Court Opinion

ID: 9658623
Source: CourtListenerOpinion
Date Created: 2023-08-23 21:06:46.704548+00
Date Added: 2024-06-11T18:13:57.258839
License: Public Domain

SUNDBY, J.
(concurring in part, dissenting in part). There are more things in the majority's opinion than are dreamt of in its philosophy. Although the majority opinion does not mention the American Rule, its " net-make-whole" construct creates an exception to the traditional rule in America that a litigant pays his or her own attorney fees. See Watkins v. LIRC, 117 Wis. 2d 753, 758, 345 N.W.2d 482, 485 (1984). "[Departures *87from the American rule are narrowly drawn exceptions." Teachers' Ass'n v. School Directors, 147 Wis. 2d 791, 797, 433 N.W.2d 669, 672 (Ct. App. 1988). In this case, Oakley collects fifty percent of his attorney fees from American Family, and may have collected 100 percent, had he argued that he was entitled to it.
This is not the proper case in which to adopt a "net-make-whole" rule, for two reasons. First, the insurance contract between American Family and Oakley does not permit the application of such a rule. Second, the parties have concentrated on the principal issue in the case, i.e., whether American Family has any subrogation rights, and have not directed their briefing attention to this issue.
Oakley's policy with American Family provides:
If we pay under this policy, we are entitled to all the rights of recovery of the person to whom payment was made against another. But, our right to recovery will apply only after that person has been fully compensated for the loss . . .. When we pay damages under this policy to a person who also collects from another, the amount collected from the other shall be repaid to us to the extent of our payment.1
The majority cites Garrity v. Rural Mut. Ins. Co., 77 Wis. 2d 537, 253 N.W.2d 512 (1977) to support the "net-make-whole" rule. However, the Garrity court applied the normal rule of subrogation, "because the contract *88here contains no language to the contrary . . .."Id. at 546-47, 253 N.W.2d at 516 (emphasis added). The Gar-rity court looked first to the contract between the insured and the insurer. Here, the majority says that the contract between Oakley and American Family contains no language contrary to the usual subrogation rule. It states that " [ijndeed, since [the contract] provides that American Family's 'right to recovery will apply only after [the insured]' has been fully compensated for the loss,' the policy is consistent with the 'make whole' principle recognized by the Garrity court." Majority op. at 84.
The Garrity court, however, did not define "loss" to include the insured's attorney fees and'costs of litigation. In fact, the standard fire insurance policy construed in Garrity,2 made clear that "loss" was limited to what it would cost to repair and replace the damaged or destroyed property. Standard fire insurance policy (intro, par.). The "make-whole" principle of Garrity is thus limited to the insured's direct loss and does not include recoupment of the insured's cost of litigation and attorney fees.
Contrary to the majority, I conclude that American Family's contractual right to recovery applies to Oakley's damages judgment before deducting his attorney fees and costs of litigation. My conclusion is consistent with the usual treatment of such fees and costs in American law. See R. Keeton & A. Widiss, Insurance Law — A Guide to Fundamental Principles, Legal Doctrines and Commercial Practices, sec. 3.10(3) at 239 (1988).
My conclusion is also consistent with Oakley's policy with American Family. "Loss" is not defined in that *89part of the contract which provides uninsured motorist coverage. It is, however, defined under Part IV dealing with car damages. There, Toss" "means direct and accidental loss of or damage to your insured car and its equipment." This definition clearly does not include attorney fees and costs of litigation. It would be quite anomalous to construe "loss" to mean one thing in one part of the policy and something else in another part of the policy, at least in the absence of a definition.
In any event, we should not decide an abstract question of law. Whether the doctrine of subrogation requires application of a "net-make-whole" rule is an interesting theoretical question3 but irrelevant here. This case should be decided under the contract between the parties.4 Further, adopting the "net-make-whole" rule represents a dramatic change in subrogation law, a change which should not be made without considering the public policy implications. If that change is made, it should be made by the supreme court upon thorough briefing of the issues.
*90For these reasons, I respectfully dissent from that part of the majority opinion which fashions a "net-make-whole" rule for Oakley's benefit. I concur with the majority's conclusion that American Family has subro-gation rights.

 The parties stipulated that this provision was included in the policy in effect on the day of the accident, September 24, 1987. However, that policy indicates that it was revised January 1988. It appears that the policy which was in effect on the date of the accident is attached to Oakley's affidavit. That policy does not include the "But" sentence. I reach the same result under either policy.

Section 203.01, Stats. (1969), required the insurance commissioner to keep on file printed forms in blank of a standard fire insurance policy. The standard policy was annexed to the statute.

Keeton and Widiss state that the American-Rule approach "does not comport with the generally accepted [subrogation] goal of providing full indemnification for the injured person." Insurance Law, sec. 3.10(3) at 239.

When American Family settled with Oakley under the uninsured motorist coverage clause of its contract, Oakley signed a release which stated in part:
I agree to perform and comply fully with the following agreements as a condition of this release:
c. I will hold in trust for the benefit of the Company all rights of recovery, to the extent of this payment, I have against another because of the damages which are the subject of this claim.
I do not rely on the release because the parties do not argue its effect. I would ask the parties to brief this issue.