Opinion ID: 4507103
Heading Depth: 3
Heading Rank: 1

Heading: Delay in Paying for Defense

Text: ¶31 The School District also faults the Insurer for the delay in reaching an agreement on attorney fees. The School District argues this establishes a breach of the Insurer's duty to defend. We disagree. ¶32 The record is woefully inadequate for a complete review of this issue; consequently, the School District forfeited review. Nickel v. United States (In re Rehab. of Segregated Account of Ambac Assurance Corp.), 2012 WI 22, ¶10, 339 Wis. 2d 48, 810 N.W.2d 450 (Our case law is clear and consistent: failure to [adequately] preserve issues at the circuit court means that they are waived.). It is unclear if the School District or its attorney engaged in fee negotiations with the Insurer, or what those negotiations entailed. Without any information regarding what negotiations took place or when, it is impossible to determine whether or to 24 No. 2013CV52718AP116 what extent any delay is attributable to the Insurer, the School District, its attorney, or other factors. ¶33 We do know that in January 2014, the Insurer asked the School District to share its fee schedule so that negotiations could occur. We also know the School District amended its crossclaim in April 2014 to allege that its attorney advised the Insurer of its fee schedule in January 2014, March 2014, and twice in April 2014. The cross-claim alleged that the Insurer failed and refused to respond to each advisement. However, the Insurer's reply to the cross-claim denies this. ¶34 There is also an indication that the Insurer never received one of the attorney's invoices. An affidavit from the School District's attorney attests that the attorney sent invoices to the Insurer as it requested, describing: (1) the amount of the invoices; (2) the amount the Insurer paid; and (3) the difference between those two amounts that remained unreimbursed. However, the affidavit does not identify the dates the attorney sent the invoices to the Insurer or the date the Insurer paid each invoice. Additionally, the affidavit is vague as to whether the Insurer made payment to the attorney or the School District. ¶35 Moreover, the Invoices attached to the liability attorney's affidavit are substantially redacted, with some descriptions of services completely blacked out and others listed only as Review or Continue Review or something similar. The limited content of the invoices certainly could have impeded the Insurer's determination of what fees were reimbursable and whether 25 No. 2013CV52718AP116 each itemized service represented the attorney's work on liability or something else. ¶36 Further, the record does not reflect the exact date fee negotiations concluded. There is a reference to non-payment for three months, as well as indications that a fee agreement was reached in April 2014, in May 2014, or no later than June 1, 2014. The record does show that as of June 22, 2016, the Insurer paid liability attorney fees in the amount of $260,021.32. ¶37 It is not surprising that negotiations on attorney fees would take some time given that the School District retained its own attorney prior to the commencement of the lawsuit, and the Insurer subsequently stepped in to defend, agreeing to allow its insured's chosen attorney to continue the representation.12 The Insurer is obligated to compensate the liability attorney only at a reasonable rate, reflecting the market standard associated with the type of case and for that geographic location, among other relevant factors. See Fireman's Fund Ins. Co., 261 Wis. 2d 4, ¶¶68-69; 14 Couch on Ins. § 202:34 (An insurer's obligation to reimburse independent counsel is limited to reasonable attorney's fees and disbursements.). Even when an insurer breaches its duty to defend, the attorney fees awarded as damages must be reasonable. See Elliott, 169 Wis. 2d at 325 (remanding for a determination of reasonable attorney fees). 12The School District was aware of the impending lawsuit because the retired employees had filed a Notice of Claim. 26 No. 2013CV52718AP116 ¶38 Accordingly, we reject the School District's argument that the delay in payment of fees means the Insurer breached its duty to defend. Because the law requires attorney fees to be reasonable, an Insurer is entitled to review fees and negotiate a reasonable rate. The record in this case contains no determination from the circuit court on any of these issues, without which we cannot assess whether a delay in payment constituted a breach of the Insurer's duty. The inadequacy of the record means the School District forfeited review of this issue. Nickel, 339 Wis. 2d 48, ¶10 (Our case law is clear and consistent: failure to [adequately] preserve issues at the circuit court means that they are waived.).