Benke v. Mukwonago-Vernon Mut. Ins. Co.

• Decision Date: 22 December 1982
• Docket Number: MUKWONAGO-VERNON,No. 81-2402,81-2402
• Citation: 110 Wis.2d 356,329 N.W.2d 243
• Parties: Jeffrey G. BENKE and Kathy Benke, Plaintiffs-Respondents and Cross-Appellants, v.MUTUAL INSURANCE COMPANY, a Wisconsin corporation, Defendant-Appellant and Cross-Respondent.
• Court: Wisconsin Court of Appeals

Page 243

329 N.W.2d 243

110 Wis.2d 356

Jeffrey G. BENKE and Kathy Benke, Plaintiffs-Respondents and Cross-Appellants, v. MUKWONAGO-VERNON MUTUAL INSURANCE COMPANY, a Wisconsin corporation, Defendant-Appellant and Cross-Respondent.

No. 81-2402.

Court of Appeals of Wisconsin.

Argued Aug. 26, 1982.

Opinion Released Dec. 22, 1982.

Opinion Filed Dec. 22, 1982.

Frank R. Terschan (argued), Milwaukee, for plaintiffs-respondents and cross-appellants; Frisch, Dudek & Slattery, Ltd., Milwaukee, on brief.

John H. Niebler (argued), Menomonee Falls, for defendant-appellant and cross-respondent; Roy E. Wagner of Niebler & Niebler, Menomonee Falls, on brief.

Before VOSS, P.J., and BROWN and SCOTT, JJ.

BROWN, Judge.

An insurance company debated the stable owners' claim for windstorm damage, claiming the collapse of the owners' building was due, instead, to snow. The stable owners sued, and a jury found that wind caused the damage, thus making the insurer responsible for coverage. The stable owners further claimed that the insurance company had failed to exercise proper care in investigating the claim. The jury agreed, found bad faith and also awarded punitive damages. We affirm the findings of coverage and bad faith but reverse the finding of punitive damages. The stable owners cross-appeal, claiming prejudgment interest should have been awarded by the trial court. We agree and reverse that part as well.

The initial dispute concerns whether the insurance company owed coverage at all. The first subissue is a claim by Mukwonago-Vernon Mutual Insurance Company (Mukwonago) that there was insufficient evidence to show wind damage as causing the collapse. We disagree. Before recitation of the evidence, we find it necessary to underscore that we must view the evidence in a light most favorable to the verdict. Bergmann v. Insurance Co. of North America, 49 Wis.2d 85, 87-88, 181 N.W.2d 348, 350 (1970). We make this statement because appellant disgorges its own brand of the facts in its brief. Although we do not doubt the sincerity of appellants' view of the facts, we cannot accept that version but must look at evidence which, under any reasonable view, supports the verdict and removes the question from the realm of conjecture. Coryell v. Conn, 88 Wis.2d 310, 315, 276 N.W.2d 723, 726 (1979).

The credible evidence taken in the light most favorable to the verdict is that Jeffrey and Kathy Benke were owners of a riding stable whose main building consisted of an indoor arena. The arena collapsed on February 21, 1979. The Benkes had a defined perils insurance policy for the riding arena which expressly covered loss directly caused by windstorm but which excluded loss caused by snow and ice. Mr. Benke and a helper shoveled snow off the roof regularly before the collapse. Thus, there were only six to eight inches on the roof at the time of the collapse. The arena roof was built to withstand snow loads far in excess of the amount on the roof at the time of the collapse. Further, the materials used in constructing the building were of good quality. Two experts testified that, in their opinion, wind damage was the substantial cause of the collapse.

The evidence by a Mr. Kopecky, one of the experts, was claimed by Mukwonago as speculative. A search of the record shows that Mr. Kopecky relied, in part, upon empirical data to support his opinion. He also had done a personal quantitative study which would provide credibility to his theory. How good this personal study was and how well-founded the empirical studies were goes to the weight of the evidence and not to its admissibility. We note that the testimony of both experts was properly scrutinized by rigorous cross-examination. The judge did not err in allowing either expert to state his opinion, in the judge's words, "for what it was worth" and instructing the jury that they are the sole determiners of the weight to be given to the experts. We conclude that there was a sufficient basis for the jury to find that wind damage caused the collapse.

The second subissue to the dispute on the coverage question is a claim by Mukwonago that the award should be reversed because of an error in the jury instructions. The verdict asked whether the collapse of the riding area was directly caused by a windstorm. In considering this question, the jury was instructed that if there is a peril which is included in the policy (wind) and a peril which is excluded in the policy (snow and ice) and the jury believes the two perils acted together to cause the building to come down, then the jury must find the damages were covered under the policy. Therefore, the jury was told that if wind is a cause of the collapse, the question of whether wind directly caused the collapse must be answered "yes."

Mukwonago claims this instruction is contrary to the law of Wisconsin. It cites Kudella v. Newark Insurance Co., 3 Wis.2d 599, 601, 89 N.W.2d 219, 220 (1958), which reads as follows:

If the windstorm or similar peril insured against is the proximate cause of the loss, it need not be the sole cause, and it is generally sufficient to authorize a recovery on the policy that the cause designated therein was the efficient cause of the loss, although other causes contributed thereto, unless the contributing cause is expressly excluded by the terms of the policy. [Emphasis added.]

Mukwonago claims that if a peril is excluded and is a contributing factor in the damage, then a jury must be directed to answer the question "no" if it believes that snow and ice, as well as wind, caused the damage.

Kudella is no longer the law in Wisconsin. It was overruled as early as Lawver v. Boling, 71 Wis.2d 408, 238 N.W.2d 514 (1976), and again in Kraemer Bros., Inc. v. United States Fire Insurance Co., 89 Wis.2d 555, 278 N.W.2d 857 (1979). The Kraemer Bros. court, citing Lawver as authority, said:

Where a policy expressly insures against loss caused by one risk but excludes loss caused by another risk, coverage is extended to a loss caused by the insured risk even though the excluded risk is a contributory cause.

....

If it is proved that an excluded peril is not the sole cause of the collapse, [the insurance carrier] is liable under the policy.

Kraemer Bros. 89 Wis.2d at 570, 278 N.W.2d at 863-64.

Mukwonago attempts to distinguish Kudella from Lawver and Kraemer Bros. by arguing that both involved an "all-risk" policy while Kudella remains good law for a "defined perils" policy as is the case here. Apparently, the reasoning is that when a person buys an "all-risk" policy, he or she is purchasing a special type of coverage which is intended to protect even against damage partially caused by an excluded risk and partially caused by an included risk. This is evidenced by the fact that the person buying an "all-risk" policy is paying more for precisely that type of comprehensiveness. On the other hand, a "defined perils" policy, as the argument goes, is different because the risks included and excluded are fewer, clearer and less expensive. Thus, the insured, from an equitable standpoint, should be held to have clearly discerned that limited coverage was being obtained, unlike the "all-risk" policy.

We disagree with Mukwonago's argument. Lawver and Kraemer Bros. do not, in any way, limit their holdings to all-risk policies or even imply such limitations. The language in both cases broadly declares that if there is any evidence that any included peril is a cause of damage, then, it is assumed that the insured paid to be protected from that loss, and it would be unfair to the insured to deny the benefits as paid for. See Lawver, 71 Wis.2d at 422, 238 N.W.2d at 521. We conclude the instruction as given by the trial court is correct, and accordingly the insurer's arguments regarding the coverage dispute must fail.

The next issue relates to the finding of bad faith made by the jury. Again, we are restricted by our standard of review and must only determine whether any credible evidence exists to uphold the verdict. We conclude there is.

Before discussing this issue, we reiterate the definition of bad faith as expressed in Anderson v. Continental Insurance Co., 85 Wis.2d 675, 691, 271 N.W.2d 368, 376 (1978):

To show a claim for bad faith, a plaintiff must show the absence of a reasonable basis for denying benefits of the policy and the defendant's knowledge or reckless disregard of the lack of a reasonable basis for denying the claim. [Emphasis added.]

The Anderson court further explained this two-pronged test in the following manner. The first prong, requiring the evidence to show the absence of a reasonable basis for denying the claim, is asking: would a reasonable insurer, under the circumstances have denied or delayed payment of a claim under the facts and circumstances. Id. at 692, 271 N.W.2d at 377. The second prong, making it necessary to show knowledge or reckless disregard of a reasonable basis for denial, is asking: is there a reckless disregard of a lack of a reasonable basis for denial or a reckless indifference to facts or to proof submitted by the insured. Id. at 693, 271 N.W.2d at 377.

With the Anderson tests in mind, we now turn to the record, taken in a light most favorable to the verdict. The Benkes' theory of bad faith rested upon the following. When the Benkes' arena collapsed, they immediately called their insurer. A man by the name of Mr. Craig told them he was sorry, but the Benkes were not covered. This was said without Mr. Craig first investigating the site or asking the Benkes for facts which might show the collapse as being due to a covered peril. The inference that can be drawn is that Mr. Craig immediately took the posture of the collapse being due to snow. Further, he was not about to be persuaded differently. When the Benkes interjected, during the initial telephone call, that the snow had been shoveled off the roof, Mr. Craig still insisted that the Benkes were not covered.

The next day, Mr....