Kontowicz v. American Standard Ins. Co., No. 03-2177

• Decision Date: 19 January 2005
• Docket Number: No. 03-2177, No. 03-2534.
• Citation: 278 Wis.2d 664,2005 WI App 22,693 N.W.2d 112
• Parties: Debra L. KONTOWICZ, Keith A. Kontowicz, and Scott Kontowicz and Katie Kontowicz, by their Guardian ad Litem, William Cannon, Plaintiffs-Respondents, AMERICAN FAMILY MUTUAL INSURANCE CO., Involuntary-Plaintiff, v. AMERICAN STANDARD INSURANCE CO. OF WISCONSIN, Defendant-Appellant, ABC INSURANCE CO., Defendant. Larry BUYATT, Plaintiff-Respondent, AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Involuntary-Plaintiff, v. METROPOLITAN PROPERTY AND CASUALTY INSURANCE COMPANY and Jason E. Schoessow, Defendants-Appellants.
• Court: Wisconsin Court of Appeals

278 Wis.2d 664

2005 WI App 22

693 N.W.2d 112

Debra L. KONTOWICZ, Keith A. Kontowicz, and Scott Kontowicz and Katie Kontowicz, by their Guardian ad Litem, William Cannon, Plaintiffs-Respondents,¹ AMERICAN FAMILY MUTUAL INSURANCE CO., Involuntary-Plaintiff, v. AMERICAN STANDARD INSURANCE CO. OF WISCONSIN, Defendant-Appellant, ABC INSURANCE CO., Defendant.

Larry BUYATT, Plaintiff-Respondent,¹ AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Involuntary-Plaintiff, v. METROPOLITAN PROPERTY AND CASUALTY INSURANCE COMPANY and Jason E. Schoessow, Defendants-Appellants.

Nos. 03-2177, 03-2534.

Court of Appeals of Wisconsin.

Oral argument November 30, 2004.

Decided January 19, 2005.

On behalf of the defendant-appellant American Standard Insurance Co. of Wisconsin, the cause was submitted on the briefs of James C. Ratzel of Ratzel & Associates, LLC, Brookfield, and Colleen D. Ball of Appellate Counsel, S.C., Wauwatosa. There was oral argument by James C. Ratzel.

On behalf of the defendants-appellants Metropolitan Property and Casualty Insurance Company and Jason E. Schoessow, the cause was submitted on the briefs of Donald H. Piper and Patrick A. O'Neil of Piper & Schmidt, Milwaukee. There was oral argument by Donald H. Piper.

On behalf of the plaintiffs-respondents Debra L. Kontowicz, Keith A. Kontowicz, and Scott Kontowicz and Katie Kontowicz, by their guardian ad litem, William Cannon, the cause was submitted on the brief of William M. Cannon and Edward E. Robinson of Cannon & Dunphy, S.C., Brookfield. There was oral argument by Edward E. Robinson.

On behalf of the plaintiff-respondent Larry Buyatt, the cause was submitted on the brief of James J. Gende II and Charles David Schmidt of Cannon & Dunphy, S.C., Brookfield. There was oral argument by Edward E. Robinson.

A nonparty brief was filed by Todd G. Smith of LaFollette, Godfrey & Kahn, Madison, for Civil Trial Counsel of Wisconsin and the Wisconsin Insurance Alliance.

A nonparty brief was filed by Keith R. Clifford and Teague D. Devitt of Clifford & Raihala, S.C., Madison, for the Wisconsin Academy of Trial Lawyers.

Before Brown, Nettesheim and Snyder, JJ.

¶ 1. SNYDER, J.

This appeal arises from judgments awarding interest pursuant to WIS. STAT. § 628.46 (2001-02),² which incorporates by reference WIS. STAT. § 646.31(2). The lead issues concerning the construction of § 628.46 in conjunction with § 646.31(2)(d) are common to both cases and the respondents in both cases are represented by the same law firm. By order dated December 6, 2004, the cases were consolidated for purposes of this opinion.

¶ 2. The plaintiffs in each case brought personal injury claims against the corresponding defendants and their insurers. Debra L. Kontowicz and Larry Buyatt were compensated for their injuries, one through negotiated settlement and the other as the result of a jury trial. Both plaintiffs sought interest pursuant to WIS. STAT. § 628.46, alleging that the insurance company had not made payment on the claims in a timely manner. The identical issue raised in each case is whether the § 628.46 interest penalty, by reference to WIS. STAT. § 646.31(2)(d), applies to a third-party personal injury claim against a liability insurance policy. American Standard Insurance Co. of Wisconsin and Metropolitan Property and Casualty Insurance Company contend that the circuit courts erred when they determined that the interest did apply to third-party personal injury claims. We agree and reverse the judgments insofar as they award interest to the plaintiffs under § 628.46. American Standard and Metropolitan raise additional issues on appeal; however, our determination that § 628.46 interest does not extend to a third-party claim resolves the remaining issues.

BACKGROUND

¶ 3. The facts before us are not in dispute. Kontowicz and American Standard stipulated to the material facts underlying the settlement of her claim. On August 30, 2000, Kontowicz was rendered a quadriplegic in an automobile accident wherein Daniel Jeffers, a sixteen-year-old driver insured by American Standard, hit Kontowicz's vehicle from behind. Kontowicz's vehicle went off the road and struck a utility pole. She was taken to the hospital by Flight for Life. At the time of the accident, Jeffers was covered by an American Standard insurance policy with a $500,000 per person liability limit.

¶ 4. Kontowicz sued Jeffers and American Standard. The parties reached a settlement, agreeing that American Standard would pay its policy limit and that Jeffers would pay approximately $78,000 in exchange for a release and dismissal. The parties reserved the issue of whether WIS. STAT. § 628.46 interest would be awarded, agreeing to request a declaratory judgment from the court. The circuit court awarded the interest to Kontowicz, and American Standard appeals.

¶ 5. In the companion case, Buyatt was injured in an automobile accident caused by Jason E. Schoessow on June 21, 1999. At the time of the accident, Schoessow was covered by a Metropolitan liability insurance policy. Buyatt sued Schoessow and Metropolitan for damages arising from the accident. Following a trial, the jury returned a verdict in favor of Buyatt and awarded him a total of $24,081. Following the verdict, Buyatt moved the circuit court for WIS. STAT. § 628.46 interest and the court granted Buyatt's motion. The court entered judgment against Metropolitan, incorporating the jury award, costs, and statutory interest. Metropolitan paid the undisputed portion of the judgment and appeals that portion associated with § 628.46 interest.

DISCUSSION

Standard of Review

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¶ 6. The issue presented for review is whether the circuit courts were correct in applying the WIS. STAT. § 628.46 interest penalty to third-party claims for personal injury. Review of a circuit court's interpretation of a statute is a question of law that this court reviews de novo. State v. Setagord, 211 Wis. 2d 397, 405-06, 565 N.W.2d 506 (1997). "When interpreting a statute, our purpose is to discern legislative intent. To this end, we look first to the language of the statute as the best indication of legislative intent. Additionally, we may examine the statute's context and history." Village of Lannon v. Wood-Land Contractors, Inc., 2003 WI 150, ¶ 13, 267 Wis. 2d 158, 672 N.W.2d 275 (citations omitted). When interpreting a statute, we presume that "the legislature intends for a statute to be interpreted in a manner that advances the purposes of the statute." State v. Carey, 2004 WI App 83, ¶ 8, 272 Wis. 2d 697, 679 N.W.2d 910 (citation omitted), review denied, 2004 WI 114, 273 Wis. 2d 657, 684 N.W.2d 138 (Nos. 03-1578-CR to 03-1583-CR). We will reject a literal reading of a statute that would lead to an absurd or unreasonable result that does not reflect the legislature's intent. State v. Jennings, 2003 WI 10, ¶ 11, 259 Wis. 2d 523, 657 N.W.2d 393.

Plain Language of the Relevant Statutes

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¶ 7. Our first task is to look at the plain language of the statutes implicated in this appeal. WISCONSIN STAT. § 628.46 states in relevant part:

Timely payment of claims. (1) Unless otherwise provided by law, an insurer shall promptly pay every insurance claim. A claim shall be overdue if not paid within 30 days after the insurer is furnished written notice of the fact of a covered loss and of the amount of the loss. If such written notice is not furnished to the insurer as to the entire claim, any partial amount supported by written notice is overdue if not paid within 30 days after such written notice is furnished to the insurer. Any part or all of the remainder of the claim that is subsequently supported by written notice is overdue if not paid within 30 days after written notice is furnished to the insurer. Any payment shall not be deemed overdue when the insurer has reasonable proof to establish that the insurer is not responsible for the payment, notwithstanding that written notice has been furnished to the insurer . . . . All overdue payments shall bear simple interest at the rate of 12% per year.

(2) Notwithstanding sub. (1), the payment of a claim shall not be overdue until 30 days after the insurer receives the proof of loss required under the policy or equivalent evidence of such loss. The payment of a claim shall not be overdue during any period in which the insurer is unable to pay such claim because there is no recipient who is legally able to give a valid release for such payment, or in which the insurer is unable to determine who is entitled to receive such payment, if the insurer has promptly notified the claimant of such inability and has offered in good faith to promptly pay said claim upon determination of who is entitled to receive such payment.

. . . .

(3) This section applies only to the classes of claims enumerated in s. 646.31(2).

Section 628.46(3) refers us to WIS. STAT. § 646.31(2) to determine which claims are eligible for the interest penalty. Section 646.31(2)(d) states as follows:

(2) CLASSES OF CLAIMS TO BE PAID. No claim may be paid under this chapter unless the claim is in one of the following classes:

. . . .

(d) Third party claimants. A claim under a liability or workers' compensation insurance policy, if either the insured or the 3rd party claimant was a resident of this state at the time of the insured event.

¶ 8. Kontowicz and Buyatt assert that the statutes are unambiguous. They note that the opening sentence of WIS. STAT. § 628.46 states that "an insurer shall promptly pay every insurance claim" and contend that the legislature clearly included third-party claims. Further, they argue that § 628.46(3) plainly states that it applies only to classes of claims enumerated in WIS. STAT. § 646.31(2), which includes third-party claimants who are Wisconsin residents under § 646.31(2)(d). We agree that this interpretation of the plain language of § 628.46, in conjunction with § 646.31(2)(d), is a reasonable one.

¶ 9. American Standard and Metropolitan insist that...