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Three UIM cases remanded to appeals court

The Wisconsin Supreme Court on Sept. 15 vacated three recently published decisions of the court of appeals, all concerning underinsured motorist (UIM) coverage: Gohde v. MSI Ins. Co., 2003 WI 69, 261 Wis.2d 710, 661 N.W.2d 470; Dowhower v. Marquez, 2003 WI App 23, 260 Wis.2d 192, 659 N.W.2d 57; and Van Erden v. Sobczak, 2003 WI App 57, 260 Wis.2d 881, 659 N.W.2d 896.

In each case, the court granted the petition for review, and summarily vacated for further consideration in light of the Supreme Court’s decision in Folkman v. Quamme, 2003 WI 116 (opinion issued July 16, 2003).


In Gohde, the court of appeals held that the reducing clause in a UIM policy was ambiguous, relying on the Wisconsin Supreme Court’s decision in Badger Mut. Ins. Co. v. Schmitz, 2002 WI 98, 255 Wis.2d 61, 647 N.W.2d 223.

The court acknowledged that the policy “does not suffer from the same organizational complexity as the Schmitz policy.” Gohde, 261 Wis.2d at 718. It also acknowledged that, unlike the policy in Schmitz, “the Gohdes’ policy’s index refers to UIM coverage and easily directs the insured to its terms.” Id. at 720.

Nevertheless, the court held the policy ambiguous, quoting language in Schmitz that a reducing clause’s effects must be “crystal clear in the context of the whole policy.” Id. at 714. Because neither the declarations page nor the index contained the reducing clause, the court held the policy not “crystal clear.”


In Dowhower, the court also held a reducing clause in a UIM policy to be ambiguous, also invoking the Supreme Court’s “crystal clear” requirement from Schmitz. Dowhower, 260 Wis.2d at 199.

Unlike the policy in Gohde, which the court found easily directs the insured to the relevant terms, here, the court not only found the policy to not be “crystal clear,” but found that the policy does not readily direct the insured to the reducing clause. On the contrary, the index did not even reference UIM coverage. Id., 260 Wis.2d at 206.

Van Erden

In contrast, in the Van Erden decision, the court held that a reducing clause and the UIM coverage was unambiguous, and upheld a trial court’s grant of summary judgment in favor of the insurer.

There, the court acknowledged the “crystal clear” language from the decision in Schmitz, but did not discuss Schmitz at length, basing its decision primarily on the fact that the policy language was identical to the policy language approved by the Wisconsin Supreme Court in Taylor v. Greatway Ins. Co., 2001 WI 93, 245 Wis.2d 134, 628 N.W.2d 916.


This summer, the Supreme Court decided Folkman, which unlike the three cases discussed supra, did not involve a reducing clause or UIM coverage, at all, but limitations on bodily injury liability.

The policy explicitly limited liability for property damage in all references to that coverage, “regardless of the number of insureds.” However, in one portion of the bodily injury limitation, that phrase was omitted.

The court of appeals held the policy to be ambiguous in Folkman v. Quamme, 2002 WI App 237, 257 Wis.2d 864, 652 N.W.2d 406.


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Case Analysis

However, the Supreme Court reversed, stating, “Here, an unreasonable negative implication must compete against clear text. The alleged ambiguity is not founded on contradictory language. We conclude that the limits of liability provision is unambiguous, particularly when it is examined the context of the whole policy.” Folkman, 2003 WI 116, par. 58.

The court also retreated from the “crystal clear” phrase that it had used in Schmitz. The court stated, “A series of court of appeals decisions decided post-Schmitz reveals that our admonition of ‘crystal clarity’ has been used to alter the analytical focus. Rather than assessing whether a policy, as written, is ambiguous in context, insurers are being required to undertake affirmative, explanatory responsibilities in drafting policies. Aspirational goals and admonitions on how to avoid ambiguity are admittedly different from minimum legal standards.” Folkman, 2003 WI 116, par. 30.

The court referenced three published court of appeals’ decisions that it found had misinterpreted the language concerning “crystal clarity”: Gohde; Dowhower; and Hanson v. Prudential Prop. & Cas. Ins. Co., 2002 WI App 275, 258 Wis.2d 709, 653 N.W.2d 915. The court did not cite the Van Erden case.

Now, the court has vacated Gohde, Dowhower, and Van Erden, leaving only Hanson, in which the insurer’s petition for review was dismissed on Dec. 12, 2002.

Cases: Gohde v. MSI Ins. Co., No. 01-2121; Dowhower v. Marquez, No. 01-1347; and Van Erden v. Sobczak, No. 02-1595.

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David Ziemer can be reached by email.

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