Fehring v. Republic Ins. Co.

• Decision Date: 04 May 1984
• Docket Number: No. 81-2445,81-2445
• Citation: 118 Wis.2d 299,347 N.W.2d 595
• Parties: Timothy FEHRING and Susan M. Fehring, Plaintiffs-Respondents and Cross- Appellants-Petitioners, v. REPUBLIC INSURANCE COMPANY and Republic Financial Services, Inc., Defendants- Appellants and Cross-Respondents.
• Court: Wisconsin Supreme Court

Page 595

347 N.W.2d 595

118 Wis.2d 299

Timothy FEHRING and Susan M. Fehring, Plaintiffs-Respondents and Cross- Appellants-Petitioners, v. REPUBLIC INSURANCE COMPANY and Republic Financial Services Inc., Defendants- Appellants and Cross-Respondents.

No. 81-2445.

Supreme Court of Wisconsin.

Argued Jan. 3, 1984.

Decided May 4, 1984.

Richard C. Gad, Milwaukee (argued), for plaintiffs-respondents and cross-appellants-petitioners; Litow, Gad & Hayman, S.C., Milwaukee, on brief, in court of appeals.

John A. Hamell, Jr., Milwaukee (argued), for defendants-appellants and cross-respondents; Rausch, Hamell, Ehrle, Sturm & Blom, S.C., Milwaukee, on brief.

CECI, Justice.

This review concerns a jury verdict finding that respondent Republic Insurance Company (Republic) acted in bad faith by refusing to offer a reasonable amount in settlement of the insureds' claim under a casualty insurance policy. The jury awarded the Fehrings, the insured petitioners, $12,500 on the insurance policy and $10,000 in compensatory damages following a finding of bad faith on Republic's part. The trial court for Milwaukee county, Honorable John E. McCormick, Circuit Judge, approved the verdict and, in addition, awarded the Fehrings $23,252.53 for actual costs and attorney fees on the bad-faith claim. The court of appeals concluded, in an unpublished opinion, 110 Wis.2d 742, 330 N.W.2d 248 (1982), that as a matter of law, Republic's conduct did not constitute bad faith and reversed the trial court's judgment. We reverse the court of appeals because we conclude that the evidence supports a jury finding that Republic did indeed act in bad faith. However, we also conclude that the Fehrings are not entitled to attorney fees.

On February 21, 1979, the Fehrings' home suffered water damage due to a burst water pipe. Their home was insured by a homeowners insurance policy issued by Republic. The home was vacant at the time that the damage occurred, but when the Fehrings discovered it on February 21, they contacted Republic almost immediately.

Republic's claims adjuster, William Reuteman, inspected the Fehrings' home during the week of February 26. Reuteman testified that following his inspection, he recommended that Republic send the Fehrings a proof of loss form in the amount of $8,000 to cover the damage from the burst water pipe. In oral argument, Republic's attorney claimed that the $8,000 figure represented a "reserve" of funds which Republic must set aside in order to satisfy pending claims such as the Fehrings'. Reuteman had testified at an earlier deposition that part of his $8,000 estimate concerned the possible replacement of walls.

On February 28, Reuteman contacted Claude Dwyer of the Dwyer Construction Company. Dwyer also went to the Fehring home to view the damage and informed Reuteman that he might have to do some repair work "behind the walls." Apparently, Dwyer was too busy to handle the job for Republic, but a written memo from Reuteman's supervisor, dated June 14, 1979, indicates that Dwyer had given a verbal estimate of the cost of repairs as "$10-12,000 min."

On March 15, 1979, Joseph Ferrari of Sid Grinker Co. was contacted by Republic. Ferrari inspected the Fehring home on March 16, 1979, without any contact with the Fehrings prior to his inspection. The June 14 memo from Reuteman's supervisor indicates that Ferrari's verbal estimate was "$5,000 min. to try to salvage." However, Ferrari testified that he initially estimated the damage at $3,000 against time and materials and later appraised the damage to be approximately $1,282. He characterized the repair work as involving painting, "patching little bits of plaster, because there wasn't much else." Ferrari's $1,282 estimate was typed shortly before June 28, 1979, and submitted to Republic.

The Fehrings obtained two independent estimates, one by New Berlin Development, Inc., dated April 15, 1979, and one from Thorpe Contractors, dated April 2, 1979. The estimate from New Berlin Development totaled $15,925 and involved removal and replacement of damaged walls, ceilings, and carpeting, and checking and repairing any damage to the electrical wiring. The Thorpe estimate totaled $5,680 and involved no actual replacement of the damaged walls or ceilings, nor did it entail any investigation for electrical damage. The Fehrings obtained further estimates of $14,500, $9,642, and also an estimate of a $13,900 reduction in the fair market value of the home from Hashek Realty. The Fehrings also retained an attorney, and these estimates were forwarded to Republic.

On June 1, 1979, Reuteman verbally offered to settle the Fehrings' claim for $7,600. The Fehrings declined the offer and, consequently, it was never formalized by Republic. On June 28, however, Republic received the written estimate from the Sid Grinker Company for $1,282. Republic then sent a "sworn statement in proof of loss" to the Fehrings for the "actual cash value loss" of $1,282.65. The Fehrings refused to sign the proof of loss and, on July 13, 1979, filed a complaint against Republic in circuit court. Republic brought a motion for summary judgment, alleging that the Fehrings had not filed the required proof of loss under the terms of the insurance contract.

On January 21, 1980, the trial court heard the motion for summary judgment and ordered the Fehrings to file a proof of loss. On January 25, the Fehrings filed a sworn proof of loss for $155,925. The actual cash value of the property loss was alleged to be $15,925, based upon the New Berlin Development estimate. ¹ The trial court subsequently denied Republic's motion for summary judgment, and the case proceeded to trial before a jury on March 10, 1981. Prior to the jury trial, the Fehrings had amended their complaint to allege damages for emotional distress resulting from Republic's alleged bad-faith conduct. The fourth day of the jury trial, the Fehrings voluntarily dismissed their claim of emotional distress.

On March 18, 1981, the jury returned a verdict awarding the Fehrings $12,500 on the insurance policy. In addition, the jury found that Republic's conduct constituted bad faith and awarded the Fehrings $10,000 in compensatory damages. No punitive damages were awarded by the jury.

Both parties filed post-verdict motions. The Fehrings' motion for costs and attorney fees based upon the bad-faith claim was granted by the trial court, in the amount of $23,252.53. Republic's motion for reasonable costs and attorney fees incurred by Republic in defending the claim for emotional distress, pursuant to section 814.025(3), Stats., was denied.

Subsequently, Republic appealed to the court of appeals. The Fehrings cross-appealed on the question of punitive damages only. The court of appeals noted that the Fehrings had not submitted a proof of loss until after the commencement of the action in circuit court. The court further stated that the amount of the Fehrings' proof of loss, $155,925, "was unsubstantiated by the evidence and was far in excess of all of the contractors' estimates." Consequently, the court of appeals concluded that the Fehrings' claim was "fairly debatable," and Republic was, therefore, justified in challenging the claim. Anderson v. Continental Ins. Co., 85 Wis.2d 675, 691-93, 271 N.W.2d 368 (1978). Concerning the issue of whether the trial court had erred by its denial of Republic's motion for reasonable costs and attorney fees under section 814.025(3), Stats., the court remanded the cause to the trial court. This was based upon the fact that the motion was denied without any findings by the trial court. See, Wurtz v. Fleischman, 97 Wis.2d 100, 108, 293 N.W.2d 155 (1980); Sommer v. Carr, 99 Wis.2d 789, 792, 299 N.W.2d 856 (1981). The court of appeals did not address any other issues raised by either party on appeal.

The Fehrings subsequently petitioned this court for review, which was granted. The parties have raised four issues before this court. They are as follows: (1) Was there sufficient evidence to support the jury's finding that the Fehrings satisfied the policy's conditions concerning the notice of loss requirement; (2) was there sufficient evidence to support a jury verdict that Republic's actions constituted bad faith; (3) must a new trial be granted on the issue of punitive damages; and (4) did the trial judge err in granting the Fehrings' motion for attorney fees?

I.

WAS THERE SUFFICIENT EVIDENCE TO SUPPORT THE JURY'S FINDING

THAT THE FEHRINGS SATISFIED THE POLICY'S

CONDITIONS CONCERNING THE NOTICE OF LOSS?

Initially, we observe that this appeal concerns a jury verdict in favor of the Fehrings. The standard of review of a jury verdict is that it will be sustained if there is any credible evidence to support the verdict. Meurer v. ITT General Controls, 90 Wis.2d 438, 450, 280 N.W.2d 156 (1979). When the verdict has the trial court's approval, this is even more true. Id., citing Upton v. Tatro, 68 Wis.2d 562, 570, 229 N.W.2d 691 (1975). The credibility of the witnesses and the weight afforded their individual testimony is left to the province of the jury. Where more than one reasonable inference may be drawn from the evidence adduced at trial, this court must accept the inference that was drawn by the jury. Cogswell v. Robertshaw Controls Co., 87 Wis.2d 243, 250, 274 N.W.2d 647 (1979). It is this court's duty to search for credible evidence to sustain the jury's verdict. This court is not to search the record on appeal for evidence to sustain a verdict that the jury could have reached, but did not. Meurer v. ITT General Controls, 90 Wis.2d at 450-51, 280 N.W.2d 156, citing Coryell v. Conn, 88 Wis.2d 310, 317, 276 N.W.2d 723 (1979).

The insurance policy in this case contained the standard language required by section 203.06, Stats. (1973), on lines 90-122. ² The relevant portion reads as follows "[W]ithin sixty days after the loss, unless such time is extended in writing by this Company, the insured shall render to...