Opinion ID: 4361951
Heading Depth: 3
Heading Rank: 3

Heading: Steadfast's Contractual Subrogation Claim

Text: ¶32 Steadfast asserts that it has a contractual subrogation claim against Greenwich due to its payment of $1.55 million in defense costs and Greenwich's failure to provide a defense. Greenwich asserts that if Steadfast has a claim, it sounds in contribution, not subrogation. Greenwich further asserts that the time has passed in which to bring a contribution claim. ¶33 Subrogation is the substitution of one party for another whose debt the party pays, entitling the paying party to rights, remedies, or securities that would otherwise belong to the debtor. Dufour, 370 Wis. 2d 313, ¶15. The doctrine of subrogation enables an insurer that has paid an insured's loss . . . to recoup that payment from the party responsible for the loss. Id. (citations omitted). The insurer steps into the shoes of its insured and pursues the legal rights or claims to which the insured would have been entitled. Wilmot v. Racine Cty., 136 Wis. 2d 57, 63, 400 N.W.2d 917 (1987). ¶34 Contribution claims sometimes occur between joint tortfeasors, or in other circumstances, where one person has paid more than that person's share of a joint obligation. Kafka v. Pope, 194 Wis. 2d 234, 241, 533 N.W.2d 491 (1995) (concluding that [w]hether the common obligation be imposed by contract or 14 No. 2016AP1631 grows out of a tort, the thing that gives rise to the right of contribution is that one of the common obligors has discharged more than his fair equitable share of the common liability.). ¶35 Subrogation may arise in three different forms: contractual, statutory, and equitable subrogation. Estate of Kriefall, 342 Wis. 2d 29, ¶37. In a subrogation claim, the subrogee seeks payment based on rights the subrogee acquired from another. Millers Nat'l Ins. Co. v. City of Milwaukee, 184 Wis. 2d 155, 168, 516 N.W.2d 376 (1994). The purpose of subrogation is to place the loss ultimately on the wrongdoers. Cunningham v. Metro. Life Ins. Co., 121 Wis. 2d 437, 444, 360 N.W.2d 33 (1985). When express contractual subrogation is claimed, we examine the policy's provisions. Id. at 449. We have given effect to express subrogation clauses contained in insurance contracts. Id. at 446. ¶36 Here, Steadfast's policy expressly provided for subrogation: In the event of any payment under this policy, we shall be subrogated to all an insured's rights of recovery against any person or organization. MMSD's right of recovery against Greenwich to which Steadfast is contractually subrogated arises from Greenwich's breach of its contractual obligation to defend MMSD. Accordingly, we examine Steadfast's alleged right of recovery against Greenwich as an express contractual subrogation right that arose from MMSD's right to a defense from Greenwich. 15 No. 2016AP1631 ¶37 Subrogation does not change the type of claim for relief that was held by the subrogor. Wilmot, 136 Wis. 2d at 63 (explaining that the identity of a cause of action is not changed by the subrogation, and no new cause of action is created thereby.). Because [t]he original right of the plaintiff measures the extent of the subrogated party's right, the statute of limitations for a subrogated claim is the same as the statute of limitations that would apply to the claim if it had not been subrogated. Gen. Accident Ins. Co. of Am. v. Schoendorf & Sorgi, 202 Wis. 2d 98, 109, 549 N.W.2d 429 (1996). Wisconsin has a six-year statute of limitations for breach of contract claims. Wis. Stat. § 893.43(1) (2015-16).8 Steadfast was subrogated to MMSD's contract claim that Greenwich breached its duty to defend. ¶38 Steadfast paid MMSD's debt for defense costs, which included what Greenwich was obligated to provide as well as Steadfast's own portion of MMSD's defense costs, when it paid MMSD $1.55 million. Because subrogation does not change the identity of the cause of action, Steadfast's claim against Greenwich is also for breach of contract. Claims for breach of contract have a six-year statute of limitations. Wis. Stat. § 893.43(1). Steadfast's action was filed less than six years after Greenwich's breach occurred, therefore, it was timely filed. 8 All subsequent references to the Wisconsin Statutes are to the 2015-16 version unless otherwise indicated. 16 No. 2016AP1631