Carpenter, Matter of, 95-2932

• Decision Date: 31 July 1996
• Docket Number: No. 95-2932,95-2932
• Citation: 205 Wis.2d 365,556 N.W.2d 384
• Parties: In the Matter of Nicholas L. CARPENTER, A Minor. TOWER INSURANCE COMPANY, INC., Plaintiff-Appellant, d v. Gary CARPENTER, Defendant-Third Party Plaintiff-Respondent, v. Jeffrey SZALACINSKI, Third Party Defendant. . Oral Argument
• Court: Wisconsin Court of Appeals

Page 384

556 N.W.2d 384

205 Wis.2d 365

In the Matter of Nicholas L. CARPENTER, A Minor.

TOWER INSURANCE COMPANY, INC., Plaintiff-Appellant, d v. Gary CARPENTER, Defendant-Third Party Plaintiff-Respondent, v. Jeffrey SZALACINSKI, Third Party Defendant.

No. 95-2932.

Court of Appeals of Wisconsin.

Oral Argument July 31, 1996.

Opinion Released Oct. 2, 1996.

Opinion Filed Oct. 2, 1996.

On behalf of the plaintiff-appellant, there were briefs and oral arguments by Terry J. Booth of Fellows, Piper & Schmidt of Milwaukee.

On behalf of the defendant-third party plaintiff-respondent, there was a brief by James C. Herrick, Jr. and Michele D. Miller of Herrick Law Office, S.C. of Fond du Lac. There were oral arguments by Michele D. Miller.

On behalf of Nicholas L. Carpenter, there was a brief by John A. Neal and Beth D. Osowski of Curtis, Wilde & Neal Trial Lawyers of Oshkosh. There were oral arguments by Beth D. Osowski.

Before ANDERSON, P.J., and BROWN and SNYDER, JJ.

SNYDER, Judge.

Tower Insurance Company, Inc., appeals from a judgment awarding Gary Carpenter $50,000 in underinsured motorist (UIM) benefits on the following grounds: (1) that the Tower policy does not provide UIM coverage; (2) that Tower is entitled to the return of its $50,000 payment because it was a mistake; and (3) that the doctrine of accord and satisfaction is not applicable. Because Tower's payment of $50,000 was a final negotiated settlement of Carpenter's claim, we affirm the trial court.

Carpenter's wife, Sandra, was killed in an automobile accident in January 1994. American Family Mutual Insurance Company insured the at-fault driver, and after negotiations with Carpenter's attorney, James Herrick, American Family tendered the $100,000 limits of the bodily injury portion of its policy in exchange for a complete release of American Family and its insured. Prior to Carpenter's acceptance of that payment, Herrick notified Carpenter's insurer, Tower, of American Family's offer pursuant to Vogt v. Schroeder, 129 Wis.2d 3, 383 N.W.2d 876 (1986). That notification consisted of a copy of a letter Herrick had sent to American Family which memorialized their telephone conference discussing the insurance company's offer to tender the limits of its bodily injury coverage, and included the following paragraph:

[W]e are hereby notifying [Tower] of the tentative settlement between our client, Gary Carpenter, and American Family Mutual Insurance Company.

The copy sent to Tower also included a blind postscript:

Our client's claims have a value in excess of $100,000. As is apparent, Tower Insurance Company will be required to pay its underinsured motorist coverage limits.... Please forward a copy of the automobile policy that was in full force and effect on the date of the subject accident of January 27, 1994.

This letter was dated July 1, 1994.

In response to this letter, on August 19, 1994, Tower advised Herrick by telephone that it would not substitute a payment from its UIM coverage for American Family's payment. ¹ A substitute payment would have been necessary had Tower chosen to protect its subrogation rights. Tower also informed Herrick that it would pay its $50,000 UIM coverage limit to Carpenter. These decisions followed an in-house discussion between the following Tower employees: Jeffrey Szalacinski, the claims representative who had reviewed the file; two claims managers, one of whom directly supervised Szalacinski; and Geraldine Garrity, a Tower vice-president and director of claims. A check for $50,000 was mailed on August 29, 1994.

Upon learning of the payment, Carpenter's insurance agent inquired of Tower whether the payment had been properly made, based on the fact that American Family's liability limit was greater than the Tower policy UIM coverage limit. On September 20, 1994, after reviewing its policy, Tower requested that the check be returned.

Carpenter declined to return the check and Tower commenced this action. Both sides brought motions for summary judgment. The trial court ruled that Tower was not entitled to a return of the $50,000 payment, finding that the check represented a settlement, and awarded the check to Carpenter pursuant to the doctrine of accord and satisfaction. Tower now appeals.

We review decisions on summary judgment de novo, applying the same methodology as the trial court. Armstrong v. Milwaukee Mut. Ins. Co., 191 Wis.2d 562, 568, 530 N.W.2d 12, 15 (Ct.App.1995), aff'd, 202 Wis.2d 258, 549 N.W.2d 723 (1996). That methodology, set forth in § 802.08(2), STATS., has been recited often and we need not repeat it here. See Armstrong, 191 Wis.2d at 568, 530 N.W.2d at 15. This court is not bound by a trial court's conclusions of law and decides such matters de novo. See First Nat'l Leasing Corp. v. City of Madison, 81 Wis.2d 205, 208, 260 N.W.2d 251, 253 (1977).

Tower first claims that Carpenter should be required to return the payment because its policy does not provide UIM coverage under these facts. Tower's policy defined an "underinsured motor vehicle" as "a land motor vehicle ... to which a bodily injury liability bond or policy applies at the time of the accident, but its limit for bodily injury liability is less than the limit of liability for this coverage." The at-fault driver carried an American Family bodily injury policy with limits of $100,000. Under the terms of Tower's policy, the other driver was not driving an underinsured motor vehicle. While we agree with Tower's belated assessment of its own policy's coverage, we conclude that this factor is not dispositive of the issue presented.

Tower next argues that the $50,000 payment was a mistake of fact and therefore should be returned. Tower claims that the check was tendered "because Tower did not read and know the applicable provisions of its insurance policy." Carpenter counters this with his claim that the payment was a settlement of a disputed amount, and as such, Tower should be held to its bargain under the doctrine of accord and satisfaction. Tower submits that the doctrine of accord and satisfaction is not applicable to the instant case. In support of this, Tower quotes the following language from Erickson v. Gundersen, 183 Wis.2d 106, 116, 515 N.W.2d 293, 298 (Ct.App.1994): "While the Clinic based its cross-claim on accord and satisfaction, the rule does not normally give rise to an affirmative claim or a cause of action."

While the more common usage of accord and satisfaction is as an affirmative defense to a creditor's claim that money paid did not satisfy a debt, we see no reason why the contract principles of accord and satisfaction would not be applicable to the issue presented in the instant case. Furthermore, the statement quoted from Erickson is dicta. The court in the Erickson case subsequently determined that the doctrine was inapplicable because the parties did not have a disputed claim. Id. at 116-17, 515 N.W.2d at 298. Thus, the Erickson court did not make a determination as to whether accord and satisfaction was applicable to the affirmative claim brought in that case.

Resolution of the issue presented requires consideration of the legal bases for the conflicting claims, as well as the undisputed facts leading up to the issuance of the check. ² The law in Wisconsin is well settled that a payment in full settlement of a claim which is disputed as to amount discharges the entire claim. Flambeau Prods. Corp. v. Honeywell Info. Sys., Inc., 116 Wis.2d 95, 113, 341 N.W.2d 655, 664 (1984). Resolution of a controversy involving something of monetary value and of interest to the parties is sufficient consideration for such a claim. Id. The common law rule of accord and satisfaction rests not only on principles of contract law but also on principles of sound public policy. Id. at 110-11, 341 N.W.2d at 663. Such a rule promotes the public interest in resolving disputes informally and without litigation. Id. at 111, 341 N.W.2d at 663.

The trial court considered the undisputed facts and determined that Carpenter entered into a settlement agreement with Tower. The trial court stated that it

place[d] great weight on the nature of the parties and their position to each other.... On the one hand, you had Gary Carpenter aided by skilled counsel well versed in the law, and on the other hand you had an insurance company whose sole business, at least in this context, is to...