Berna-Mork v. Jones

• Citation: 478 N.W.2d 301,165 Wis.2d 661
• Decision Date: 27 November 1991
• Docket Number: BERNA-MORK and J,No. 90-1626,90-1626
• Parties: Jenniferay Mork, Plaintiffs-Respondents, v. Jane P. JONES, Milwaukee Guardian Insurance, Inc., West Bend Mutual Insurance Company, and James Doe Insurance Company, Defendants. LUMBERMEN'S MUTUAL CASUALTY COMPANY, Plaintiff-Appellant, d v. WEST BEND MUTUAL INSURANCE COMPANY, Defendant-Respondent.
• Court: Wisconsin Court of Appeals

Page 301

478 N.W.2d 301

165 Wis.2d 661

Jennifer BERNA-MORK and Jay Mork, Plaintiffs-Respondents, v. Jane P. JONES, Milwaukee Guardian Insurance, Inc., West Bend

Mutual Insurance Company, and James Doe Insurance

Company, Defendants.

LUMBERMEN'S MUTUAL CASUALTY COMPANY, Plaintiff-Appellant, d v. WEST BEND MUTUAL INSURANCE COMPANY, Defendant-Respondent.

No. 90-1626.

Court of Appeals of Wisconsin.

Submitted on Briefs April 4, 1991.

Opinion Released Nov. 27, 1991.

Opinion Filed Nov. 27, 1991.

Robert J. Shannon and David G. Keefe of Anderson, Shannon, O'Brien, Rice & Bertz, Stevens Point, for plaintiff-appellant, Lumbermen's Mut. Cas. Co.

Scott C. Woldt of Schultz and Woldt Law Office, Green Bay, for plaintiffs-respondents, Jennifer Berna-Mork and Jay Mork.

David A. Ray of Terwilliger, Wakeen, Piehler & Conway, S.C., Stevens Point, for defendant-respondent, West Bend Mut. Ins. Co.

Before EICH, C.J., GARTZKE, P.J., and SUNDBY, J.

GARTZKE, Presiding Judge.

Lumbermen's Mutual Casualty Company appeals from a judgment dismissing its complaint against West Bend Mutual Insurance Company. The issue is whether a worker's compensation carrier has the right to reimbursement for benefits it paid to an employee when reimbursement is sought from the uninsured motorist coverage available to the employee as an additional insured. We conclude that a compensation carrier does not have that right because the employee's right to uninsured motorist coverage is contractual. We therefore affirm.

Section 102.29(1), Stats., provides in material part:

The making of a claim for compensation against an employer or compensation insurer for the injury or death of an employe shall not affect the right of the employe ... to bring action, to make claim or maintain an action in tort against any other party for such injury or death, hereinafter referred to as a 3rd party.... The employer or compensation insurer who shall have paid or is obligated to pay a lawful claim under this chapter shall have the same right to make claim or maintain an action in tort against any other party for such injury or death.

On August 6, 1986, Jennifer Berna-Mork was injured in an automobile accident in the City of Stevens Point. She was a passenger in an automobile operated by Jane Jones. While the Jones automobile was stopped in traffic, an automobile driven by Keith Plasky struck the rear of the Jones automobile and injured Berna-Mork. The Plasky vehicle was not insured and Plasky has been granted a discharge of bankruptcy. Berna-Mork filed a worker's compensation claim for benefits on account of her injuries. Lumbermen's is the worker's compensation insurer of her employer. The Department of Industry, Labor and Human Relations ordered Lumbermen's to pay benefits to Berna-Mork, and Lumbermen's has done so.

Berna-Mork brought a third-party action in tort against Plasky, Jones and Jones' liability and uninsured motorist carrier, West Bend Mutual Insurance Company. West Bend's policy is of record. As a passenger in Jones' car, Berna-Mork is an insured with respect to the uninsured motorist coverage. Lumbermen's commenced an action against West Bend to participate in the third- party action. Lumbermen's amended complaint alleges that it is entitled to reimbursement from West Bend for payment Lumbermen's made to Berna-Mork by virtue of West Bend's policy providing uninsured motorist coverage. Lumbermen's complaint seeks no relief against Jones and does not allege that Jones was negligent. The two actions were consolidated.

The trial court granted summary judgment dismissing Lumbermen's action against West Bend on grounds that Lumbermen's action against West Bend sounds in contract rather than in tort. Lumbermen's appeals from the judgment dismissing its action against West Bend.

An action on uninsured motorist coverage is based on contract. This is true even though "in order to recover the insured must prove the negligence of an uninsured motorist." Sahloff v. Western Casualty & Sur. Co., 45 Wis.2d 60, 70, 171 N.W.2d 914, 918 (1969).

Because its action against West Bend is based on contract, Lumbermen's action cannot be brought under sec. 102.29, Stats. In New Amsterdam Casualty Co. v. Acorn Products Co., 42 Wis.2d 127, 166 N.W.2d 198 (1969), a worker's compensation insurer attempted to enforce its subrogation claim against a defendant for the latter's breach of a contract to obtain worker's compensation insurance. The court held that the insurer had no right to relief under sec. 102.29(1), Stats., since its complaint failed to allege that the defendant was a tort-feasor. New Amsterdam, 42 Wis.2d at 131 n. 1, 166 N.W.2d at 200 n. 1.

In Kottka v. PPG Indus., Inc., 130 Wis.2d 499, 514, 388 N.W.2d 160, 167 (1986), the court said:

We construe sec. 102.29(1), Stats., to apply to all claims in tort for an employe's injury or death for which the employer or its insurer has or may have liability. As one commentator emphasizes, this section "... preserves to an employer or compensation insurer, the same right possessed by an employee to bring suit against a third-party whose negligence caused injuries to the employee." See Arnold, "Third Party Actions and Products Liability," 46 Marq.L.Rev. 136 (1962).

Other Wisconsin decisions contain similar language. Mulder v. Acme-Cleveland Corp., 95 Wis.2d 173, 176-77, 290 N.W.2d 276, 278 (1980); Skornia v. Highway Pavers, Inc., 34 Wis.2d 160, 165, 148 N.W.2d 678, 680 (1967); Severin v. Luchinske, 271 Wis. 378, 382-83, 73 N.W.2d 477, 479 (1955).

Consequently, because Lumbermen's action against West Bend is based on contract and not on tort, it has no rights against West Bend under sec. 102.29(1), Stats.

In reaching that conclusion, we have not neglected the cases in other jurisdictions which have reached a contrary result. See Harris v. New Castle County, 513 A.2d 1307, 1308-09 (Del.1986) (per curiam), citing Montedoro v. City of Asbury Park, 174 N.J.Super. 305, 416 A.2d 433 (App.Div.1980) and Johnson v. Fireman's Fund Ins. Co., 425 So.2d 224 (La.1982) for support and five cases in 2A Arthur Larson, LARSON'S WORKMEN'S COMPENSATION LAW sec. 71.23(e) and (i) (1990), to the contrary. In view of New Amsterdam, we see no reason to discuss those authorities.

We are told that the effect of our holding is to permit the employee, Berna-Mork, a double recovery, since she has recovered worker's compensation for her injuries and she may, under our holding, also recover against her driver's insurance carrier by virtue of the uninsured motorist coverage with no participation by Lumbermen's in the latter recovery.

That may be. "The theory of third party procedure in compensation law rests on the assumption that typically the third-party recovery will cover all of plaintiff's loss, and that therefore to retain the tort recovery and compensation would result in double recovery ... exceeding [the plaintiff's] actual loss." LARSON'S, sec. 71.23(h), at 14-37. Here there is no evidence one way or the other as to whether Berna-Mork's double recovery will exceed her actual loss. Larson points out, "There can be no conceivable [public] policy objection to allowing an injured person to retain two recoveries that, when combined, still do not make him whole." Id. at 14-38.

West Bend asserts that no double recovery will occur because the amount it pays under its uninsured motorist coverage is reduced by amounts payable under any worker's compensation law. Whether West Bend is right we need not decide. The trial court did not decide the issue, and neither will we.

Past decisions by our supreme court bind us regarding the rights of a worker's compensation carrier under sec. 102.29(1), Stats., and the nature of an action on an uninsured motorist clause. Whether the case law should be changed is for the supreme court to decide. Whether sec. 102.29(1) should be changed is for the legislature. ¹

Judgment affirmed.

SUNDBY, Judge (dissenting).

This appeal presents an important issue of first impression as to the distribution of the proceeds of a third-party liability claim under sec. 102.29(1), Stats.: Is the compensation insurer who has paid worker's compensation to an employee, entitled to share according to the statutory formula in the third-party action recovery from the carrier providing uninsured motorist coverage? I conclude that it is. I therefore respectfully dissent.

If the negligent tort-feasor had been subject to judgment or had had liability insurance, the amount recovered in the employee's action against the tortfeasor would have been distributed under sec. 102.29(1), Stats. The compensation insurer would have been reimbursed for the compensation it paid the employee. In this case, however, the negligent tort-feasor was discharged in bankruptcy and was uninsured. The employee then sought to recover from the insurance carrier which provided uninsured motorist coverage to the operator of the vehicle in which the employee was riding when injured. ¹ The majority concludes that the compensation insurer is not entitled to share in the employee's recovery from the carrier providing uninsured motorist coverage because the employee's recovery is founded in contract, not in tort. This construction ignores the fact that the employee's underlying third-party action is an action in tort.

The amount recovered on account of the uninsured motorist coverage is mandated by the legislature under sec. 632.32(4), Stats., which requires that every automobile and motor vehicle liability insurance policy contain a provision protecting injured persons against uninsured motorists. For purposes of third-party liability claims subject to sec. 102.29(1), Stats., the recovery is the equivalent of what would have been recovered from a solvent or insured negligent tort-feasor.

Larson states that the courts dealing with this "comparatively recent problem" almost unanimously disfavor giving the carrier that has paid compensation benefits a lien upon the...