AW Huss Co. v. Continental Cas. Co., Civ. A. No. 82-C-341.

• Decision Date: 24 March 1983
• Docket Number: Civ. A. No. 82-C-341.
• Citation: 560 F. Supp. 513
• Parties: A.W. HUSS COMPANY, debtor in possession, a Wisconsin corporation, Plaintiff, v. CONTINENTAL CASUALTY COMPANY, an Illinois corporation, Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

560 F. Supp. 513

A.W. HUSS COMPANY, debtor in possession, a Wisconsin corporation, Plaintiff, v. CONTINENTAL CASUALTY COMPANY, an Illinois corporation, Defendant.

Civ. A. No. 82-C-341.

United States District Court, E.D. Wisconsin.

March 24, 1983.

Patrick O. Dunphy, Habush, Habush & Davis, Milwaukee, Wis., for plaintiff.

Thomas N. Harrington, Prosser, Wiedabach & Quale, S.C., Milwaukee, Wis., for defendant.

DECISION and ORDER

TERENCE T. EVANS, District Judge.

This is a diversity action in which the A.W. Huss Company, a debtor in possession under Chapter XI of the United States Bankruptcy Laws, has sued Continental Casualty Company (CNA), its automobile liability insurer, for bad faith in the settlement of a claim. CNA has moved for summary judgment.

For purposes of the motion, CNA concedes the allegations of the complaint and other "facts" argued by Huss in opposition to the motion. Because issues of fact cannot be determined on summary judgment, I will likewise accept as true plaintiff's version of the facts, even though from the attachments to the affidavit of Patrick O. Dunphy, filed on behalf of the plaintiff, it seems clear that those allegations are not entirely supported by plaintiff's own evidence.

The automobile accident out of which the claim arose occurred on May 20, 1977, at an intersection in Manitowoc, Wisconsin. A car driven by Patricia Mangin, sister of William Mangin, who was riding in the car and whose injuries account for the extensive damages in the case, pulled out in front of a Huss Company truck driven by employee Craig Moldenhauer. Moldenhauer had the right of way; however, he was exceeding the speed limit.

Prior to the accident, on June 1, 1976, CNA had issued to Huss two policies of insurance: a policy of comprehensive automobile liability insurance with bodily injury limits on liability of $100,000.00, and an umbrella excess third-party liability policy with limits of $1,000,000.00 per occurrence. The policies were in effect at the time of the accident.

CNA offered the Mangins first $50,000.00 and then $75,000.00 in settlement of the claim. Plaintiff alleges that the company failed to settle the claim for $100,000.00 when it had an opportunity to do so. In addition, CNA withheld from the Mangin attorney information that the umbrella coverage existed.

Huss also alleges that CNA failed to timely inform it of the $100,000.00 settlement offer and of Huss's rights with respect to the negotiation of a settlement of the claim. Huss alleges that CNA suggested that Huss did not need to retain independent counsel to protect its interests and that CNA failed to examine the financial condition of Huss to determine the impact of a judgment against it.

The claim was settled on May 18, 1981, for the full limits of the coverage, $1,100,000.00. Huss alleges that the breaches of CNA's fiduciary duty prior to the settlement resulted in the necessity of Huss retaining special litigation counsel in August, 1979. Furthermore, Huss claims that the uncertainty surrounding the litigation caused Huss to suffer business damage which was a substantial factor in causing the company to seek the protection of the Bankruptcy Court in January, 1982.

In the motion for summary judgment CNA argues that under these facts, even accepting the plaintiff's version for purposes of the motion, no cause of action for bad faith exists under Wisconsin law in the absence of an excess judgment against Huss. I agree that, under Wisconsin law, Huss has suffered no damage resulting from any possible bad faith on the part of CNA.

Wisconsin caselaw on the tort of bad faith in insurance claims was reviewed by the Wisconsin Supreme Court in Kranzush v. Badger State Mutual Casualty Co., 103 Wis.2d 56, 307 N.W.2d 256 (1981). The court stated that Wisconsin recognized three separate theories of bad faith recovery. A fourth...