Case Title: James Weiss v. United Fire and Casualty Company

Citation: 

Docket Number: 1993AP003341

State: wisconsin

Court: Wisconsin Supreme Court

Date: 1995-12-15T00:00:00Z

Document:
No. 93-3341 
 
 
 
 
 
 
 
 
 
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
 
 
 
 
No.  93-3341 
 
STATE OF WISCONSIN             :                IN SUPREME COURT 
                                                                   
 
 
James Weiss, 
 
 
Plaintiff-Appellant-Cross Respondent-
Petitioner, 
 
 
v. 
 
United Fire and Casualty Company, 
 
 
Defendant-Respondent-Cross Appellant. 
 
 
FILED 
 
 DEC 15, 1995 
 
 
 Marilyn L. Graves 
  
Clerk of Supreme Court 
  
Madison, WI  
                                                                 
  
 
 
 
REVIEW of part of a decision of the Court of Appeals.  
Reversed and cause remanded. 
 
SHIRLEY 
S. 
ABRAHAMSON, 
J.   James 
Weiss, 
the 
insured 
plaintiff, seeks review of an unpublished decision of the court of 
appeals, Weiss v. United Fire & Casualty Co., No. 93-3341 (Wis. 
Ct. App. Sept. 27, 1994), affirming a judgment of the Douglas 
County circuit court, Robert E. Eaton, judge.  The judgment 
granted the motion of the defendant, United Fire and Casualty 
Company, the plaintiff's insurer, to change answers in the verdict 
pursuant to Wis. Stat. § 805.14(5)(c) (1993-94), to conform with 
the circuit court's dismissal of the plaintiff's bad faith claim. 
 
No. 93-3341 
 
 
 
2 
 In answering the verdict questions relating to the bad faith 
claim, the jury found (1) that United Fire had exercised bad faith 
in denying the plaintiff's claim and (2) that $225,000 should be 
awarded the plaintiff as punitive damages for the tort of bad 
faith.  We reverse the part of the decision of the court of 
appeals which is before us
1 and remand the cause to the circuit 
court with directions to reinstate the jury verdict and to enter 
judgment in accordance with this decision.   
 
Three issues are presented for our review.  First, relying 
upon the court of appeals' holding in Heyden v. Safeco Title Ins. 
Co., 175 Wis. 2d 508, 498 N.W.2d 905 (Ct. App. 1993), United Fire 
contends that the plaintiff cannot prevail on a bad faith tort 
claim against it without first introducing expert testimony 
concerning what a reasonable insurer would have done under the 
particular facts and circumstances to ensure a fair and neutral 
evaluation of its insured's claim. 
 
We reject the circuit court's and court of appeals' bright-
line rule requiring expert testimony in all bad faith tort claims. 
 Cases presenting particularly complex facts and circumstances 
outside the common knowledge and ordinary experience of an average 
juror will ordinarily require an insured to introduce expert 
testimony to establish a prima facie case for bad faith.  Under 
                     
     
1  The remaining parts of the court of appeals' decision, 
such as the issue of setoff against the plaintiff's compensatory 
damages award, are not before the court.  
 
No. 93-3341 
 
 
 
3 
the facts and circumstances of other cases, however, the question 
of whether an insurer has breached its duty as a reasonable 
insurer to evaluate its insured's claim fairly and neutrally will 
remain well within the realm of the ordinary experience of an 
average juror and therefore will not require expert testimony.  As 
this court has previously stated, "[t]he requirement of expert 
testimony is an extraordinary one, and is to [be] applied by the 
trial court only when unusually complex or esoteric issues are 
before the jury."  White v. Leeder, 149 Wis. 2d 948, 960, 440 
N.W.2d 557 (1989) (citing Netzel v. State Sand & Gravel Co., 51 
Wis. 2d 1, 7, 186 N.W.2d 258 (1971)).  
 
Second, United Fire contends that even should we hold, as we 
do, that the plaintiff was not required to introduce expert 
testimony to establish his bad faith claim, the verdict should be 
overturned because the plaintiff failed to introduce sufficient 
evidence in his case in chief to establish a bad faith claim.  Our 
review of the record, as set forth below, leads us to conclude 
that the plaintiff produced sufficient evidence in his case in 
chief to establish his bad faith tort claim; therefore the jury's 
verdict should stand.   
 
Third, United Fire asserts (1) that the jury did not award 
the plaintiff compensatory damages on his bad faith claim and (2) 
that United Fire's conduct does not warrant a punitive damages 
award.  Therefore United Fire contends that even should we uphold 
the verdict finding that it exercised bad faith in denying the 
 
No. 93-3341 
 
 
 
4 
plaintiff's insurance claim, the plaintiff is not entitled to the 
punitive damages which the jury awarded him.  Because we conclude 
that the jury did award the plaintiff compensatory damages on his 
bad faith claim and because we also conclude that the evidence 
supports the jury's finding that punitive damages were warranted, 
we remand the cause to the circuit court with directions to 
reinstate the jury's punitive damage award as well. 
 
I. 
 
For purposes of this review the facts are undisputed.  Some 
facts follow and additional pertinent facts are set forth in the 
discussion of the legal issues. 
 
On the morning of December 20, 1990, the plaintiff set out 
from his home in Iron River, Wisconsin, to join his family for the 
holidays.  When he arrived in Onalaska, Wisconsin, some five hours 
later, he was met with the news that a fire had broken out shortly 
after he left Iron River; his home had been completely gutted.  
Three months later, United Fire informed the plaintiff that 
because it believed he had intentionally set fire to the house, 
his claim for $149,250 of losses under his fire insurance policy 
was denied.  The plaintiff brought suit against United Fire 
shortly thereafter, alleging both breach of contract and the tort 
of bad faith. 
 
A three-day jury trial followed in October of 1993.  At the 
close of the plaintiff's case in chief, the circuit court granted 
United Fire's motion to dismiss the plaintiff's bad faith claim. 
 
No. 93-3341 
 
 
 
5 
Relying on Heyden, 175 Wis. 2d 508, the circuit court concluded 
that the plaintiff's failure to introduce expert testimony 
regarding the reasonableness of United Fire's conduct in denying 
the claim was fatal.  Citing Mills v. Regent Ins. Co., 152 Wis. 2d 
566, 449 N.W.2d 294 (Ct. App. 1989), the circuit court also 
concluded 
that, 
entirely 
apart 
from 
the 
question 
of 
the 
plaintiff's failure to introduce expert testimony, the plaintiff 
had failed to produce sufficient evidence to establish a prima 
facie bad faith claim.  
 
In the interest of avoiding a second trial on the issue of 
punitive damages in the event that its ruling was reversed, the 
circuit court nevertheless agreed to submit special verdict 
questions to the jury regarding the plaintiff's bad faith claim.  
At the same time, however, the circuit court made clear its 
intention to abide by its original ruling and direct a verdict for 
the defendant on the issue of bad faith, regardless of how the 
jury answered the special verdict questions on bad faith.
2 
 
The jury found that the plaintiff did not intentionally cause 
the fire to his residence and that United Fire had breached its 
contract with the plaintiff.  The jury also found that United Fire 
                     
     
2  In the interest of economizing scarce judicial resources, 
the court has long encouraged circuit judges to reserve ruling on 
motions challenging the sufficiency of the evidence until after 
submitting the issue in dispute to the jury so that a remand for a 
new trial need not be made if the circuit court's ruling is 
reversed.  Samson v. Riessing, 62 Wis. 2d 698, 704-05, 215 N.W.2d 
662 (1974); James v. Heintz, 165 Wis. 2d 572, 577 n.4, 478 N.W.2d 
31 (Ct. App. 1991).   
 
No. 93-3341 
 
 
 
6 
had exercised bad faith toward the plaintiff in its investigation 
and processing of his claim, and awarded him compensatory and 
punitive damages.   
 
After the jury was excused, the circuit court reversed the 
jury's special verdict answers finding that United Fire had 
breached its duty of good faith and assessing punitive damages 
against United Fire as a consequence of that breach.  The court of 
appeals affirmed the decision of the circuit court.   
 
II. 
 
We now turn to the issue of whether expert testimony is 
required as a matter of law to establish a bad faith claim against 
an insurer.  
 
To establish a claim for bad faith, the insured "must show 
the absence of a reasonable basis for denying benefits of the 
policy and the defendant's knowledge or reckless disregard of the 
lack of a reasonable basis for denying the claim."  Anderson v. 
Continental Ins. Co., 85 Wis. 2d 675, 691, 271 N.W.2d 368 (1978). 
 The first prong of this test is objective, while the second prong 
is subjective.  Benke v. Mukwonago-Vernon Mut. Ins. Co., 110 
Wis. 2d 356, 362, 329 N.W.2d 243 (Ct. App. 1982).   
 
Under the first prong, the insured must establish that, under 
the facts and circumstances, a reasonable insurer could not have 
denied or delayed payment of the claim.  James v. Aetna Life & 
Casualty Co., 109 Wis. 2d 363, 370, 326 N.W.2d 114 (Ct. App. 
1982).  In applying this test, it is appropriate for the trier of 
 
No. 93-3341 
 
 
 
7 
fact to determine whether the insurer properly investigated the 
claim and whether the results of the investigation were subjected 
to reasonable evaluation and review.  Anderson, 85 Wis. 2d at 692. 
 In other words, under the first prong of the Anderson test, to 
determine whether the insurer acted in bad faith the trier of fact 
measures the insurer's conduct against what a reasonable insurer 
would have done under the particular facts and circumstances to 
conduct a fair and neutral evaluation of the claim.
3  
 
In Wisconsin, expert testimony is generally admissible if the 
person testifying is qualified and if the testimony will help the 
trier of fact to understand the evidence or to determine a fact in 
issue.  Wis. Stat. § 907.02 (1993-94); Kerkman v. Hintz, 142 
Wis. 2d 404, 422-23, 418 N.W.2d 795 (1988).  A circuit court's 
decision about admission of expert testimony is largely a matter 
within the discretion of the circuit court.  Kerkman, 142 Wis. 2d 
at 422; State v. Friedrich, 135 Wis. 2d 1, 15, 398 N.W.2d 763 
(1987).   
 
The court has long recognized that certain kinds of evidence 
are difficult for jurors to evaluate without the benefit of expert 
testimony.  Cedarburg Light & Water Comm'n v. Allis-Chalmers, 33 
Wis. 2d 560, 567, 148 N.W.2d 13 (1967).  When confronted with such 
a case, "the trial court may decline, upon motion, to permit the 
                     
     
3  We discuss the second prong and its relation to the facts 
of this case below.   
 
No. 93-3341 
 
 
 
8 
case to go to the jury in the absence of expert testimony 
 . . . ."  Id.   
 
But the court has simultaneously emphasized that requiring 
expert testimony rather than simply permitting it represents an 
extraordinary step, one to be taken only when "unusually complex 
or esoteric issues are before the jury."  White, 149 Wis. 2d at 
960.  See also Netzel, 51 Wis. 2d at 7; Cedarburg Light & Water 
Comm'n, 33 Wis. 2d at 567.  Before expert testimony is required 
the circuit court must find that the matter involved is 
" . . . not within the realm of the ordinary experience of 
mankind . . . ."  Cramer v. Theda Clark Mem. Hosp., 45 Wis. 2d 
147, 150, 172 N.W.2d 427 (1969). 
 
Thus, for example, we have required expert testimony in many 
cases involving medicine, precisely because medical practice 
demands "special knowledge or skill or experience on subjects 
which are not within the realm of the ordinary experience of 
mankind, 
and 
which 
require 
special 
learning, 
study, 
or 
experience."  Cramer, 45 Wis. 2d at 150 (collecting cases 
requiring expert testimony).  
 
Even in the medical realm, however, courts have limited the 
application of a requirement of expert testimony to those matters 
outside the common knowledge and ordinary experience of an average 
juror.  Thus the Cramer court, for example, reversed a directed 
verdict for the defendant and held that the injured person need 
not introduce expert testimony regarding the hospital's alleged 
 
No. 93-3341 
 
 
 
9 
negligence and breach of its standard of care because the question 
of whether the injured person was properly attended and adequately 
restrained was not "so technical in nature as to require expert 
testimony."  Cramer, 45 Wis. 2d at 153-54.  "Consequently," wrote 
the court, "the trial court should have allowed the issues which 
could be determined by common knowledge to go to the jury and 
instructed them on such reasonable care."  Id. at 154.
4  
 
Further, the court has "acknowledged the similarity between 
medical and legal malpractice actions," and has stated that the 
standard with respect to the need for expert testimony is 
substantially the same in both types of actions.  Olfe v. Gordon, 
93 Wis. 2d 173, 181, 286 N.W.2d 573 (1980).  Thus we have 
cautioned that, in legal malpractice cases, expert testimony will 
be required only when related to "legal expertise" of a kind not 
within the realm of ordinary experience of an average juror.  
Olfe, 93 Wis. 2d at 181.  In Olfe itself, for example, we held 
that expert testimony was not necessary to establish that the 
attorney had acted negligently in failing to draft an offer to 
                     
     
4  See also Kujawski v. Arbor View Ctr, 139 Wis. 2d 455, 468, 
407 N.W.2d 249 (1987) (expert testimony not necessary to establish 
standard of care applicable to nursing home's decision not to 
restrain wheelchair-bound patient); Trogun v. Fruchtman, 58 
Wis. 2d 569, 601, 604, 207 N.W.2d 297 (1973) (expert testimony not 
necessary to establish material risk in determining what physician 
should have disclosed so that patient could exercise informed 
consent); Froh v. Milwaukee Medical Clinic, 85 Wis. 2d 308, 315, 
270 N.W.2d 83 (Ct. App. 1978) (layperson is able to determine as a 
matter of common knowledge that a Penrose drain left inside the 
body will cause infection).   
 
No. 93-3341 
 
 
 
10 
purchase and a mortgage according to the client's instructions.  
Olfe, 93 Wis. 2d at 184. 
 
Thus "[w]hether expert testimony is required in a given 
situation must be answered on a case-by-case basis."  Netzel, 51 
Wis. 2d at 6.  The lack of expert testimony in cases which are so 
complex or technical that a jury would be speculating without the 
assistance of expert testimony constitutes an insufficiency of 
proof.  Cramer, 45 Wis. 2d at 152. 
 
The question presented in this case is whether it is 
necessary, in all tort causes of action alleging an insurer's bad 
faith, that the insured produce an expert witness to testify about 
what a reasonable insurer would have done under the particular 
facts and circumstances.  The decision in Heyden upon which the 
circuit court relied declared that what a reasonable insurer would 
have done under the particular facts and circumstances was "a 
matter beyond the ken of the ordinary juror and, therefore, 
require[d] expert testimony."  Heyden, 175 Wis. 2d at 522.  No 
Wisconsin case other than Heyden has been cited to support the 
proposition that an insured must produce expert testimony to 
establish every bad faith claim.  
 
The Heyden court cited Kujawski, 139 Wis. 2d at 463, as 
authority for its conclusion.  In the present case the court of 
appeals conceded, as the plaintiff has argued, that the Heyden 
court's reliance on the Kujawski decision was misplaced.  Kujawski 
did not involve a bad faith claim.  In Kujawski, the court 
 
No. 93-3341 
 
 
 
11 
concluded that expert testimony was not required to establish the 
standard of care when a nursing home patient required nonmedical, 
administrative, ministerial or routine care.  Kujawski, 139 
Wis. 2d at 463.  Nevertheless, declaring itself bound by the 
Heyden decision,
5 the court of appeals concluded in this case that 
it had "no alternative but to affirm" the circuit court's directed 
verdict in United Fire's favor on the issue of bad faith.  Weiss, 
unpublished slip op. at 8.  The court of appeals nevertheless 
opined that "requiring expert evidence to establish what a 
reasonable insurer would have done under the particular facts of a 
case in every bad faith claim is too rigid . . . ."  Id. 
 
Adhering to the rules and standards we have previously 
discussed relating to expert witnesses for medical and legal 
malpractice cases, we reject, as did United Fire in its 
presentation before this court, a categorical requirement that the 
insured produce expert testimony to establish every bad faith 
claim against an insurer.  We conclude that when an insurer's 
alleged breach of its duty of good faith and fair dealing toward 
its insured involves facts and circumstances within the common 
knowledge or ordinary experience of an average juror, an insured 
need not introduce expert testimony to establish a bad faith 
claim.  To the extent that Heyden establishes a contrary rule, it 
                     
     
5  The court of appeals cited C.J. v. State, 120 Wis. 2d 355, 
358 n.3, 354 N.W.2d 219 (Ct. App. 1984) (published opinions of the 
court of appeals have statewide precedential effect).  See also 
Wis. Stat. § 752.41(2) (1993-94).  
 
No. 93-3341 
 
 
 
12 
is hereby overruled.  Conversely, if the circuit court finds that 
an insurer's alleged breach of its good faith duty involves 
"unusually complex or esoteric" matters beyond the ken of an 
average juror, the circuit court should ordinarily require an 
insured to introduce expert testimony to establish a prima facie 
case for bad faith.  
 
We conclude that this case does not present "unusually 
complex or esoteric" issues requiring expert testimony.  Although 
United Fire contends otherwise, we conclude that in this case the 
facts and circumstances of United Fire's investigation of the 
claim and 
United 
Fire's 
analysis of the results of the 
investigation are within the common knowledge and ordinary 
experience of an average juror.  The investigation at issue in 
this case did not involve complex or technical knowledge of the 
insurance industry or industry practices.  Thus the average juror 
might readily determine, without the benefit of expert testimony, 
whether United Fire had a reasonable basis for denying policy 
benefits.   
 
The crux of the plaintiff's position is that United Fire's 
incomplete and slipshod investigation of the claim prevented it 
from learning the true facts on which the plaintiff's claim was 
based.  During the course of his case in chief, the plaintiff 
introduced evidence establishing that United Fire denied his claim 
for several reasons, including (1) that its investigator, James 
Miller, concluded that the fire was caused by arson; (2) that the 
 
No. 93-3341 
 
 
 
13 
plaintiff's failure to return home immediately after the fire to 
observe the extent of the damage appeared to be suspicious 
behavior from which arson could be inferred; (3) that the 
plaintiff's apparently precarious financial condition provided a 
motive to set the fire; and (4) that the plaintiff's personal 
visit to the insurance agency's office to renew his fire coverage 
shortly before the fire appeared to be suspicious behavior from 
which arson could be inferred.  The plaintiff produced evidence to 
contradict each of United Fire's contentions.  
 
 Investigator James Miller's report was placed in evidence in 
the plaintiff's case in chief.  The plaintiff testified that 
Miller had removed pieces of wire from the very two areas where 
Miller claimed that the fire had started.  The plaintiff further 
testified that Miller's report to United Fire did not mention 
these wires, did not describe any testing of the wires, did not 
explain the conclusion that the fire was not electrical in origin, 
and did not explain why or how other accidental causes for the 
fire had been ruled out.
6  The jury could have inferred from the 
evidence that United Fire's investigator had removed the very 
                     
     
6  United Fire's claims supervisor, whom the plaintiff called 
as an adverse witness during his case in chief, admitted that she 
had never verified Miller's qualifications.  Had the supervisor 
examined Miller's qualifications, she might have found that in 
another fire investigation Miller had also failed to disclose that 
electrical evidence had been removed from the premises, and that 
his conduct had triggered a punitive damages award against the 
insurer in that case.  See Upthegrove Hardware, Inc. v. Lumbermans 
Mut. Ins. Co., 146 Wis. 2d 470, 431 N.W.2d 689 (Ct. App. 1988). 
 
No. 93-3341 
 
 
 
14 
evidence that might have demonstrated conclusively whether the 
fire was electrical in origin and then failed either to analyze 
the wires or to reveal the results of any analysis to the 
plaintiff.   
 
To further support his claim that United Fire did not 
carefully investigate or evaluate its suspicion of arson, the 
plaintiff established during his case in chief (1) that the Iron 
River fire chief had concluded that the fire was not caused by 
arson; (2) that the fire chief believed the fire to be electrical 
in origin; and (3) that it was not uncommon for accidental fires 
to have two points of origin, even though Miller had relied 
heavily on the fact that the fire had two points of origin in 
reaching his conclusion of arson.  From this evidence the jury 
could have inferred that United Fire ignored the conclusions of a 
knowledgeable firefighter. 
 
The plaintiff also testified that the premises had been 
rewired two years earlier by a person who was not a licensed 
electrician.  This testimony bolstered the inference from other 
evidence that the cause of the fire was electrical in origin.  It 
appears that United Fire's investigation gave no weight to the 
manner in which the electrical wiring had been installed. 
 
During his testimony, the plaintiff also addressed the issue 
of why he had declined to return home immediately after learning 
about the fire.  When the plaintiff spoke with Iron River's fire 
chief after his arrival in Onalaska, he was told that his house 
 
No. 93-3341 
 
 
 
15 
was a "total loss" and that he "had no place to come back to."  
The jury could have inferred that the plaintiff might therefore 
elect to spend the holiday with his family rather than return to a 
house 
which 
even 
United 
Fire's 
investigator 
conceded 
was 
"uninhabitable." 
 
The United Fire claims supervisor, both in her answers to the 
plaintiff's interrogatories during discovery and in her testimony 
at trial during the plaintiff's case in chief, emphasized the 
importance of the plaintiff's allegedly precarious financial 
condition in her determination that the plaintiff was responsible 
for the fire.  The jury could have concluded that the supervisor 
based her assessment of the plaintiff's financial position 
primarily on her knowledge that the plaintiff was in arrears on 
both his property taxes and his mortgage payments.   
 
Nevertheless, the plaintiff's own banker testified in the 
plaintiff's case in chief that a person's net worth could be 
substantial even if that person's tax and mortgage payments were 
in arrears.  The banker described the plaintiff's arrearages in 
tax and mortgage payments as "a common condition," and estimated 
the plaintiff's net worth at the time of the fire at more than 
$200,000.  Finally, the banker testified that he was not "overly 
concerned" about the plaintiff's financial condition.  From this 
evidence, the jury could have concluded that United Fire failed to 
explore fully the plaintiff's actual financial condition.   
 
No. 93-3341 
 
 
 
16 
 
Finally, when the plaintiff renewed his policy on its normal 
renewal date--just one week before the fire--he did not increase 
the scope of his coverage.  Nor did he purchase business 
interruption coverage, despite the fact that he had recently begun 
operating his business from his home.  The plaintiff increased the 
coverage on his house from $75,000 to $79,000, a nominal amount 
which the plaintiff believed had been recommended by United Fire 
as an automatic adjustment, presumably to cover appreciation and 
inflation.  Furthermore, the plaintiff introduced evidence in his 
case in chief that he was underinsured.  Thus it was arguably to 
the plaintiff's disadvantage to collect insurance proceeds.
7 
 
Hence the jury could have determined that the plaintiff's 
visit to the insurance agency to renew the policy shortly before 
the fire did not support the inference that the plaintiff 
committed arson.  The jury could have concluded that United Fire 
did 
not 
even 
consider 
the 
fact 
that 
the 
plaintiff 
was 
underinsured--a factor negating a motive for arson--in making its 
determination that the plaintiff had set fire to the premises. 
                     
     
7  The plaintiff's policy did not insure him for the 
replacement value of the goods he lost; he received only monies 
equivalent to his goods' depreciated value.  His house was insured 
for $79,000; United Fire's own investigation concluded that it 
would cost $93,000 just to make repairs, exclusive of costs for 
debris removal.  The plaintiff's coverage for his personal goods 
was for just over $39,000; the actual, depreciated cost of his 
destroyed personal goods as determined by United Fire was $47,000 
and the replacement cost was $65,000.   
 
No. 93-3341 
 
 
 
17 
 
Upon review of the plaintiff's case in chief, we conclude 
that the facts presented are neither unusually complex nor 
esoteric but rather well within the ken of an average juror.  The 
average juror could have determined, without the benefit of an 
expert witness, whether United Fire acted reasonably when its own 
investigator failed to report his taking of electrical wires from 
the scene, when it failed to consider the fire chief's conclusion 
that the fire was not caused by arson, when it failed to consider 
the electrical wiring of the house, when it failed to procure full 
financial information concerning the plaintiff, and when it failed 
to consider that the premises were underinsured.  Accordingly, we 
conclude that the plaintiff was not required to introduce expert 
testimony to establish a cause of action in tort against United 
Fire for a bad faith refusal to honor his claim.   
 
III. 
 
United Fire also seeks dismissal of the bad faith claim on 
the alternative ground that, regardless of his failure to 
introduce expert testimony, the plaintiff also failed to introduce 
sufficient evidence in his case in chief to support his bad faith 
claim.
8   
                     
     
8  We note in passing that the plaintiff's counsel might have 
been able to incorporate evidence introduced after the conclusion 
of his case in chief if he had moved to reopen his case in chief. 
 "The general rule is that after the evidence of the defendant is 
closed the plaintiff will be confined to rebutting evidence, and 
will not be allowed to produce original or direct evidence on his 
part, or go into his original case again; but the rule is not 
inflexible, and the court may, in its discretion, allow or refuse 
to receive such evidence."  Diener v. Heritage Mut. Ins. Co., 37 
 
No. 93-3341 
 
 
 
18 
 
A motion challenging the sufficiency of the evidence may not 
be granted "unless the court is satisfied that, considering all 
credible evidence in the light most favorable to the party against 
whom the motion is made, there is no credible evidence to sustain 
a finding in favor of such a party."  Wis. Stat. § 805.14(1) 
(1993-94).  This standard applies both to a motion to dismiss at 
the close of a plaintiff's case and to a motion for a directed 
verdict or dismissal at the close of all the evidence when the 
motion challenges the sufficiency of the evidence.  Wis. Stat. 
§ 805.14(3) and (4) (1993-94); Mills, 152 Wis. 2d at 570.  It also 
applies both to the circuit court and to "an appellate court on 
review of the trial court's determination" of the motion.  
Millonig v. Bakken, 112 Wis. 2d 445, 450, 334 N.W.2d 80 (1983).  
 
In ruling upon a motion made at the close of a plaintiff's 
case, a circuit court may not grant the motion "unless it finds, 
as a matter of law, that no jury could disagree on the proper 
facts or the inferences to be drawn therefrom," and that there is 
no credible evidence to support a verdict for the plaintiff.  
American Family Mut. Ins. Co. v. Dobrzynski, 88 Wis. 2d 617, 625, 
(..continued) 
Wis. 2d 411, 421, 155 N.W.2d 37 (1967) (quoting McGowan v. Chicago 
& N.W. Ry. Co., 91 Wis. 147, 153, 64 N.W. 891 (1895)).  A circuit 
court "may on its own motion reopen [a case] for further testimony 
in order to make a more complete record in the interests of equity 
and justice."  State v. Hanson, 85 Wis. 2d 233, 237, 270 N.W.2d 
212 (1978).  In the present case, Miller's testimony, which 
contradicted Miller's deposition, offered grounds on which either 
the plaintiff or the court might have moved to allow the plaintiff 
to reopen his case in chief.  We discuss Miller's testimony in 
more detail below. 
 
No. 93-3341 
 
 
 
19 
277 N.W.2d 749 (1979) (quoting Household Util. Inc. v. Andrews 
Co., 71 Wis. 2d 17, 24, 236 N.W.2d 663 (1976)).   
 
Because a circuit court is better positioned to decide the 
weight and relevancy of the testimony, an appellate court "must 
also give substantial deference to the trial court's better 
ability to assess the evidence."  James v. Heintz, 165 Wis. 2d 
572, 577, 478 N.W.2d 31 (Ct. App. 1991).  An appellate court 
should not overturn a circuit court's decision to dismiss for 
insufficient evidence unless the record reveals that the circuit 
court was "clearly wrong."  Helmbrecht v. St. Paul Ins. Co., 122 
Wis. 2d 94, 110, 362 N.W.2d 118 (1985).  See also James, 165 
Wis. 2d at 577; Olfe, 93 Wis. 2d at 186.   
 
Three recent court of appeals decisions debate a perceived 
tension between the "no credible evidence" standard and the 
"clearly wrong" standard.  See Macherey v. Home Ins. Co., 184 
Wis. 2d 1, 516 N.W.2d 434 (Ct. App. 1994); Peterson v. Marquette 
University, No. 94-2178, unpublished slip op. (Wis. Ct. App. June 
13, 1995); Platz v. U.S. Fidelity & Guar. Corp., 195 Wis. 2d 775, 
537 N.W.2d 397 (Ct. App. 1995).   
 
This tension described in the decisions of the court of 
appeals is more illusory than real.  As the analysis in Helmbrecht 
itself makes clear, the "clearly wrong" standard and the "no 
credible evidence" standard must be read together.  When a circuit 
court overturns a verdict supported by "any credible evidence," 
 
No. 93-3341 
 
 
 
20 
then the circuit court is "clearly wrong" in doing so.
9  When 
there is any credible evidence to support a jury's verdict, "even 
though it be contradicted and the contradictory evidence be 
stronger and more convincing, nevertheless the verdict . . . must 
stand."  Macherey, 184 Wis. 2d at 7-8 (quoting Bergmann v. 
Insurance Company of North America, 49 Wis. 2d 85, 88, 181 N.W.2d 
348 (1970)).  See also Leatherman v. Garza, 39 Wis. 2d 378, 387, 
159 N.W.2d 18 (1968).   
 
In 
overturning 
the 
jury 
verdict 
and 
dismissing 
the 
plaintiff's claim in this case, the circuit court stated that it 
didn't "see any evidence in the record [in the plaintiff's case in 
chief] that the insurance company willfully overlooked factual 
information, tried to hide any factual information, or in any way 
abused its discretion in making its determination."   
 
Cognizant of the circuit court's superior advantage for 
judging the testimony, we nevertheless disagree with the circuit 
                     
     
9  See, e.g., Helmbrecht v. St. Paul Ins. Co., 122 Wis. 2d 
94, 118, 
362 N.W.2d 118 
(1985)("We 
hold 
that 
there was 
substantiated credible evidence to support the jury's finding of 
malpractice.  The trial court was clearly wrong in granting the 
defendants' motion to dismiss after the verdict was returned"); 
Delvaux v. Kewaunee, Green Bay & Western R. Co., 167 Wis. 586, 
596-97, 167 N.W. 438 (1918) (because "there was credible evidence 
upon which the jury could arrive at their verdict, the action of a 
trial court in disregarding such determination is clearly wrong 
and must be, as it is here, set aside"). 
 
 
Thus a circuit court commits error in affirming a jury 
verdict when there is no credible evidence supporting the jury's 
finding or in overturning a jury verdict which is supported by any 
credible evidence.  When the circuit court commits such error, an 
appellate court declares that the circuit court is clearly wrong.  
 
No. 93-3341 
 
 
 
21 
court's analysis of the evidence presented in the plaintiff's case 
in chief.  Drawing the inferences as favorably to the plaintiff 
(the non-moving party) as the evidence in his case in chief 
permits, we conclude that there is credible evidence that United 
Fire had no reasonable basis for denying the plaintiff the policy 
benefits and either knew or recklessly disregarded the absence of 
a reasonable basis for denying the claim.  There was credible 
evidence 
that 
United 
Fire 
acted 
unreasonably 
in 
ignoring 
information that the fire might have been accidental in origin, 
that the fire might be electrical in origin, and that the fire was 
not caused by arson.  There was credible evidence that United 
Fire's investigator had removed electrical wires which might have 
conclusively demonstrated whether the fire was electrical in 
origin and failed to include information about these wires or 
their analysis in his report.  The record allowed an inference 
that United Fire's investigator had taken and concealed crucial 
evidence that might have exonerated the plaintiff.  
 
There was credible evidence that the plaintiff's failure to 
return home was not suspicious behavior but reasonable under the 
circumstances.   
 
There was credible evidence that despite United Fire's 
reliance on the plaintiff's supposedly precarious financial 
condition, United Fire did not act reasonably when it failed to 
investigate fully the plaintiff's financial status or to uncover 
 
No. 93-3341 
 
 
 
22 
readily available information that the plaintiff's financial 
health was good.  
 
Furthermore, the plaintiff's underinsured status was credible 
evidence from which inferences could be drawn that the plaintiff 
had no motive to commit arson and that the plaintiff's inquiries 
about renewal of the insurance policy at the local insurance 
agency's office were routine.   
 
In short, even after giving substantial deference to the 
circuit court's better "ability to assess the evidence," James, 
165 Wis. 2d at 577, we conclude that there is credible evidence 
from which the jury could have inferred that United Fire lacked a 
reasonable basis for denying the benefits of the plaintiff's 
policy.
10   
 
Once it has been determined that an insurer has violated the 
objective prong of the bad faith test, the trier of fact must also 
                     
     
10  The circuit court relied on Mills v. Regent Ins. Co., 152 
Wis. 2d 566, 449 N.W.2d 294 (Ct. App. 1989), in reaching its 
decision that the evidence the plaintiff introduced during his 
case in chief was insufficient.  Mills is readily distinguishable 
from this case.  In upholding the defendant insurer's motion to 
dismiss in Mills, the court of appeals noted that the insured's 
tavern which burned had been losing money or, at best, breaking 
even; that the insured had increased his coverage shortly before 
the fire; that the fire, which had been set in three separate 
locations including under the building, had unquestionably been 
caused by arson--a conclusion bolstered by evidence of a fuse 
mechanism, an explosion, and numerous empty and full gasoline 
cans; that an above--average number of arson fires had recently 
been reported in the area of the tavern; that the insured had been 
giving away free drinks and souvenirs shortly before the fire 
broke out; and that the insured submitted a possibly inflated 
repair claim.  Mills, 152 Wis. 2d at 571-74.  
 
No. 93-3341 
 
 
 
23 
determine whether the insurer has violated the subjective prong of 
the test.  The subjective component can be inferred from "a 
reckless disregard of a lack of a reasonable basis for denial or a 
reckless indifference to facts or to proofs submitted by the 
insured."  Anderson, 85 Wis. 2d at 693; Mills, 152 Wis. 2d at 575. 
 The record in this case provides sufficient grounds for the jury 
to draw such an inference.  We therefore conclude that the circuit 
court was clearly wrong in dismissing the plaintiff's bad faith 
tort claim at the end of his case in chief.   
 
No. 93-3341 
 
 
 
24 
 
IV. 
 
Finally, United Fire argues that even if the court should 
uphold the jury's finding of bad faith, the jury's award of 
punitive damages should be overturned.  United Fire contends that 
awarding punitive damages is inappropriate because the jury 
awarded the plaintiff compensatory damages in conjunction only 
with his breach of contract claim and not with his bad faith tort 
claim.  Moreover, United Fire urges that its behavior toward the 
plaintiff does not support an award of punitive damages.   
 
Wisconsin does not allow punitive damages to be awarded in 
the absence of an award of actual damages.  Tucker v. Marcus, 142 
Wis. 2d 425, 438-39, 418 N.W.2d 818 (1988).  Nor are punitive 
damages available as a remedy for breach of contract actions.  
Autumn Grove Joint Venture v. Rachlin, 138 Wis. 2d 273, 279, 405 
N.W.2d 759 (Ct. App. 1987).  Thus the plaintiff is entitled to 
punitive damages only if the jury awards him compensatory damages 
on his bad faith claim.  Therefore, we first analyze the record to 
determine whether the jury awarded the plaintiff compensatory 
damages on his bad faith claim.  
 
Following the instruction conference, the circuit court 
submitted the following four questions to the jury: 
 
QUESTION NO. 1:  Did the plaintiff James C. Weiss 
intentionally cause the loss insured by the policy of 
insurance issued by the defendant United Fire and 
Casualty Company? 
 
QUESTION NO. 2:  If you answered Question No. 1 "No," then 
answer this question:  What amount of benefits under the 
 
No. 93-3341 
 
 
 
25 
policy and consequential damages is plaintiff James C. 
Weiss entitled to recover pursuant to the insurance 
policy with defendant United Fire & Casualty Company?  
 
QUESTION NO. 3:  If you have answered Question No. 1 "No," 
then answer this question:  Did the defendant United 
Fire & Casualty Company exercise bad faith in denying 
the claim of James Weiss? 
  
QUESTION NO. 4:  If you answer Question No. 3 "Yes," then 
answer this question:  What sum of money do you assess 
against defendant United Fire & Casualty Company as 
punitive damages?  
 
During the jury instruction conference, counsel for United 
Fire objected to this verdict form on the ground that the verdict 
questions did not differentiate between the compensatory damages 
for the loss sustained under the policy (breach of contract) and 
for the tort of bad faith.  United Fire wanted a special verdict 
question form asking separate compensatory damage questions for 
each of the plaintiff's two claims.  
 
The circuit court concluded that its verdict form adequately 
addressed the damages issues.  The jury answered "No" to the first 
question and proceeded to award the plaintiff $225,000 under 
question No. 2.  The jurors then answered "Yes" to the third 
question and proceeded to award the plaintiff an additional 
$225,000 under question No. 4. 
 
Bearing in mind that "[w]e must assume the jury followed the 
instructions," Johnson v. Pearson Agri-Systems, Inc., 119 Wis. 2d 
766, 776, 350 N.W.2d 127 (1984), we conclude on the basis of the 
record (which is, we concede, somewhat confusing) that the jury 
awarded the plaintiff compensatory damages for his bad faith 
 
No. 93-3341 
 
 
 
26 
claim.  First, with both parties' approval, the jury was given the 
pattern jury instruction on the elements of the tort of bad faith
11 
and the pattern jury instruction on punitive damages.
12  These 
instructions were given together and were separated from the 
instructions on the breach of contract claim.  The instruction on 
punitive damages relating to the tort claim clearly and succinctly 
states that punitive damages may be awarded "in addition to 
compensatory damages, if you [the jury] find that the defendant's 
conduct was outrageous" and then proceeds to admonish the jury 
that you "may not, however, award punitive damages unless you have 
awarded compensatory damages."  The instructions thus spelled out 
the relationship between compensatory and punitive damages on the 
tort claim.   
 
If the jury were to adhere to the instruction that punitive 
damages 
were 
not 
to be 
awarded 
unless the 
jury awarded 
compensatory 
damages, 
the 
jury 
would 
have 
had 
to 
award 
compensatory damages for the bad faith claim.  The only place the 
jury could make an award of compensatory damages for the bad faith 
claim was in response to question No. 2.
13  
                     
     
11  Wis JI—Civil 2761 (1991). 
     
12  Wis JI—Civil 1707 (1994). 
     
13  The circuit court had instructed the jury to award 
compensatory damages in an amount that would reasonably compensate 
the plaintiff for all losses that were the natural and probable 
results of United Fire's breach of contract.  The circuit court 
did not, however, give two instructions about compensatory 
damages, one for the breach of contract claim and one for the tort 
claim of bad faith. 
 
No. 93-3341 
 
 
 
27 
 
Second, the jury's award to the plaintiff in response to 
question No. 2 for "benefits [due] under the policy and 
consequential damages" was in the amount of $225,000.  This amount 
exceeded the plaintiff's claim for $149,250 under the policy.
14  To 
give full effect to the jury's verdict, we have to conclude that 
the jury thought that "benefits due under the policy" referred to 
the plaintiff's breach of contract claim for $149,250, while 
"consequential damages" referred to additional damages due the 
plaintiff under his bad faith tort claim.
15 
 
This interpretation of the jury verdict was proposed by 
United Fire in its brief as cross appellant before the court of 
appeals.  United Fire argued that "[a]ny damages awarded by the 
jury over and above this amount [of $149,250.00] must necessarily 
represent compensatory damages attributable to the tort of bad 
faith."  Brief for Cross-Appellant at 11, Weiss v. United Fire & 
Casualty Co., No. 93-3341 (Wis. Ct. App. Sept. 27, 1994).
16  Hence 
                     
     
14  Neither party elected to place the opening and closing 
arguments on the record.  Thus the court does not know whether 
plaintiff's counsel subsequently asked the jury for damages 
greater than those to which he had laid claim in his complaint. 
     
15  Before the court of appeals, United Fire contended that 
any reference to consequential damages in the instruction was 
erroneous because the plaintiff was entitled only to the benefits 
payable under the terms of the insurance contract.  The court of 
appeals did not address this issue, asserting that United Fire 
waived this objection because it had failed to  object at the 
circuit court to the special verdict question on this ground.  
     
16  Nor was this argument an aberration.  United Fire made the 
same argument in its memorandum in support of its motions after 
the verdict, in which it stated that "[a]ny damages in addition to 
the policy proceeds are attributable to the alleged tort of 'bad 
 
No. 93-3341 
 
 
 
28 
it is rather late in the case for United Fire to argue for the 
first time before this court that "[i]t is clear that all of the 
damages awarded by the jury, with the exception of punitive 
damages, were awarded for the breach of contract claim."  Brief 
for Cross-Appellant at 33.  
 
On the basis of the record before us, the better argument was 
the one United Fire made in the circuit court and court of 
appeals:  that in responding to the second verdict question the 
jury addressed compensatory damages for the breach of contract and 
the bad faith tort claims.  Accordingly, because we conclude that 
the jury awarded the plaintiff compensatory damages for his bad 
faith tort claim, the necessary prerequisite exists for upholding 
a punitive damages award on the same claim. 
 
Turning to the award of punitive damages itself, United Fire 
contends that there was insufficient evidence to warrant the 
jury's punitive damages award.  United Fire points out that 
punitive damages in bad faith insurance cases are only appropriate 
when, above and beyond a finding that an insurer has acted in bad 
faith toward its insured, there has been an additional showing 
(..continued) 
faith' which was dismissed by the Court at the close of the 
plaintiff's case."  Repeating this argument, United Fire stated 
that "[t]he damages which [the plaintiff] contends he sustained 
over and above the benefits under the insurance policy are 
compensatory damages which would flow from the tort of bad faith." 
 Because this court denied United Fire's petition for cross review 
of the award of consequential damages under the second special 
verdict question, United Fire has not had occasion to advance such 
an argument here.  
 
No. 93-3341 
 
 
 
29 
that the insurer has manifested an "evil intent deserving of 
punishment or of something in the nature of special ill-will or 
wanton disregard of duty or gross or outrageous conduct."  
Anderson, 85 Wis. 2d at 697.  United Fire argues that the 
plaintiff has failed to make such a showing. 
 
We disagree with United Fire.  As we have stated previously, 
"[t]o sustain an award for punitive damages, the law does not 
require a specific finding of an intentional and ruthless desire 
to injure, vex or annoy.  The injured party need show only a 
wanton, willful or reckless disregard of the rights of others on 
the part of the wrongdoer."  Fahrenberg v. Tengel, 96 Wis. 2d 211, 
221, 291 N.W.2d 516 (1980).   
 
Searching (as we are required to do) for evidence to sustain 
the jury's verdict, Fehring v. Republic Ins. Co., 118 Wis. 2d 299, 
305-06, 347 N.W.2d 595 (1984), and drawing (as we are required to 
do) those reasonable inferences that were presumably drawn by the 
jury in reaching its verdict, we conclude that there is credible 
evidence to support the jury's award of punitive damages.  
 
The primary witness for the defense was United Fire's 
investigator James Miller.  When cross examined by counsel for the 
plaintiff, he could not explain why he had removed electrical 
wires from the scene, why he had failed to record his possession 
of those wires in his evidence log, why he had failed to mention 
the wires when asked in his deposition to account for all of the 
evidence he had removed from the scene, and why, given that he was 
 
No. 93-3341 
 
 
 
30 
not an electrical engineer, he had failed to hire an expert to 
examine either the wires he had removed or the electrical wiring 
in the plaintiff's home before eliminating the possibility that 
the fire was electrical in origin.  Miller also admitted that the 
electrical entry box on the plaintiff's home had only one-third of 
the capacity this home required.  Finally, on the last day of 
trial, Miller testified that he had not only removed and forgotten 
to record the aforementioned wires, but that he had also forgotten 
to record having taken an electrical fixture removed from one of 
the fire's two origin points.   
 
In another case in which Miller discarded similar electrical 
evidence indicative of a possible electrical fire, the court of 
appeals upheld an award of punitive damages.  The court of appeals 
explained that decision as follows: 
 
[E]vidence indicating that Lumbermans' investigators lied 
about what they found in their investigation and 
knowingly destroyed what might have been a crucial piece 
of evidence permitted the jury to conclude that 
Lumbermans did not have a good faith belief that the 
fire was caused by arson and that it acted with malice 
or ill will in investigating and denying the claim. 
 
No. 93-3341 
 
 
 
31 
Upthegrove Hardware, Inc. v. Lumbermans Mut. Ins. Co., 146 Wis. 2d 
at 483-84.
17  
                     
     
17  In Upthegrove as well as in the present case, other 
witnesses refused to rule out the possibility that the fire being 
investigated was electrical in origin.  There, as here, those 
witnesses were denied the opportunity to investigate evidence of 
an electrical fire--a lamp cord--because of Miller's conduct.  For 
example, Rodney Pevytoe, an investigator employed by the Arson 
Bureau of the Wisconsin Department of Justice who testified in 
this case that he could not rule out the possibility that the fire 
was electrical in origin, neither knew of nor had access to the 
wires and fixture in Miller's possession.  
 
In this case, the jury had even more evidence on which to 
base its determination of punitive damages.  Not only did United 
Fire's investigator both remove and then fail to test or 
acknowledge possessing potentially dispositive evidence, but 
United Fire's home office failed to take into account the fact 
that the plaintiff was underinsured.  Furthermore, United Fire's 
home office failed to investigate fully the plaintiff's finances 
even though the negative inferences drawn from its limited 
financial information played a large role in its ultimate decision 
to deny the plaintiff's claim.  Viewing this evidence in the light 
most favorable to the plaintiff, we must sustain the jury's award 
which was reached on the basis of proper instruction regarding the 
 
No. 93-3341 
 
 
 
32 
"outrageous" behavior that makes punitive damages appropriate.  
Wangen v. Ford Motor Co., 97 Wis. 2d 260, 268, 294 N.W.2d 437 
(1990). 
 
For the reasons set forth, we reverse the part of the 
decision of the court of appeals which is before us and remand the 
cause to the circuit court with directions to reinstate the jury 
verdict and to enter judgment in accordance with this decision.   
 
By the Court.—The part of the decision of the court of 
appeals which is before us is reversed; the cause is remanded to 
the circuit court with directions to reinstate the jury verdict 
and to enter judgment in accordance with this decision.   
 
No. 93-3341 
 
 
 
 
SUPREME COURT OF WISCONSIN 
 
                                                              
 
Case No.: 
 
93-3341 
                                                              
 
Complete Title 
of Case: 
James Weiss, 
 
 
 
 
Plaintiff-Appellant-Cross Respondent- 
 
 
 
 
Petitioner, 
 
 
 
 
v. 
 
 
 
United Fire and Casualty Company, 
 
 
 
 
Defendant-Respondent-Cross Appellant. 
 
 
 
_________________________________________ 
 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
 
 
 
Reported at:  188 Wis. 2d 81, 524 N.W.2d 648 
 
 
 
 
 
 
 
(Ct. App. 1994) 
 
 
 
 
 
 
 
UNPUBLISHED 
 
                                                              
 
Opinion Filed:  
December 15, 1995 
Submitted on Briefs: 
 
Oral Argument: 
September 6, 1995 
 
                                                              
 
Source of APPEAL 
 
COURT: 
Circuit 
 
COUNTY: 
Douglas 
 
JUDGE: 
ROBERT E. EATON 
 
                                                              
 
JUSTICES: 
 
 
Concurred: 
 
 
Dissented: 
 
 
Not Participating: 
 
                                                              
 
ATTORNEYS:  
For 
the 
plaintiff-appellant-cross 
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 defendant-respondent-cross appellant there was a 
brief by Michael F. Durst, Terri L. Lehr and Weiby, Maki, Durst, 
Ledin & Bick, S.C., Superior and oral argument by Terri L. Lehr. 
 
No. 93-3341 
 
 
93-3341   Weiss v. United Fire/Casualty 
 
 
 
Amicus curiae brief was filed by Susan J. Reigel and Everson, 
Everson, Whitney & Brehm, S.C., Green Bay for the Civil Trial 
Counsel of Wisconsin. 
 
 
Amicus curiae brief was filed by Timothy J. Muldowney and 
LaFollette & Sinykin, Madison for the Wisconsin Insurance 
Alliance.