Fire Ins. Exchange v. Basten
| Decision Date | 13 June 1995 |
| Docket Number | No. 94-3377-FT,94-3377-FT |
| Citation | 195 Wis.2d 260,536 N.W.2d 150 |
| Parties | FIRE INSURANCE EXCHANGE, Plaintiff-Respondent, v. Dale M. BASTEN, Defendant-Appellant. d |
| Court | Wisconsin Court of Appeals |
On behalf of the defendant-appellant, the cause was submitted on the briefs of Avram D. Berk of Robinson, Robinson, Peterson, Berk & Cross of Appleton.
On behalf of the plaintiff-respondent, the cause was submitted on the brief of Robert N. Duimstra of Menn, Nelson, Sharratt, Teetaert & Beisenstein, Ltd. of Appleton.
Before CANE, P.J., and LaROCQUE and MYSE, JJ.
Dale M. Basten appeals a declaratory judgment finding that Fire Insurance Exchange had no duty to defend and indemnify Basten in the lawsuit brought against him and others by Susan Monfils. 1 Basten contends that the declaratory judgment action was improper procedure. Because we conclude that bringing a declaratory judgment action separate from the underlying lawsuit was not improper, we affirm the trial court.
The facts are undisputed. On May 26, 1993, the estate of Thomas Monfils and his surviving spouse and children brought a wrongful death lawsuit against Basten and six other defendants, not including Fire Insurance, in Brown County Circuit Court. The case was assigned to Judge Richard Greenwood in Branch I. The Monfils' lawsuit sought compensatory and punitive damages against all defendants.
Basten tendered his defense to his homeowner's insurance company, Fire Insurance, which refused to defend Basten or pay for his defense. Fire Insurance then filed a declaratory judgment action on the insurance coverage issue, which was assigned to a separate branch of the Brown County Circuit Court. That trial court found that the declaratory judgment procedure was appropriate and that Fire Insurance had no duty to defend or indemnify Basten in the Monfils case.
The sole issue on appeal is whether Fire Insurance followed proper procedure by filing a separate declaratory judgment action on the coverage issue. This issue involves application of the declaratory judgment statute, § 806.04, STATS., 2 as well as the permissive joinder of parties statute, § 803.04(2)(b), STATS., 3 to undisputed facts, which is a question of law that we review independently of the trial court's conclusions. State v. Williams, 104 Wis.2d 15, 21-22, 310 N.W.2d 601, 604-05 (1981).
Basten contends that Fire Insurance's only proper course of action to resolve the issue of insurance coverage is to intervene in the underlying lawsuit and then request a bifurcated trial pursuant to § 803.04(2)(b), STATS. We are not persuaded.
Generally, the issue of proper procedure turns on the status of the parties involved. If the insurance coverage involves a party not named in the underlying lawsuit, coverage may be determined by either a bifurcated trial or a separate declaratory judgment action. See Elliott v. Donahue, 163 Wis.2d 1059, 1066 n. 3, 473 N.W.2d 155, 159 n. 3 (Ct.App.1991), rev'd on other grounds, 169 Wis.2d 310, 485 N.W.2d 403 (1992). However, if the party seeking a determination of insurance coverage is a named party, a bifurcated trial per § 803.04(2)(b), STATS., is the proper procedure. Newhouse v. Citizens Sec. Mut. Ins. Co., 176 Wis.2d 824, 836, 501 N.W.2d 1, 6 (1993).
Fire Insurance contends that bifurcating the trial pursuant to § 803.04, STATS., is not the exclusive means by which determinations of insurance coverage can be made. We agree. Section 803.04(2) is a direct action statute that allows the plaintiff to join an insurer as a party to an action. Here, the plaintiff, Monfils, chose not to join Fire Insurance to the action. Although Fire Insurance could have intervened and then moved to bifurcate the trial, instead it sought a separate declaratory judgment on the coverage issue.
The Uniform Declaratory Judgments Act empowers courts to determine, among other issues, certain legal relations or rights. See 3A JAY E. GRENIG & WALTER L. HARVEY, WISCONSIN PRACTICE, CIVIL PROCEDURE, § 604.1 (2d ed. 1994). Declaratory judgment actions are often used in the context of insurance coverage involving nonparty insurers. See, e.g., Newhouse, 176 Wis.2d at 831-32, 501 N.W.2d at 4. Further, a declaratory judgment is a separate action; thus, it may take place in a different circuit court branch due to court scheduling. Because of its status as a nonparty to the underlying personal injury lawsuit, Fire Insurance's filing of a declaratory judgment was not improper procedure.
However, the preferred procedure in determining insurance coverage is the joinder or intervention of all concerned parties, then bifurcation on the coverage and liability issues. See id. at 836, 501 N.W.2d at 6. This procedure is consistent with the premise that insurance coverage issues should be resolved within the context of the...
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