Prestwood v. Americo Life, Inc.
| Decision Date | 30 July 1998 |
| Docket Number | No. 98-1189-FT,98-1189-FT |
| Citation | 584 N.W.2d 235,221 Wis.2d 223 |
| Parties | NOTICE: UNPUBLISHED OPINION. RULE 809.23(3), RULES OF CIVIL PROCEDURE, PROVIDE THAT UNPUBLISHED OPINIONS ARE OF NO PRECEDENTIAL VALUE AND MAY NOT BE CITED EXCEPT IN LIMITED INSTANCES. Margaret PRESTWOOD, Plaintiff-Appellant, v. AMERICO LIFE, INC., Defendant-Respondent. |
| Court | Wisconsin Court of Appeals |
APPEAL from orders of the circuit court for La Crosse County: JOHN J. PERLICH, Judge. Affirmed.
1
Margaret Prestwood appeals an order denying her request for actual attorney's fees following the successful prosecution of her claim against Americo Life, Inc., to recover the proceeds of a life insurance policy Americo had issued to her late husband. She also appeals the trial court's denial of her motion to reconsider the matter. Prestwood claims that because she joined a request for declaratory relief with her breach of contract claim, the trial court should have granted her request for actual attorney's fees under § 806.04(8), STATS. 2 We conclude that the trial court did not erroneously exercise its discretion when it declined to grant declaratory relief under § 806.04, and that Prestwood is not entitled to recover her actual attorney's fees in this action. Accordingly, we affirm the trial court orders.
A little over a year before he died, Prestwood's husband, William, took out a $5,000 life insurance policy from Americo. On the policy application, William failed to disclose that he had been treated for asthma within the preceding year. After reviewing Mr. Prestwood's medical records following his death, Americo denied Prestwood's claim for a death benefit under the policy and instead tendered a return of the premiums paid on the policy. Americo claimed that the failure to disclose the diagnosis and treatment for asthma constituted a misrepresentation on the application which voided the policy.
Prestwood commenced this small claims action, initially employing the standard form summons and complaint, in which she indicated she was seeking a judgment for money damages in the amount of $5,000. Subsequently, she filed an amended complaint alleging two causes of action. The first alleged a breach of the life insurance contract and sought contract damages of $5,000 plus costs; the second requested a declaratory judgment that she was entitled to the specified death benefit under the policy and "actual attorney's fees pursuant to Wisconsin Statute § 806.04(8)." Following a bench trial, the court concluded that William had not misrepresented his medical history on the policy application, and it awarded judgment to Prestwood for $5,000 plus allowable costs. Following briefing by both counsel, the trial court entered a decision and order denying Prestwood's requests for declaratory relief and for actual attorney's fees. The court subsequently entered an order denying Prestwood's motion for reconsideration, and she appeals both orders.
Whether to grant or deny declaratory relief is a decision committed to the discretion of the trial court. See Wisconsin Educ. Ass'n Council v. Wisconsin State Elections Bd., 156 Wis.2d 151, 161, 456 N.W.2d 839, 844 (1990). Thus, we will affirm the trial court's decision to withhold declaratory relief if it applied the correct law to the relevant facts, and through a process of reasoning, reached a result that a reasonable judge could reach. See Schneller v. St. Mary's Hosp. Med. Ctr., 155 Wis.2d 365, 374, 455 N.W.2d 250, 254 (Ct.App.1990) aff'd, 162 Wis.2d 296, 470 N.W.2d 873 (1991). Whether a party can recover attorney's fees as damages, however, is a question of law which we decide de novo. See DeChant v. Monarch Life Ins. Co., 200 Wis.2d 559, 568, 547 N.W.2d 592, 595 (1996).
Our supreme court has noted on numerous occasions that Wisconsin "continues to adhere to the American Rule on the award of attorney fees." Gorton v. Hostak, Henzl & Bichler, S.C., 217 Wis.2d 493, ----, 577 N.W.2d 617, 624 (1998). Under the Rule, actual attorney's fees are only recoverable if authorized by statute or contract, or when the fees are incurred by a plaintiff who is subjected to third-party litigation on account of a defendant's wrongful act. See id. Prestwood does not base her claim for recovery of actual attorney's fees on any language in the life insurance contract. Rather, she relies on Elliott v. Donahue, 169 Wis.2d 310, 485 N.W.2d 403 (1992), for her argument that she is entitled under § 806.04(8), STATS., to recover the actual attorney's fees she incurred in enforcing the life insurance contract against Americo.
In Elliott, a motor vehicle liability insurer sought a declaratory judgment that it was not obligated to defend the insured operator of a motor vehicle in a personal injury action because of an exclusion from coverage contained in the applicable liability insurance policy. See id. at 315, 485 N.W.2d at 404. The insured prevailed at trial on the coverage issue and sought to recover from the insurer his actual attorney's fees "in successfully defending coverage." Id. at 315, 318-19, 485 N.W.2d at 405, 406. The supreme court concluded that "supplemental relief under sec. 806.04(8) may include a recovery of attorney fees incurred by the insured in successfully establishing coverage under an insurance policy." Id. at 324, 485 N.W.2d at 409.
We conclude, however, that the rationale and holding in Elliott is of no assistance to Prestwood on the present facts. The successful insured in Elliott was awarded actual attorney's fees after successfully defending against a liability insurer's attempt to avoid its duty to defend the insured in a personal injury action. The supreme court has noted the "limited circumstances" under which Elliott recognized an equitable power, as well as statutory authority, for a court to award attorney's fees to an insured, and it...
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