Admiral Ins. Co. v. Paper Converting Mach. Co., 2009AP2099.

Decision Date27 March 2012
Docket NumberNo. 2009AP2099.,2009AP2099.
Citation2012 WI 30,339 Wis.2d 291,811 N.W.2d 351
PartiesADMIRAL INSURANCE COMPANY, Plaintiff–Appellant–Petitioner, v. PAPER CONVERTING MACHINE COMPANY (PCMC), Defendant–Respondent,Chubb Custom Insurance Company, Defendant–Co–Appellant–Petitioner.
CourtWisconsin Supreme Court

OPINION TEXT STARTS HERE

Appeal from Circuit Court, Outagamie County, Mitchell J. Metropulos, Judge.For the plaintiff-appellant-petitioner there were briefs filed by Ward I. Richter, Sheila M. Sullivan and Bell, Moore & Richter, S.C., Madison and oral argument by Sheila M. Sullivan.

For the defendant-co-appellant-petitioner there were briefs filed by Robert S. Soderstrom, Todd S. Schenk, Nicolas C. Mesco and Tressler LLP, Chicago, and oral argument by Todd S. Schenk.

For the defendant-respondent there was a brief filed by Dudley W. Von Holt, Matthew S. Darrough and Thompson Coburn LLP, St. Louis, Gregory B. Conway, April Baker and Liebmann, Conway, Olejniczak & Jerry, S.C. Green Bay and oral argument by Dudley W. Von Holt.¶ 1ANN WALSH BRADLEY, J.

The petitioners, Admiral Insurance Company and Chubb Custom Insurance Company (hereinafter Admiral), seek review of unpublished orders of the court of appeals, which dismissed as untimely Admiral's appeal of a grant of summary judgment in favor of Paper Converting Machine Company (PCMC).1 In the event that we conclude that the appeal was timely and reverse the court of appeals, Admiral also asks us to review the circuit court's grant of summary judgment in favor of PCMC.

¶ 2 The court of appeals dismissed Admiral's appeal as untimely because it concluded that the circuit court's March 26, 2009 decision and order was the final order for purposes of appeal. Admiral argues that the March 26 decision and order was not a final order because it did not dispose of the entire matter in litigation, and it notes that the order did not contain a statement of finality. Admiral contends that the judgment entered on July 8, 2009, was final for purposes of appeal, and that it timely appealed from that judgment.

¶ 3 If we conclude that there is any ambiguity in an order or judgment about whether it disposes of the entire matter in litigation as to one or more of the parties, we will construe the ambiguity so as to preserve the right to appeal. Under these circumstances, although the March 26 order arguably disposed of the entire matter in litigation between the parties, we cannot say on this record that it unambiguously did so. Accordingly, we construe it as nonfinal, pursuant to our policy of construing any ambiguity to preserve the right of appeal. We conclude that Admiral's appeal of the July 8 judgment is timely.

[339 Wis.2d 296] ¶ 4 Regarding the merits, Admiral acknowledges that it entered into an agreement with its insured, PCMC, to contribute $2 million towards the settlement of a lawsuit, but it contends that the oral funding agreement is unenforceable because it does not meet the requirements of Wis. Stat. § 807.05.2 Even if the contract is enforceable, Admiral asserts that it is entitled to restitution, either because PCMC was unjustly enriched by its contribution of $2 million towards the settlement or because of Admiral's mistake of fact.

¶ 5 We conclude that the requirements of Wis. Stat. § 807.05 are inapplicable, and the funding agreement is an enforceable contract. We further conclude that under these circumstances, an insurer cannot recover payments based on an unjust enrichment theory, and Admiral's asserted mistake of fact does not provide grounds for voiding the contract.

¶ 6 Accordingly, we reverse the court of appeals.

I

¶ 7 The following facts are undisputed. PCMC manufactures paper machines. Elizabeth Young was severely injured on February 22, 2005, while working on a machine that was manufactured by PCMC, and PCMC learned about the accident shortly thereafter. At the time, PCMC was self-insured.

¶ 8 Several months later, PCMC was acquired by another company, and it purchased additional insurance coverage. PCMC maintained a self-insured retention of $250,000 (which included defense costs), and additionally, it purchased two relevant policies: (1) a claims-made policy issued by Admiral Insurance Company that provided $2 million in products/completed operations liability coverage; 3 and (2) an excess policy issued by Chubb Custom Insurance.

¶ 9 As part of its application for insurance, PCMC disclosed all pending legal cases as well as known accidents that could reasonably result in litigation. PCMC's disclosure was made to Admiral's underwriting department, and it included the accident in which Young was injured.

¶ 10 Approximately one year after the policies were issued, Young filed suit against PCMC, and PCMC notified Admiral's claims department of the litigation. Although Admiral was not named as a party, it opened a file on the case and hired an attorney to represent its interest in the lawsuit. By letter, Admiral informed PCMC that it had been “monitoring the ... claim and determined that there is exposure to the Admiral policy.”

¶ 11 Admiral participated in mediation, and during settlement negotiations, it entered into a funding agreement with PCMC to contribute its policy limits, $2 million, toward settlement of the lawsuit. Admiral admits that the attorney it sent to the settlement negotiations acted as its representative or agent, and that Admiral provided the attorney with authority to contribute the policy limits to achieve settlement without any intent to seek reimbursement from PCMC.

[339 Wis.2d 298] ¶ 12 Ultimately, Young agreed to accept $3.5 million to settle the suit. A written settlement agreement was signed by PCMC's attorney, Young, and Young's attorney, but not by Admiral.

¶ 13 After the settlement agreement was negotiated but prior to sending its payment under the funding agreement, Admiral changed its position on coverage. It contended, for the first time, that there was no coverage for the Young accident under the known claims exclusion of its policy.4

¶ 14 Admiral implied that it would withhold payment unless PCMC agreed that it had reserved the right to seek reimbursement from PCMC in a subsequent lawsuit.5 PCMC replied that Admiral was bound by the funding agreement and had no right to seek reimbursement. Admiral paid the policy's maximum, $2 million, as it had agreed to do.6

¶ 15 Admiral then filed an action against PCMC, seeking a declaration that its policies provided no coverage for Young's claim and reimbursement of the $2 million.7 PCMC answered and filed a separate counterclaim for attorney fees.8 All parties moved for summary judgment.

¶ 16 The circuit court entered a decision and order on March 26, 2009. It concluded that PCMC was entitled to summary judgment because the oral settlement agreement between Admiral and PCMC was enforceable and there was no mutual mistake of fact. The circuit court's order provided as follows: “Based on the foregoing, the Court denies the summary judgment motions filed on behalf of Admiral and Chubb. The Court grants the summary judgment motion in favor of PCMC. The Court hereby orders this case dismissed.”

¶ 17 The parties assert that after the entry of this order, they agreed to delay entry of a final judgment because PCMC intended to pursue its counterclaim for attorney fees, which had not been addressed in the court's decision and order. They assert that PCMC ultimately decided not to pursue this counterclaim.9

¶ 18 The circuit court entered judgment on July 8, 2009. The judgment provided, “This is a final judgment for purposes of appeal.”

¶ 19 Admiral appealed on August 12, 2009. In an unpublished opinion, the court of appeals affirmed the circuit court. Admiral Ins. Co. v. Paper Converting Machine Co., unpublished slip op., No. 2009AP2099 (Wis.Ct.App. Dec. 7, 2010). It reasoned that Admiral entered into a valid and enforceable oral agreement with PCMC to pay money toward the settlement of the Young claim. It rejected Admiral's argument that it should be relieved of this agreement based on a mistake of fact or some equitable theory. Id., ¶¶ 11–13.

¶ 20 In a footnote, the court of appeals questioned the timeliness of the appeal, given that the March 26 decision and order appeared to be final and Admiral's notice of appeal was not filed within 90 days of that order. Id., ¶ 1 n. 1. However, it concluded that PCMC had waived any objection to the court's jurisdiction by declining to object to the timing of the appeal. Id.

¶ 21 The following day, the court of appeals withdrew its opinion on its own motion. Admiral Ins. Co. v. Paper Converting Machine Co., unpublished order, No. 2009AP2099 (Wis.Ct.App. Dec. 8, 2010). As it later explained, “A court must raise questions of subject matter jurisdiction even if the parties do not, and subject matter jurisdiction cannot be obtained by a party's waiver or consent.” Admiral Ins. Co. v. Paper Converting Machine Co., No. 2009AP2099, unpublished slip op., ¶ 3, 2010 WL 5158628 (Wis.Ct.App. Dec. 21, 2010). The court of appeals dismissed Admiral's appeal as untimely. Id. It likewise denied Admiral's motion for reconsideration. Admiral Ins. Co. v. Paper Converting Machine Co., No. 2009AP2099, unpublished order, (Wis.Ct.App. Jan. 14, 2011).

II

¶ 22 In this case, we are required to review the court of appeals' determination that it lacked subject matter jurisdiction because Admiral's appeal was untimely. Admiral's appeal was untimely if the March 26 order was a final order for purposes of appeal. This presents a question of law that we review independently of the court of appeals' determination. Kenosha Prof'l Firefighters v. City of Kenosha, 2009 WI 52, ¶ 20, 317 Wis.2d 628, 766 N.W.2d 577.

¶ 23 If we conclude that the appeal is timely, we will also review the circuit court's decision to grant summary judgment in favor of PCMC. A circuit court's grant or denial of summary judgment is a question of law which we review independently of the circuit...

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