By Joe Forward, Legal Writer, State Bar of Wisconsin

July 30, 2010 – The Wisconsin Supreme Court ruled 4-3 in Blum v. 1st Auto & Casualty Insurance Co., 2010 WI 78 (July 14, 2010) that appeals court decisions that are subsequently overruled lose all precedential value, unless expressly stated otherwise.

That includes appeals cases that are overruled “in part.” Three justices dissented, stating that such a conclusion “is made without input from the many Wisconsin judges and lawyers who will be impacted by the court’s decision.”

In addition, the supreme court – in a lead opinion written by Justice David Prosser – rejected (5-2) the argument that uninsured motorist insurance coverage follows the uninsured vehicle, not just the uninsured driver, absent negligence.

Justice Ann Walsh Bradley filed a separate opinion (Abrahamson, C.J., joined) concurring with the ruling on precedential value, but dissenting on the insurance coverage issue.

Justice Patience D. Roggensack filed a separate opinion (Gableman, J. and Ziegler, J., joined) concurring on the insurance coverage issue, but dissenting on the precedential value issue.

Background

Kevin Blum jumped on the hood of a pick-up truck driven by Nicholas Burch, who accelerated then applied the brakes. Blum was thrown off, and hit his head on a curb, causing injury.

N. Burch’s father, Bruce Burch, owned the pick-up truck but did not maintain any vehicle insurance policy at the time of the accident. However, N. Burch was covered by a liability insurance policy on another car. Blum settled with N. Burch for $250,000.

Blum then filed suit against his own insurance carrier, 1st Auto & Casualty Co. (1st Auto), to recover under the uninsured motorist provision of his policy.

Blum asserted that 1st Auto was strictly liable because the vehicle that caused the injury was uninsured. The circuit court granted summary judgment to 1st Auto.

The appeals court affirmed, relying on part of the analysis in Hemerley v. American Family Mutual Insurance Co., 127 Wis. 2d 304, 379 N.W.2d 860 (Wis. Ct. App. 1985).

However, the supreme court expressly overruled Hemerley in Hull v. State Farm Mutual Automobile Insurance Co., 222 Wis. 2d 627, 586 N.W.2d 863 (1998).

The appeals court reasoned that Hemerley “could still be used as precedent for holdings that had not been specifically overruled” by the supreme court.

The policy

The supreme court considered whether, under the policy and state statute, Blum’s uninsured motorist coverage triggered simply because B. Burch, the owner, did not have insurance.

The majority held that Blum’s policy did not provide uninsured motorist coverage absent negligence on the part of the vehicle owner.

The court found that the policy unambiguously required negligence, the vehicle did not fall within the policy’s definition of “uninsured motor vehicle,” and the policy contained a valid clause reducing 1st Auto’s liability in the event a liable party paid compensation.

The statute

Next, the court considered whether Wis. Stat. section 632.32(4) mandates insurance coverage in this circumstance regardless of what the policy states.

Section 632.32(4) states, in relevant part, that policies insuring against injuries that arise out of “ownership, maintenance or use of a motor vehicle” must cover “persons injured who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury … in limits of at least $25,000 per person and $50,00 per accident.

The court analyzed Hull, a case in which the vehicle’s owner was both negligent and uninsured, even though he was not driving at the time of the accident. The uninsured motorist’s negligence in Hull stemmed from failing to maintain the vehicle properly.

Blum asserts that “the uninsured status of the vehicle is enough to provide coverage” under Hull, the court explained. But here, Blum was not legally entitled to recover damages from B. Burch under the statute because B. Burch was not negligent.

“In the absence of negligence by the uninsured party, the statute does not mandate UM coverage,” the court held.

Precedential value

The appeals court relied in part on Hemerley to support its interpretation of the policy, but Hemerley was overruled by the supreme court in Hull.

Hemerleyinterpreted an insurance policy, and Hull ruled on construction of section 632.32(4), the appeals court explained. Thus, Hemerley’s holding with regard to policy interpretation still held precedential value.

However, the supreme court held that “unless this court explicitly states otherwise, a court of appeals opinion overruled by this court no longer retains any precedential value.”

The purpose of the supreme court – to “oversee and implement the statewide development of the law” – “would not be served by requiring this court to address specifically every holding in a court of appeals decision to protect this court’s holding,” the Justice Prosser wrote.

Overruled in part?

Three justices opposed the majority’s holding that overruled appeals court decisions no longer possess any precedential value, unless expressly stated otherwise.

“I dissent from the majority’s conclusion that a court of appeals decision loses all precedential value when it is overruled in part by this court,” Justice Roggensack wrote.

Roggensack suggested referring the issue to the Wisconsin Judicial Council to obtain input for judges and lawyers, and called for a study on how other states and federal rules treat opinions that are overruled in part.

Attorneys

J. Michael Riley and Timothy Barber of Axley Brynelson LLP, Madison, represented Kevin Blum. Rick Mundt and Chet Holzbauer of Winner, Wixson & Pernitz, Madison, represented 1st Auto & Insurance Co.