Because “hit-and-run” is ambiguous, an insured is entitled to uninsured motorist (UM) coverage, even if the driver stops to inquire before leaving.
Rejecting the argument that “hit-and-run” has a defined meaning, Justice Ann Walsh Bradley wrote for the Wisconsin Supreme Court on May 14, “Given that the phrase ‘hit-and-run’ in the … UM policy is susceptible to more than one reasonable construction, we determine that it is ambiguous. We therefore construe the phrase ‘hit-and-run’ in favor of coverage.”
According to the facts in the complaint, in 2005 Zachary Zarder, 13, was riding his bicycle in New Berlin when he was struck by an unidentified motorist.
The occupants exited the car and inquired whether Zarder was injured. He said he was not and the occupants drove away.
In fact, however, Zarder was injured. Zarder sought UM coverage under his parents’ automobile policy with Acuity, which defined “uninsured motor vehicle” to include “a land motor vehicle or trailer which is … [a] hit-and-run vehicle whose operator or owner is unknown and which strikes [an insured].”
Acuity rejected the claim, and the Zarders filed suit.
Acuity argued that the meaning of “hit-and-run” is the one given it by the Supreme Court in Hayne v. Progressive Northern Insurance Co., 115 Wis. 2d 68, 73-74, 339 N.W.2d 588 (1983), which holds “[T]he plain meaning of ‘hit-and-run’ consists of two elements: a ‘hit’ or striking, and a ‘run,’ or fleeing from the scene of an accident.”
The circuit court denied Acuity’s motion for declaratory judgment on policy grounds.
The Court of Appeals accepted Acuity’s interlocutory appeal, and affirmed on other grounds in a published opinion. 2009 WI App 34, 316 Wis.2d 573, 765 N.W.2d 839.
The Court of Appeals determined that Hayne’s definition of “run” was dictum, because the issue before the Supreme Court was the meaning of “hit” rather than “run.”
It found the definition of “run” was not “germane to the outcome of Hayne” but was an off-the-cuff statement unsupported by analysis.
Accordingly, the Court of Appeals adopted a broader definition: “the operator stops but drives on without providing identification or complying with his or her other legal duties.”
In addition, the court found that the driver technically violated the criminal hit-and-run statute, sec. 346.67, despite lack of criminal intent, and that allowing coverage would further the legislative purpose of protecting insureds when there is no tortfeasor insurance available to pay for their injuries.
The Supreme Court granted certiorari, and affirmed, although on different grounds.
The court said that both the definition of “hit-and-run” in the criminal statute and the definition in Hayne are irrelevant to the analysis.
Addressing the criminal statute, the court wrote, “we do not find the scope and application of that statute to be helpful to the interpretation of this insurance policy. Insurance coverage for a hit-and-run accident involving an unidentified vehicle is not coextensive with the criminal culpability of the driver of that vehicle under Wis. Stat. sec. 346.67.”
Addressing the definition in Hayne, the court wrote, “the court in Hayne was interpreting the language of a statute. Here, however, we interpret the language in an insurance policy. … [T]he court applies different rules when construing a statute than it does when construing an insurance contract.”
The court noted that, when an insurance policy is ambiguous, it is construed in favor of coverage, while ambiguous statutes are construed according to legislative intent.
Instead, the court looked solely to the reasonable expectations of insureds.
The court acknowledged that a reasonable insured could interpret “hit-and-run” to only encompass vehicles that flee the scene without stopping.
But the court found, “a reasonable insured might also conclude that a hit-and-run vehicle is one that strikes an insured and then leaves the scene of the accident without the driver providing identifying information.”
Because the term is ambiguous, the court interpreted it in favor of coverage and affirmed.
Before concluding, however, the court addressed the Court of Appeals’ statement that the Supreme Court’s definition of “run” in Hayne was dictum.
Declining to define “dicta,” the court said that the Court of Appeals lacks authority to dismiss a statement by the Supreme Court as dicta. Doing so, the court concluded, would necessarily withdraw or modify language from the opinion, contrary to the mandate in Cook v. Cook, 208 Wis.2d 166, 560 N.W.2d 246 (1997), that it not do so.
Two aspects of the opinion are noteworthy.
First is the Supreme Court’s refusal to consider the meaning of “hit-and-run” in the criminal statutes when interpreting an insurance policy.
Suppose an insurance policy protects against theft, and the insured is the victim of multiple acts of theft by the same actor — five separate thefts of $5,000 each. Suppose also that the insured has a $5,000 deductible.
Under the Court of Appeals’ analysis — which includes looking to the criminal statutes — each theft would likely be treated as a separate occurrence under the policy, because each act of theft could be prosecuted as a separate criminal offense. Thus, the insured would not be able to recover anything from his insurer.
However, under the Supreme Court’s analysis, what matters is that a reasonable insured might consider himself the victim of one big theft, rather than several smaller thefts.
Treating the thefts as just one large theft — a reasonable interpretation — only one deductible would apply and the insured could recover $20,000 of the $25,000 that was stolen.
A second noteworthy aspect is what the opinion suggests to lawyers and lower court judges seeking to avoid the application of Supreme Court language that undermines a preferred interpretation.
The court wrote, “by concluding that the definition of ‘run’ was dictum — rather than inapplicable as precedent for interpreting an insurance policy — the court of appeals implied that the Hayne definition would never be binding authority, even for a court interpreting the omnibus statute.”
In other words, attorneys need to argue that adverse language is “inapplicable as precedent” for whatever reason, and scrupulously avoid the term “dictum.”
Of course, to succeed, attorneys will have to put forth a legitimate reason why a given statement is “inapplicable as precedent”; courts will quickly figure out when that term is simply being used as a code word for “dictum.”
David Ziemer can be reached at email@example.com.