DAY v. ALLSTATE INDEMNITY CO

¶ 1. ANN WALSH BRADLEY, J.

Wendy M. Day seeks review of a published decision of the court of appeals reversing the circuit court's denial of Allstate Indemnity Company's motion for summary judgment. The parties dispute whether Wendy's claim for wrongful death is covered under the terms of a homeowner's policy Allstate issued to Clinton and Holly Day. Allstate argues that the language of the family exclusion precludes coverage for Wendy's claim because a benefit of coverage would accrue directly or indirectly to an insured person.

See Day v. Allstate, 2010 WI App 72, 325 Wis. 2d 370, 784 N.W.2d 694, reversing a nonfinal order of the Circuit Court for St. Croix County, Edward F. Vlack III, Judge.

¶ 2. The court of appeals concluded that Clinton, who is an insured person, would benefit from the coverage by virtue of his entitlement to half of any recovery Wendy received. It determined that the exclusion applied, and it directed the circuit court to grant summary judgment in favor of Allstate.

¶ 3. We determine that the court of appeals erred when it directed the circuit court to grant summary judgment in favor of Allstate. The court of appeals' assertion that Clinton would have a legal right to collect a portion of the wrongful death award fails to distinguish the right to pursue a claim under the wrongful death statute from the ownership of a wrongful death recovery when the parties are divorced.

¶ 4. Based upon an examination of the language of the policy, the canons of insurance policy construction, and our case law, we conclude that Allstate has failed to meet its burden to demonstrate that the family exclusion unambiguously precludes coverage. Therefore, we reverse the decision of the court of appeals directing the entry of summary judgment and remand to the circuit court for further proceedings.

I

¶ 5. This insurance coverage dispute arises out of several claims advanced in the wake of the events of November 27, 2006. On that evening, eight-year-old Emma Day drowned while taking a bath at the home of her father, Clinton Day, and her stepmother, Holly Day.

¶ 6. The plaintiff in this action is Emma's mother and Clinton's former wife, Wendy Day. Wendy and Clinton divorced in 2004. They shared joint custody and placement of Emma prior to her death. Emma and her two sisters, Hannah Day and Desirae Sarver, were scheduled to spend the night of November 27 at Clinton and Holly's home.

¶ 7. According to the allegations in the complaint, Emma had epilepsy and suffered from frequent seizures. On the day of her death, she had two seizures and was excused early from school. Holly picked Emma up from school. Later that evening, Holly prepared a bath for Emma. The complaint alleges that Holly left Emma unattended in the bathtub with the bathroom door closed, and that Emma drowned as a result of having a seizure in the bathtub.

¶ 8. Wendy filed suit against Holly, alleging negligence. The complaint named Wendy as a plaintiff in three different capacities: "Individually"; "as Personal Representative of the Deceased"; and "on behalf of her Minor Children," Desirae and Hannah.

¶ 9. The complaint demanded the pecuniary loss and injury Wendy suffered as a result of Emma's death, an amount sufficient to compensate Wendy for the loss of her daughter's society and companionship, and relief for "the wrongful death of Emma Day." On behalf of Emma, the deceased, it demanded the damages for Emma's pre-death pain and suffering. Finally, on behalf of Desirae and Hannah, the complaint demanded compensation for their severe emotional distress as well as an amount sufficient to compensate the girls for the loss of Emma's society and companionship.

Wendy later amended her complaint and demanded additional damages, including medical expenses, funeral expenses, and burial expenses.

¶ 10. Holly tendered her defense to Allstate, which had issued a homeowner's policy listing Clinton and Holly as the named insureds. The policy, which includes coverage for family liability, provides in relevant part: "Subject to the terms, conditions and limitations of this policy, Allstate will pay damages which an insured person becomes legally obligated to pay because of bodily injury or property damage arising from an occurrence to which this policy applies, and is covered by this part of the policy." It provides further: "If an insured person is sued for these damages, we will provide a defense with counsel of our choice, even if the allegations are groundless, false or fraudulent."

During oral argument in this court, Allstate's attorney acknowledged that the policy's limit of liability was $300,000, which is $200,000 short of the damage cap for wrongful death. Wis. Stat. § 895.04(4).
All subsequent references to the Wisconsin Statutes are to the 2005-06 version unless otherwise indicated.

¶ 11. The policy's grant of coverage is subject to various exclusions, including the following family exclusion: "We do not cover bodily injury to an insured person . . . whenever any benefit of this coverage would accrue directly or indirectly to an insured person."

¶ 12. Allstate hired counsel to defend Holly, subject to its reservation of its right to deny coverage based on the family exclusion. The reservation of rights letter explained: "[t]he Allstate policy contains an exclusion that provides that the policy does not cover bodily injury to an insured person. Some or all of the damages claimed in the complaint relate to bodily injury sustained by an insured person. Allstate does not believe that Holly Day is entitled to coverage for such damages."

¶ 13. Allstate then moved to intervene as a party plaintiff "so that its obligation to provide insurance coverage to the defendant, Holly Day, relative to some or all of the claims set forth in the Complaint, can be determined." It also moved for an order bifurcating insurance coverage issues from the underlying issues of liability and damages. Finally, Allstate filed a cross-complaint seeking judgment declaring that Allstate has no duty to defend or indemnify Holly in connection with some or all of the claims set forth in the complaint.

¶ 14. The circuit court granted Allstate's motion to intervene. The court ordered bifurcation of the case so that the insurance coverage issues would be decided first, and stayed discovery on the merits pending final determination on coverage.

¶ 15. Allstate then filed a third-party complaint, requesting that Clinton Day be joined as an interested party. It later explained that "Clinton Day was joined by Allstate simply because, as one of Emma Day's parents, he owns a portion of the wrongful death cause of action brought by Wendy Day, and is therefore a necessary party in Allstate's declaratory judgment action. Clinton Day also paid for half of the funeral and related expenses, and would therefore own part of Emma's survivorship action."

¶ 16. Several months later, the parties filed a series of stipulations with the court. First, they stipulated to Holly's dismissal. Wendy expressed her intention to proceed exclusively against Allstate's liability policy. The parties further stipulated to the dismissal of the claims made on behalf of Desirae and Hannah. Finally, Wendy represented and stipulated that she was pursuing no claim against Clinton in connection with the action.

Wisconsin's direct action statute, Wis. Stat. § 632.24, permits a plaintiff to bring suit directly against a tortfeasor's insurer without bringing suit against the tortfeasor:

Any bond or policy of insurance covering liability to others for negligence makes the insurer liable, up to the amounts stated in the bond or policy, to the persons entitled to recover against the insured for the death of any person or for injury to persons or property, irrespective of whether the liability is presently established or is contingent and to become fixed or certain by final judgment against the insured.

¶ 17. Based on the parties' stipulations, the court dismissed Holly, and it also dismissed with prejudice the claims of Desirae and Hannah. In addition, the court ordered: "No claim shall be pursued against Clinton Day, now or in the future, in connection with this action." Finally, the court ordered that the complaint be amended to name Allstate as a defendant. As a result of the court order, the only remaining claims were the survival action advanced on behalf of Emma's estate and Wendy's claim for wrongful death.

The parties and the court of appeals refer to this action as a "survivorship action." Wisconsin case law and practice guides more frequently refer to this type of claim as a "survival action." See, e.g., Estate of Merrill v. Jerrick, 231 Wis. 2d 546, ¶ 5, 605 N.W.2d 645 (Ct. App. 1999); 9 Callaghan's Wisconsin Pleading Practice § 82:2 (4th ed. 2005); 2 The Law of Damages in Wisconsin § 16.10 (5th ed. 2010). For the sake of clarity and consistency, we use the term "survival action" throughout this opinion.

¶ 18. Allstate moved for summary judgment. With regard to the survival claim, it argued that "[t]he Allstate policy provides no coverage for the claims brought by Wendy Day as Emma Day's personal representative because they are based on Emma's bodily injury, the recovery for which would directly benefit the estate of the insured, Emma Day." It argued further that because there was no coverage for the survival claim, there was likewise no coverage for the wrongful death claim. In response to Allstate's brief, Wendy filed a cross motion for summary judgment.

¶ 19. After hearing arguments, the circuit court issued a written decision. Addressing the survival claim, the circuit court assumed for the sake of argument that Emma was an insured under Clinton and Holly's policy. Nevertheless, it concluded that there was coverage under the policy for a claim brought by Emma's personal representative that would benefit her estate: "While bodily injury in the policy includes death, the direct or indirect benefit must accrue to an `insured person.' [The policy] does not say to an insured person or their estate." The court construed ambiguity against the insurer and concluded that "the phrase `insured person' does not include an insured person's estate."

¶ 20. Addressing Wendy's wrongful death claim, the court found that "Wendy Day is clearly not an insured under Clinton Day's insurance policy with All-state." It explained that it was required to interpret the phrase "accrue directly or indirectly to an insured person." Relying on this court's discussion of that phrase in Whirlpool Corp. v. Ziebert, 197 Wis. 2d 144, 152, 539 N.W.2d 883 (1995), the circuit court determined: "This court cannot, as a matter of law, find that any moneys that Wendy Day may receive would `be funneled through' directly or indirectly" to Hannah or Desirae. (Emphasis in original.) The court concluded that coverage existed under the policy, and it granted Wendy's motion for summary judgment.

¶ 21. The court of appeals granted Allstate's petition for leave to appeal the non-final order, and it reversed the circuit court. It began by acknowledging that "resolution of this coverage dispute requires that we determine to whom the benefits of Wendy's wrongful death and [survival] claims would accrue." Day v. Allstate, 2010 WI App 72, ¶ 9, 325 Wis. 2d 370, 784 N.W.2d 694. The court reasoned that both claims were excluded from coverage because Clinton, an insured, was entitled to half of any recovery on either claim. Id., ¶ 16.

¶ 22. Regarding the survival claim, the court reasoned that Clinton and Wendy would share equally any assets belonging to Emma's estate under the laws governing intestate succession. Id., ¶ 13. Consequently, it determined, "one-half of any [survival] damages Wendy recovers will pass through Emma's estate to Clinton. If Allstate must indemnify Holly for these losses, Clinton — an insured person — would benefit from the coverage." Id.

¶ 23. The court of appeals also determined that there was no coverage for Wendy's wrongful death claim. Citing Bruflat v. Prudential Prop. Cos. Ins. Co., 2000 WI App 69, ¶ 18, 233 Wis. 2d 523, 608 N.W.2d 371, the court of appeals asserted that "any amount recovered shall belong and be paid to Clinton and Wendy." Day, 325 Wis. 2d 370, ¶ 11. Therefore, it concluded that Clinton would benefit from coverage because he would have a "legal right to collect a portion of the wrongful death award." Id.

¶ 24. Wendy filed a petition with this court seeking review of the court of appeals' determination that there is no coverage for her wrongful death claim. She did not seek review of the court of appeals' determination regarding the survival claim, and accordingly, that issue is not before this court.

II

¶ 25. In this case, we are required to construe the terms of an insurance policy to determine whether Allstate may deny coverage for Wendy's wrongful death claim. An insurance policy is a contract for insurance. Construction of an insurance policy is a question of law, which we review independently of the determinations rendered by the circuit court and the court of appeals. Folkman v. Quamme, 2003 WI 116, ¶ 12, 264 Wis. 2d 617, 665 N.W.2d 857.

¶ 26. When determining whether an insurance policy provides coverage, we examine the facts of the claim and the language of the policy to determine whether the policy's insuring agreement makes an initial grant of coverage. Estate of Sustache v. Am. Family Mut. Ins. Co., 2008 WI 87, ¶ 22, 311 Wis. 2d 548, 751 N.W.2d 845. If the claim triggers the initial grant of coverage, we determine next whether any of the various exclusions preclude coverage for the claim. Id., ¶ 23. The insured bears the burden of showing an initial grant of coverage, and if that burden is met the burden shifts to the insurer to show that an exclusion nevertheless precludes coverage. Am. Family Mut. Ins. Co. v. Schmitz, 2010 WI App 157, ¶ 8, 330 Wis. 2d 263, 793 N.W.2d 111.

¶ 27. The court's goal is to determine and carry out the intentions of the parties as expressed by the language of the insurance policy. Folkman, 264 Wis. 2d 617, ¶ 12. An insurance policy is to be construed, whenever possible, "so as to give a reasonable meaning to each provision of the contract, and [] courts must avoid a construction which renders portions of a contract meaningless, inexplicable or mere surplusage." 1325 North Van Buren, LLC v. T-3 Group, Ltd., 2006 WI 94, ¶ 56, 293 Wis. 2d 410, 716 N.W.2d 822.

¶ 28. We interpret policy terms not in isolation, but rather in the context of the policy as a whole. Badger Mut. Ins. Co. v. Schmitz, 2002 WI 98, ¶ 61, 255 Wis. 2d 61, 647 N.W.2d 223. We give undefined words and phrases their common and ordinary meaning. Folkman, 264 Wis. 2d 617, ¶ 17. If words or phrases are susceptible to more than one reasonable construction, they are ambiguous. Id., ¶ 13. "[B]ecause the insurer is in a position to write its insurance contracts with the exact language it chooses — so long as the language conforms to statutory and administrative law — ambiguity in that language is construed in favor of an insured seeking coverage." Froedtert Mem'l Lutheran Hosp. v. Nat'l States Ins., 2009 WI 33, ¶ 43, 317 Wis. 2d 54, 765 N.W.2d 251.

¶ 29. A basic canon of construction in Wisconsin is that exclusions in an insurance policy are narrowly construed against the insurer. Whirlpool, 197 Wis. 2d at 152. A court will enforce exclusions that are clear from the face of the policy. Id. However, if the effect of an exclusion is ambiguous or uncertain, it will be construed in favor of coverage. Id.

III

¶ 30. Because the parties focus many of their arguments on public policy, we begin our discussion by briefly clarifying the role that public policy plays in a discussion about insurance coverage. Next, we turn to examining the policy language to determine whether the family exclusion in this policy of insurance unambiguously precludes coverage.

¶ 31. If an insurance policy provision is contrary to clear public policy, a court may conclude that it is unenforceable. On several occasions, this court has addressed public policy arguments regarding the enforceability of family exclusions. In both Shannon v. Shannon and in Whirlpool, it was argued that the family member exclusion, which excluded coverage under the facts of each case, was "contrary to public policy." Shannon v. Shannon, 150 Wis. 2d 434, 455, 442 N.W.2d 25 (1989); Whirlpool, 197 Wis. 2d at 147.

See, e.g., Mau v. North Dakota Ins. Reserve Fund, 2001WI 134, 134, 248 Wis. 2d 1031, 637 N.W.2d 45 (concluding that an occupancy requirement in an underinsured motorist policy was unenforceable because it excluded coverage for a named insured in violation of Wis. Stat. § 632.32(6)(b)2.a. (1995-96)). Courts will determine that a policy provision is contrary to public policy only in cases that are free from doubt. Continental Ins. Co. v. Daily Express, Inc., 68 Wis. 2d 581, 589, 229 N.W.2d 617 (1975).

¶ 32. In those cases, we concluded that the exclusions were not contrary to public policy because they serve the legitimate purpose of "exempt[ing] the insurer from liability to those persons to whom the insured, on account of close family ties, would be apt to be partial in case of injury." Shannon, 150 Wis. 2d at 456. We further determined that an insurer need not prove actual collusion between the plaintiff and the insured as a prerequisite to enforcing a family exclusion: "[S]uch clauses are not contrary to public policy, even though there may be no collusion in this particular case." Whirlpool, 197 Wis. 2d at 151-52.

¶ 33. Seizing upon our discussion in Shannon and Whirlpool, the parties focus many of their arguments on notions of public policy and the purpose underlying family exclusions. Wendy argues that there is little likelihood of collusion here given the probable antagonism between Clinton's former and current wives. The amicus brief filed by the Wisconsin Association for Justice takes the public policy discussion one step further. It argues that even if concerns about collusion would support denying coverage, there may be other public policies that should be considered, including the public policy against denying coverage in cases involving domestic abuse. Allstate contends that these facts present a likelihood of collusion, and accordingly, it implies that it is appropriate to deny coverage.

¶ 34. By advancing these arguments, the parties put the cart in front of the horse. Generally, family exclusions are enforceable because they protect the insurer from a class of plaintiffs to whom the insured defendant may be partial — but it does not follow that the family exclusion protects an insurer from all plaintiffs to whom the defendant insured may be partial.

See Whirlpool Corp. v. Ziebert, 197 Wis. 2d 144, 148, 539 N.W.2d 883 (1995) (recognizing that whether a claim is excluded under "the specific language of the family exclusion clause" is a separate question from whether such exclusions are "contrary to public policy").

¶ 35. Whether the family exclusion precludes coverage for Wendy's wrongful death claim is a question of contract interpretation. The purpose underlying a family exclusion does not control our determination of whether the language of the family exclusion unambiguously precludes coverage for a claim. The answer to that question depends upon the language of the insurance policy.

IV

¶ 36. We turn next to interpreting the relevant policy language. It is clear that Wendy's claim for wrongful death falls within the policy's initial grant of coverage. The policy provides that, "[s]ubject to the terms, conditions and limitations of this policy, Allstate will pay damages which an insured person becomes legally obligated to pay because of bodily injury . . . arising from an occurrence to which this policy applies, and is covered by this part of the policy." If Wendy prevails, Holly, who is an insured, will be legally obligated to pay damages because of Emma's bodily injury.

¶ 37. The question, then, is whether the language of the family exclusion unambiguously precludes coverage for the claim. The family exclusion provides: "We do not cover bodily injury to an insured person . . . whenever any benefit of this coverage would accrue directly or indirectly to an insured person."

¶ 38. In this context, the word "whenever" serves the role of a conjunction and indicates that two conditions must be met for the exclusion to apply The exclusion's language precludes coverage if: (1) the coverage sought is for bodily injury to an insured person; and (2) any benefit of coverage would accrue directly or indirectly to an insured person.

At some points throughout its argument, Allstate appears to abandon any language-based interpretation of the policy. Instead, it briefly suggests that because there is no coverage for Emma's estate's claims, there is likewise no coverage for Wendy's wrongful death claim: "If there is no coverage for Emma Day's bodily injury under Allstate's policy, it follows there can be no coverage for Wendy Day's wrongful death claim, which is dependent on and stems from that bodily injury."
This argument is inconsistent with the language of the policy. The language of the exclusion precludes coverage when (1) the coverage sought is for bodily injury to an insured person and (2) any benefit of coverage would accrue directly or indirectly to an insured person. Allstate's argument that the sole consideration should be whether there is injury to an insured fails to account for the second condition, that is, whether any benefit would accrue to an insured.

¶ 39. Like the circuit court and the court of appeals, we focus our examination on whether "any benefit" of coverage "would accrue directly or indirectly to an insured person." The parties agree that Clinton, Holly, Hannah, and Desirae are all insureds.

There is no dispute that Emma is an insured person, and that Wendy's wrongful death claim arises out of Emma's bodily injury. The parties do not brief or argue whether claims that arise out of bodily injury to an insured fit within the exclusion's first condition. Accordingly, we do not determine whether the first condition is met, and like the parties, we focus our examination on the exclusion's second condition.

Emma was likewise an insured under the policy. Under the circumstances here, we need not determine whether her estate would be considered an "insured." The court of appeals determined that there is no coverage for the estate's survival claim, and Wendy does not seek review of that determination.

¶ 40. We are mindful that the only claim now being pursued, and therefore the only claim we need address in this opinion, is Wendy's wrongful death claim. It is undisputed that Wendy is not an insured under Allstate's policy. Nevertheless, we agree with Allstate that "[t]he fact that Wendy Day is not an insured person under the policy will not save her wrongful death claim against Allstate if a benefit would accrue to an insured person[.]" The language of the policy requires us to determine whether a benefit of coverage would accrue directly or indirectly to an insured person.

¶ 41. We examine first what is meant by the term "benefit," as it is used in the family exclusion. Next, we turn to examining whether any benefit of coverage would accrue directly or indirectly to any insured.

A

¶ 42. Although the meaning of the exclusion turns on a definition of the term "benefit," the policy does not define that term. We are left, then, to attempt to discern its meaning. Our inquiry about the meaning of "benefit" is aided by this court's examination of the identical family member exclusion in Whirlpool, 197 Wis. 2d 144.

¶ 43. The relevant facts from the Whirlpool case are important but not complex. Three-year-old Jaclyn Ziebert was injured by a meat grinder that had been manufactured by Whirlpool. Id. at 147. Jaclyn's parents filed suit against Whirlpool and another defendant, seeking damages for Jaclyn's injuries. Id. at 147-48. In a separate action, Whirlpool filed a contribution claim against Jaclyn's mother. Id. at 148. It alleged that Jaclyn's mother's negligent supervision contributed to Jaclyn's injuries. Id. Jaclyn's mother tendered the defense of Whirlpool's contribution claim to her homeowner's insurer, which contested coverage. Jaclyn's action for negligence against Whirlpool was stayed pending resolution of the coverage dispute in the contribution claim.

Whirlpool, 197 Wis. 2d 144, Appendix of Petitioner at 111, available at the Wisconsin Law Library.

¶ 44. To understand the reasoning adopted by the Whirlpool court, it is essential to understand the nature of a contribution claim. A contribution claim may arise when more than one tortfeasor is legally responsible for an injury. If one of the tortfeasors has paid more than its proportionate share of the damages, it may seek contribution from the other tortfeasors. "Contribution distributes the loss by requiring each person to pay his proportionate share of the damages on a comparative fault basis." Swanigan v. State Farm Ins. Co., 99 Wis. 2d 179, 196, 299 N.W.2d 234 (1980).

¶ 45. By bringing the contribution action against Jaclyn's mother, Whirlpool was alleging that Jaclyn's mother, an insured, was obligated to pay-her proportionate share of the damages Whirlpool owed to Jaclyn, also an insured, for her bodily injury. See Whirlpool, 197 Wis. 2d at 155 ("The liability being asserted in Whirlpool's contribution claim against [Jaclyn's mother] is based on the claim for damages suffered by Jaclyn Ziebert. That liability is identical whether there is a direct claim against [Jaclyn's mother] by her daughter or whether the claim is indirectly asserted through a contribution claim by Whirlpool.").

¶ 46. The language of the family exclusion in Whirlpool was identical to the language in this policy, and we had occasion to explore the circumstances under which a "benefit" would accrue to an insured. This court determined that the language "is unambiguous and clearly contemplates contribution claims." Id. at 153. It explained that a benefit would accrue indirectly to Jaclyn because "the money Whirlpool receives [as a result of the contribution claim] will, in all practical respects, be funneled through to Jaclyn," who was injured and also an insured under the policy. Id. at 153-54 (emphasis added). The court commented: "To say that Jaclyn Ziebert is not receiving a benefit because her recovery comes from a contribution claim rather than a direct claim for personal injuries is the ultimate tribute to form over substance. Such a conclusion defies both logic and common sense." Id. at 155 (emphasis added).

¶ 47. In Whirlpool, the court applied the term "benefit" to reference money recovery, that is, the proceeds of insurance coverage. It concluded that when the insurance proceeds end up in the pocket of the insured, a benefit has accrued to the insured, regardless of whether those proceeds are paid directly by the insurer or funneled indirectly through a third party: "An indirect benefit would incur to Jaclyn if Whirlpool won its contribution claim since the money Whirlpool receives will, in all practical respects, be funneled through to Jaclyn. Jaclyn would receive, in the plainest sense of the word, an indirect benefit." Id. at 153-54. The court continued: "The direct/indirect benefit language was obviously meant to differentiate between two possible types of benefits and to clarify the policy language to ensure that contribution claims were included in the scope of the clause." Id. at 154.

Like the exclusion at issue in this case, the key phrase in the Whirlpool exclusion was "whenever any benefit of this coverage would accrue directly or indirectly to an insured person." The plain language of the exclusion does not set forth two different types of benefits. Rather, it sets forth two different ways in which benefits may accrue to an insured.
We recognize that at times, the Whirlpool court used the shorthand "direct and indirect benefits" when discussing the language of the exclusion. Nevertheless, the "benefits" contemplated by the court — whether direct or indirect — were the proceeds of the insurance policy. The distinction made by the court was the means by which this benefit would accrue to the insured rather than what constitutes a benefit. See Whirlpool, 197 Wis. 2d at 153 ("A `direct' benefit [] would accrue to Jaclyn Ziebert by way of a direct claim against Sharon Ziebert and Allstate. . . . An indirect benefit would incur to Jaclyn if Whirlpool won its contribution claim since the money Whirlpool receives will, in all practical respects, be funneled through to Jaclyn.").
The dissent's reliance on "two types of benefits" misconstrues both Whirlpool and the language of the policy. See dissent, ¶ 99.

¶ 48. Allstate argues for a more expansive interpretation of the term "benefit." Citing Red Arrow Products Co., Inc. v. Employers Insurance of Wausau, 2000 WI App 36, ¶ 17, 233 Wis. 2d 114, 607 N.W.2d 294, Allstate asserts that "the principal benefits provided under an insurance policy are indemnification and defense." It contends that "the family exclusion will apply if any benefit under the policy — including [not only] (1) the proceeds of coverage, [but also] (2) the right to indemnification under the policy, or (3) the right to a defense under the contract's obligation to defend the insured — would accrue to an insured person." (Emphasis in original.)

¶ 49. Because Holly would be benefited by her contractual right to receive defense and indemnification, Allstate argues that a "benefit of coverage" "would accrue directly or indirectly to [Holly] an insured person." Therefore, Allstate concludes, the family exclusion applies.

¶ 50. Certainly, an insured is benefitted by receiving defense and indemnification from an insurer. However, Allstate's expansive interpretation of the undefined term "benefit" to include an insured's contractual right to defense and indemnification is inconsistent with how that term is used in the very next exclusion in the policy.

¶ 51. In addition to the family exclusion, the term "benefits" appears in the exclusion immediately following. That exclusion precludes coverage if the bodily injury occurred to a person eligible to receive certain benefits, including workers' compensation benefits:

We do not cover bodily injury to any person eligible to receive benefits required to be provided or voluntarily provided by an insured person under any workers' compensation, non-occupational disability or occupational disease law.

¶ 52. Again, the policy does not define what is meant by the term "benefits." Nevertheless, we are unaware of any workers' compensation benefits that do not involve the payment of money. It appears that this exclusion is referring to money — that is, monetary benefits that are paid pursuant to a workers' compensation policy. It does not make sense to suggest that the term "benefits" as used in this exclusion is a reference to the contractual right to receive a defense or the contractual right of indemnification.

See, e.g., total disability benefits (Wis. Stat. § 102.43(1)); partial disability benefits (Wis. Stat. § 102.43(2)); temporary disability benefits (Wis. Stat. § 102.43(5)); death benefit (Wis. Stat. § 102.46); compensation for burial expenses (Wis. Stat. § 102.50).

¶ 53. Thus, Allstate's interpretation of the term "benefit" in the family exclusion is not consistent with the meaning of the term "benefits" used in the exclusion that appears immediately below it. Allstate's expansive interpretation of the term "benefit" would violate the canon of construction that policy terms should be interpreted not in isolation, but rather in the context of the policy as a whole. Schmitz, 255 Wis. 2d 61, ¶ 61; see also Johnson Controls, Inc. v. London Market, 2010 WI 52, ¶¶ 67-69, 325 Wis. 2d 176, 784 N.W.2d 579.

The term "benefit" also appears in a section setting forth various conditions to the policy's coverage for accidental loss to dwellings, other structures, and personal property. One condition of this first-party coverage, titled "No Benefit to Bailee," provides: "This insurance will not benefit any person or organization who may be caring for or handling your property for a fee". Again, the term is undefined and does not appear to unambiguously include an insured's contractual right to defense and indemnification.

¶ 54. Additionally, interpreting the term "benefit" to include the contractual right to defense and indemnification in addition to the recovery of insurance proceeds would violate a second canon of construction. It would render an entire phrase in the family exclusion meaningless.

¶ 55. As discussed above, the language of the exclusion precludes coverage if two conditions are satisfied: (1) the coverage sought is for bodily injury to an insured person; and (2) any benefit of coverage would accrue directly or indirectly to an insured person. Yet, in every case where there is an initial grant of coverage under this policy, the right to defense and indemnification would always accrue to an insured. Accordingly, under Allstate's interpretation, the exclusion's second condition would always be satisfied. The language of Allstate's family exclusion would mean nothing different from an exclusion with the single condition: "We do not cover bodily injury to an insured person."

¶ 56. If Allstate had intended to exclude coverage in all cases where the coverage sought was for bodily injury to an insured person, it should have said so. An established canon of construction provides that language in an insurance policy will be construed "so as to give a reasonable meaning to each provision of the contract." 1325 North Van Buren, 293 Wis. 2d 410, ¶ 56. Because it would "render[] portions of a contract meaningless, inexplicable or mere surplusage," id., it is not reasonable to interpret the word "benefit" in the family exclusion as a reference to defense and indemnification.

We recognize that a recent decision of the New York appellate division, Cragg v. Allstate Indem. Corp., 74 A.D.3d 90, 92 (NY. App. Div. 2010), adopted reasoning similar to the reasoning advanced by Allstate. The Cragg court did not discuss any defense that would be received by an insured, but it did consider the insured's contractual right to indemnification for a money judgment: "[I]ndemnification by Allstate on behalf of decedent's mother would result in the receipt by the mother, an insured, of the benefits of the policy in the form of the satisfaction of the money judgment obtained against her for the death of her daughter, also an insured."
We do not find the New York decision to be persuasive for several reasons. Most importantly, its interpretation of this language contravenes our canons of construction, as discussed above. Additionally, the New York Court of Appeals has granted leave to appeal the Cragg decision, leaving uncertain the status of this lower court decision relied on by Allstate. 15 N.Y.3d 705 (Sept. 2, 2010).

¶ 57. We conclude that Allstate has failed to meet its burden to demonstrate that the policy term "benefit" unambiguously includes the contractual right to receive a defense or the contractual right to indemnification. The term is undefined in the policy. Allstate's expansive definition is inconsistent with Wisconsin case law interpreting identical policy language. It is likewise inconsistent with how the term is used in the context of another policy provision. Finally, it would render policy language meaningless surplusage.

B

¶ 58. Having determined that Allstate has failed to demonstrate that the term "benefit" unambiguously includes the right to a defense and the right to indemnification, we turn to examining whether any insurance proceeds will accrue directly or indirectly to an insured person as a result of Allstate's coverage of Wendy's claim. Allstate advances several arguments in support of its position.

¶ 59. Most formidably, Allstate contends that because half of the wrongful death claim belongs to Clinton, any insurance proceeds Wendy recovers for Emma's wrongful death "must be split between Wendy Day and Clinton Day." Similarly, the court of appeals concluded that Clinton "benefits from coverage by virtue of his legal right to collect a portion of the wrongful death award." Day, 325 Wis. 2d 370, ¶ 11. Citing Bruflat, 233 Wis. 2d 523, ¶ 18, the court of appeals asserted that any wrongful death recovery "shall belong and be paid" to both Clinton and Wendy.

¶ 60. We construe these arguments as an assertion that insurance proceeds would accrue directly to Clinton by virtue of Wendy's wrongful death recovery. To evaluate this assertion, it is necessary to review the nature of wrongful death actions under Wisconsin law.

¶ 61. Some causes of action survive the death of the person who is entitled to bring them. Wisconsin Stat. § 895.01 codifies this common law principle. A "survival action" is brought to recover damages suffered by the decedent prior to death. Weiss v. Regent Properties, Ltd., 118 Wis. 2d 225, 233, 346 N.W.2d 766 (1984); see also Schilling v. Chicago, N. Shore Milwaukee R.R. Co., 245 Wis. 173, 177, 13 N.W.2d 594 (1944) (pre-death conscious pain and suffering). With a survival action, both the cause of action and the recovery belong to the estate.

¶ 62. An action for wrongful death is separate and distinct from a survival action. Weiss, 118 Wis. 2d at 233; see also Truesdill v. Roach, 11 Wis. 2d 492, 496-97, 105 N.W.2d 871 (1960). "It has been held many times that the wrongful-death statute creates a new cause of action, . . . and such cause of action is distinct from any cause of action that the deceased might have had if he had survived." Id. Importantly, wrongful death beneficiaries seek recovery not for the injury suffered by the deceased, but rather "for the loss sustained to the beneficiaries because of the death." Id.

A wrongful death action compensates the beneficiaries "for the pecuniary benefits which they would have derived from the earning power of the decedent had he or she lived" and "the loss of the relational interest existing between the beneficiaries and the decedent." Weiss v. Regent Properties, Ltd., 118 Wis. 2d 225, 230, 346 N.W.2d 766 (1984). The loss of the deceased's society and companionship is an "element of damages recoverable in the cause of action for wrongful death." Nichols v. Jointed States Fid. Guar. Co., 13 Wis. 2d 491, 497, 109 N.W.2d 131 (1961).

¶ 63. In contrast to a survival action, which belongs to the estate, "[t]he action for wrongful death does not belong to the estate of the deceased or become an asset thereof." Nichols v. United States Fid. Guar. Co., 13 Wis. 2d 491, 496, 109 N.W.2d 131 (1961); Weiss, 118 Wis. 2d at 230-31. Instead, the right to bring an action for wrongful death belongs to certain relatives of the decedent, who are designated by statute.

¶ 64. Wisconsin Stat. § 895.04(1) "provides that a wrongful death action may be brought by the person to whom the amount recovered belongs, and § 895.04(2) instructs that the person to whom it belongs is the relative (or relatives) next in order under § 852.01." homers v. Am. Hardware Mut. Ins. Co., 2008 WI App 165, ¶ 15, 314 Wis. 2d 731, 761 N.W.2d 38. In this case, the right to bring an action for wrongful death belongs to the class of beneficiaries consisting of Emma's lineal heirs, Wendy and Clinton. Wisconsin Stat. § 895.04(3) requires that the claims of both Wendy and Clinton be consolidated for the action to proceed.

Wisconsin Stat. § 895.04(2) provides in part: "If there are no such surviving minor children, the amount recovered shall belong and be paid to the spouse or domestic partner of the deceased; if no spouse or domestic partner survives, to the deceased's lineal heirs as determined by s. 852.01; if no lineal heirs survive, to the deceased's brothers and sisters."

Wisconsin Stat. § 895.04(3) provides: "If separate actions are brought for the same wrongful death, they shall be consolidated on motion of any party. Unless such consolidation is so effected that a single judgment may be entered protecting all defendants and so that satisfaction of such judgment shall extinguish all liability for the wrongful death, no action shall be permitted to proceed except that of the personal representative."

¶ 65. Based on the fact that Wendy and Clinton are members of the same class of beneficiaries, Allstate argues that Clinton will benefit directly from coverage for Wendy's wrongful death claim. This argument relies on the assumption that because Clinton has a right to make a claim under the wrongful death statute and because his claim must be consolidated with Wendy's claim for wrongful death, Clinton will have an entitlement to a portion of any insurance proceeds Wendy recovers. Allstate's assumption is not supported by our case law.

¶ 66. This court has explained that "[t]he right to sue and recover damages under the wrongful death statute must be distinguished from the ownership and allocation of the recovery itself." Chang v. State Farm Mut. Auto. Ins. Co., 182 Wis. 2d 549, 561, 514 N.W.2d 399 (1994) (emphasis added). Although all members of a class (here, both Wendy and Clinton) share the right to bring a wrongful death action, they do not necessarily share joint ownership of the recovery. Rather than requiring joint ownership or an equal division of any wrongful death recovery, each wrongful death beneficiary's recovery may be an individualized amount that is based on a beneficiary's actual loss. Keithley v. Keithley, 95 Wis. 2d 136, 289 N.W.2d 368 (Ct. App. 1980).

¶ 67. In Keithley, the divorced parents of a deceased minor accepted a settlement of their wrongful death claim, but they could not agree on a division of the proceeds. Id. at 137. The circuit court considered each parent's loss to be a question of fact, and it submitted the questions to the jury. The jury awarded the entire settlement to the mother. On appeal, the father argued that he was entitled to half of the wrongful death damages as a matter of law.

¶ 68. The Keithley court determined that "wrongful death damages do not become a part of the decedent's estate, to be divided simply on the basis of a biological relationship," and that the wrongful death statute does not require an equal division between parents. Id. at 138. It determined that the rules of intestate succession were irrelevant to the proportioning of wrongful death damages. Rather, "[w]rongful death damages are not automatically recoverable; the survivors must prove their loss." Id.

¶ 69. In Chang, the wrongful death beneficiaries were the married parents of a deceased child. The specific issue was whether the father's negligence, which had contributed to the child's death, diminished the mother's ability to recover her own damages for the child's wrongful death.

¶ 70. Like the Keithley court, this court rejected the argument that "there must be an automatic, equal division of damages or recovery among the class members." Chang, 182 Wis. 2d at 562. It clarified that "[d]amages may be stipulated . . . or damages may be awarded jointly to a class of beneficiaries if so requested and agreed, but since recovery is for actual damages, every individual beneficiary has the right to prove and collect upon his or her individual loss[.]" Id. at 557.

¶ 71. We explained that under the statute, a wrongful death beneficiary's recovery is not affected by any other beneficiary's inability to recover damages:

There are no provisions in the statute for reducing a non-negligent beneficiary's recovery. Nor are there any provisions for reducing the award of the class of beneficiaries because of the negligence of one of its members. Nor will we impute the negligence of the father to the mother in these circumstances.

Id. at 563-64.

¶ 72. As both Keithley and Chang made clear, the wrongful death statute does not provide that all members of a class always have a legal right to collect a portion of any wrongful death recovery. Rather, each beneficiary's recovery for wrongful death may be independent from the recovery of any other beneficiary. This premise is made more evident in situations where the wrongful death beneficiaries are divorced. Wisconsin's pattern jury instructions advise circuit courts that when "the parents are separated or divorced, it may be advisable to submit separate questions for each parent." Wis. JI-Civil 1895 cmt.

¶ 73. Accordingly, any language from Bruflat suggesting that a wrongful death recovery must be distributed to all wrongful death beneficiaries is inconsistent with this court's pronouncement in Chang, and it is withdrawn. See Cook v. Cook, 208 Wis. 2d 166, 189, 560 N.W.2d 246 (1997) ("The supreme court is the only state court with the power to overrule, modify or withdraw language from a previous supreme court case.").

In addition to its inconsistency with Keithley and Chang, it appears that the Bruflat court's brief discussion of the wrongful death statute was based on an error of law. Specifically the court of appeals failed to recognize the distinction between survival damages for the deceased's injuries (which belong to the deceased's estate) and wrongful death damages for the beneficiaries' own losses (which belong to the beneficiaries).
In that case, Simon Bruflat was killed in an automobile accident, and his estate filed a claim for uninsured motorist (UM) coverage. Bruflat v. Prudential Prop. Cos. Ins. Co., 2000 WI App 69, ¶¶ 2, 4, 233 Wis. 2d 523, 608 N.W.2d 371. Although the court of appeals characterized the UM proceeds as a "wrongful death award," id., ¶ 1, this characterization was inconsistent with other portions of the court of appeals' opinion. For example, the court asserted that the recovery was for Simon's own injuries, not for his parents' losses. It further explained: "Prudential's UM coverage seeks to reimburse the victim. In the present case, Simon is the victim, not [his parents]." Id., ¶ 20.

¶ 74. Further, the court of appeals in this case erred by concluding that Clinton would have a "legal right to collect a portion of the wrongful death award." Day, 325 Wis. 2d 370, "¶ 11. The court of appeals' assertion fails to distinguish ownership of wrongful death recovery from the right to pursue a claim under the wrongful death statute. See Chang, 182 Wis. 2d at 561; see also Wis. JI-Civil 1895 cmt.

¶ 75. When examined in this light, it is apparent that under the facts of this case, no insurance proceeds will accrue to Clinton by virtue of Allstate's coverage of Wendy's wrongful death claim. Regardless of whether Wendy pursues a wrongful death claim and whether Allstate provides coverage, Clinton has a right to bring a claim for Emma's wrongful death. Yet, a judgment in favor of Wendy does not entitle Clinton to any ownership of her recovery. If he remains a party to this action, Clinton will have to prove his own loss. It goes almost without saying that if the fact-finder awards Clinton any damages, Allstate will have no contractual obligation to indemnify those losses under the family exclusion.

The dissent misconstrues this opinion when it contends that Clinton's decision not to actively pursue wrongful death damages is "the touchstone upon which the majority relies." Dissent, ¶ 105; see also id., ¶ 108. Rather, the "touchstone" of our analysis is that Clinton and Wendy have separate recoveries under the wrongful death statute, and that Allstate can provide coverage for the wrongful death damages sought by Wendy without providing coverage for any wrongful death damages awarded to Clinton.
The dissent likewise misconstrues other aspects of this opinion. It asserts: "According to the majority, [the dismissal of the claims originally advanced by Hannah and Desirae] results in coverage for" Wendy's wrongful death claim. Id., 1102. Contrary to this assertion, we do not conclude that coverage for Wendy's claim is contingent upon the dismissal of her daughters' claims.
The dissent mistakenly assumes that the exclusion of coverage for any one claim advanced in a lawsuit will lead to the exclusion of coverage for all other claims advanced in the same lawsuit. The dissent's assumption is unsupported. Regardless of whether Clinton, Hannah, and Desirae pursue claims for which there is no coverage under the policy, the determination of whether there is coverage for Wendy's claim is made by comparing Wendy's claim against the language of the policy.

¶ 76. Allstate advances several additional arguments that benefit will accrue directly or indirectly to an insured. It contends that Wendy "would undoubtedly utilize at least some of the proceeds of this lawsuit to benefit her children," Hannah and Desirae, who are both insureds. It further asserts that "[a]ny money that Wendy Day[] recovers from Allstate will ease Clinton Day's financial burden of providing Hannah Day and Desirae Sarvdr with their desired material resources."

¶ 77. Under the facts here, no benefit would directly accrue to Hannah, Desirae, or Clinton. Neither Hannah and Desirae nor Clinton would have any entitlement to the insurance proceeds. The distribution of insurance proceeds to Wendy is not equivalent to the distribution of insurance proceeds to her daughters or to her former husband.

¶ 78. During oral argument, the attorney for All-state explained his argument that a benefit would indirectly accrue to an insured as follows:

I think first of all, to the extent that Clinton Day and Wendy Day have joint custody of the children and Wendy Day would obtain a financial recovery, I think that there is a potential benefit to the children. She has more money, she's got more money to spend on providing things like clothing and food and shelter and school supplies and things of that nature. I think that Clinton Day could even indirectly benefit insofar as perhaps his load for caring for these children could be decreased by virtue of the fact that she has a financial recovery in this case.

The attorneys and the court speculated that as a result of Wendy's recovery, Hannah and Desirae might be able to go on an extra vacation, ride in a new car, or supersize their meals.

¶ 79. When pressed by members of the court, Allstate's attorney appeared to acknowledge that this argument was based not on the language of the exclusion, but rather upon the purpose underlying the exclusion and notions of public policy. He explained: "You have to go back to the public policy that underlies the family member exclusion." He further emphasized: "I would say [] that it is the public policy behind the exclusion, the potential for collusion." As discussed above, the purpose underlying an exclusion does not control our determination of whether the language of the family exclusion unambiguously precludes coverage for a claim. See supra, ¶ 35.

¶ 80. In evaluating whether a benefit would accrue indirectly to an insured, it is helpful to compare the alleged benefits that Allstate identifies with the benefit identified in Whirlpool that would accrue indirectly to Jaclyn Ziebert. In Whirlpool, the court found that a benefit would accrue indirectly to an insured because, due to the nature of a contribution claim, "in all practical respects, the money [recovered in the action] will be funneled through to" the insured under the policy. Unlike in Whirlpool, this case does not involve a contribution claim. In this case, there is no reason to suggest that any insurance proceeds that Wendy recovers would be in any way funneled through Wendy's accounts and on to an insured. Allstate's assumptions about how Wendy would spend the insurance proceeds are based only on speculation.

Allstate also argues that "the benefit to Clinton Day as a result of the survivorship claim triggers the application of the family exclusion to preclude coverage for Emma Day's bodily injuries." We do not understand Allstate's argument. Wendy's claim for wrongful death action is a separate cause of action from the estate's survival claim, and the estate's survival claim has been dismissed.

¶ 81. Further, stretching the policy term "benefit" to encompass the possibility that Wendy might buy her daughters supersized meals or take them on a vacation would appear have no stopping point. Rather, it seems that the same argument could be made any time that there was an injury to an insured person. As stated above, if Allstate had intended to exclude coverage in all cases where there was bodily injury to an insured person, it should have said so. See supra, ¶ 56.

¶ 82. We conclude that Allstate has failed to meet its burden to demonstrate that a benefit of coverage would accrue directly or indirectly to an insured. To the extent that the terms of the policy lack clarity, the ambiguity in an insurance contract is construed in favor of coverage.

Having determined that the policy language does not unambiguously preclude coverage for Wendy's wrongful death claim, we need not address Wendy's argument that the exclusion is unenforceable under these facts.

¶ 83. In sum, we determine that the court of appeals erred when it directed the circuit court to grant summary judgment in favor of Allstate. The court of appeals' assertion that Clinton would have a legal right to collect a portion of the wrongful death award fails to distinguish the right to pursue a claim under the wrongful death statute from the ownership of a wrongful death recovery when the parties are divorced.

¶ 84. Based upon an examination of the language of the policy, the canons of insurance policy construction, and our case law, we conclude that Allstate has failed to meet its burden to demonstrate that the family exclusion unambiguously precludes coverage. Therefore, we reverse the decision of the court of appeals directing the entry of summary judgment and remand to the circuit court for further proceedings.

By the Court. — The decision of the court of appeals is reversed and the cause is remanded.