Nelson v. Davidson

• Decision Date: 14 June 1990
• Docket Number: 88-1854,Nos. 88-1769,s. 88-1769
• Citation: Nelson v. Davidson, 456 N.W.2d 343, 155 Wis.2d 674 (Wis. 1990)
• Parties: Gloria J. Brunckhorst NELSON, Plaintiff-Appellant, v. Paul R. DAVIDSON, American Home Assurance Company and State Farm Mutual Automobile Insurance Company, Defendants-Respondents. Rachel PRITCHARD, in her own right, and as special administrator of the estate of Lynn L. Pritchard and Carolyn Pritchard, Plaintiffs-Appellants, v. Henry G. BAIER, American Home Assurance Company, and State Farm Mutual Automobile Insurance Company, Defendants-Respondents.
• Court: Wisconsin Supreme Court

Page 343

456 N.W.2d 343

155 Wis.2d 674

Gloria J. Brunckhorst NELSON, Plaintiff-Appellant, v.Paul R. DAVIDSON, American Home Assurance Company and State

Farm Mutual Automobile Insurance Company,

Defendants-Respondents.

Rachel PRITCHARD, in her own right, and as specialadministrator of the estate of Lynn L. Pritchard and Carolyn Pritchard, Plaintiffs-Appellants, v.Henry G. BAIER, American Home Assurance Company, and State

Farm Mutual Automobile Insurance Company,

Defendants-Respondents.

Nos. 88-1769, 88-1854.

Supreme Court of Wisconsin.

Argued March 6, 1990.

Decided June 14, 1990.

James Drill, orally, Sverre O. Tinglum, Ardell W. Skow and Doar, Drill & Skow, S.C., on briefs, (in court of appeals), Baldwin, for plaintiff-appellant.

Kim Z. Mastro, orally, Lawrence R. King and Murnane, Conlin, White, Brandt & Hoffman, on brief (in court of appeals), St. Paul, Minn., for defendants-respondents.

Noreen J. Parrett and LaFollette & Sinykin, Madison, amicus curiae, for Wisconsin Ins. Alliance, Professional Ins. Agents of Wisconsin, Independent Ins. Agents of Wisconsin and Wisconsin Ass'n of Life Underwriters.

BABLITCH, Justice.

The plaintiffs in these consolidated cases were involved in auto accidents where the negligent party had insufficient insurance to cover the damages.Prior to the accidents, both plaintiffs had obtained insurance coverage from State Farm Mutual Automobile Insurance Company(State Farm), but each lacked underinsured motorist (UIM) coverage.We accepted certification to determine whether an insurance agent owes an affirmative duty to advise its insureds of the availability or advisability of underinsured motorist (UIM) coverage.We conclude that absent special circumstances they do not.We therefore affirm the decisions of the circuit courts granting summary judgments in favor of the defendants.

Gloria Brunckhorst Nelson(Nelson) was involved as a passenger in a one-car accident in River Falls on October 14, 1982.Nelson and her former husband had purchased casualty insurance coverage from State Farm through its agent, Paul Davidson(Davidson), for two cars with coverage to begin in 1980 and 1981.Nelson alleges by affidavit that she relied exclusively on Davidson for auto insurance information and that he offered advice to her on at least two occasions.Nelson also claims that she requested "the best coverage" available with respect to motor vehicle insurance, and that she was assured by one of Davidson's employees that she had the best coverage.Davidson denies that Nelson or her former husband ever discussed or requested underinsured motorist coverage, and further that he never held himself out as an insurance advisor, consultant, or specialist.

Rachel Pritchard(Pritchard) and her former husband Lynn were involved in a two car collision while riding with their daughter in Michigan on December 28, 1983.The Pritchards had purchased automobile insurance from State Farm agent, Henry Baier(Baier), since 1969.Prior to that time, they insured their automobiles with State Farm through Baier's predecessor.Lynn Pritchard made all decisions regarding auto insurance purchases for the family, and on at least one occasion purchased uninsured motorist coverage in excess of the limits mandated by statute.The Pritchards allege that they expected State Farm and its agents would provide them with reasonable and timely information and counsel regarding their family's automobile insurance requirements.

State Farm began marketing underinsured motorist (UIM) coverage in Wisconsin in January, 1982.At about that time, the company mailed a pamphlet to all Wisconsin insureds informing them about the availability of UIM coverage.These inserts were sent with semiannual premium renewal notices as premiums became due in 1982.The pamphlet contained the following section regarding the availability of UIM coverage:

Also New Coverage Available--Coverage W

To protect you from damages caused by underinsured motor vehicles, State Farm now offers Coverage W--Underinsured Motor Vehicle Coverage.Here's how Coverage W works: If the other driver is at fault in an accident and damages for injuries to you and your passengers exceed the amount that you receive from that driver's insurance company, your Underinsured Motor Vehicle Coverage takes over, up to the limits you choose.

The plaintiffs allege that they have no recollection of receiving the pamphlet, although they concede they may have.It is undisputed that neither party attempted thereafter to communicate with the other regarding the availability or scope of UIM coverage.

The plaintiffs subsequently commenced this suit for damages, alleging State Farm and its agents were negligent in failing to adequately inform them of the availability of UIM coverage.The defendants moved for summary judgements of dismissal, primarily on the ground that they had no duty to inform their insureds of the availability of UIM coverage, nor to recommend certain policy limits.In the alternative, the defendants argued that in any event they mailed notices of the availability of UIM coverage to all Wisconsin policyholders in early 1982, prior to the accidents.

The trial courts granted summary judgments in favor of the defendants and dismissed the actions.The trial courts concluded that an insurance agent has no affirmative duty under Wisconsin law to inform the insured about available coverages, or to review existing coverage to determine whether coverage is adequate.

We accepted certification of the consolidated cases specifically to resolve whether an insurance agent has an affirmative duty to inform the insured regarding the availability of UIM coverage.We affirm the decisions of the trial courts granting summary judgment in favor of the defendants.

In Wisconsin, a plaintiff alleging a negligence cause of action is required to plead the four traditional elements of a tort: 1) a duty on the part of the defendant; 2) a breach of that duty; 3) a causal connection between the conduct and the injury; and 4) an actual loss or damage as a result of the injury.Robinson v. Mt. Sinai Medical Center, 137 Wis.2d 1, 15, 402 N.W.2d 711(1987);Coffey v. Milwaukee, 74 Wis.2d 526, 531, 247 N.W.2d 132, 135(1976).Therefore, in order for liability to exist in the present case, it must first be shown that the defendants had an affirmative duty to advise clients of the availability of UIM coverage.

This court on a number of occasions has discussed the somewhat elusive concept of "duty."In Ollerman v. O'Rourke Co., Inc., 94 Wis.2d 17, 27, 288 N.W.2d 95(1980), we pointed out that the question of duty presents an issue of law, and that when the court resolves a question of duty the court is essentially making a policy determination.See alsoKlassa v. Milwaukee Gas Light Co., 273 Wis. 176, 183-84, 77 N.W.2d 397(1956)(discussingWaube v. Warrington, 216 Wis. 603, 258 N.W. 497(1935)).Furthermore, we made clear in Walker v. Bignell, 100 Wis.2d 256, 265, 301 N.W.2d 447(1981), that the imposition of liability in a given situation is a question of policy whether the liability is regulated by the notion of duty, or whether liability is cut off after all the elements of negligence have been established, as more recent cases of this court have stated.See, e.g., Marciniak v. Lundborg, 153 Wis.2d 59, 450 N.W.2d 243(1990);Dumer v. St. Michael's Hospital, 69 Wis.2d 766, 774, 233 N.W.2d 372(1975);Rieck v. Medical Protective Co., 64 Wis.2d 514, 517, 219 N.W.2d 242(1974).

The plaintiffs refer us to no cases decided by a Wisconsin court holding that an insurance agent possesses an affirmative duty to advise a client regarding the availability or advisability of insurance coverage.Rather, they rely principally upon several cases from other jurisdictions holding that insurance agents have a duty to advise clients concerning the kind and extent of desired coverage, and to choose the appropriate insurance for the client.For example, in Sobotor v. Prudential Property & Cas. Ins. Company, 200 N.J.Super. 333, 491 A.2d 737, 742(1984), the court stated that the inequality between the average purchaser of insurance and the insurance agent entitles the client, "untutored in the intricacies of insurance," to a broad measure of protections, including all information pertinent to the risk and desired coverage before the contract is issued.In Dimeo v. Burns, Brooks & McNeil, Inc., 6 Conn.App. 241, 504 A.2d 557, 559(1986), the court stated that insurance is a specialized field with specialized knowledge and experience, and an agent has the duty to advise the client about the kind and extent of desired coverage and to choose the appropriate insurance for the client.

However, the vast majority of other jurisdictions hold that the general duty of care which an insurance agent owes a client does not include the obligation to advise of available coverages.These courts conclude that while it may be good business for an insurance agent to make such suggestions, and perhaps inquire into financial circumstances, the failure to do so does not constitute either negligence or breach of contract for which an insurer must answer in damages.Nor is the insured under an obligation to respond to the agent's questions.The seminal case on the issue, Hardt v. Brink, 192 F.Supp. 879, 880(W.D.Wash.1961), states:

Clearly, the ordinary insurance solicitor only assumes those duties normally found in any agency relationship.In general this includes the obligation to deal with his principal in good faith and to carry out his instructions.No affirmative duty to advise is assumed by the mere creation of an agency relationship.

Jurisdictions following this rule have delineated strong policy considerations which weigh against the imposition of any...