Court of Appeals Digest

by Prof. Daniel D. Blinka & Prof. Thomas J. Hammer

Editor's Note: Each case summarized in the Court of Appeals Digest includes its new public domain citation.

| Arbitration | Damages | Family Law | Insurance | Worker's Compensation |

Arbitration

Confirmation - Costs - "Double Costs" - Offers to Settle - Stays

Briggs v. Farmers Ins. Exchange, 2000 WI App 40 (filed 25 Jan. 2000) (ordered published 23 Feb. 2000)

The plaintiff was injured in an accident and claimed uninsured motorist coverage from her insurer. She filed suit but later agreed to a stay and arbitration. After arbitration Briggs received judicial confirmation of her award pursuant to section 788.09 of the Wisconsin Statutes. The circuit court also awarded her costs under chapter 814.

The court of appeals, in an opinion written by Judge Hoover, reversed. Prior cases established that chapter 814 "envisions a 'prevailing party' as one who is successful in a litigated trial court proceeding, not one who succeeds in obtaining an award before an arbitrator." In this case Briggs asked the court to decide only if one or two policies were applicable. Examining the record, the court of appeals held that litigation did not amount to a "contested trial court proceeding." The trial court also erred by awarding Briggs double costs pursuant to section 807.01. After she agreed to arbitrate the claim, Briggs served the insurer with an offer to settle under section 807.01. The insurer never responded. The court held that the insurer was not obligated to respond to the offer because the trial court had stayed proceedings pending arbitration.

Damages

Contracts - Intentional Interference - Mental Health Treatment - Compensatory Damages

Musa v. Jefferson County Bank, 2000 WI App 33 (filed 27 Jan. 2000) (ordered published 23 Feb. 2000)

Musa owned a hotel on which the bank held a mortgage. Musa tried unsuccessfully to sell the hotel but the bank foreclosed and the hotel was scheduled for a sheriff's sale. Musa sued the bank and Buelow, a bank officer, asserting a variety of claims. One set of claims alleged that Buelow had intentionally interfered with a possible sale to Aliu. The jury found for Musa and determined that Buelow should pay $4,000 in consequential damages and $50,000 in punitive damages. The bank was found liable for $4,000 in consequential losses resulting from its intentional interference and assessed nearly $400,000 for losses stemming from its breach of the duty of good faith. On post-verdict motions, the judge ruled that Musa could not recover the $4,000 in consequential damages from Buelow because there had been no pecuniary damages, and, without any compensatory damages, Musa could not recover the punitive damages award from Buelow.

The court of appeals, in an opinion written by Judge Vergeront, affirmed on different grounds. The dispositive issue was whether "a plaintiff may recover damages for the costs of mental health treatment on a claim for intentional interference with a prospective contract, when no other compensatory damages are awarded on that claim." The case law permits damages for emotional distress resulting from intentional torts where there are "substantial other damages in addition to damages for emotional distress" (¶ 10). The court held that case law "requirement of substantial other damages must logically be applied both to general damages for emotional distress and to damages for costs of mental health treatment" (¶15). Alternatively, Musa argued that the $400,000 damage award against the bank satisfied the "substantial other damages" element. The court also rejected this argument because the special verdict expressly negated it: The jury was instructed to consider separately each defendant, each claim, and each category of damages.

Family Law

Divorce - Maintenance - Consideration of Premarital Cohabitation in Determining Maintenance - Unjust Enrichment

Meyer v. Meyer, 2000 WI App 12 (filed 9 Dec. 1999) (ordered published 19 Jan. 2000)

The parties in this divorce action cohabited from 1987 until 1993 at which point they married. The wife filed for divorce in 1997. The circuit court awarded her maintenance and, in making the maintenance decision, considered the parties' lengthy nonmarital relationship. The court of appeals, in a majority decision authored by Judge Dykman, reversed the circuit court.

Though the determination and amount and duration of maintenance rest within the discretion of the trial court, the appellate court concluded that the circuit judge erroneously exercised discretion by considering the premarital relationship when it made its maintenance determination. The court relied primarily upon Greenwald v. Greenwald, 154 Wis. 2d 767, 454 N.W.2d 34 (Ct. App. 1990), wherein it held as a matter of law that a trial court may not consider premarital contribucontributions in its maintenance and property division determinations.

The appellate court also addressed the wife's claim of unjust enrichment based upon her support of her husband while he obtained his undergraduate and medical degrees, most of which occurred prior to their marriage. Her husband graduated from medical school one year after the parties were married and he thereafter began his residency program.

In Wisconsin "unmarried cohabitants may raise claims based upon unjust enrichment following the termination of their relationship where one of the parties attempts to retain an unreasonable amount of the property acquired through the efforts of both." Watts v. Watts, 137 Wis. 2d 506, 532-33, 405 N.W.2d 303 (1987). In a nonmarital cohabitation situation, for the complaining party to recover under an unjust enrichment claim, he or she must demonstrate: 1) an accumulation of assets, 2) acquired through the efforts of the claimant and the other party, and 3) retained by the other party in an unreasonable amount.

The husband in this case argued that his wife's unjust enrichment claim could not succeed because she has not shown an accumulation of assets, pointing out that the claim was based on her support while he obtained a medical degree. The appellate court agreed with him that a degree is not an asset for purposes of an unjust enrichment claim.

Judge Deininger filed a dissenting opinion.

Insurance

Comprehensive Liability Policies - Duty to Defend/Indemnify Successor Entity

Red Arrow Products Company Inc. v. Employers Insurance of Wausau, 2000 WI App 36 (filed 19 Jan. 2000) (ordered published 23 Feb. 2000)

In May 1984 Red Arrow Products Company ("Old Red Arrow") transferred and assigned certain of its assets and liabilities to a new corporation referred to hereafter as New Red Arrow. In this case New Red Arrow appealed from an order dismissing its action requesting a declaration of the duty of Employers Insurance of Wausau to defend and/or indemnify New Red Arrow under liability policies issued by Wausau to Old Red Arrow. (Old Red Arrow existed in a variety of corporate and partnership forms prior to the 1984 transfer and assignment of assets and liabilities to New Red Arrow). New Red Arrow argued that, by operation of law, the benefits of Wausau's policies which were in effect prior to New Red Arrow's existence were transferred to it.

In a decision authored by Judge Snyder, the court of appeals concluded that New Red Arrow was not a named insured and was never assigned the policies. The 1984 sale agreement gave New Red Arrow various specified assets, but these did not include the Wausau policies. The court further rejected New Red Arrow's contention that the benefits of the Wausau policies were transferred to it by operation of law.

UIM Coverage - Stacking

Meyer v. Michigan Mutual Ins. Co., 2000 WI App 37 (filed 26 Jan. 2000) (ordered published 23 Feb. 2000)

Meyer was seriously injured at work when a semi-trailer backed into him. The truck was insured by Michigan Mutual, its policy carrying limits of $1 million. Meyer also sought underinsured motorist (UIM) coverage from Millers Classified Ins. Co. (Millers), which insured two vehicles owned by his parents, each carrying limits of $250,000. Meyer's parents also had an umbrella (excess) policy for $1 million issued by Millers. The trial judge ruled that Meyer was entitled to the UIM coverage and awarded him $1.5 million from Millers.

The court of appeals, in an opinion written by Judge Anderson, affirmed. The umbrella policy contained no definition of UIM coverage, thus forcing the court to consider the parties' intentions. The umbrella policy required the Meyerses to maintain the UIM coverage; thus, the Meyerses intended to add the $1 million coverage to the underlying UIM coverage. The court also held that the case law and the policy language dictated "that the primary and umbrella policies should be considered together for determining coverage." Adding the $1 million in excess coverage to the underlying $250,000 in UIM coverage gave the Meyerses at least a $1.25 million liability limit. Since this exceeded the $1 million that covered the semi-trailer truck, the Meyerses qualified for the "underinsured" coverage. Finally, Meyer was permitted to "stack" the twin $250,000 UIM coverage because separate premiums were paid on each vehicle.

Exclusions - Permission to Drive - Implied Permission

Heaton v. Mountin, 2000 WI App 45 (filed 19 Jan. 2000) (ordered published 23 Feb. 2000)

Robert and his wife Diane owned a car insured by American Family. Robert permitted his son, Travis, age 17, to drive the car. Travis later permitted Mountin to drive the car. Mountin struck Heaton's automobile raising the issue of whether Mountin was covered under the American Family policy, which denied coverage. The trial judge refused to grant summary judgment dismissing American Family.

The court of appeals, in an opinion written by Judge Hoover, reversed. The policy contained two applicable exclusions: (# 1) "Any person other than a relative, using your insured car without your permission, or that of an adult member of your household;" (# 3) "Any person using a vehicle without the permission of the person having lawful possession." The court held that the exclusions must be applied separately. Nothing in the policy prevented exclusion # 3 from applying to a person using the insured car. Since Travis was in lawful possession of the car and permitted Mountin to use it, Mountin was not excluded under this provision. But exclusion # 1 did bar coverage. Neither Robert nor Diane permitted Mountin to drive the car. Mountin also raised the issue of their "implied permission" to drive the car, but the summary judgment record raised disputed issues of fact and the court remanded the case for further proceedings.

Worker's Compensation

Independent Contractors - Statutory Standards for Determining Independent Contractor Status

Jarrett v. Labor and Industry Review Commission, 2000 WI App 46 (filed 25 Jan. 2000) (ordered published 23 Feb. 2000)

This case concerns the test for determining whether a person is an independent contractor within the meaning of the Worker's Compensation Act. Wis. Stat. section 102.07(8)(b) articulates nine conditions that must be met before a worker is considered an independent contractor. The Labor and Industry Review Commission (LIRC) contended that this statute is the exclusive test for determining independent contractor status for worker's compensation purposes. The plaintiff argued that the LIRC must first consider common law criteria for determining whether a worker is an independent contractor or an employee and, only if it first concludes under the common law that the worker is an independent contractor, should it apply the statutory criteria.

The court of appeals, in a decision authored by Judge Hoover, agreed with the LIRC. It held that the nine criteria specified in the statute cited above supplant the common law and provide the sole test to determine independent contractor status under the Worker's Compensation Act.

Prof. Daniel D. Blinka and Prof. Thomas J. Hammer invite comments and questions about the digests. They can be reached at the Marquette University Law School, 1103 W. Wisconsin Ave., Milwaukee, WI 53233, (414) 288-7090.

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