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Groshek v. Rural Mutual Insurance Co.

Court of Appeals of Wisconsin
Nov 14, 1996
Case No. 96-1935-FT (Wis. Ct. App. Nov. 14, 1996)

Opinion

Case No. 96-1935-FT.

Opinion Released: November 14, 1996. Opinion Filed: November 14, 1996. This opinion will not be published. Rule 809.23(1)(b)5, Stats.

APPEAL from an order of the circuit court for Dodge County: DANIEL W. KLOSSNER, Judge. Reversed and cause remanded with directions.

Before Eich, C.J., Dykman, P.J., and Deininger, J.


Steven J. Groshek appeals from an order on summary judgment dismissing his complaint against Rural Mutual Insurance Company (RMIC). Groshek's action for declaratory judgment sought a ruling that RMIC owed him $100,000 under his underinsured motorist (UIM) policy. The trial court held that under the plain terms of the reducing clause in the policy, Groshek was only entitled to the $75,000 that RMIC had already agreed to pay him. We conclude that under controlling precedent the reducing clause in the policy is illusory and therefore void on public policy grounds. We therefore reverse.

This is an expedited appeal under Rule 809.17, Stats.

Groshek's UIM coverage provided a maximum policy limit of $100,000. A reducing clause in the policy provided that "the limit of liability [$100,000] shall be reduced by all sums paid because of the `bodily injury' by or on behalf of persons or organizations who may be legally responsible."

Groshek's wife was killed in an accident caused by a driver whose automobile insurance coverage contained a $25,000 limit on personal injury liability. The liable driver's insurance company subsequently tendered the $25,000 policy limit to Groshek, who then claimed $100,000 from RMIC under his UIM coverage. RMIC took the position that the reducing clause quoted above reduced its liability to $75,000, and Groshek commenced this declaratory judgment action to resolve the dispute.

It is stipulated that Groshek's damages for wrongful death exceeded the total insurance pool of $125,000.

RMIC cannot use the reducing clause in Groshek's policy to reduce its liability to $75,000. If the reducing clause is valid, then RMIC will never have to pay the stated policy limits of its UIM coverage. The result is an illusory contract that defeats the reasonable expectation of the insured and is therefore contrary to public policy. Kuhn v. Allstate Ins. Co. , 181 Wis.2d 453, 463-65, 510 N.W.2d 826, 830-31 (Ct. App. 1993), aff'd on other grounds, 193 Wis.2d 50, 532 N.W.2d 124 (1995). In a decision on related issues, the supreme court stated that "we do not overrule or limit language in previous holdings of this court and the court of appeals [including Kuhn ] that invalidated reducing clauses in UIM policies in part on the basis of the illusory nature of the coverage." Matthiesen v. Continental Casualty Co. , 193 Wis.2d 192, 204, 532 N.W.2d 729, 733-34 (1995). The issue is therefore settled. We reverse and remand with instructions to enter judgment declaring that Groshek's claim against RMIC shall not be reduced by payments received from the tortfeasor's insurer.

By the Court. — Order reversed and cause remanded with directions.


Summaries of

Groshek v. Rural Mutual Insurance Co.

Court of Appeals of Wisconsin
Nov 14, 1996
Case No. 96-1935-FT (Wis. Ct. App. Nov. 14, 1996)
Case details for

Groshek v. Rural Mutual Insurance Co.

Case Details

Full title:STEVEN J. GROSHEK, PLAINTIFF-APPELLANT, v. RURAL MUTUAL INSURANCE CO.…

Court:Court of Appeals of Wisconsin

Date published: Nov 14, 1996

Citations

Case No. 96-1935-FT (Wis. Ct. App. Nov. 14, 1996)