Lambert v. Wrensch, No. 84-793

• Court: United States State Supreme Court of Wisconsin
• Writing for the Court: DAY; Patrick T. Sheedy
• Citation: 135 Wis.2d 105,399 N.W.2d 369
• Decision Date: 20 January 1987
• Docket Number: No. 84-793
• Parties: Gwynne D. LAMBERT, Plaintiff-Appellant-Petitioner, v. Sally K. WRENSCH, nka Sally Wendt, Elizabeth K. Wrensch, Robert D. Lambert, and State Farm Mutual Automobile Insurance Company, Defendants-Respondents.

Page 369

399 N.W.2d 369 135 Wis.2d 105 Gwynne D. LAMBERT, Plaintiff-Appellant-Petitioner,
v.
Sally K. WRENSCH, nka Sally Wendt, Elizabeth K. Wrensch,
Robert D. Lambert, and State Farm Mutual
Automobile Insurance Company,
Defendants-Respondents. No. 84-793. Supreme Court of Wisconsin. Argued Oct. 28, 1986.
Opinion Filed Jan. 20, 1987.

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[135 Wis.2d 107] Roger T. Lambert, Milwaukee, argued, for plaintiff-appellant-petitioner; Godfrey & Kahn, S.C., Milwaukee, on brief.

Gregory J. Cook, Milwaukee, argued, for defendants-respondents; Mark D. Koss and Kasdorf, Lewis & Swietlik, S.C., Milwaukee, on brief.

DAY, Justice.

This is a review of an unpublished decision of the Court of Appeals dated August 27, 1985, 375 N.W.2d 219, affirming a Judgment of the Circuit Court of Milwaukee county, Honorable Clarence Parrish, Circuit Judge, awarding damages in a personal injury action arising out of an automobile accident. The issues on review are: 1) Is the insurance policy under which the injured Plaintiff received medical expense payments as a dependent beneficiary an "indemnity" contract such that subrogation exists by operation of law? 2) Is the Plaintiff wife precluded from recovering from the defendant tortfeasor medical expenses paid on her behalf by her husband's insurer when subrogation exists under such policy but such insurer was barred from recovery for failure to pursue its subrogated claim within the period of the statute of limitations? 3) Does a jury award to the husband of the injured Plaintiff wife for loss of consortium, including the element of "material services," preclude the insured Plaintiff homemaker from independently recovering "the reasonable value of her own loss of earning[135 Wis.2d 108] capacity in the form of domestic services donated by her to her family unit"? ¹

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We conclude that the insurance policy at issue in this case constituted an "indemnity" contract, as that term has been defined and employed in previous instances by this court, and therefore subrogation exists by operation of law. This case was properly governed by principles of subrogation and not the "collateral source" rule. We concur with the court of appeals' determination that the trial court did not err in allowing evidence of insurance payments received by Plaintiff to go to the jury, and it did not err in refusing to instruct the jury on the collateral source rule.

The fact that the insurer was barred from recovery for failure to pursue its subrogated claim prior to the expiration of the applicable statute of limitations did not have any substantive effect on the existence of subrogation under the insurance contract. Therefore, the Plaintiff wife is precluded from recovering medical expenses from the defendant tortfeasor which were paid on her behalf by her husband's insurer, despite the fact that the insurer did not and may not pursue its subrogation rights.

We also conclude that the award to Plaintiff's husband for loss of consortium incorporated the damages sought by Plaintiff for loss of earning capacity as a homemaker. We, therefore, agree with the court of appeals that the trial court did not err in refusing to instruct the jury on damages related to Plaintiff's inability to perform housekeeping tasks during her period of recovery from the accident, since such an award would have amounted to a double recovery.

[135 Wis.2d 109] The Plaintiff, Gwynne D. Lambert (Plaintiff), was injured in an automobile accident which occurred May 19, 1978, while a passenger in an automobile driven by her husband, Robert D. Lambert. The Lambert vehicle collided with a vehicle driven by Sally K. Wrensch, and insured by State Farm Mutual Automobile Insurance Company (State Farm). Gwynne Lambert commenced an action against her husband and Sally Wrensch on May 11, 1981. Causal negligence was stipulated between the parties at five percent to Mr. Lambert and ninety-five percent to Ms. Wrensch.

Plaintiff also joined as a defendant the Equitable Life Assurance Society of the United States (Equitable), pursuant to section 803.03(2)(a), Stats. (1983-1984) ² Robert Lambert was an employee of Harnishfeger Corporation, and Equitable was the group health insurance provider for the company. Gwynne Lambert was a dependent under the Equitable policy, and received [135 Wis.2d 110] insurance payments of $17,887.60 from Equitable to cover medical expenses related to the accident.

Equitable filed an answer, dated December 29, 1981 and subsequently amended it January 8, 1982, in which it asserted its subrogation interest. Plaintiff moved to "dismiss the pleadings" of Equitable, arguing that the applicable statute of limitations barred any claim by Equitable. ³ In a memorandum decision dated May 4, 1982,

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Judge Patrick T. Sheedy ⁴ dismissed Equitable's claim, finding that, although Equitable held a subrogation interest, its failure to respond in a timely fashion to the complaint resulted in the running of the statute of limitations.

Prior to trial, Plaintiff brought a motion in limine, asking the court to exclude any evidence of insurance payments which Equitable had paid, under its policy, on behalf of the Plaintiff. In a memorandum decision dated May 18, 1983, Judge Sheedy ruled that the defendants had a right to show that medical expenses had been paid by Equitable.

At the conclusion of trial, Plaintiff requested jury instructions on the "collateral source" rule ⁵ and such [135 Wis.2d 111] request was refused. The court of appeals upheld the trial court's denial of motions to restrict testimony related to Equitable's payments and the trial court's refusal to instruct the jury on the collateral source rule.

Robert Lambert cross-claimed against his co-defendants for loss of consortium, nursing services provided by him to his wife, current and future medical care for his wife, and for his own personal injuries.

Plaintiff sought damages for the reasonable value of her services as a homemaker. At trial, the court permitted the introduction of opinion testimony from an expert witness, an economist, as to the reasonable value of the services of a homemaker. She claimed that part of her recoverable damages included the fair value of the work and time she would have expended in her capacity as a homemaker in the Lambert household, had she been fully functional in that role during her period of recovery following the accident. Plaintiff requested a jury instruction on her loss of earning capacity as a nonworking homemaker during her recovery period which was refused. Plaintiff contends that such refusal was error.

The court of appeals upheld the trial court's refusal to submit instructions on lost earning capacity of Plaintiff as a homemaker, reasoning that any such damage award would result in a double recovery, since the jury instruction given on Robert Lambert's loss of consortium claim included "the rendering of material services," and this element included the damages sought by Plaintiff.

The jury awarded Plaintiff $2,500 for personal injuries, pain and suffering, and $250 for out-of-pocket medical[135 Wis.2d 112] expenses. The jury awarded Robert Lambert $1,250 for unreimbursed medical expenses, $3,700 for loss of consortium, and $1,200 for nursing services he provided for his wife.

Plaintiff brought motions after verdict protesting the damage awards by the jury and the trial court's refusal to submit special verdicts incorporating "collateral source rule" and "loss of earning capacity of nonworking homemaker" jury instructions. By order dated February 21, 1984, Judge Parrish denied these motions and ordered judgment in accordance with the original jury verdict returned on December 2, 1983.

Plaintiff seeks an additur for her claimed damages not included in the jury award, a remedy whereby the trial court would increase the damages awarded by the jury, to a sum which the court thinks is as a matter of law reasonable; the defendant would then be given the option of accepting the new damage figure or a new trial. ⁶

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Plaintiff asks that if this matter proceeds to a new [135 Wis.2d 113] trial, that jury instructions be submitted on both the collateral source rule and a homemaker's loss of earning capacity.

SUBROGATION AND THE COLLATERAL SOURCE RULE

Plaintiff argues that Equitable constitutes a "collateral source." Therefore, she should be allowed to recover from the tortfeasor all of her medical expenses, evidence of these payments should not have been admitted, and the jury should have been instructed on the "collateral source" rule.

Plaintiff claims that the Equitable policy contains no subrogation agreement, and that even if the policy can be construed in such a way so as to find subrogation, the party to whom the rights of subrogation belong, Equitable, waived those rights by failing to assert them in time, and therefore no other party may assert subrogation as a "defense." Finally, Plaintiff argues that the defendants lack standing to raise subrogation as a "defense," since defendants (except for Robert Lambert) are not parties to the Equitable insurance contract.

[135 Wis.2d 114] Defendants argue that the Equitable policy, by its terms, contains a subrogation agreement. Defendants point out that the trial court found as a matter of fact that Equitable had a subrogated interest in this action. The defendants point to the memorandum decision dated May 4, 1982, in which Judge Sheedy, ruling on Plaintiff's motion to dismiss Equitable's claim, specifically found that the Equitable policy contained a "subrogation provision."

At a subsequent hearing on a motion in limine, also brought by Plaintiff, in which Plaintiff sought to exclude evidence of insurance payments by Equitable, Judge Parrish denied the motion, stating that "the court does not find good or sufficient reasons for modifying, setting aside, or in any manner disturbing the order previously entered by Judge Sheedy, and that order stands."...