Marks v. Frey-Rude & Associates, Inc.
| Decision Date | 07 January 1992 |
| Docket Number | FREY-RUDE,No. 90-2907,90-2907 |
| Citation | 166 Wis.2d 1050,481 N.W.2d 707 |
| Parties | NOTICE: UNPUBLISHED OPINION. RULE 809.23(3), RULES OF CIVIL PROCEDURE, PROVIDE THAT UNPUBLISHED OPINIONS ARE OF NO PRECEDENTIAL VALUE AND MAY NOT BE CITED EXCEPT IN LIMITED INSTANCES. Thomas MARKS, Plaintiff-Respondent, v.& ASSOCIATES, INC., Defendant, Badger Mutual Insurance Company, Defendant-Appellant. |
| Court | Wisconsin Court of Appeals |
Appeal from a judgment of the circuit court for Milwaukee county: Russell W. Stamper, Judge.
Circuit Court, Milwaukee County.
AFFIRMED.
Before MOSER, P.J., and SULLIVAN and FINE, JJ.
Badger Mutual Insurance Company (Badger) appeals from a judgment awarding Thomas Marks (Marks) $11,200 as compensatory and punitive damages resulting from the activities of an insurer who refused, in bad faith, to pay for damage to his car, and also awarding Marks' counsel $25,380.15 in attorney's fees. Marks also has requested that this court award appellate costs and reasonable attorney's fees because of the frivolous nature of this appeal. We affirm the judgment of the trial court and further direct the trial court to determine appellate attorney's fees and costs consonant with this opinion.
In May 1986, Marks purchased a Badger policy from Frey-Rude & Associates, Inc. (Frey-Rude) providing comprehensive and collision coverage for a 1977 Buick automobile. This policy defined "your insured car" as "[a]ny car owned and described in the Declarations and any private passenger car or utility car you replace it with" and further provided that "[i]f you wish Car Damage Coverage to apply to the replacing car you must notify us within 30 days of its acquisition." 1 On July 2, 1986, Marks notified Mary Pankowski (Pankowski), an employee of Frey-Rude, 2 that he had replaced the Buick with a 1974 Chevrolet automobile. All premiums for comprehensive and collision coverage were paid in advance and accepted by the insurer. Although Frey-Rude had allegedly received numerous bulletins from Badger stating that Badger did not write car damage coverage on vehicles that were ten years old or older, Pankowski still did not inform Marks of any potential change in coverage; she merely directed him to provide an appraisal and photograph of the car. Marks provided the appraisal and photograph which were forwarded to Badger on July 7, 1986, by Pankowski.
On July 9, 1986, Todd Weissenborn (Weissenborn), a Badger underwriter, notified Frey-Rude that Badger did not write car damage coverage on vehicles that were ten years old or older. When Pankowski received this notice on July 11, she sent the notice back to Badger with a handwritten note requesting coverage. Pankowski did not notify Marks of any potential lack of coverage. Clerical personnel at Badger processed an amended declarations sheet on July 16, 1986.
Marks' 1974 Chevrolet was damaged in a hit-and-run accident on August 3, 1986. On Monday, August 4, Marks reported the accident to Pankowski, who completed and sent a loss report to Badger. Badger received this loss notice from Frey-Rude on August 5, assigned a claims number, and clerical personnel sent a form letter to Marks requesting two repair estimates on the automobile.
Clerical personnel at Badger issued all refund checks reflecting July 16 changes in coverage on August 5, 1986, two days after Marks' accident. On August 7, Marks received an amended declarations sheet, prepared July 16 and effective July 2. This amended declarations sheet did not show collision or car damage coverage, although bodily injury, property damage, medical and uninsured motorist coverage were the same as for the 1977 Buick. The amended sheet was accompanied by a refund check for $21. Weissenborn learned of Marks' accident from Denis Frey (Frey) on August 8; Frey and Weissenborn discussed Marks' coverage in two telephone conversations. The parties do not agree as to the communications regarding coverage between Badger's agent and employee. However, Marks received the form letter from Badger on September 2, and subsequently provided the two requested estimates to Badger. Upon receipt of the estimates on September 4, Weissenborn directed Greg Sawatzke, a Badger claims representative, to send a letter acknowledging receipt of the estimates, but informing Marks that there was no collision coverage on his vehicle and suggesting that Marks pursue the hit-and-run driver himself.
The parties disagree on certain facts essential to an understanding of the investigation of Marks' coverage. At trial, Frey testified that he told Marks and Weissenborn that Marks' claim was covered and that "collision on the 1974 [Chevrolet] had been bound." Weissenborn testified that he learned of the accident on August 8, in a telephone conversation with Frey, but that Frey did not inform him that coverage had been bound. There was a second conversation between Weissenborn and Frey on August 11 regarding Marks' coverage. Badger's Vice-President, John Graeber, testified that he spoke to Frey by telephone and Frey agreed Marks did not have coverage although Frey testified that he had "never talked to Graeber on this case at all."
On October 2, 1986, Marks filed suit against Badger and Frey-Rude, alleging breach of contract and bad faith denial of car damage coverage. On July 20, 1987, Badger filed with the court a certified copy of Marks' policy which did not include either the original declaration sheet or copies of the amended declaration sheet that had been provided to its agent Frey-Rude, and presumably to Marks as well. The declaration page of the submitted policy was created by Badger on November 25, 1986, and differed from declaration pages in the files of Frey-Rude.
Trial was held in October 1989. 3 At the conclusion of the evidence, the trial court denied Badger's motion to dismiss the bad faith claim and motion for mistrial, determined as a matter of law that the policy provided collision coverage on the date of the accident, and dismissed Marks' bad faith claim against Frey-Rude and Badger's cross-complaint against Frey-Rude. By stipulation of the parties, Marks' breach of contract claim was also dismissed. The jury awarded $1,200 as "damages resulting from the bad faith of Badger" and an additional $10,000 in punitive damages due to Badger's "outrageous conduct."
A postverdict hearing was held on December 18, 1989. At this hearing, the trial court denied Badger's motions after verdict, ordered judgment on the verdict in favor of Marks and granted Frey-Rude's motion for attorney's fees and costs against Badger. With respect to the amount of attorney's fees against Badger, the trial court gave Badger the option of filing a responsive affidavit 4 or both filing an affidavit and having an evidentiary hearing on the amount of fees. An evidentiary hearing on fees was held January 26, 1990. On October 3, 1990, the trial court issued Findings of Fact, Conclusions of Law, and a Memorandum Decision and Order awarding approximately $25,000 costs and attorney's fees to Marks, pursuant to sec. 814.025, Stats. Judgment in the total amount of $36,580.15 was entered on December 17, 1990. It is from that judgment which Badger now appeals. Additional facts are set forth in the opinion.
For clarity, before beginning our analysis, we summarize this case as a denial of payment of benefits as of the September 4 letter from Badger to Marks denying car damage coverage. 5 The benefits were claimed on August 4. The plaintiff's claim for benefits is based upon language in a policy existing at the time of purchase of a replacement car. Badger's basis for the denial of benefits are conversations and/or disagreements between its own employees and agents, beginning on or about July 9, which had not been internally resolved or communicated to Marks at the time of the accident.
A motion challenging the sufficiency of the evidence to support a verdict may not be granted unless all credible evidence and reasonable inferences derived from that evidence, viewed in the light most favorable to the non-movant, result in a finding that there is "no credible evidence" to sustain the verdict. 6 The standard applies equally to motions to dismiss at the close of the plaintiff's case or to a motion for directed verdict, if either challenge the sufficiency of the evidence. 7 The test applied to a trial court's entry of judgment upon a jury verdict is that it will be affirmed if there is "any credible evidence to support it." 8 Where a trial court approves a damage award by a jury, without giving reasons for doing so, the appellate court should examine the record to determine if any credible evidence exists to support the verdict. 9
Whether certain conduct constitutes bad faith is to be determined by the trier of fact. 10 The inquiry raises two questions. First, what the party allegedly acting in bad faith did or did not do is determined. 11 The second determination is whether a reasonable insurer would have denied policy coverage under the facts and circumstances of a particular case. 12 However, the fact that coverage under an insurance policy is ultimately determined to exist does not establish that the insurer denied the insured's claim in bad faith. 13
The standard for bad faith has two elements: absence of a reasonable basis for denying benefits of the policy and the defendant insurer's knowledge or reckless disregard of the lack of a reasonable basis for denying the claim. 14 Determination of the first element alone again requires a dual inquiry, into (1) the absence of a fairly debatable issue of fact or law at the time of denial of coverage, and (2) the nature or extent of the investigation and evaluation of that investigation by the insurer prior to denial of coverage. 15
In the case at hand, Badger refused to pay Marks' monetary claim...
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