On remand of these three cases, two of the court of appeals decisions were so deficient, that even if Folkman was not decided the way it was, the court of appeals would have to virtually start over from scratch; the third was relatively sound prior to the Folkman decision, and needs little more than a balancing of the competing principles enunciated in that case and Schmitz.
One of the cases that the court will have to begin anew on remand, and almost certainly decide differently than it did the first time, is Gohde. As the court of appeals acknowledged the first time it examined the policy, it is not complex or confusing.
The only defect in the policy in Gohde is that the reducing clause is not contained in the declarations page or index. The first time the court heard the case, the court of appeals relied primarily, not on Schmitz, but on Justice Bradleys concurring opinion in Dowhower v. West Bend Mut. Ins. Co., 2000 WI 73, 236 Wis.2d 113, 613 N.W.2d 557 (Dowhower I)(the same case that also was remanded last week; Dowhower has been back and forth between the Supreme Court and the court of appeals for years the first time the Supreme Court considered it, the court held only that sec. 632.32(5)(i), which authorizes reducing clauses, does not violate plaintiffs due process rights, and remanded for a determination whether the policy was ambiguous).
The underlying premise of Justice Bradleys opinion is that the reasonable insured reads nothing but the declarations page of his policy, and therefore, the failure to include the reducing clause on the declarations page renders the policy ambiguous. However, that is not the opinion of a majority of the court.
The court in Gohde stated, The provisions of the UIM coverage, however, must still be consistent no matter how easy it is for the insured to find them. Gohde, 261 Wis.2d at 721.
This statement may be true, but the courts definition of consistent is at odds with Folkman. There is no inconsistency in the policy, but only the negative implication of the absence of a reducing clause in the declarations page and index exactly what the court in Folkman found insufficient to create ambiguity.
Furthermore, there is no reason why a reducing clause, or any clause for that matter, would be found in the index, the purpose of which is only to guide the insured to the relevant portions of the policy that he seeks.
Thus, the only defect in the Gohde policy is the lack of a reducing clause in the declarations page, something insufficient to create ambiguity, even before Folkman was decided.
The second case in which the court of appeals needs to begin anew is Van Erden. It was somewhat ingenuous for the Supreme Court to have remanded this case for reconsideration in light of just Folkman, also; but in this case, the court could have more honestly instructed the court of appeals to reconsider the case in light of Schmitz, even though Schmitz was decided before the court of appeals decision.
The court of appeals found that the reducing clause mirrors the statute and the language that the Supreme Court held to be unambiguous in Taylor v. Greatway Ins. Co., 2001 WI 93, 245 Wis.2d 134, 628 N.W.2d 916.
The problem with this analysis is that the reducing clause in Schmitz was also unambiguous and valid applying this analysis, and yet the Supreme Court held it ambiguous.
From merely reading the court of appeals opinion in Van Erden, it is literally impossible to even speculate what the right decision is, defining right as consistent with both Folkman and Schmitz, because the decision fails to state where in the policy the reducing clause even appears, and what an insured must do to find it.
We can safely assume that the declarations page itself does not contain the reducing clause; thus, Schmitz requires courts to trace how many steps an insured must take until he finds it.
Therefore, while Folkman will have some bearing on the final decision in this case, before the court even begins to consider the case in light of Folkman, it needs to follow the trail from the declarations page to the reducing clause, as required by Schmitz.
Thus, we come to the one decision that genuinely needs reconsideration only in light of Folkman Dowhower.
The last time the court of appeals heard Dowhower, it did trac[e] the route the insured would have to take from the declarations page through the UIM portion and to the endorsement containing the reducing clause, Id., as required by Schmitz. The court of appeals devoted five paragraphs to this tracing, a process wholly omitted in Van Erden, and concluded that the tracing requires careful work. Dowhower, 260 Wis.2d at 208.
It should be expected that, on remand, the court of appeals will again find that the policy does not easily guide the insured to the reducing clause.
However, the policy contains no explicit inconsistency there is only the negative implication from the absence of a reducing clause in the declarations page.
However, it is (in the court of appeals opinion, at least) hard for the insured to find the reducing clause. Thus, of the three cases, this is the one that genuinely requires reconsideration purely in light of Folkman to balance the two relevant principles: insureds should be able to easily find the reducing clause (Schmitz); and a mere negative implication is not in itself an ambiguity (Folkman).
– David Ziemer
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David Ziemer can be reached by email.