Radlein v. Industrial Fire & Cas. Ins. Co.

• Decision Date: 08 May 1984
• Docket Number: No. 82-536,82-536
• Citation: 345 N.W.2d 874,117 Wis.2d 605
• Court: Wisconsin Supreme Court
• Parties: Elizabeth RADLEIN, a/k/a Elizabeth Grenier, Plaintiff-Appellant-Petitioner, v. INDUSTRIAL FIRE & CASUALTY INSURANCE COMPANY, Defendant-Respondent.

Page 874

345 N.W.2d 874

117 Wis.2d 605

Elizabeth RADLEIN, a/k/a Elizabeth Grenier Plaintiff-Appellant-Petitioner, v. INDUSTRIAL FIRE & CASUALTY INSURANCE COMPANY, Defendant-Respondent.

No. 82-536.

Supreme Court of Wisconsin.

Argued Jan. 30, 1984.

Decided March 27, 1984.

Motion for Reconsideration Denied May 8, 1984. ^*

Marjan R. Kmiec, Milwaukee, for plaintiff-appellant-petitioner.

Ernest J. Philipp, Milwaukee (argued), for defendant-respondent; Melanie N. Aska for Philipp & Sletteland, S.C., Milwaukee, on brief.

STEINMETZ, Justice.

The first issue in this case is whether the injured plaintiff has stated a bad faith claim against her former husband's insurance carrier since that company did not pay the entire $15,000 of uninsured motorist coverage to her when her injuries potentially had a disproportionately greater value than that. The second issue is whether plaintiff's attorney commenced a frivolous action, since his client had previously settled her uninsured motorist claim with the carrier and, since the theory of law relied on has never been established in this state, although it is argued it is a predictable development or extension of existing law.

The defendant, Industrial Fire & Casualty Insurance Co. (Industrial), brought a motion to dismiss before the Milwaukee county circuit court, the Honorable Elliot N. Walstead, reserve judge presiding. Industrial also requested reasonable attorney fees pursuant to sec. 814.025, Stats. ¹ The motion to dismiss was presented pursuant to sec. 802.06(2), ² and upon the court receiving and accepting an affidavit on behalf of Industrial's attorney and documents from a previous court action, the motion converted to one for summary judgment. Therefore, though the trial court stated it was granting a motion to dismiss, it was actually a motion for summary judgment that was granted. See Schlumpf v. Yellick, 94 Wis.2d 504, 511, 288 N.W.2d 834 (1980).

Summary judgment is appropriate when material facts are not in dispute and when inferences which may reasonably be drawn from the facts are not doubtful and lead only to one conclusion. Jahns v. Milwaukee Mut. Ins. Co., 37 Wis.2d 524, 527, 155 N.W.2d 674 (1968); Fed. Deposit Ins. Corp. v. First Mortg. Investors, 76 Wis.2d 151, 154-55, 250 N.W.2d 362 (1977); Heck & Paetow Claim Service, Inc. v. Heck, 93 Wis.2d 349, 355-56, 286 N.W.2d 831 (1980); Board of Regents v. Mussallem, 94 Wis.2d 657, 672-73, 289 N.W.2d 801 (1980), see sec. 802.08(2), Stats.

The only document on file with the trial court for the support of plaintiff's position was the complaint. No depositions, answers to interrogatories, or admissions were on file, and plaintiff did not submit an opposing affidavit to the motion.

Sec. 802.08(3), Stats., ³ governs the disposition of summary judgment motions when the adverse party rests on the mere allegations of the pleadings. The plaintiff rested upon the allegations of the complaint which did not create any material issues of fact and therefore it was proper for the trial court to determine the legal effect of a release given by the plaintiff in a previous court action. Plummer v. Leonhard, 44 Wis.2d 686, 692, 172 N.W.2d 1 (1969); Pokorny v. Stastny, 51 Wis.2d 14, 24, 186 N.W.2d 284 (1971).

The trial court dismissed the complaint on the basis of the release executed by the plaintiff in the previous lawsuit, which was with the court's approval. Judge Walstead in a bench decision stated:

"I have read the release. It seems to be a good release in the absence of fraud and mistake.... I don't see how you can have people in court under the supervision of a court sign a release with all of the safeguards that attend that kind of assignment and then, disregard it and have it set aside in the absence of fraud or mistake."

The trial court granted the motion and found that the plaintiff's attorney "should have known that the action was without any reasonable basis in law and could not be supported by a good faith argument." The trial court then adjourned the case for a determination regarding the defendant's reasonable attorney fees. The plaintiff's attorney did not ask the court to stay the finding of frivolousness, but rather only the terms pending an appeal "of the main action." The record shows that a hearing as to defendant's attorney fees was held on March 1, 1982; however, the transcript of the hearing is not in the record. After that hearing the judge signed an order for judgment and judgment awarding actual attorney fees and court costs pursuant to sec. 814.025, Stats., in the amount of $2,608.75 attorney fees and $102.69 in disbursements for a total of $2,711.44. There is an affidavit in the record from defendant's attorney stating the hours worked and the hourly rate for a total as reflected in the judge's order.

The plaintiff appealed to the court of appeals. That court, in an unpublished decision, affirmed the granting of the summary judgment, but reversed and remanded to the trial court to make specific findings under the frivolous claim statute, if appropriate, that the claim of plaintiff was frivolous and how it violated the options in sec. 814.025(3)(a) or (b), Stats., by finding that it was: (a) "commenced, used or continued in bad faith, solely for purposes of harassing or maliciously injuring another" or (b) "the party's attorney knew, or should have known, that the action ... was without any reasonable basis in law ... and could not be supported by a good faith argument for an extension, modification or reversal of existing law." (Emphasis added.)

Before a proper finding of frivolous claim is made pursuant to sec. 814.025(3)(b), Stats., it is necessary for the trial court to find that in addition to or in support of that finding the attorney knew the action was without any reasonable basis in law and could not be supported by a good faith argument for an extension, modification or reversal of existing law. The trial court must consider each of the alternative possibilities of a good faith argument, i.e., was the existing law ready for an extension, modification or reversal. If the argument of the attorney does not establish the law is ready for an extension, modification or reversal, he is still not responsible for having commenced a frivolous action unless his argument does not show he made it in good faith. It is a two-pronged test. First, is the law ready for extension, modification or reversal, and, if not, then secondly, was the argument for such change made in good faith even though not successful.

The court of appeals stated that until the trial court makes such necessary findings, the appellate court will not on review be able to determine whether those findings are contrary to the great weight and clear preponderance of the evidence. Sommer v. Carr, 99 Wis.2d 789, 792, 299 N.W.2d 856 (1981) held: "The statute does not allow the trial judge to conclude frivolousness or lack of it without findings stating which statutory criteria were present, harassment or knowledge or imputed knowledge that there was not 'any reasonable basis in law or equity' for the position taken."

However, in this case, since there are no issues of fact and the decision is controlled not only by existing law but also by whether the law is ready for extension, modification or reversal, then the standard of review is not whether the findings of fact of a trial court were against the great weight and clear preponderance of the evidence, but instead it is a review of the application of the appropriate law in granting the motion for summary judgment, and there we do not defer to the trial court but analyze and apply the law without deference to the trial court. State ex rel. Bilder v. Delavan Tp., 112 Wis.2d 539, 549, 334 N.W.2d 252 (1983); State v. Ziegenhagen, 73 Wis.2d 656, 664, 245 N.W.2d 656 (1976). This is the first review we have considered since Sommer on the claim that the law, in this case bad faith, is ready for extension, modification or reversal as to uninsured motorist coverage and whether a good faith argument can be made for it.

Frivolous action claims are an especially delicate area since it is here that ingenuity, foresightedness and competency of the bar must be encouraged and not stifled. Without that dedication of the bar, Wisconsin would still have the duties of landlords to others dependent on the relationship of those persons to the land, Antoniewicz v. Reszczynski, 70 Wis.2d 836, 236 N.W.2d 1 (1975); statutes of limitations would start from the day of the actual injury, not from the date the plaintiff knew of the injury or should have known, Hansen v. A.H. Robins, Inc., 113 Wis.2d 550, 335 N.W.2d 578 (1983); and an injured plaintiff would have to identify the exact drug manufacturer whose product injured her, Collins v. Eli Lilly Co., 116 Wis.2d 166, 342 N.W.2d 37 (1984). These are only a few changes in the law in recent years without attempting to identify all of them. The present law of bad faith itself, products liability and punitive damages would not have developed but for the informed, good faith positions taken by attorneys for development of the law. However, that does not mean that good faith depends on the success of a court accepting the argument for change.

Lawyers must have the opportunity to be able to espouse a legal principle not presently accepted without fears of personal loss or prosecution for unethical conduct by the Board of Attorneys Professional Responsibility. However, in bringing a cause of action, the other side is affected and has expenses due to defending against the new approach to existing but perhaps developing law. Precious court time must not be wasted on frivolous actions, for one of the trial judge's most time consuming and challenging duties is to determine the future predictable course of the law. In balancing the conflicting interests in such actions, the attorneys bringing the new cause for acceptance must be able to argue in good faith...