Ives v. Coopertools, a Div. of Cooper Industries, Inc., 1

• Decision Date: 28 February 1997
• Docket Number: No. 4,No. 2,D,No. 1,No. 95-0932,1,2,4,95-0932
• Parties: Michael IVES and Tammy Ives, Plaintiffs-Respondents, Rhinelander Paper Company Group Health Plan for Hourly Employees Sponsored By Rhinelander Paper Company, Inc., Plaintiff-Appellant-Petitioner, d v. COOPERTOOLS, A DIVISION OF COOPER INDUSTRIES, INC., Alias Insurance Company; Cooper Industries, Inc., Alias Insurance Company; Berns Enterprises, Inc., d/b/a Rhinelander Hardware; The Aetna Casualty & Surety Company; McGraw-Edison Company; and Alias Insurance Companyefendants.
• Court: Wisconsin Supreme Court

Page 571

559 N.W.2d 571

208 Wis.2d 55

Michael IVES and Tammy Ives, Plaintiffs-Respondents Rhinelander Paper Company Group Health Plan for Hourly Employees Sponsored By Rhinelander Paper Company Inc., Plaintiff-Appellant-Petitioner, ^d v. COOPERTOOLS, A DIVISION OF COOPER INDUSTRIES, INC., Alias Insurance Company No. 1; Cooper Industries, Inc., Alias Insurance Company No. 2; Berns Enterprises, Inc., d/b/a Rhinelander Hardware; The Aetna Casualty & Surety Company McGraw-Edison Company; and Alias Insurance Company No. 4, Defendants.

No. 95-0932.

Supreme Court of Wisconsin.

Argued Sept. 5, 1996.

Decided Feb. 28, 1997.

For the plaintiff-appellant-petitioner there were briefs by Matthew E. Yde and Ruder, Ware & Michler, S.C., Wausau and oral argument by Matthew E. Yde.

For the plaintiffs-respondents there was a brief by D.J. Weis and Habush, Habush, Davis & Rottier, S.C., Rhinelander and oral argument by D.J. Weis.

Amicus curiae brief was filed by Mark L. Thomsen and Cannon & Dunphy, S.C., Brookfield for the Wisconsin Academy of Trial Lawyers.

Amicus curiae brief was filed by Terry J. Booth and Fellows, Piper & Schmidt, Milwaukee for the Wisconsin Health Insurers.

¶1 PER CURIAM.

This is a review of a published decision of the court of appeals ¹, vacating the order of the Circuit Court for Oneida County, Robert E. Kinney, Judge. The question in this case is whether a subrogated insurer is entitled to reimbursement on its lien when the injured plaintiffs settle with the alleged tortfeasors before trial for an amount less than their total damages. We unanimously conclude that the court of appeals erred in its holding that there must be a determination of Michael Ives' contributory negligence, if any, before the question of reimbursement to Rhinelander can be considered. However, we are evenly divided on the reasons for this conclusion.

¶2 The published opinion of the court of appeals here should not stand when we unanimously agree that it does not state the law in Wisconsin. The court in State v. Gustafson, 121 Wis.2d 459, 462, 359 N.W.2d 920, cert. denied, 471 U.S. 1056, 105 S.Ct. 2121, 85 L.Ed.2d 485 (1985), affirmed a conviction where a majority of the court concluded there was prejudicial error, but no majority agreed on a particular error. There, a reversal would have sent the matter back for a new trial, but without providing adequate guidance to the circuit court. Id. at 462, 359 N.W.2d 920, citing Will of McNaughton, 138 Wis. 179, 118 N.W. 997, 120 N.W. 288 (1909). Here, however, we are in agreement as to the proper resolution of the contributory negligence question. Thus, despite our even division on the rationale for our decision, we affirm the order of the circuit court.

¶3 The situation at hand is unlike the case of a tie vote on a certification or bypass. In such instance, if we allow the circuit court's decision to stand the parties have in effect been denied a full appellate review and opinion. State v. Richard Knutson, Inc., 191 Wis.2d 395, 396, 528 N.W.2d 430 (1995). Here, the parties have had the opportunity of full review by both this court and the court of appeals. Our division on reasoning simply means that the analyses of the two concurrences have no precedential value. State ex rel. Thompson v. Jackson, 199 Wis.2d 714, 719, 546 N.W.2d 140 (1996)(citing State v. Elam, 195 Wis.2d 683, 685, 538 N.W.2d 249 (1995))(a majority of justices must have agreed on a particular point for it to be considered the opinion of the court).

¶4 Chief Justice Shirley S. Abrahamson, Justice William A. Bablitch and Justice Janine P. Geske would vote to reaffirm the made whole rule enunciated in Garrity v. Rural Mutual Ins. Co., 77 Wis.2d 537, 253 N.W.2d 512 (1977) and Rimes v. State Farm Mut. Auto. Ins. Co., 106 Wis.2d 263, 316 N.W.2d 348 (1982), but would overrule Sorge v. National Car Rental System, Inc., 182 Wis.2d 52, 57, 512 N.W.2d 505 (1994). This rule focuses on what an injured plaintiff has lost, and not on what an injured plaintiff can legally receive. ² Justices Donald W. Steinmetz, Jon P. Wilcox and N. Patrick Crooks would conclude that, in the case of a settlement before trial, the circuit court should assess the subrogated insurer's rights of recovery at a rate equal to the percentage of the plaintiff's recovery in relation to his or her gross damages. Attorney's fees and costs may be handled on a pro rata basis as well, if the insurer is not represented by counsel. ³ Justice Ann Walsh Bradley did not participate.

¶5 For the reasons set forth, the decision of the court of appeals is reversed, and the order of the circuit court denying Rhinelander's claim for reimbursement is affirmed.

¶6 JANINE P. GESKE, Justice (concurring).

In our opinion, Rhinelander is not entitled to reimbursement of its lien because the circuit court determined that the Iveses were not made whole by their settlement with the alleged tortfeasors. ¹ We start with a recitation of the facts as presented to us.

Facts and Procedural History

¶7 In November 1989, Michael Ives sustained severe injuries when he fell out of a tree after his homemade deer stand collapsed. Rhinelander Paper Company Group Health Plan for Hourly Employees Sponsored by Rhinelander Paper Company, Inc. (Rhinelander), paid $132,292 in medical expenses Michael incurred because of the accident. ² Michael and Tammy Ives sued the manufacturer and seller of a double-end snap cap Michael used to hold his deer stand in place, and also named the insurers of the manufacturer and seller (hereinafter, collectively, "the defendants"). The Iveses alleged that the double-end snap cap failed, causing the deer stand to collapse. Rhinelander employed counsel to participate in the Iveses' suit and to prosecute its subrogation claim for payment of Michael's medical expenses. ³

¶8 Approximately one week before trial, the Iveses entered into a settlement with the defendants. The defendants paid $261,250 to fully settle the $1.5 million claim that included the past medical expenses previously paid by Rhinelander. This settlement extinguished Rhinelander's claim against the defendants. Schulte v. Frazin, 176 Wis.2d 622, 634-35, 500 N.W.2d 305 (1993). The Iveses then requested a post-settlement subrogation hearing ⁴ to determine their potential liability, if any, to Rhinelander out of the settlement proceeds. For purposes of the post-settlement subrogation hearing, the Iveses and Rhinelander stipulated to the following facts:

1. Plaintiffs' total damages as a result of injuries to Plaintiff MICHAEL IVES following his fall from a deer stand on or about November 10, 1989, are 1.5 million dollars.

2. That the defendants' payment of $261,250.00 in full settlement of all personal injury and property damage claims arising out of Plaintiff MICHAEL IVES' fall from a deer stand on or about November 10, 1989, is full-value for the Plaintiffs' claims based on the following factors:

a. Liability difficulties; and

b. Uncertainty of successor corporate liability on the Coopertools defendants.

3. That due to liability problems and the uncertainty of successor corporate liability, the Plaintiffs accepted 17.42 percent of their total damages arising out of the November 10, 1989, accident.

4. That Plaintiffs' decision to accept 17.42 percent of their total damages was not based on insufficient insurance coverage or the unavailability of funds on the part of the defendants to satisfy a 1.5 million dollar judgment.

5. That Rhinelander has paid medical expenses ($128,487.40) and accident and sickness benefits ($3,804.60) relating to this accident in the amount of $132,292.00.

¶9 Relying upon this court's decision in Rimes, 106 Wis.2d 263, 316 N.W.2d 348, the circuit court held that the Iveses were not made whole. The court considered the stipulated facts, and found that the settlement did not compensate the Iveses for their entire actual loss. Further, the circuit court concluded that the equities of the case favored the Iveses. Thus, Rhinelander was not entitled to reimbursement of its subrogated lien.

¶10 The court of appeals vacated the order of the circuit court. Relying upon Sorge v. National Car Rental System, Inc., 182 Wis.2d 52, 512 N.W.2d 505 (1994), the court of appeals remanded for a determination of Michael Ives' percentage of contributory negligence. Because the Iveses stipulated that they received 17.42 percent of their damages in the settlement, the appellate court calculated that the settlement would make the Iveses whole only if Michael was 82.58 percent or greater contributorily negligent. The court of appeals further concluded that Rhinelander had a right of priority in any money collected over the amount of the Iveses' total damages, discounted for the percentage of Michael's contributory negligence, up to the amount of benefits paid. The court held that a settlement discounted for factors other than the plaintiff's contributory negligence does not make the insured whole. Finally, the court of appeals held that the Wis.Stat. § 895.045 (1989-90) bar to recovery in negligence actions has no application to the equitable resolution of a subrogation dispute. ⁵

Standard of Review

¶11 In this case we are asked to determine the rights of the insured and the subrogated insurer when the insured has settled with the defendants without involving the subrogated insurer. This case presents a question of law that we decide without deference to the lower courts. Schulte v. Frazin, 176 Wis.2d 622, 628, 500 N.W.2d 305 (1993). In doing so, we apply principles of equity to the facts before us. Beacon Bowl, Inc. v. Wisconsin Electric Power Co., 176 Wis.2d 740, 776, 501 N.W.2d 788 (1993).

Arguments of the Parties

¶12 Rhinelander asserts that the Iveses have been made more than whole by their settlement with the tortfeasors. The Iveses settled for an amount equaling 17.42 percent of their stipulated total damages of $1.5 million. According to their stipulation, the settlement of...