Kimble v. Land Concepts, Inc.

Decision Date22 April 2014
Docket NumberNo. 2011AP1514.,2011AP1514.
PartiesRobert L. KIMBLE and Judith W. Kimble, Plaintiffs, v. LAND CONCEPTS, INC., John E. Stevenson and Jane E. Stevenson, Trustees of the John E. and Jane E. Stevenson Revocable Trust, Dorene E. Dempster and Mark F. Herrell, Defendants, John E. Stevenson and Jane E. Stevenson, Defendants–Respondents, First American Title Insurance Company, Defendant–Appellant–Petitioner.
CourtWisconsin Supreme Court

OPINION TEXT STARTS HERE

For the defendant-appellant-petitioner, there were briefs by J. Bushnell Nielsen, Rebecca Leair, and Reinhart Boerner Van Deuren S.C., Waukesha, and oral argument by J. Bushnell Nielsen.

For the defendants-respondents, there was a brief by David H. Weber, T. Wickham Schmidt, and Conway, Olejniczak & Jerry, S.C., Green Bay, and oral argument by David H. Weber.

An amicus curiae brief was filed by James A. Friedman, Kerry L. Gabrielson, and Godfrey & Kahn, S.C., Madison, on behalf of the Wisconsin Insurance Alliance, the Wisconsin Civil Justice Council, Inc., and Wisconsin Manufacturers & Commerce.

ANNETTE KINGSLAND ZIEGLER, J.

¶ 1 J. This is a review of an unpublished decision of the court of appeals, Kimble v. Land Concepts, Inc., No. 2011AP1514, unpublished slip op., 2012 WL 4815574 (Wis.Ct.App. Oct. 11, 2012), affirming the judgment of the Door County Circuit Court,1 upholding a jury award of punitive damages against First American Title Insurance Company (First American).

¶ 2 First American argues that the punitive damages award against it was excessive and violated its right to due process under the United States and Wisconsin constitutions.2

¶ 3 John E. and Jane E. Stevenson (Stevensons) 3 argue that First American had no right to appeal the punitive damages award because it filed its post-verdict motion late. The Stevensons also argue that the award was reasonable in light of First American's bad faith conduct, and the harm that they might have suffered as a result of that bad faith. The Stevensons further contend that punitive damages were appropriate because First American's conduct needed to be deterred.

¶ 4 We conclude that the punitive damages award in this case was excessive and deprived First American of its right to due process. We therefore reverse the court of appeals' decision and remand this case to the circuit court for entry of a judgment against First American in the amount of $239,738.49.

I. BACKGROUND FACTS

¶ 5 On October 26, 2004, Robert L. Kimble and Judith W. Kimble (Kimbles) purchased a lakefront lot located in the Town of Nasewaupee in Door County (“Kimble Lot”) from Dorene Dempster (Dempster) and Mark Herrell (Herrell). 4 A private cut-off road that crossed the property immediately to the west provided access to the Kimble Lot. That property was owned by Land Concepts, Inc. (Land Concepts).

¶ 6 The deed executed by Dempster and Herrell conveying the Kimble Lot to the Kimbles warranted that the property was benefitted by two easements. One easement purported to grant the Kimble Lot use of a private driveway connecting it to County Highway M across property to the north (“North Easement”). That private driveway had not been used in many years at the time of the sale. The other easement purported to grant the Kimble Lot access to County Highway M across Land Concepts' property (“West Easement”).5 It is undisputed that the cut-off road was not within the boundaries of either of these easements.

¶ 7 On October 27, 2004, First American issued the Kimbles a title insurance policy for the Kimble Lot. The policy obligated First American to defend and indemnify the Kimbles for any covered loss, including losses resulting from [u]nmarketability of the title” and [l]ack of a right of access to and from the land.” The policy did not insure any specific route of access.

¶ 8 In early 2008, the Kimbles listed their property for sale with a real estate agent.6 On March 5, 2008, the Kimbles' agent received a letter from Land Concepts stating that the Kimbles “do not own—and cannot convey—any access rights to County Highway M” from the Kimble Lot. The letter instructed the agent to make prospective purchasers of the Kimble Lot aware of lack of access rights [i]n order to avoid possible future misunderstandings and/or confusion.” On March 17, 2008, the Kimbles' attorney contacted the Kimbles' local insurance agent, Marilyn DeNamur (“DeNamur”), about the dispute. DeNamur forwarded the matter to Donald Schenker (“Schenker”), an assistant vice president at First American.

¶ 9 On March 18, 2008, DeNamur provided Schenker with the deeds and other recorded documents purportedly granting the North and West Easements to the Kimbles' predecessors in title. In a follow-up message to Schenker on March 28, DeNamur noted that there appeared to be a problem with the deeds purporting to grant and convey the North Easement. DeNamur asked Schenker whether she should “continue to dig for more documentation?” Schenker never asked for more research.7

¶ 10 On March 31, 2008, Schenker, on behalf of First American, sent the Kimbles a letter which addressed the access issue. Schenker indicated in his letter that he believed the West Easement was defective.8 Schenker asserted, however, that the North Easement continued to provide the Kimble Lot access to the highway, and because the title remained as insured, First American had no duty to intervene in the dispute. In his letter, Schenker described the chain of title he claimed supported the North Easement, but made no mention of the problems identified by DeNamur.

¶ 11 On May 27, 2008, the Kimbles forwarded Schenker a copy of a letter they intended to send to Land Concepts asserting their right to use the cut-off road. The Kimbles asked Schenker whether the letter jeopardized their title insurance policy. On May 28, 2008, Schenker assured the Kimbles that it did not, again implicitly asserting that another right of access existed.

¶ 12 On June 13, 2008, the Kimbles received a response letter from Land Concepts, wherein Land Concepts threatened to “close the access over [its] property” if the dispute was not “promptly resolved.” On June 18, 2008, the Kimbles contacted Schenker regarding the threatened closure. The Kimbles asked Schenker whether First American would insure the North Easement under the title policy if the Kimbles constructed a new driveway following the route of that easement.

¶ 13 On June 25, 2008, Schenker reiterated to the Kimbles that their title policy did not insure any particular route of access. Schenker again asserted that the North Easement provided access and stated, [w]hether there is some legal defense to prevent the Kimbles from using it, which falls under some exclusion or exception in the policy, we do not know.” Schenker further recommended that the Kimbles have a survey of the North Easement performed before constructing any driveway.

¶ 14 The Kimbles continued to market their property throughout 2008, relying on Schenker's assurances that it had good access to the highway. Land Concepts continued to dispute the Kimbles' right of access, but did not follow through on its threat to physically close the cut-off road.

¶ 15 On January 12, 2009, the Kimbles received a cash offer to purchase their property. The sale was made contingent on the access issue being resolved. Despite an extension on the original 30–day time limit, the Kimbles were unable to negotiate a resolution with Land Concepts and lost the sale.

II. PROCEDURAL POSTURE

¶ 16 On June 3, 2009, the Kimbles filed suit against Land Concepts and the Stevensons. The Kimbles sought a declaration that the North Easement was valid and sought a prescriptive easement for their use of the cut-off road. The Kimbles also claimed that Land Concepts, in recording the West Easement, had slandered the title to the Kimbles' property.

¶ 17 On October 23, 2009, the Kimbles amended their complaint adding breach of warranty claims against Dempster, Herrell, and the Stevensons, and a breach of contract claim against First American for failing to defend the title to their property.

¶ 18 On July 21, 2010, the Kimbles settled their claims against all the defendants except First American. As part of the settlement, the Kimbles and the Stevensons paid Land Concepts $40,000 to secure an easement over the route of the existing cut-off road. The Stevensons paid an additional $10,000 to the Kimbles for an assignment of the Kimbles' rights under the title insurance policy, including any claims against First American.

¶ 19 On August 6, 2010, the Stevensons filed a cross-claim against First American, alleging breach of contract and breach of fiduciary duty and bad faith in First American's refusal to defend the title to the Kimble Lot.

¶ 20 On December 1, 2010, First American filed a motion for declaratory and summary judgment, asking the court to dismiss the Stevensons' cross-claim. First American argued that the Stevensons were not “insureds,” and thus had no rights under the title policy. First American also contended that the Kimbles were not permitted to settle their claims against other defendants without the written consent of First American. First American asserted that the title policy was void as a result.

¶ 21 The Stevensons argued that the Kimbles were permitted to assign their rights under the title policy, and that the partial settlement was proper under the terms of the insurance contract. The Stevensons also asserted that, to the extent summary judgment was warranted, it should be granted against First American on the Stevensons' breach of contract claim.

¶ 22 On January 18, 2011, the circuit court denied First American's motion for declaratory and summary judgment. The court concluded that the assignment of rights from the Kimbles to the Stevensons was proper and that there were issues of fact to be tried regarding the Stevensons' breach of contract and breach of fiduciary duty and bad...

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