Ambiguity not shown by negative implication.

Byline: David Ziemer

Where an automobile policy limits bodily injury liability, regardless of the number of insureds, the policy is not ambiguous merely because the policy more explicitly limits liability for property damage, a unanimous Wisconsin Supreme Court held on July 16.

In doing so, the court reversed a published decision of the court of appeals, Folkman v. Quamme, 2002 WI App 237, 257 Wis.2d 864, 652 N.W.2d 406.

In 1998, 17-year-old Keith Folkman was driving a vehicle owned by his parents, Debra and Kenneth Folkman, Sr., when it collided with another vehicle. Debra and another son, Kenneth Folkman, Jr., were passengers in the car. Debra incurred approximately $76,000 in medical expenses, and Kenneth Jr. became permanently paralyzed as a result of the accident.

Both Keith Folkman and Sheri Quamme, the driver of the other vehicle, were at fault for the accident.

The car driven by Keith was insured by a Society Insurance policy issued to Debra Folkman. The policy also covered Kenneth Folkman Sr., Keith Folkman, and a third son, who was age 16, as drivers. Both of Keith's parents had sponsored Keith's license to drive, and therefore, Society insured both Debra and Kenneth Sr. for sponsorship liability imputed to them by Keith's negligence.

According to its declarations page, the policy included a "split limit of liability" for bodily injury of $25,000 for "each person" and $50,000 for "each occurrence."

An endorsement to the split liability limits contained two paragraphs. The first set forth the "maximum limit of liability for all damages" for bodily injury per person, and per auto accident.

The second paragraph set forth the "maximum limit of liability for all 'property damage' resulting from any one auto accident. The same paragraph then stated, "This is the most we will pay regardless of the number of: 1. 'Insureds;' 2. Claims made; 3. Vehicles or premiums shown in the Declarations; or 4. Vehicles involved in the auto accident."

After unsuccessfully attempting to resolve coverage issues, Kenneth Sr., Debra, and Kenneth Jr. (the Folkmans) jointly brought suit against Keith and Society, in addition to Quamme and her automobile insurer, to collect damages related to bodily injuries stemming from the accident.

Society acknowledged Keith's responsibility for the accident, but sought to limit its liability to $50,000. The Folkmans sought $125,000, arriving at this figure as follows: (1) Keith had liability to Debra and Kenneth Jr., for a maximum of $25,000 to each; (2) Debra was liable to Kenneth Jr. as Keith's sponsor for a maximum of $25,000; and (3) Kenneth Sr. was liable to both Debra and Kenneth Jr. as Keith's sponsor, for a maximum of $25,000 to each of them.

The Folkmans argued that Society's $25,000 "per person" and $50,000 "per occurrence" limits of liability must apply separately to each of the three insureds.

Brown County Circuit Court Judge Mark A. Warpinski construed the Folkmans' policy to limit Society's liability to $50,000 per accident, regardless of the number of insureds liable for that accident.

The Folkmans appealed, and the court of appeals reversed, holding the policy ambiguous. Construing the policy against the insurer, the court of appeals determined that Society was obligated to pay up to its limits of liability for each of the three insureds under the policy. The Supreme Court accepted review, and reversed the court of appeals in a unanimous decision by Justice David T. Prosser.

Guiding Principles

The court began with the following principles, "Some ambiguity is unavoidable because words are...