pertinent text as a whole.”[31] After considering Wis. Stat. § 632.32(2)(d) in context with other parts of the same statute, the supreme court concluded that “UIM coverage exists only when an insured suffers bodily injury or death.”[32]
III. Conclusion
In Brey, Wisconsin joined the majority of other jurisdictions which have held that auto insurers may properly limit UIM coverage to claims for bodily injury sustained by an insured. In doing so, our supreme court rejected the insured’s plea to expand UIM coverage beyond its intended purpose. A unanimous supreme court made clear that the omnibus statute must be read as a whole and that statutes should not be read in isolation or in a “hyper-literal” way that reaches an absurd result.
Author Biography:
Kaitlyn M. Gradecki is an attorney at Everson, Whitney, Everson & Brehm, S.C. in Green Bay. Her practice focuses on civil litigation, insurance defense, personal injury defense, criminal defense, and misdemeanor defense. Kaitlyn received a Bachelor of Arts in Political Science and minor in Psychology from the University of Wisconsin-Milwaukee. She earned her Master of Arts from Northern Illinois University with a focus in American Government and Public Law. Kaitlyn obtained her JD from Marquette University Law School, where she was inducted into the Pro Bono Honor Society after achieving 50 hours of service, served as an ASP Leader for Appellate Writing and Advocacy, participated in the Jenkins Honors Moot Court Competition, and was a member of the Moot Court General Board. Kaitlyn was awarded the Best Brief for Petitioner from competing in the National Criminal Procedure Moot Court Tournament during her law school tenure. During her law school years, Kaitlyn volunteered at the House of Peace serving low-income individuals with a variety of legal issues, and interned with the Wisconsin Court of Appeals District I, the Fond du Lac District Attorney’s Office, and other firms in the Milwaukee and Fox Valley areas.
[1] Brey v. State farm Mut. Auto. Ins. Co., 2022 WI 7, 2022 Wisc. LEXIS 9, 2022 WL 453473.
[2] Id. ¶ 3.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] Id.
[8] Id. ¶ 4.
[9] Id.
[10] Id.
[11] Id.
[12] Ledman v. State Farm Mut. Auto. Ins. Co, 230 Wis. 2d 56, 601 N.W.2d 312 (Ct. App. 1999).
[13] Id. at 69.
[14] Brey, 2002 WI 7, ¶ 6 (citing Ledman, 230 Wis. 2d at 67-68).
[15] Id. ¶ 7 (citing Brey v. State Farm Mut. Auto. Ins. Co., 2020 WI App 45, ¶¶ 24-25, 393 Wis. 2d 574, 947 N.W.2d 205).
[16] Wis. Stat. § 632.32(5)(g).
[17] “The definite article ‘the’ signals that the noun following it, in this case, ‘person,’ refers back to a specific instance of that noun already mentioned.” Brey, 2020 WI App 45, ¶ 15; see also Flandreau Santee Sioux Tribe v. United States, 197 F. 3d 949, 952 (8th Cir. 1999).
[18] Id.
[19] Id.
[20] Id. ¶ 17.
[21] Id. (quoting Belding v. Demoulin, 2014 WI 8, ¶ 8, 352 Wis. 2d 359, 843 N.W.2d 373).
[22] Id.
[23] Brey, 2022 WI 7, ¶ 18.
[24] Vieau v. American Family Mutual Insurance Co., 2006 WI 31, ¶ 40, 289 Wis. 2d 552, 712 N.W.2d 661.
[25] Id.
[26] Brey, 2022 WI 7, ¶¶ 18-19 (quoting Vieau, 289 Wis. 2d 552, ¶ 40).
[27] Id. ¶ 18.
[28] Id. ¶ 28.
[29] Id. (citing State v. Ziegler, 2012 WI 73, ¶ 43, 342 Wis. 2d 256, 816 Wis. 2d 123, 717 N.W.2d 258).
[30] Id. ¶¶ 13-14.
[31] Id. ¶ 12.
[32] Id. ¶ 14.
