Adams v. Northland Equip. Co.

• Decision Date: 22 July 2014
• Docket Number: No. 2012AP580.,2012AP580.
• Citation: 2014 WI 79,850 N.W.2d 272,356 Wis.2d 529
• Parties: Russell ADAMS, Plaintiff–Appellant–Petitioner, v. NORTHLAND EQUIPMENT COMPANY, INC., Cincinnati Insurance Company and The League of Wisconsin Municipalities Mutual Insurance Company, Defendants–Respondents.
• Court: Wisconsin Supreme Court

356 Wis.2d 529

850 N.W.2d 272

2014 WI 79

Russell ADAMS, Plaintiff–Appellant–Petitioner,

v.NORTHLAND EQUIPMENT COMPANY, INC., Cincinnati Insurance Company and The League of Wisconsin Municipalities Mutual Insurance Company, Defendants–Respondents.

No. 2012AP580.

Supreme Court of Wisconsin.

Argued Feb. 4, 2014.

Decided July 22, 2014.

For the plaintiff-appellant-petitioner, there were briefs by Thomas E. Greenwald, Rockford, and oral argument by Thomas E. Greenwald.

For the defendants-respondents, Northland Equipment Company and Cincinnati Insurance Company, there was a brief by James M. Ryan, Dustin T. Woehl, and Kasdorf, Lewis & Swietlik, S.C., Milwaukee, and oral argument by James M. Ryan.

PATIENCE DRAKE ROGGENSACK, J.

¶ 1 We review a decision of the court of appeals ¹ affirming an order of the Rock County Circuit Court ² that compelled plaintiff Russell Adams to accept a settlement offer from defendant Northland Equipment Company, Inc. that Adams' employer's worker's compensation insurer, The League of Wisconsin Municipalities Mutual Insurance Company (LWMMIC), chose to accept.

¶ 2 Adams sued Northland and its insurer, Cincinnati Insurance Company, pursuant to Wis. Stat. § 102.29(1) (2011–12) ³ for personal injuries Adams sustained while plowing snow for his employer, the Village of Fontana. ⁴ Northland offered $200,000 to settle Adams' claim. LWMMIC accepted Northland's offer and moved the circuit court to compel Adams to accept it as well. The circuit court granted LWMMIC's motion.

¶ 3 Adams contends that the circuit court erred because a worker's compensation insurer cannot compel an employee to accept settlement of a third party tort claim. Adams reasons that Wis. Stat. § 102.29(1) cannot be interpreted to permit the circuit court to compel settlement because such an interpretation would violate his right to a jury trial, which Article I, Section 5 of the Wisconsin Constitution secures. He also contends that the circuit court's order violates procedural due process and is the product of an erroneous exercise of discretion because, among other things, the circuit court did not conduct an evidentiary hearing.

¶ 4 We conclude that a circuit court may compel an employee to accept settlement of the claim the legislature created in Wis. Stat. § 102.29(1). In such a claim, both the employee and the worker's compensation insurer share the right to sue third parties; the employee and the worker's compensation insurer have an equal voice in the prosecution of the claim; recovery from the claim is apportioned in the manner described in § 102.29(1)(b); and the circuit court is empowered to resolve any disputes arising between the employee and the worker's compensation insurer during the prosecution of their claim, including those disputes involving settlement.

¶ 5 We also conclude that our interpretation of Wis. Stat. § 102.29(1) does not violate Adams' right to a jury trial because the claim § 102.29(1) creates is not the counterpart of a cause of action at law recognized at the time of the adoption of the Wisconsin Constitution. We further conclude that the circuit court's authority to compel an employee to accept settlement does not violate procedural due process because judicial resolution of disputes is part of the statutory claim. Lastly, we conclude that the circuit court appropriately exercised its discretion by defining the dispute, taking stock of the relative positions of the parties and considering matters that impacted the fairness of the settlement. Accordingly, we affirm the decision of the court of appeals.

I. BACKGROUND

¶ 6 This case concerns personal injuries Adams sustained during the course of his employment with the Village of Fontana. On February 21, 2009, Adams was plowing the driveway to the Village Hall when the blade of his plow struck the lip of a sidewalk. Adams claims that when the plow came into contact with the lip, the truck stopped suddenly and threw him up into the ceiling of the cab of the truck, “causing excessive compression forces to be applied to his spine.” The truck then continued past the end of the driveway, crossed the street, and struck a curb, where it came to a final stop and another plow operator discovered it. Adams was not wearing a seat belt at the time of the accident.

¶ 7 The plow was equipped with springs that were designed to absorb some of the shock when the plow experienced a certain amount of resistance. The springs were to reduce the shock by allowing the bottom of the plow to rotate toward the truck, or “trip.” In order to function correctly, the springs needed to be tight enough to plow snow, but loose enough to trip when the plow hit fixed obstacles.

¶ 8 Before Adams' accident, the Village had been experiencing problems with the plow Adams used in that it was tripping too easily when pushing heavy snow. The Village brought the plow to Northland for repair.

¶ 9 Northland explained that the two Henderson brand springs on the plow were worn out and in need of replacement. Northland did not have the exact Henderson brand replacement springs for the plow, and could not obtain them before an expected snowstorm. Therefore, Northland and the Village decided to replace the Henderson brand springs with Western brand springs that Northland had on hand. The replacement springs worked without incident for the year and a half prior to Adams' accident.

¶ 10 As a result of the accident, Adams suffered permanent injury to his spine. He brought personal injury claims against Northland and its insurer, alleging negligence in the repair of the plow and strict liability for the malfunction of the replacement springs. LWMMIC, which had paid Adams $148,332 in worker's compensation benefits for medical expenses and temporary total and permanent partial disability as of the date of the motion to compel, participated in Adams' suit pursuant to the claim created by Wis. Stat. § 102.29(1).

¶ 11 Northland and Cincinnati Insurance moved for summary judgment, arguing that Adams could not prove negligence or causation. They asserted that the deposition testimony of Adams' expert, Robert Wozniak, showed that Wozniak could not “establish[ ] a standard for a safe tension level in the snow plow's springs” and therefore, Adams could not prove that “this accident would not have happened at different tensions.”

¶ 12 At the summary judgment motion hearing, the circuit court pressed Adams' attorney, Thomas Greenwald, on this issue asking, “So [Northland] put on [springs] that ha[d] more tension. Now what's the evidence going to be that that was negligence?”

¶ 13 Greenwald responded that Wozniak was “going to testify that that created an unreasonable risk of harm by adding that much spring, requiring that much tension, and that unreasonable risk of harm was that the plow would not trip when required to trip and that that unreasonable risk of harm is what caused this event to occur.” As to the basis for this testimony, Greenwald explained that Wozniak's opinions were part of a memo Greenwald prepared for Wozniak and “asked at his deposition are these [Wozniak's] opinions, and [Wozniak said] yes.”

¶ 14 After explaining that Greenwald would not be allowed to prove Adams' case at trial by “present[ing Wozniak] with some legal gobbledy gook and ask[ing] him to confirm it,” the circuit court denied defendant's summary judgment motion. The court explained its decision as follows:

I think Mr. Greenwald is spitting into an awfully strong wind here, and it may be that even this case will get dismissed at the end of the plaintiff's case, I don't know, but I do think that there is at least that minimum quantity of opinion by an engineer that says that this is an accident that was caused by springs that were too tight.

How a jury—I'm sure [Wozniak is] going to be asked at trial, ‘Well, how tight would have been tight enough?’ And I—it will be interesting to see what his answer [i]s. But I think that this is not a proper case that should be decided on summary judgment, and for that reason the motion is denied.

¶ 15 Four days after the circuit court denied Northland's summary judgment motion, LWMMIC received a $200,000 settlement offer. LWMMIC's attorney contacted Greenwald, who informed LWMMIC that Adams would not accept the offer.

¶ 16 LWMMIC then attempted to negotiate resolution with Adams. It proposed that in exchange for relinquishing control of the litigation to Adams, Adams release LWMMIC from liability for future worker's compensation payments. After Adams rejected LWMMIC's proposal, LWMMIC unilaterally accepted the settlement offer and moved the circuit court to compel Adams to accept it as well.

¶ 17 The circuit court received submissions from both parties and held a hearing on the motion. LWMMIC explained that it wished to accept the settlement offer because of the risks of a defense verdict at trial, citing concerns about “comparative fault, seatbelt negligence, and damages.” LWMMIC also said that it thought Adams' case had “not improved” since the summary judgment hearing because Robert Krenz, an expert witness for the defense, tested the plow and found that it “actually does trip[,] even at just 2 1/2 m.p.h. with very little movement of the driver.”

¶ 18 Adams responded that: (1) a court has no authority to compel an employee to accept settlement; (2) if a court had such authority, an evidentiary hearing to evaluate the merits of the case would be necessary before compelling settlement; and (3) the settlement offer in the present case is “grossly inadequate” and “not in the best interest” of Adams.

¶ 19 The circuit court granted LWMMIC's motion to compel settlement. It concluded that it had the authority to do so under Dalka v. American Family Mutual Insurance Co., 2011 WI App 90, 334 Wis.2d 686, 799 N.W.2d 923; that an evidentiary hearing was unnecessary; and that the risk of a finding of no liability at trial exceeded the possibility of a verdict that exceeded the settlement...