Dowhower v. Marquez12/10/2003
. In Dowhower ex rel. Rosenberg v. Marquez, 2003 WI App 23, 260 Wis. 2d 192, 659 N.W.2d 57 (Dowhower II), we applied the principles of insurance contract interpretation espoused in Badger Mutual Insurance Company v. Schmitz, 2002 WI 98, 255 Wis. 2d 61, 647 N.W.2d 223, to the insurance policy West Bend Mutual Insurance Company issued to the Dowhowers. Applying the Schmitz methodology, we concluded that although the reducing clause in the underinsured motorist (UIM) provision of the policy, standing alone, was unambiguous, the clause's effect was ambiguous within the context of the whole policy and therefore the clause was unenforceable. But in making this determination, we also used the wording found in the Schmitz opinion and concluded that the clause's effect was not "crystal clear" within the context of the whole policy.
. Recently, however, in Folkman v. Quamme, 2003 WI 116, -30, 264 Wis. 2d 617, 665 N.W.2d 857, the supreme court clarified Schmitz and the analytical framework that courts are to apply in cases alleging contextual ambiguity in insurance policies. In Folkman, the court held that the "crystal clear" language in Schmitz had produced the unintended effect of altering the analytical focus in cases involving alleged contextual ambiguity. Folkman, 264 Wis. 2d 617, . The court then vacated our decision and remanded the case to us for reconsideration in light of its teachings.
. We are convinced that Folkman does not undermine but, rather, supports our holding in Dowhower II. In Folkman, the supreme court reaffirmed the principle of contextual ambiguity that guided our previous decision and instructed that a policy with a clear UIM provision can still be rendered ambiguous by the "organization, labeling, explanation, inconsistency, omission, and text of other provisions in the policy." Folkman, 264 Wis. 2d 617, , 24. As we explained in Dowhower II, West Bend's policy is an organizational maze making it nearly impossible for a reasonable insured to locate, let alone to understand the effect of, the reducing clause. As a consequence, the policy fails to inform a reasonable insured that he or she is purchasing a fixed level of UIM recovery that would be arrived at by combining payments made from all sources. Accordingly, we hold that the policy is contextually ambiguous and affirm the trial court judgment declaring the reducing clause unenforceable and requiring West Bend to pay the Dowhowers the full $50,000 limit of liability guaranteed in the policy.
. The facts are undisputed and we take them primarily from Dowhower ex rel. Rosenberg v. West Bend Mutual Insurance Company, 2000 WI 73, 236 Wis. 2d 113, 613 N.W.2d 557 (Dowhower I) and Dowhower II. While crossing the street in April 1997, Dustin Dowhower, a minor, was injured as a result of the negligence of a motorist. Viking Insurance Company of Wisconsin insured the vehicle that struck Dowhower. Viking's policy carried a limit of $25,000 per person. Viking paid its $25,000 policy limit to the Dowhowers. Pursuant to both Wis. Stat. § 632.32(5)(i) (2001-02), which authorizes insurance companies to include reducing clauses in their policies, and the reducing clause in the Dowhowers' policy, West Bend paid the Dowhowers $25,000, an amount representing the $50,000 UIM bodily injury limit under the Dowhowers' UIM policy, minus the $25,000 paid by Viking.
. The Dowhowers sought a judgment from the trial court declaring unenforceable the reducing clause provision in the UIM section of the policy and contending that Wis. Stat. § 632.32(5)(i) violated the United States and Wisconsin Constitutions. West Bend filed a motion to dismiss the action and counterclaimed for a declaration that it had paid all that it
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