Vogel v. Liberty Mut. Ins. Co.

• Court: Wisconsin Court of Appeals
• Writing for the Court: WEDEMEYER; FINE
• Citation: Vogel v. Liberty Mut. Ins. Co., 214 Wis.2d 443, 571 N.W.2d 704 (Wis. App. 1997)
• Decision Date: 28 October 1997
• Docket Number: No. 96-2145,96-2145
• Parties: Barbara L. VOGEL, Dennis Vogel, Plaintiffs, Tank Transport, Inc., Plaintiff-Appellant, v. LIBERTY MUTUAL INSURANCE CO., Steven E. Ellifson, E & L Truck Rental Co., E & L Transport Co., Defendants-Respondents, West Bend Mutual Insurance Co., Defendant.

Page 704

571 N.W.2d 704

214 Wis.2d 443

Barbara L. VOGEL, Dennis Vogel, Plaintiffs Tank Transport, Inc., Plaintiff-Appellant, v. LIBERTY MUTUAL INSURANCE CO., Steven E. Ellifson, E & L Truck Rental Co., E & L Transport Co. Defendants-Respondents West Bend Mutual Insurance Co., Defendant.

No. 96-2145.

Court of Appeals of Wisconsin.

Submitted on Briefs Aug. 7, 1997.

Opinion Released Oct. 28, 1997.

Opinion Filed Oct. 28, 1997.

On behalf of the plaintiff-appellant, the cause was submitted on the briefs of David J. Regele and Richard A. Westley of Westley Law Offices, S.C. of Madison.

On behalf of the defendants-respondents, the cause was submitted on the brief of W. Ted Tornehl and Christopher E. Rogers of Borgelt, Powell, Peterson & Frauen, S.C. of Milwaukee.

Before WEDEMEYER, P.J., and FINE and SCHUDSON, JJ.

WEDEMEYER, Presiding Judge.

Tank Transport, Inc. (hereinafter "Tank") appeals from a judgment dismissing its tort action against Liberty Mutual Insurance Co., Steven E. Ellifson, E & L Truck Rental Co., and E & L Transport Co. Tank claims that the trial court erred in dismissing Tank's action for tort damages, which sought to recover lost premium dividends and increased payments Tank incurred from its worker's compensation insurance carrier on the grounds that public policy and § 102.29, STATS., bar recovery. Because the trial court correctly concluded that public policy bars recovery for these purely economic damages, we affirm. ¹

I. BACKGROUND

On July 24, 1992, plaintiff Barbara Vogel was traveling northbound in an automobile on North 107th Street in Milwaukee. The defendant, Steven E. Ellifson, was traveling southbound on North 107th Street. Without warning, Ellifson turned left in front of Vogel. Vogel struck the truck driven by Ellifson causing extensive damages to her automobile and severely injuring her. Vogel was employed by Tank, and was acting in the course of her employment at the time of the accident, and Ellifson was employed by the defendant E & L Transport Co., and was also acting in the course of his employment at the time of the accident. Liberty Mutual provided liability insurance to Ellifson's employer.

Because Vogel was acting in the course of her employment at the time of the accident, Tank's worker's compensation carrier, West Bend Mutual Insurance Co., paid her medical bills and lost wages totaling approximately $15,000. The West Bend insurance policy contained a clause which stated that if West Bend was indemnified by the defendants within eighteen months of the inception of the policy (beginning in August 1993), there would be no effect on Tank's worker's compensation premiums as a result of the accident. The defendants did not reimburse West Bend within this period, however, causing Tank to receive $19,720 less in premium dividends than it would have received had the defendants reimbursed West Bend within the eighteen-month period, and causing West Bend to increase its "experience modifier," which resulted in Tank incurring an additional $3,707 in worker's compensation premiums during the 1994-95 policy year. This increase has also had a similar effect in raising the premiums for the 1995-96 and 1996-97 policy years as well.

Tank brought an action in tort against defendants Liberty Mutual, Ellifson, E & L Truck Rental Co. and E & L Transport Co. to recover the amount of the increased worker's compensation premiums and amount of the lost premium discounts incurred. The defendants filed a motion to dismiss the action, which the trial court granted stating that public policy and § 102.29, S TATS., bars Tank's claims. Tank now appeals.

II. DISCUSSION

A. Standard of Review

A motion to dismiss tests the legal sufficiency of a complaint. See Anderson v. Continental Ins. Co., 85 Wis.2d 675, 683, 271 N.W.2d 368, 372 (1978). The issue is not whether the plaintiff can prove the case as pled, but whether the complaint is legally sufficient to state a claim upon which relief can be granted. See Scarpaci v. Milwaukee County, 96 Wis.2d 663, 669, 292 N.W.2d 816, 819 (1980). On a motion to dismiss, the facts pled are taken as true and inferences from the pleadings are construed in favor of the party against whom the motion is brought. See Heinritz v. Lawrence Univ., 194 Wis.2d 606, 610, 535 N.W.2d 81, 83 (Ct.App.1995). A claim is dismissed when "it is quite clear that under no conditions can the plaintiff recover." State v. American T.V. & Appliance, 146 Wis.2d 292, 300, 430 N.W.2d 709, 712 (1988) (citations omitted). Whether a complaint properly pleads a cause of action upon which relief may be granted is a question of law this court reviews de novo. See Heinritz, 194 Wis.2d at 610, 535 N.W.2d at 83.

B. Public Policy

Tank claims that the trial court erred in dismissing its action on public policy considerations. Tank claims that applying each of the public policy considerations enumerated by the court in Colla v. Mandella, 1 Wis.2d 594, 85 N.W.2d 345 (1957), fails to produce any basis for protecting the respondents from the damages caused by their employee's negligence. We disagree.

As both parties to this action concede, liability in tort may be denied based on factors that the courts have termed "public policy considerations." See id. at 598-99, 85 N.W.2d at 348. The application of these considerations is the function of the court and does not always require a full factual resolution of the cause of action through a trial. See Hass v. Chicago & Northwestern Ry. Co., 48 Wis.2d 321, 327, 179 N.W.2d 885, 888 (1970). Where the public policy question is fully presented by the complaint, a court may make a public policy determination without requiring a trial. See Rieck v. Medical Protective Co., 64 Wis.2d 514, 520, 219 N.W.2d 242, 245 (1974). "Public policy is involved in determining whether a particular claim is compensable as a matter of law." See Howard v. Mount Sinai Hosp. Inc., 63 Wis.2d 515, 520, 217 N.W.2d 383, 386 (1974) (Hansen, J., concurring).

The court in Colla, enumerated a number of considerations to be applied in determining whether or not imposing liability in a tort action violates public policy. These considerations have been summarized to include the following: (1) the injury is too remote from the negligence; (2) the injury is too wholly out of proportion to the culpability of the negligent tortfeasor; (3) in retrospect, it appears too highly extraordinary that the negligence should have brought about the harm; (4) allowance of recovery would place too unreasonable a burden on the tortfeasor; (5) allowance of recovery would be too likely to open the way for fraudulent claims; or (6) allowance of recovery would enter a field that has no just or sensible stopping point. See Citizens State Bank v. Timm, Schmidt & Co., 113 Wis.2d 376, 387, 335 N.W.2d 361, 366 (1983). In applying these rationales to the case at bar, the trial court found:

Although denial of liability in this case may be justified on multiple factors, the Court finds, in particular, that the business loss suffered by Tank Transport in the form of increased premiums and lost discounts is too remote from the negligence of the defendant in failing to exercise due care when making a left turn on a city street.

Employers are required by law to provide Worker's Compensation insurance for their employees. And the cost of providing such insurance is a necessary cost of doing business. The fact that the premiums may rise or discounts may be lost following a claim is simply the nature of the insurance industry. The court finds that the negligent act of failing to use due care while driving is simply too remote to impose liability on the defendant for the collateral consequence of increased Worker's Compensation premiums and lost discounts.

Tank argues that the negligence of the truck driver in causing the increase in premiums and lost discounts is not too remote. Tank states that increased premiums and reduced dividends were caused directly by Ellifson's negligence and thus, Tank should be able to recover for these damages. We affirm the trial court's decision that public policy bars this action, but base our decision on the public policy that in allowing this claim, we would be entering a field that has no sensible or just stopping point.

If Tank is allowed to recover from a tortfeasor for increased premiums and lost dividends pertinent to a worker's compensation insurance policy that it is required to maintain by law, what next? Will every automobile driver in this state who gets into an auto accident and as a result has to pay an increase in auto insurance premiums be able to sue to recover those increased premiums? And if so, for how long will the tortfeasor have to pay for the increased premiums--for as long as the insurance company decides to charge or only for the following year? What happens if that same driver gets into multiple car accidents? Which tortfeasor pays which premium? And will the tortfeasor be expected to compensate the driver whose insurance company terminates the auto policy because the driver was involved in too many accidents?

Will this recovery for increased premiums extend to homeowner's and renter's insurance policies? What about the numerous other types of insurance?

These issues raise another problem relative to allowing the recovery sought. To what extent do other factors come into play? If the tortfeasor is found to be only partially responsible, will the tortfeasor only have to pay that percentage of the premium increase? With respect to the instant accident, would payment of the increased premiums be reduced by any percentage of negligence attributed to Vogel? What will happen where a case involves multiple tortfeasors? And specific to worker's compensation issues, other factors are still at work. For example, a worker's compensation insurer may choose not to raise the rates if a company has only one claim. However, if there have been multiple claims, these...