Nelson v. McLaughlin, 95-3391

CourtUnited States State Supreme Court of Wisconsin
Citation211 Wis.2d 487,565 N.W.2d 123
Docket NumberNo. 95-3391,95-3391
PartiesThomas W. NELSON, Plaintiff-Respondent-Petitioner, American Family Mutual Insurance Company and Wisconsin Physicians Service Insurance Corporation, Plaintiffs-Respondents, v. John L. McLAUGHLIN and Mutual Service Casualty Company, Defendants-Appellants. . Oral Argument
Decision Date28 May 1997

For the plaintiff-respondent-petitioner there were briefs by Toby E. Marcovich, George L. Glonek and Marcovich, Cochrane & Milliken, Superior and oral argument by Toby E. Marcovich.

For the defendants-appellants there was a brief by Jeffrey A. Schmeckpeper, Christine D. Bakeis and Kasdorf, Lewis & Swietlik, S.C., Milwaukee and oral argument by Jeffrey A. Schmeckpeper.

Amicus curiae was filed by Jason W. Whitely and Erspamer Law Office, Amery, for the Wisconsin Academy of Trial Lawyers.


Thomas W. Nelson (Nelson) seeks review of a published decision of the court of appeals which reversed an Order for Judgment of the Circuit Court for Douglas County, Joseph A. McDonald, Judge. 1 In the circuit court, Nelson filed suit against John L. McLaughlin (McLaughlin) and McLaughlin's insurer, Mutual Service Casualty Company (Mutual Service), for damages Nelson suffered in an automobile accident. Prior to trial, Nelson offered to settle the entire case for the policy limits of $100,000, but the offer was rejected. Subsequently, the jury awarded Nelson $507,407.40 in damages. Accordingly, pursuant to Wis.Stat. § 807.01(4) (1993-94), 2 Nelson was entitled to 12% interest on the amount recovered from the date of the offer of settlement until the amount was paid.

¶2 The sole issue on review is whether Mutual Service is liable for interest owed under Wis.Stat. § 807.01(4) on the entire verdict of $507,407.40, rather than its policy limits of $100,000. The court of appeals, applying its recent decision in Blank v. USAA Property & Cas. Ins. Co., 200 Wis.2d 270, 546 N.W.2d 512 (Ct.App.1996), held that the circuit court improperly imposed interest on the entire verdict against Mutual Service. We agree with the court of appeals that Mutual Service is liable for interest imposed under § 807.01(4) only on its policy limits. This conclusion is based on: (1) the legislature's choice of the phrase "amount recovered" instead of "verdict" or "judgment" in § 807.01(4); and (2) the fact that if "amount recovered" is interpreted to mean the entire verdict, insurers will be forced to settle cases that would be more appropriately resolved at trial. We emphasize that our interpretation of "amount recovered" will not encourage insurers to deny settlement offers in reckless disregard of their insureds' interests, because the availability of a bad faith claim provides a substantial deterrent against insurers engaging in such practices.

¶3 In addition, we acknowledge that an insurer may, pursuant to its insurance contract, agree to pay interest imposed under Wis.Stat. § 807.01(4) on damages above its policy limits. However, in this case, we conclude that Mutual Service did not agree to pay interest on damages above its policy limits, and that this provision of its insurance contract with McLaughlin does not contravene Wisconsin law or public policy. Accordingly, we affirm the decision of the court of appeals.


¶4 The pertinent facts are undisputed. On May 3, 1990, an accident occurred involving motor vehicles operated and owned by Nelson and McLaughlin. At the time of the accident, Mutual Service insured McLaughlin under a car insurance policy that contained a bodily injury liability limit of $100,000 per person. The policy also contained the following provision:

We will pay damages for bodily injury ... for which any insured becomes legally responsible because of an accident.... We will settle or defend, as we consider appropriate, any claim or suit asking for these damages.

(R.68, exhibit 24, at 3) (emphasis added; emphasis from policies omitted.) Therefore, pursuant to this provision, Mutual Service had control over the litigation, including settlement.

¶5 On December 11, 1992, Nelson filed suit against McLaughlin and Mutual Service, alleging damages for pain and suffering, loss of wages, and medical expenses. Subsequently, Mutual Service conceded that McLaughlin was liable to Nelson; therefore, the only remaining issue was the extent of Nelson's damages. However, Mutual Service decided to contest this issue, because it believed that surgery performed on Nelson's back in 1993 was not necessary to alleviate symptoms caused by the accident, but instead to alleviate symptoms of Schurmann's disease, a preexisting degenerative disc disease.

¶6 On November 21, 1994, pursuant to Wis.Stat. § 807.01, Nelson served a formal offer of settlement, whereby Nelson offered to settle the litigation against both Mutual Service and McLaughlin for the $100,000 policy limits. This offer was not accepted.

¶7 On August 29, 1995, through August 31, 1995, a jury trial was held on the issue of damages. The jury returned a unanimous verdict against Mutual Service and McLaughlin in the total amount of $507,407.40. Since Nelson's offer of settlement, was not accepted, and the verdict was greater than or equal to the amount specified in the offer, Nelson was entitled to 12% interest on the amount recovered from the date of the offer of settlement until the amount was paid, pursuant to Wis.Stat. § 807.01(4).

¶8 In its motions after verdict, Mutual Service argued that, pursuant to McPhee v. American Motorists Ins. Co., 57 Wis.2d 669, 205 N.W.2d 152 (1973), it was not liable for interest on the entire verdict because the following language from the insurance policy was controlling:

In addition to our limit of liability we will pay for an insured:


4. Interest on all damages owed by an insured as the result of a judgement until we pay, offer or deposit in court the amount due under this coverage. Interest will be paid only on damages which do not exceed our policy limits.

(R.68, exhibit 24, at 3) (emphasis added; emphasis from policies omitted.) Mutual Service therefore contended that it was liable for interest only on its policy limits. 3

¶9 At a motion hearing held on November 21, 1995, the circuit court rejected Mutual Service's argument. The circuit court held that Mutual Service was responsible for interest on the entire verdict, based on Knoche v. Wisconsin Mut. Ins. Co., 151 Wis.2d 754, 445 N.W.2d 740 (Ct.App.1989). Accordingly, on November 28, 1995, the circuit court entered judgment against Mutual Service in the amount of $100,000, together with double taxable costs and disbursements pursuant to Wis.Stat. § 807.01(3), 12% interest on the jury verdict of $507,407.40 from November 21, 1994 through October 24, 1995, and further interest until the judgment was paid. The circuit court also entered judgment against McLaughlin in the amount of $407,407.40.

¶10 Mutual Service appealed, and the court of appeals reversed the circuit court's order. Nelson v. McLaughlin, 205 Wis.2d 460, 467-68, 556 N.W.2d 130 (Ct.App.1996). In making its determination, the court of appeals relied exclusively on its recent decision in Blank, in which it held that Wis.Stat. § 807.01(4) "merely allows a trial court to impose interest against a party on the 'amount recovered' against that party." 4 See Nelson, 205 Wis.2d at 468, 556 N.W.2d 130 (explaining Blank ). Applying Blank, the court of appeals held that, under § 807.01(4), Mutual Service could only be held liable for interest on its policy limits. Id. In addition, the court concluded that it was "unnecessary to address Mutual Service's argument that its contract with McLaughlin denied coverage for penalty interest on amounts above the policy limits." Id. at 468 n. 6, 556 N.W.2d 130.


¶11 The issue of whether Mutual Service is liable for interest on the entire verdict involves the interpretation and application of Wis.Stat. § 807.01(4). Interpretation and application of a statute to undisputed facts is a question of law, reviewable de novo. See, e.g., Sievert v. American Family Mut. Ins. Co., 190 Wis.2d 623, 628, 528 N.W.2d 413 (1995); Chang v. State Farm Mut. Auto. Ins. Co., 182 Wis.2d 549, 560, 514 N.W.2d 399 (1994).

¶12 The goal of statutory interpretation is to ascertain and give effect to the legislature's intent. See, e.g., Lake City Corp. v. City of Mequon, 207 Wis.2d 156, 163, 558 N.W.2d 100 (1997); DeMars v. LaPour, 123 Wis.2d 366, 370, 366 N.W.2d 891 (1985). If the meaning of a statute is clear from its language, we are prohibited from looking beyond such language. See, e.g. Stockbridge School Dist. v. DPI, 202 Wis.2d 214, 220, 550 N.W.2d 96 (1996) (quoting Jungbluth v. Hometown, Inc., 201 Wis.2d 320, 327, 548 N.W.2d 519 (1996)). However, if the language of a statute is ambiguous, we must look at the history, scope, context, subject matter, and object of the statute to discern legislative intent. See, e.g., Lake City Corp., 207 Wis.2d at 164, 558 N.W.2d 100; DeMars, 123 Wis.2d at 370, 366 N.W.2d 891. Statutory language is ambiguous if reasonably well-informed individuals could differ as to its meaning. Harnischfeger Corp. v. LIRC, 196 Wis.2d 650, 662, 539 N.W.2d 98 (1995); Wagner Mobil, Inc. v. City of Madison, 190 Wis.2d 585, 592, 527 N.W.2d 301 (1995).

¶13 When interpreting a statute, this court is guided by several principles. First, in the absence of a statutory definition "[a]ll words and phrases shall be construed according to common and approved usage; but technical words and phrases and others that have a peculiar meaning in the law shall be construed according to such meaning." Wagner Mobil, Inc., 190 Wis.2d at 591, 527 N.W.2d 301 (quoting Wis.Stat. § 990.01(1)). Second, where the legislature uses similar but different terms in a statute, particularly within the same section, it is presumed that the legislature intended such terms to have different meanings. Armes v. Kenosha...

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