Author: Hamilton

3rd District Court of Appeals Decision: Klatt v. Penske Truck Leasing Co. (Duty to Defend)

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In Klatt v. Penske Truck Leasing Co. (2017AP2064), the Court of Appeals District III held that, although it acknowledged Great West Casualty Co. breached its duty to defend Penske Truck Leasing Co., Penske forfeited its right to recover defense costs because it failed to raise that argument in a previous appeal.

The underlying liability proceedings in this case arose from an accident that occurred on a Penske parking lot. Plaintiff James Klatt worked for a transport company that rented trucks from Penske and was injured upon returning a truck to a Penske lot. Klatt sued Penske for his injuries resulting from “large accumulations of ice” in the lot.

Great West insured Klatt’s employer transport company, and Penske was an additional insured under the plan. Great West rejected Penske’s tender of defense of the complaint because it argued the policy was for auto liability only, and the accident may not have occurred in relation to a vehicle.

As is proper procedure in a coverage dispute, the circuit court stayed the liability dispute between Klatt and Penske while the third-party coverage dispute between Great West and Penske was settled.

The circuit court eventually granted Great West summary judgment because additional evidence had clarified that Klatt’s injury was unrelated to use of a covered vehicle.  Penske appealed, and the appeals court reversed and remanded, agreeing with Penske’s argument that Great West had a duty to defend under the four corners of Klatt’s complaint, which, without additional evidence, showed there was possible need for coverage.

In the meantime, Penske had settled with Klatt. With the case back in circuit court, Penske moved for reimbursement of its defense costs and settlement payment, arguing Great West breached its duty to defend. Great West argued it did not yet have a duty to defend because the liability proceedings had been stayed. The parties disagreed on whether a scheduling conference that had occurred after the stay was in place had effectively lifted the stay. The circuit court ruled that the stay had not been lifted at the scheduling conference, and thus Great West had not breached its duty to defend.

In the instant decision, the appeals court determined that the stay had been effectively lifted by the scheduling conference, even though the circuit court never provided formal notice that it was modifying the stay order. Thus, Great West did breach its duty to defend by not covering Penske’s defense and settlement costs. However, since Penske did not raise an argument regarding Great West’s duty to defend in its prior appeal, Penske forfeited its right to that claim here. In its per curiam decision, the court noted that this case is unusual because the parties did not follow the proper procedure of staying an underlying liability dispute while third parties are settling a coverage dispute.

4th District Court of Appeals Decision: Peter N. Anderson v. WEA Trust (Health Insurance Coverage)

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In Peter N. Anderson v. WEA Trust (2017AP2386), the Court of Appeals District IV held that health insurance company WEA Trust did not breach its implied contractual duty of good faith when it denied primary coverage of medical expenses because its denial was unambiguously stated on the plaintiff’s monthly statements.

Under Peter Anderson and his wife’s retiree insurance plan, WEA provided secondary insurance for expenses above and beyond Medicare Part B. For the first few months of the plan, Anderson had not yet enrolled in Medicare Part B and incurred approximately $3,000 in medical expenses. WEA denied Anderson’s claims for those expenses that should have been covered under Medicare Part B. Anderson claimed that WEA breached its implied contractual duty of good faith because it failed to inform him that it had denied coverage.

The court of appeals upheld the ruling that Anderson’s monthly statements from WEA clearly stated that WEA denied his claims. The court declined to address Anderson’s other appellate arguments that WEA failed to state clearly in the contract that it was only offering secondary insurance and that WEA failed to inform him he was not enrolled in Medicare Part B.

1st District Court of Appeals Decision: Theresa Payton-Myrick v. LIRC (Worker’s Compensation)

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In Theresa Payton-Myrick v. LIRC (2016AP2463), the Court of Appeals District I held that the plaintiff was not entitled to further worker’s compensation and disability payments because her disability-causing surgery was not related to a compensable work injury.

Plaintiff Theresa Payton-Myrick was diagnosed with degenerative disc disease and arthritic changes in her spine. While working as an administrative assistant at University of Wisconsin-Milwaukee, Payton-Myrick fell out of her desk chair and sustained several muscle strains. She subsequently received opinions from several doctors, one of whom recommended spinal fusion surgery.

Despite conflicting medical opinions, Payton-Myrick underwent the surgery, which resulted in two procedures and left her arguably disabled. The UW System denied her benefits for the surgeries and subsequent disability. The Labor and Industry Review Commission (LIRC) determined that Payton-Myrick’s muscle strains were a compensable work injury, but the work injury had healed and did not aggravate her preexisting condition enough to necessitate surgery.

The appeals court upheld LIRC’s decision denying Payton-Myrick further worker’s compensation benefits. The court echoed LIRC’s argument that 2017 Wisconsin Supreme Court case Tracie Flug v. LIRC controls the instant case.

In Flug, the Supreme Court held that the worker’s compensation statute (Wis. Stat. § 102.42(1m)) extending benefits to workers who undertake a not medically necessary treatment in good faith does not apply to secondary treatment not related to the compensable injury. In Payton-Myrick’s case, LIRC and the appeals court determined that her surgeries were a result of her preexisting condition and not related to the work injury from falling out of the chair.

 

3rd District Court of Appeals Decision: Vande Corput v. Pekin Insurance Co. (Third-Party Liability in Worker’s Compensation)

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In Vande Corput v. Pekin Insurance Co. (2017AP357), the Court of Appeals District III ordered recalculation of attorney fees and maintained that circuit courts can mandate settlement agreements in third-party liability worker’s compensation disputes.

After Jody Vande Corput was injured in a car accident during his employment, Continental Western Insurance Co. paid him worker’s compensation benefits. Vande Corput and his wife filed a third-party liability lawsuit against the other driver’s insurer Pekin Insurance Co. Continental was added as an involuntary plaintiff. The Vande Corputs and Continental settled with Pekin, leaving the circuit court to apportion settlement proceeds. The Vande Corputs appealed the circuit court’s distribution.

The appeals court agreed with the Vande Corputs and remanded the case to the circuit court to properly follow the three-step distribution process laid out by the Wisconsin Supreme Court in Anderson v. MSI Preferred Insurance Co.

The Wisconsin Association for Justice (WAJ) filed an amicus brief in this case arguing that Continental’s lawyers should not recover any fees because they did not have a written fee arrangement with Continental. However, the court disagreed with WAJ because the Supreme Court Rules WAJ cited apply in disciplinary, not civil proceedings. Furthermore, Continental and its lawyers still maintained a contract for services, and the third-party liability worker’s compensation statute (Wis. Stat. § 102.29(1)(c)) expresses clear intent that both the employee’s and the worker’s compensation insurer’s attorneys should be entitled to attorney fees in a joint third-party claim.

The appeals court also rejected the Vande Corputs’ request to mandate the circuit court to use the quantum meruit theory to determine the allocation of attorney fees to Continental’s lawyers. This theory multiplies the number of hours worked on the case by a reasonable hourly rate to determine the appropriate fees.

The appeals court further held that the circuit court could compel the Vande Corputs to accept the settlement agreement, even though it contained the unfulfilled contingency of the allocation of settlement payments. The court argued that precedent shows circuit courts can compel settlements in third-party liability worker’s compensation actions despite objections from employees or their insurers.

Judge Hagedorn Announces Run for Supreme Court

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2nd District Court of Appeals Judge Brian Hagedorn announced this week his candidacy for Wisconsin Supreme Court.

Hagedorn is running for the seat that will be vacated by Justice Shirley Abrahamson’s retirement in 2019. Justice Abrahamson announced in May she will not run for re-election after four terms on the bench. Court of Appeals Chief Judge Lisa Neubauer (also serving in the 2nd District) announced her candidacy for the seat in July.

Gov. Scott Walker appointed Hagedorn to the Court of Appeals in 2015. Hagedorn previously served as chief legal counsel to Walker, assistant attorney general to J.B. Van Hollen, and clerk for recently retired Wisconsin Supreme Court Justice Michael Gableman. Hagedorn was president of the Federalist Society at Northwestern Law School.

In addition to announcing his candidacy, Hagedorn received endorsements from Gableman and current Justices Rebecca Bradley and Daniel Kelly.

 

Justice Rebecca Dallet Sworn In To Wisconsin Supreme Court

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On Aug. 6, Justice Rebecca Dallet was sworn into office as a justice on the Wisconsin Supreme Court. Dallet’s 10-year term will expire on July 31, 2028.

Liberal Dallet, a former Milwaukee County circuit court judge, defeated conservative candidate Judge Michael Screnock in an April election. Dallet replaces conservative Justice Michael Gableman on the bench, shifting the court’s conservative majority from 5-2 to 4-3.

Wisconsin Supreme Court Accepts New Cases

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At the end of July, the Wisconsin Supreme Court accepted 27 new cases. The list includes several insurance-related cases:

  • Paula Grigg v. Arrowcast, Inc. – duty to defend, timely notice
  • West Bend Mutual Insurance Co. v. Ixthus Medical Supply, Inc. – advertising injury liability coverage, Criminal Acts exclusion, other coverage preclusion considerations
  • Steadfast Insurance Co. v. Greenwich Insurance Co. – contemporaneous duty to defend with multiple insurers
  • SECURA Insurance v. Ray Duerr Logging LLC – occurrences from a single cause

Other cases of note include:

  • Midwest Neurosciences Associates, LLC v. Great Lakes Neurological Associates, LLC – compelled arbitration
  • Christopher Kleninger v. Crown Equipment Corp. – compensability of commuting time
  • Russell Robertson v. Cleaver-Brooks, Inc. – liability of insulation company
  • Michael Engelhardt v. City of New Berlin – government ministerial duties immunity
  • Koss Corp. v. Park Bank – bad faith violation of Uniform Fiduciaries Act

Full list of the newly accepted cases.

The next oral arguments are scheduled for Sept. 5. Visit the WCJC website for updates on these and other cases relevant to the Wisconsin business community.

Conversation with Former Judge Kavanaugh Clerk Rebecca Taibleson

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On Aug. 3, the Madison chapter of the Federalist Society hosted a discussion with Rebecca Taibleson, former clerk to U.S. Supreme Court nominee Judge Brett Kavanaugh. Taibleson discussed her time clerking for Kavanaugh, compared it with her experience as clerk to current U.S. Supreme Court Justice Antonin Scalia, and reflected on Kavanaugh’s judicial philosophy. Taibleson answered questions about where Kavanaugh, if confirmed, might fall on Supreme Court issues such as the second amendment and Chevron deference.

Click here for the full conversation, moderated by Wisconsin Chief Deputy Solicitor General Ryan Walsh.

4th District Court of Appeals Decision: Krueger v. AllEnergy Hixton, LLC (Anticipated Private Nuisance)

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In Krueger v. AllEnergy Hixton, LLC (2017AP1802), the Court of Appeals District IV held that anticipated private nuisance claims are recognized under Wisconsin case law and the plaintiffs failed to state such a claim against a proposed AllEnergy frac sand mine.

Plaintiff landowners filed a complaint against AllEnergy, which planned to build a frac sand mine operation contiguous to the landowners’ properties. The complaint anticipated a nuisance would occur once AllEnergy built the frac sand mine.

The appeals court held that, under Wisconsin case law in Wergin v. Voss (1923), anticipated private nuisance claims are recognized separate from general private nuisance claims. Furthermore, anticipated private nuisance claims must include facts sufficient to support a claim that the defendant’s conduct will certainly create a nuisance and the nuisance will inevitably cause harm. The appeals court dismissed the landowners’ complaint because it did not specifically indicate the frac sand mine would inevitably lead to harm.

In contrast, the dissent argued that Wergin is outdated and subsequent case law, statutes, and Supreme Court guidance indicates anticipated private nuisance claims are not recognized distinctly from general private nuisance claims. The dissent said the level of proof the majority required in the landowners’ complaint goes beyond Wisconsin law. Thus, the landowners did present sufficient facts to state a private nuisance claim.

The appeals court also noted that the court need not consider post-complaint affidavits in a summary judgement analysis that is limited to claim for relief in the complaint. The dissent agreed with the majority opinion on this point.

1st District Court of Appeals Decision: Mohn v. CBS Corp. (Asbestos Statute of Repose)

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In Mohn v. CBS Corp. (2017AP861), the Court of Appeals District I’s per curiam decision upheld the constitutionality of the property improvements statute of repose (Wis. Stat. § 893.89); thus Sprinkmann Sons Corp. was not liable for the plaintiff’s asbestos exposure.

Mary Ellen Mohn’s husband was exposed to asbestos while working at a construction project that ended in the late 1960s. Mohn was diagnosed with cancer in 2009, and Mary Ellen subsequently filed action against manufacturers and suppliers involved in the construction, including Sprinkmann, in 2012.

Wisconsin’s statute of repose for property improvements bars liability for persons involved in property improvements after ten years (reduced to seven years by 2017 Wis. Act 235). The statute of repose does not protect manufacturers of defective materials and property owners negligent in subsequent maintenance of improvements.

Mohn argued that Sprinkmann could be considered a manufacturer of defective material because it supplied defective, asbestos-containing insulation during the construction project. However, the appeals court rejected this argument, stating that Mohn’s argument would conflate manufacturers and other persons involved in property improvements, ultimately negating the protective purpose of the statute of repose. Sprinkmann furnished but did not manufacture the asbestos-containing insulation.

Mohn further argued that the statute of repose itself is unconstitutional as-applied to asbestos exposure claims because it violates rights to remedy and equal protection. The appeals court upheld the constitutionality of the law because the statute extinguishes the entire “right by which the litigant seeks a remedy.” Furthermore, the statute does not violate equal protection rights because the distinction of a class of asbestos claims that take longer to manifest serves a “legitimate governmental interest.”