Dan Danbeck, Plaintiff-Respondent-Petitioner v. American Family Mutual Insurance Company, Defendant-Appellant

Summary

The Wisconsin Supreme Court held that an underinsured motorist (UIM) policy's exhaustion clause, which requires that the tortfeasor's liability limits be 'exhausted by payment of judgments or settlements,' unambiguously requires payment of the full liability policy limits before the UIM carrier's duty to pay is triggered. A settlement for less than the tortfeasor's liability limits plus a credit to the UIM carrier for the difference does not satisfy the exhaustion requirement. The court affirmed the court of appeals' reversal of the circuit court's denial of American Family's summary judgment motion. Ann Walsh Bradley, J., dissenting, joined by Chief Justice Abrahamson, would have found the exhaustion clause ambiguous, construed it against the insurer, and held that a settle-and-credit agreement exhausts the tortfeasor's liability limits.