Johnson v. ABC Ins. Co.

• Court: Wisconsin Supreme Court
• Writing for the Court: DAY, J
• Citation: Johnson v. ABC Ins. Co., 193 Wis. 2d 35, 532 N.W.2d 130 (Wis. 1995)
• Decision Date: 23 May 1995
• Docket Number: No. 94-0762.,94-0762.
• Parties: Lisa M. JOHNSON, Individually, and as special administrator of the Estate of Scott E. Johnson, deceased, Plaintiffs-Respondents, DOMKE CONTRACTORS, INC., Plaintiff, v. ABC INSURANCE COMPANY, Rudy Rijen, Otrokovice National Corporation, DEF Insurance Company, Motokov Foreign Trade Corporation, GHI Insurance Company, American Jawa, Ltd.,—Canada, JKL Insurance Company, American Jawa, Ltd.,—New York, MNO Insurance Company, Tyres International, Inc., PQR Insurance Company, State of Wisconsin, STU Insurance Company, LaCrosse County, VWX Insurance Company, Town of Campbell, Defendants, TRANSPORTATION INSURANCE COMPANY, Defendant-Appellant.

193 Wis.2d 35

532 N.W.2d 130

Lisa M. JOHNSON, Individually, and as special administrator of the Estate of Scott E. Johnson, deceased, Plaintiffs-Respondents DOMKE CONTRACTORS, INC., Plaintiff, v. ABC INSURANCE COMPANY, Rudy Rijen, Otrokovice National Corporation, DEF Insurance Company, Motokov Foreign Trade Corporation, GHI Insurance Company, American Jawa, Ltd.,—Canada, JKL Insurance Company, American Jawa, Ltd.,—New York, MNO Insurance Company, Tyres International, Inc., PQR Insurance Company, State of Wisconsin, STU Insurance Company, LaCrosse County, VWX Insurance Company, Town of Campbell, Defendants TRANSPORTATION INSURANCE COMPANY, Defendant-Appellant.

No. 94-0762.

Supreme Court of Wisconsin.

Oral argument April 5, 1995.

Decided May 23, 1995.

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For the defendant-appellant there were briefs (in the Court of Appeals) by David M. Victor and Law Offices of Mark H. Miller, Brookfield and oral argument by David M. Victor.

For the plaintiffs-respondents there were briefs (in the Court of Appeals) by Larry B. Brueggeman, Hope K Olson and Previant, Goldberg, Uelmen, Gratz, Miller & Brueggeman, S.C., Milwaukee and oral argument by Larry B. Brueggeman.

Amicus curiae was filed (in the Supreme Court) by Nancy J. Sixel and Tinglum & Sixel, S.C., River Falls for the Civil Trial Counsel of Wisconsin, Wisconsin Insurance Alliance and Wisconsin Manufactures and Commerce.

DAY, J.

This is an appeal on bypass granted pursuant to sec. (Rule) 809.60, Stats. (1993-94), from an order of the circuit court for La Crosse County, Dennis G. Montabon, Judge. The order of the circuit court approved a settlement between Mrs. Lisa Johnson and several third-party tortfeasors allegedly responsible for the one vehicle accident which caused the death of Mr. Scott E. Johnson, Mrs. Johnson's spouse at the time. Transportation Insurance Company, the worker's compensation insurer of Mr. Johnson's employer had paid death benefits upon Mr. Johnson's death. Pursuant to the Wisconsin Worker's Compensation Act, Ch. 102, Stats. Transportation Insurance Co. sought allocation of the proceeds of the settlement pursuant to sec. 102.29(1), Stats. (1993-94).¹ The circuit court ordered distribution of that portion of the settlement proceeds apportioned for pain and suffering and expenses related to Mr. Johnson's burial, but did not order distribution of that portion of the proceeds apportioned for loss of consortium or pecuniary damages. The issue on appeal is whether pecuniary damages recovered by a surviving spouse in a settlement of a third-party wrongful death claim are subject to distribution.

We hold that amounts recovered for pecuniary loss are subject to distribution under sec. 102.29(1), Stats.

Mr. Scott E. Johnson was killed when the truck he was driving during the course of his employment with Domke Contractors, Inc., went through the railings of a bridge and fell into the river below. Death apparently occurred before the truck entered the river. Transportation Insurance Co., Domke Contractors' workers compensation carrier, paid death benefits totaling $108,067.50 pursuant to the Worker's Compensation Act. Section 102.46, Stats. (1993-94).² Mrs. Johnson brought a subsequent wrongful death action both personally and as the administrator of her husband's estate against the manufacturer and sellers of the tires which were on the truck at the time of Mr. Johnson's death and against various state employees who designed and constructed the bridge.

The parties negotiated a settlement to the suit which totaled $490,000. The settlement was structured as follows: For loss of consortium Mrs. Johnson received $50,000,³ for pecuniary loss she received $419,000, for pain and suffering and expenses in connection with Mr. Johnson's burial the estate received $21,000. Pursuant to sec. 102.29(1), Stats., the settlement and the distribution of the proceeds were subject to the approval of the circuit court. A hearing was held on the matter on January 18, 1994.

The circuit court approved the settlement in its Findings of Fact and Order Approving Settlement and Dismissing Action, dated February 14, 1994. As part of that order, the circuit court held that reimbursement to Transportation Insurance Co. pursuant to sec. 102.29(1), Stats., was required only from the portion of the settlement that went to the estate. After deducting the pro rata costs of collection, this meant that the Estate of Scott E. Johnson, Deceased, received $3,601.67, representing one-third of the proceeds, and Transportation Insurance Co., as worker's compensation carrier for Domke Contractors, Inc., received the remaining $7,203.32. The circuit court ordered the remaining settlement proceeds, $241,312.48 after deducting pro rata costs of collection, be divided among Mrs. Johnson and her two minor children, Kristina M. Johnson and Emily M. Johnson, pursuant to sec. 895.04(2), Stats. (1993-94).⁴ The circuit court ordered $60,000 be set aside, in trust, for each minor, leaving $121,312.48 for Mrs. Johnson. Transportation Insurance Co. appeals from this order.⁵

Whether the pecuniary damages recovered in the settlement are subject to distribution under sec. 102.29(1), Stats., is a question of statutory interpretation. The interpretation of a statute is a question of law which appellate courts review without deference to the trial court. State v. Wittrock, 119 Wis. 2d 664, 669, 350 N.W.2d 647 (1984).

This court set out the test for applying sec. 102.29(1), Stats., in Kottka v. PPG Industries, Inc., 130 Wis. 2d 499, 388 N.W.2d 160 (1986). There this court held that the section "applies to all claims in tort for an employe's injury or death for which the employer or its insurer has or may have liability." Id. at 514. This case requires the resolution of competing court of appeals' interpretations of the application of Kottka to wrongful death claims.

The first court of appeals decision to apply the Kottka test to a wrongful death claim was Stolper v. Owens-Corning Fiberglas Corp., 178 Wis. 2d 747, 505 N.W.2d 157 (Ct. App. 1993). There the court of appeals quite simply held that "Section 102.29(1), Stats., encompasses wrongful-death actions by permitting third party claims `for ... the death' of a covered employee." Id. at 752. The Stolper court based its conclusion that distribution of the wrongful death pecuniary damages was appropriate on its conclusion that a wrongful death action is a claim for an employe's injury or death for which the employer or its insurer has or may have liability. Id. at 753.

One month later, the court of appeals in Cummings v. Klawitter, 179 Wis. 2d 408, 506 N.W.2d 750 (Ct. App. 1993), reached the opposite conclusion, holding that wrongful death claims for loss of society and financial support did not fall under sec. 102.29(1), Stats. It stated that Kottka required this result because:

the two types of loss represent personal injuries to the appellants, and, thus, were not claims for Rodger Cummings's injury or death. Furthermore, the two types of loss were asserted as part of a wrongful death action which the appellants could not have maintained against Harco or Mid State Truck Service. Therefore, neither Harco nor Mid State Truck Service were liable for, or could have been liable for, the two claims.

Id. at 418-19 (citations and footnotes omitted). Because we conclude that the Cummings court was incorrect in holding that pecuniary damages in a wrongful death action represent damages personal to the surviving family members, see infra at 46, and that the Cummings court misinterpreted the requirement that "the employer or its insurer has or may have liability." see infra at 47, the Cummings court holding that pecuniary damages are not subject to distribution under the statute is overruled.

We conclude that the test laid out in Kottka for sec. 102.29(1), Stats., distribution to apply contains three elements, all of which were satisfied by Mrs. Johnson's wrongful death action for pecuniary damages. First, the action must be one grounded "in tort." Berna-Mork v. Jones, 174 Wis. 2d 645, 651, 498 N.W.2d 221 (1993). Second, the action must be one for the employee's injury or death. Third, the injury or death must be one for which the employer or its insurer has or may have liability.

The first element of the Kottka test is not in dispute in this case. A wrongful death action is an action "in tort" as that term is used in sec. 102.29(1), Stats. See Kottka, 130 Wis. 2d at 514.

However, Ms. Johnson contends that the second element was not satisfied in this case. She argues that a wrongful death action is not for the employee's injury or death because it is like a claim for loss of society in that it is a separate cause of action which never belonged to the decedent. DeMeulenaere v. Transport Insurance Co., 116 Wis. 2d 322, 327, 342 N.W.2d 56 (Ct. App. 1983). Thus, she argues both are derivative in that neither arises unless the injured spouse had a claim, See Miller v. Luther, 170 Wis. 2d 429, 436, 489 N.W.2d 651 (1992), but yet both are personal to the claiming spouse and apart from the claim of the injured spouse. See Kottka, 130 Wis. 2d at 521. Therefore, she claims that pecuniary damages from a wrongful death action are not subject to distribution. We disagree.

6, 7

Wrongful death actions are purely a statutory remedy. Weiss v. Regent Properties, Ltd., 118 Wis. 2d 225, 230, 346 N.W.2d 766 (1984). In Wisconsin, the legislature established the right to maintain an action for wrongful death in sec. 895.03, Stats.,⁶ entitled "Recovery for death by wrongful act." Further, the surviving spouse has the right to bring a wrongful death action only if the decedent would have had a cause of action had death not ensued. Miller, 170 Wis. 2d at 437. The portion of the surviving spouse's wrongful death action in this case for pecuniary loss is predicated on the claim of the deceased and...