Kontowicz v. American Standard Insurance Co. of Wisconsin, 2006 WI 48 (Wis. 5/18/2006)
| Decision Date | 18 May 2006 |
| Docket Number | No. 2003AP2534.,No. 2003AP2177.,2003AP2177.,2003AP2534. |
| Citation | 2006 WI 48 |
| Parties | Debra L. Kontowicz, Keith A. Kontowicz, Scott Kontowicz, and Katie Kontowicz, by their Guardian ad Litem, William Cannon, Plaintiffs-Respondents-Petitioners, American Family Mutual Insurance Co., Involuntary-Plaintiff, v. American Standard Insurance Co. of Wisconsin, Defendant-Appellant, ABC Insurance Co., Defendant. Larry Buyatt, Plaintiff-Respondent-Petitioner, American Family Mutual Insurance Company, Involuntary-Plaintiff, v. Metropolitan Property and Casualty Insurance Company and Jason E. Schoessow, Defendants-Appellants. |
| Court | Wisconsin Supreme Court |
Appeal from the Circuit Court, Waukesha County, Mark Gempeler and Lee S. Dreyfus, Jr., Judges.
REVIEW of a decision of the Court of Appeals. Reversed and Remanded. 2005 WI App 22 Reported at: 278 Wis. 2d 664, 693 N.W.2d 112 (Ct. App. 2005-Published)
For the plaintiffs-respondents-petitioners there were briefs by William M. Cannon, Edward E. Robinson, and Cannon & Dunphy, S.C., Brookfield, and oral argument by Edward E. Robinson.
For the defendants-appellants Metropolitan Property and Casualty Insurance Company and Jason E. Schoessow, there was a brief by Donald H. Piper, Patrick A. O'Neil, and Piper & Schmidt, Milwaukee, and oral argument by Donald H. Piper.
For the defendant-appellant American Standard Insurance Co. of Wisconsin, there was a brief by James C. Ratzel and Ratzel & Associates, LLC, Brookfield; and Colleen D. Ball and Appellate Counsel, S.C., Wauwatosa, and oral argument by James C. Ratzel.
An amicus curiae brief was filed by Todd G. Smith and LaFollette, Godfrey & Kahn, Madison, on behalf of Civil Trial Counsel of Wisconsin and the Wisconsin Insurance Alliance.
An amicus curiae brief was filed by Keith R. Clifford, Teague D. Devitt, and Clifford & Raihala, S.C., Madison, on behalf of the Wisconsin Academy of Trial Lawyers.
¶ 1 Debra Kontowicz (Kontowicz) and Larry Buyatt (Buyatt) appeal a published decision of the court of appeals reversing the decisions of two different branches of the Waukesha County Circuit Court. The cases were consolidated on appeal. In each case, the circuit court awarded the plaintiffs/petitioners interest under Wis. Stat. § 628.46 (2001-02).1 The issue before this court is whether § 628.46, which imposes a 12 percent simple interest rate for overdue payment of an insurance claim, applies to the insurance company of a negligent tortfeasor and, thus, allows the recovery of interest by a third-party claimant, such as the plaintiffs/petitioners here, injured by such tortfeasor.
¶ 2 We reverse the decision of the court of appeals. We conclude that when there is clear liability, a sum certain owed, and written notice of both, the plain language of Wis. Stat. § 628.46, incorporating by reference Wis. Stat. § 646.31(2), imposes 12 percent simple interest on overdue payments to third-party claimants in such personal injury claims and actions. However, we limit our holding to only those situations in which three conditions to trigger the interest are met. First, there can be no question of liability on the part of the insured. Second, the amount of damages must be in a sum certain amount. Third, the claimant must provide written notice of both liability and the sum certain amount owed. We further hold that claims concerning the issue of interest due under § 628.46 may be bifurcated under Wis. Stat. § 805.05(2), and that in the case of Buyatt, the award of interest should be in accord with Wis. Stat. § 807.01(4), rather than § 628.46.
¶ 3 On August 30, 2000, Debra Kontowicz's spinal cord was severed and she was rendered a quadriplegic as a result of an automobile accident. Kontowicz's van was struck from behind by a vehicle operated by Daniel Jeffers (Jeffers), a 16-year-old insured by American Standard Insurance Co. of Wisconsin (American Standard). Based on the skid marks left by his car, police concluded that Jeffers had been traveling between 88 and 90 miles per hour (m.p.h.) in a 35 m.p.h. zone. Kontowicz's vehicle went off the road, striking a utility pole. She was taken to the hospital by Flight for Life. At the time of the accident, Jeffers' policy with American Standard included a $500,000 per person liability limit.
¶ 4 By September 7, 2000, American Standard was aware of Kontowicz's quadriplegic injuries, and Jeffers' almost certain liability. The head of American Standard's legal department met with the claims adjuster assigned to the Kontowicz claim on that date, and decided that "[o]nce the paraplegic injuries are confirmed, we should post the $500,000 limits with what appears at this time to be clear liability on the part of Dan Jeffers."
¶ 5 Kontowicz and her family filed suit against American Standard and Jeffers on November 8, 2000. On December 28, 2000, both American Standard and Jeffers filed separate answers to Petitioners' complaint. In his answer, Jeffers admitted that he was negligent with respect to the operation of his motor vehicle. One week later, on January 5, 2001, the Kontowiczs' attorney wrote counsel for American Standard, enclosing a copy of the hospital discharge summary documenting Kontowicz's severed spinal cord and quadriplegia, and an itemization of her related medical bills, along with copies of the actual billing statements, in the amount of $238,379.53.
¶ 6 American Standard did not agree to tender its limits until June 1, 2001. Its offer to the Kontowiczs was conditioned upon "a full release of all defendants," even though American Standard was not required to secure a full release of its insureds as a condition of paying limits.2
¶ 7 On July 30, 2001, the attorney for the Kontowiczs wrote American Standard demanding the payment of policy limits, together with Wis. Stat. § 628.46 interest. American Standard responded on October 18, 2001, reiterating its position that it would pay policy limits only in return for a release of American Standard and its insureds.
¶ 8 American Standard agreed to pay its policy limits in return for only a partial release of its insureds on February 2, 2002. Three weeks later, on February 19, 2002, the Kontowiczs reached a settlement with Jeffers, whereby Jeffers agreed to pay $78,000 over and above the $500,000 liability limit.
¶ 9 On February 20, 2002, American Standard sent a check to the Kontowiczs for $500,000. The Kontowiczs reserved their right to bring a claim against American Standard for interest pursuant to Wis. Stat. § 628.46.
¶ 10 Following a motion hearing, Waukesha County Circuit Court Judge Donald P. Hassin made an oral ruling awarding the Kontowiczs interest pursuant to Wis. Stat. § 628.46. The circuit court ruled that a claim was made against American Standard for at least $238,000 when, on January 5, 2001, the Kontowiczs sent the company a copy of the hospital discharge summary and itemized medical bills. In addition, the circuit court ruled that American Standard was presented with a claim for the full $500,000 policy limit on July 30, 2001, when the Kontowiczs' counsel demanded payment of the limits. An order was entered on January 2, 2003, awarding the Kontowiczs $49,643.15 in statutory interest.3 American Standard appealed.
¶ 11 On June 21, 1999, Larry Buyatt was injured in a motor vehicle collision caused by the negligence of Jason Schoessow (Schoessow). Schoessow was driving west on Highway 59 at approximately 45 m.p.h. when he failed to stop at a red light, striking Buyatt's truck on its front right fender as it traveled north through the intersection. At the time of the accident, Schoessow was covered by a Metropolitan Property and Casualty Insurance Co. (Metropolitan) liability insurance policy.
¶ 12 On January 29, 2001, Buyatt sent Metropolitan a letter and documentation detailing the collision and his resulting injuries. Buyatt's medical bills and lost wages, at the time, totaled $6,361. In this letter, Buyatt offered to settle his claim for $35,000.
¶ 13 In response, Metropolitan admitted that at least a portion of Buyatt's medical bills were reasonable and necessary for treatment as a result of injuries he suffered in the collision. However, Metropolitan offered only $6,400 to settle fully Buyatt's claim. Buyatt filed suit against Metropolitan and Schoessow for damages arising from his accident, as well as Wis. Stat. § 628.46 interest.
¶ 14 On June 8, 2001, Metropolitan admitted that Schoessow's negligence was the sole cause of the injuries Buyatt suffered in the collision. However, Metropolitan refused to tender any amount in partial payment of Buyatt's claim, and conditioned any payment upon acceptance of a full settlement.4
¶ 15 Buyatt filed an offer of settlement, on April 16, 2003, for $21,000 pursuant to Wis. Stat. § 807.01(3). On May 14, 2003, a jury awarded Buyatt $24,081 in damages, including past medical expenses, past wage loss, and past and future pain, suffering, and disability.
¶ 16 Buyatt then moved the circuit court for interest under Wis. Stat. § 628.46, and the court granted Buyatt's motion. Waukesha County Circuit Court Judge Lee S. Dreyfus, Jr. found that Metropolitan had written notice of Buyatt's claim on June 8, 2001, that Schoessow was causally negligent for the injuries Buyatt suffered as a result of the collision, and that Buyatt was not contributorily negligent. The court further determined that, based on the information in its possession and its own admissions, as of June 8, 2001, Metropolitan knew or reasonably should have known that it was responsible for at least a portion of Buyatt's claims. Because the circuit court found that § 628.46 applies to third-party insurance claims, it granted Buyatt's motion for § 628.46 interest.5 Metropolitan appealed the portion of the judgment imposing § 628.46 interest.
¶ 17 The court of appeals consolidated the cases. Concluding that there were "two incompatible, yet reasonable,...
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