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Sukala v. Heritage Mutual Insurance Co.6/22/2005
Review of a decision of the Court of Appeals. Reversed.
Heritage Mutual Insurance Company (Heritage) and Western National Mutual Insurance Company (Western) seek review of a court of appeals decision reversing the circuit court's denial of relief from judgment to Dawn and John Sukala under Wis. Stat. § 806.07(1)(h) (2001-02). We conclude that the circuit court correctly determined that there had been no change in the law in regard to the enforceability of the reducing clauses at issue here. Therefore, because a change in the law was the basis for the Sukalas' motion, the circuit court appropriately exercised its discretion in denying the Sukalas relief from judgment. Accordingly, we reverse the court of appeals.
I. BACKGROUND
On October 2, 1996, automobiles operated by John Sukala and Bruce Hasenohrl were involved in an accident that caused serious injuries to Sukala. The accident occurred during the course of Sukala's employment, and he received $786,000.18 in workers' compensation benefits from a policy issued by Heritage to his employer. The Sukalas also received $100,000 from Hasenohrl's automobile liability insurance, the limits of that policy.
The Sukalas sought additional recovery from two underinsured motorist (UIM) provisions, one in the Sukalas' personal automobile policy issued by Western with coverage limits of $250,000, and the other in a Heritage policy held by John Sukala's employer with $1,000,000 limits. Both UIM policies contained reducing clauses to lower the UIM limits by payments received from liability insurance and workers' compensation benefits.
In February 1997, the Sukalas sued Heritage, as both Hasenohrl's insurer and the UIM insurer for John Sukala's employer, and Western, as the Sukalas' UIM insurer. The Sukalas moved to invalidate the Heritage and Western UIM reducing clauses and to declare Wis. Stat. § 632.32(5)(i) unconstitutional, because it permits reducing clauses in automobile insurance policies. The circuit court concluded that the reducing clauses were enforceable and § 632.32(5)(i) was constitutional. The Sukalas appealed, and while the case was pending before the court of appeals, this court decided Dowhower v. West Bend Mutual Insurance Co., 2000 WI 73, 236 Wis. 2d 113, 613 N.W.2d 557. There we held that § 632.32(5)(i) was constitutional and that a "reducing clause may be ambiguous within the context of the insurance contract." Dowhower, 236 Wis. 2d 113, -36. The court of appeals affirmed the circuit court's ruling against the Sukalas, Sukala v. Heritage Mutual Insurance Co., 2000 WI App 266, , 240 Wis. 2d 65, 622 N.W.2d 457 (Sukala I), and we denied the Sukalas' petition for review.
Seven months after we denied the Sukalas' petition for review, we granted review in Badger Mutual Insurance Co. v. Schmitz, 2002 WI 98, 255 Wis. 2d 61, 647 N.W.2d 223. We decided Schmitz in July 2002, stating that a reviewing court must examine a reducing clause in the context of the entire policy to determine whether the reducing clause is ambiguous. Id., . If the reducing clause, in the context of the entire policy, is misleading or unclear, it is ambiguous and not enforceable. Id. We also referred to the court of appeals decision in Sukala I, stating, " n essence, we agree with [the court's] analysis," but that the court "proceeded to an ambiguous and misleading conclusion." Schmitz, 255 Wis. 2d 61, . The conclusion in Sukala I to which we referred in Schmitz was:
nder Dowhower and the declared public policy of the legislature in Wis. Stat. § 632.32(5)(i), UIM reducing clauses complying with § 632.32(5)(i) cannot render UIM coverage "illusory." Once we have concluded that the UIM provi
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