Court Opinion

ID: 9572361
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:41:08.684168+00
Date Added: 2024-06-11T12:32:36.889060
License: Public Domain

STEINMETZ, J.
(dissenting). The majority concludes that "the excess judgment [in this case] is a natural and proximate cause of the insurance company's breach of its duty to defend." Majority op. at 839. However, the majority does not explain its reasoning for this legal conclusion. Clearly, the child was permanently and severely injured, and the trial court determined the value of those injuries. The record before us does not indicate whether or by how much the trial court's valuation of the child's injuries would have changed had the insurance company's attorney defended Floyd Omann. In short, I see only a deep pocket conclusion by the majority.
The trial court, Honorable John G. Bartholomew, after deciding the coverage issue, offered to adjourn the trial on liability and damages until the coverage issue was conclusively decided on appeal. Citizens did not accept this offer. From the majority's opinion, it appears that an insurance company which challenges coverage is entitled to an adjournment of the trial on liability and damages until the coverage issue is finally determined on *843appeal or until after the time for appeal has passed, even if an adjournment is not offered by the trial court.
The majority states as follows: "However, when coverage is not determined before a liability trial, the insurer must provide a defense for its insured with regard to liability and damages." Majority op. at 836. Certainly, this statement means that when the trial court finds that the insurance policy at issue does not provide coverage, the insurance company is still obligated to defend its insured until the time for appeal of that ruling has passed or the coverage issue is finally resolved on appeal. Therefore, an insurance company is entitled to an adjournment of the trial on liability and damages until the coverage issue is finally and conclusively resolved.
The majority states as follows: "In Elliott, we clearly stated that the proper procedure for an insurance company to follow when coverage is disputed is to request a bifurcated trial on the issues of coverage and liability and move to stay any proceedings on liability until the issue of coverage is resolved." Majority op. at 836. Certainly, an insurance company is therefore entitled to an adjournment of the trial on liability and damages until final resolution of the coverage issue.
The majority cites Thorp Sales Corp. v. Gyuro Grading Co., 111 Wis. 2d 431, 438, 331 N.W.2d 342 (1983) as authority for the following general rule: " [W]here an insurer wrongfully refuses to defend on the grounds that the claim against the insured is not within the coverage of the policy, the insurer is guilty of a breach of contract which renders it liable to the insured for all damages that naturally flow from the breach." Majority op. at 837. Thorp did not involve a dispute over insurance; it involved a suit by an auctioneer against a private corporation for failure to "produce specified *844goods at a scheduled auction." Thorp, 111 Wis. 2d at 432-33.
It would be unethical for a trial judge to award additional damages to an injured party in order to punish an insurance company which failed to defend its insured at trial, when said failure was not in bad faith. Valuation of damages is based exclusively upon the extent of the injuries sustained by the injured party.
The majority suggests that an insurance company can protect itself by a reservation of rights. This would mean that a defendant insurance company can represent its insured at the liability trial but reserve its right to challenge coverage. The majority fails to explain what recovery the insurance company can expect from its insured if the coverage issue is ultimately resolved in favor of the insurance company. Will the company recover the funds expended to defend its insured? I doubt it.
For the foregoing reasons, I would affirm the court of appeals. Accordingly, I dissent.