PUBLISHED
OPINION
Case No.: 95-1085
Complete Title Petition for
of Case: Review Filed
OTMAR RABAS, Surviving
Spouse of DOROTHY RABAS and
Sole Beneficiary of the
Estate of DOROTHY RABAS,
Plaintiffs,
v.
CLAIM MANAGEMENT SERVICES, INC.,
Defendant,
THE AETNA CASUALTY & SURETY COMPANY,
MANITOWOC CLINIC, INC., and
MANITOWOC CLINIC, S.C.,
Defendants-Third Party
Plaintiffs-Appellants,
v.
DIANE RABAS,
Third Party Defendant,
Submitted on Briefs: September 16, 1996
Oral Argument:
COURT COURT OF APPEALS OF WISCONSIN
Opinion Released: October 16, 1996
Opinion Filed: October 16, 1996
Source of APPEAL Appeal from a judgment
Full Name JUDGE COURT: Circuit
Lower Court. COUNTY: Manitowoc
(If "Special", JUDGE: EUGENE F. McESSEY
so indicate)
JUDGES: Anderson, P.J., Brown and Snyder, JJ.
Concurred:
Dissented: Brown, J.
Appellant
ATTORNEYS On behalf of the third party defendant-respondent,
the cause was submitted on the briefs of Philip A.
Munroe of Di Renzo and Bomier of Neenah.
Respondent
ATTORNEYS On behalf of the third party defendant-respondent,
the cause was submitted on the brief of Arnold P.
Anderson of Mohr & Anderson, S.C. of Madison.
COURT OF APPEALS
DECISION
DATED AND
RELEASED
OCTOBER 16, 1996
NOTICE
A party may file with the Supreme Court a
petition to review an adverse decision by the
Court of Appeals. See § 808.10 and Rule
809.62, Stats.
This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
No. 95-1085
STATE OF WISCONSIN IN COURT OF APPEALS
OTMAR RABAS, Surviving
Spouse of DOROTHY RABAS and
Sole Beneficiary of the
Estate of DOROTHY RABAS,
Plaintiffs,
v.
CLAIM MANAGEMENT SERVICES, INC.,
Defendant,
THE AETNA CASUALTY & SURETY COMPANY,
MANITOWOC CLINIC, INC., and
MANITOWOC CLINIC, S.C.,
Defendants-Third Party
Plaintiffs-Appellants,
v.
DIANE RABAS,
Third Party Defendant,
KOSSUTH MUTUAL INSURANCE COMPANY,
Third Party Defendant-
Respondent.
______________________________________________________________________________
APPEAL from a judgment of the circuit court for Manitowoc County:
EUGENE F. MC ESSEY, Reserve Judge. Affirmed.
Before Anderson, P.J., Brown and Snyder, JJ.
ANDERSON, P.J. The Aetna Casualty & Surety
Company (Aetna), Manitowoc Clinic, Inc. and Manitowoc Clinic, S.C. appeal from a
summary judgment in favor of Kossuth Mutual Insurance Company (Kossuth), the third
party defendant-respondent. Aetna maintains that the family exclusion clause in the
Rabases' insurance policy only applies to direct action claims and therefore does not
apply to this indirect claim for contribution. Because we conclude that the family
exclusion clause applies to direct and indirect actions against insured family members,
we affirm the trial court's order for summary judgment.
On June 20, 1991, Dorothy Rabas, accompanied by her daughter, Diane
Rabas, went to the Manitowoc Clinic, Inc. and Manitowoc Clinic, S.C. (collectively the
Clinic) for treatment. While on the premises, Dorothy tripped and fell over a hose
which resulted in severe and disabling injuries. The following day, Dorothy passed
away allegedly as a result of the injuries.
Otmar Rabas, Dorothy's surviving spouse and the sole beneficiary of her
estate, filed an action against the Clinic; Aetna, the Clinic's insurer and Claim
Management Services, Inc., the third-party administrator of the Fisher-Hamilton
Scientific, Inc. Health and Welfare Plan which paid certain medical bills for Dorothy,
to recover damages for Dorothy's death. This appeal arises from a separate
contribution action filed by Aetna against Diane, who lived with her parents, and their
homeowner's liability insurer, Kossuth. Aetna alleges that Dorothy's injuries were
caused by Diane's negligent care of her mother.
Kossuth moved for summary judgment in the contribution action, arguing
that the family exclusion clause precluded coverage for her alleged conduct in any claim
Otmar, her father, may have. The circuit court granted the motion ordering that the
complaint against Kossuth be dismissed and assessing costs against Aetna. Aetna
appeals.(1)
The issue on appeal turns on the family exclusion clause in Kossuth's
policy. There are no disputed issues of fact. We conduct a de novo review of a motion
for summary judgment using the same methodology as the trial court.
M & I First
Nat'l Bank v. Episcopal Homes, 195 Wis.2d 485, 496, 536 N.W.2d
175, 182 (Ct.
App. 1995). In addition, the construction of an insurance policy is a question of law
which we also decide de novo. Whirlpool Corp. v.
Ziebert, 197 Wis.2d 144, 152, 539
N.W.2d 883, 886 (1995).
The family exclusion clause states: "[Personal liability coverage] does
not apply to liability: 1. for bodily injury to you, and if residents of your household,
your relatives, and persons under the age of 21 in your care or in the care of your
resident relatives ."(2) The family exclusion
clause is not ambiguous. Accordingly, it
must be construed "as it stands." See Borchardt v.
Wilk, 156 Wis.2d 420, 427, 456
N.W.2d 653, 656 (Ct. App. 1990). The exclusion precludes coverage for any insured
or resident of the household, in this case, all three members of the Rabas family.
Family exclusion clauses are valid in Wisconsin involving both a direct
suit against an insured family member or an indirect action, such as a contribution claim
by a third party. See Shannon v.
Shannon, 150 Wis.2d 434, 455-56, 442 N.W.2d 25,
35 (1989); see also Whirlpool, 197
Wis.2d at 151-52, 539 N.W.2d at 886. "The
potential for collusion is virtually the same in either situation [direct suits against family
members or third-party contribution claims against family members]--at least in the
sense that the parents would have no incentive to defeat or reduce the claim."
Id. at
151, 539 N.W.2d at 885 (quoting Groff v. State Farm Fire &
Casualty Co., 646 F.
Supp. 973, 975 (E.D. Pa. 1986)). Thus, the family exclusion clause furthers the
legitimate public policy of protecting insurers from situations, both direct and indirect
actions, where an insured may not completely cooperate and assist the insurance
company's administration of the case. See
Whirlpool, 197 Wis.2d at 149-50, 539
N.W.2d at 885.
The supreme court further explained the family exclusion clause as
follows:
The liability being asserted in Whirlpool's contribution
claim against Sharon Ziebert is based on the claim for
damages suffered by Jaclyn Ziebert. That liability is
identical whether there is a direct claim against Sharon
Ziebert by her daughter or whether the claim is indirectly
asserted through a contribution claim by Whirlpool. To
say that Jaclyn Ziebert is not receiving a benefit because
her recovery comes from a contribution claim rather than
a direct claim for personal injuries is the ultimate tribute
to form over substance. Such a conclusion defies logic
and common sense.
Id. at 155, 539 N.W.2d at 887.
This reasoning also applies here.(3) The
liability asserted in Aetna's
contribution claim against Diane is based on the negligence claim brought by Otmar
against the Clinic, Aetna's insured. That liability is identical whether there is a direct
claim against Diane by her father or whether the claim is indirectly asserted through a
contribution claim by Aetna. This is precisely the exposure the Kossuth policy
eliminates. See id. at 150-51, 539
N.W.2d at 885.
Aetna attempts to distinguish the reasoning and holding in
Whirlpool
based upon the direct/indirect language in that policy which is not contained in the
Kossuth policy. Aetna argues that Whirlpool only
barred "coverage for contribution
claims which expressly applied to both direct and indirect claims."
We do not read Whirlpool as mandating the
magic words "direct and
indirect;" to do so would place form over substance. The court agreed with the
California appellate court that the additional language clarifies the scope of the standard
clause which excludes coverage liability for bodily injury to the insured so that it is
more clearly understood that contribution claims are covered by the clause.
Id. at 154,
539 N.W.2d at 886-87 (citing State Farm Mut. Auto. Ins. Co. v.
Vaughn, 208 Cal.
Rptr. 601, 603 (Cal. App. 1984)). It does not follow that a family exclusion clause
without this language is rendered ambiguous. This was not the holding of the
Whirlpool court. The basic principle in
Whirlpool is that family exclusion clauses
cover contribution claims when the liability is identical, whether there is a
direct claim
between family members or whether the claim is indirectly asserted through a
contribution claim by a third party because the possibility of collusion is present in both
situations.
This argument also ignores the important public policy reasons for
applying family exclusion clauses to indirect claims, such as contribution actions. On
this point, the court stated:
[T]here are times when we must look beyond the
immediate facts to principles of public policy and the
broader ramifications that our decisions have on the people
of this state as a whole. We are persuaded that the
possibility of collusion is great enough to warrant allowing
family exclusion clauses to cover contribution actions.
Therefore, we hold that such clauses are not contrary to
public policy .
Id. at 151-52, 539 N.W.2d at 886 (emphasis
added). Because the liability is identical
in this case, we conclude that the family exclusion clause precludes coverage for
Aetna's contribution claim.
Moreover, "[c]ontribution is the 'process by which one person obtains
reimbursement from another for a proportionate share of an obligation paid by the first
person but for which they are both liable.' This process is based upon principles of
equity and natural justice, not express contract." Kafka v.
Pope, 186 Wis.2d 472, 475,
521 N.W.2d 174, 176 (Ct. App. 1994) (quoted source omitted), aff'd, 194
Wis.2d 234,
533 N.W.2d 491 (1995)). "When no express agreement confers a right of contribution,
a party's right to seek contribution against another is premised on two conditions: (1)
the parties must be liable for the same obligation; and (2) the party seeking contribution
must have paid more than a fair share of the obligation." Kafka v.
Pope, 194 Wis.2d
234, 242-43, 533 N.W.2d 491, 494 (1995). Aetna's argument fails because Kossuth
has no liability for Dorothy's injuries.
In sum, Aetna's claim for contribution stems from its liability for
Dorothy's injuries; if Diane's negligence contributed to her mother's injuries, Aetna
could have a potential claim for contribution against her. However, Aetna does not
have a claim against Diane's insurer because Kossuth's policy does not insure her
liability to a family member.
By the Court.--Judgment affirmed.
No. 95-1085(D)
BROWN, J. (dissenting). I disagree with the majority's interpretation
of
Whirlpool Corp. v. Ziebert, 197 Wis.2d 144, 539
N.W.2d 883 (1995). The majority
effectively reads Whirlpool to say that whenever a
homeowner's liability policy contains
a family exclusion clause, that exclusion automatically operates to bar coverage for
direct and indirect suits. If a liability policy excludes coverage for one
family member
when another family member is the victim of the tort, the majority believes that the
contribution action arising out of the injured family member's claim is also excluded.
The underlying theory is that the liability is "identical."
In my view, Whirlpool does not go that far.
Even a cursory reading of
the case shows that the supreme court did only two things. First, it decided that family
exclusion clauses which apply to contribution claims do not violate public policy.
See
id. at 151-52, 539 N.W.2d at 886. Second, the court
determined that the exclusion
clause in that case properly encompassed contribution actions.
Id. at 155-56, 539
N.W.2d at 887.
The court started the analysis of this second issue with the maxim that
ambiguities in coverage are to be construed in favor of coverage, while exclusions are
narrowly construed against the insurer. Id. at 152,
539 N.W.2d at 886. It then stated
that this rule of strict construction is not applicable if the policy is unambiguous.
Id.
Then, turning directly to the language within the exclusion, the court
accented the portion which stated: "We do not cover bodily injury to an insured person
... whenever any benefit of this coverage would accrue directly or indirectly to an
insured person." Id. at 153, 539 N.W.2d at 886.
The court then used four pages to
explain why this particular language was unambiguous and hence, valid.
The court specifically pointed out and italicized the phrase "directly
or
indirectly." Id. The court took the
time to review the dictionary definitions of the two
terms. Id. The court also favorably cited a California
case construing a statute that
authorized automobile insurers to write exclusions governing contribution claims. Our
supreme court noted how adding the phrase "directly or indirectly" to the statute
"clarified" the statute. Id. at 154, 539 N.W.2d at
887.
The supreme court's careful and lengthy attention to the language of the
exclusion in Whirlpool informs me that the court
believed that a family exclusion must
be specifically tailored to contribution claims before the exclusion may be found to
apply to such claims. Had the Whirlpool court
intended to hold that family exclusions
automatically applied to contribution claims, it would not have spent four pages
discussing its view of the language in that exclusion. Yet, the majority in this case
views the supreme court's detailed analysis as irrelevant. I cannot agree.
With regard to the exclusion in this case, I believe it is ambiguous, while
the one in the Whirlpool case was not. The
Whirlpool exclusion clearly told the
reasonable insured that the insurer would not cover any bodily injury claim if the person
benefiting from the insurance was relying on it to defend either a direct or an indirect
suit. Id. at 153, 539 N.W.2d at 886. The exclusion
in this case, however, does not do
that. Indeed, nothing in this policy tells the reasonable insured that the family exclusion
applies not only to suits directly brought by family members, but that the exclusion also
applies when a third party brings an action. While, under
Whirlpool, the family
exclusion in this case could validly apply to third-party contribution actions, the
exclusion is nontheless flawed because it does not clearly convey what the insurer
claims it is designed to do.
Although an exclusion properly aimed at contribution claims does not
have to contain the word "indirect" to be viable, the exclusion must contain some
language which tells the reasonable insured that contribution claims are not covered.
Mindful of the supreme court's long-standing rule that we must narrowly construe
exclusions against the insurer, I would reverse because the exclusion in this case does
not contain any such language.
1. Aetna moved this court for an order staying further
appellate proceedings in this appeal pending
resolution of Whirlpool Corp. v. Ziebert, No.
93-3307, by the supreme court. The stay was
granted on May 25, 1995. Once the decision was issued in
Whirlpool, this court lifted the stay
in this appeal in an order dated January 29, 1996.
2. It is undisputed that Otmar, Dorothy and Diane Rabas
are all "insureds" under the Kossuth
policy. The policy defines an "insured" as: "a. you; b.
your relatives if residents of your
household." Otmar and Dorothy are the named insureds on the declaration page and Diane
is
their adult daughter who also resides in the covered household.
3. Although Aetna contends that
Whirlpool Corp. v. Ziebert, 197 Wis.2d 144, 539
N.W.2d 883
(1995), "demonstrates the correctness of [its] arguments," it fails to address why the basic
reasoning of Whirlpool does not apply to this case.
We do not interpret Whirlpool as supporting
Aetna's position.
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