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COURT OF APPEALS DECISION DATED AND RELEASED FEBRUARY 18, 1997 |
NOTICE |
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A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62(1), Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 96-0418
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT III
TIMOTHY L. LORENZ,
d/b/a NORTHWEST
MILLING,
Plaintiff-Appellant-
Cross-Respondent,
v.
RURAL MUTUAL INSURANCE
COMPANY,
Defendant-Respondent-
Cross-Appellant.
APPEAL and CROSS-APPEAL
from a judgment of the circuit court for Polk County: ROBERT H. RASMUSSEN, Judge.
Affirmed in part; reversed in part, and cause remanded with
directions.
Before Cane, P.J.,
LaRocque and Myse, JJ.
CANE, P.J. Timothy Lorenz appeals a judgment
granting a directed verdict in favor of Rural Mutual Insurance Company because
the evidence was insufficient to support the jury's punitive damages award to
Lorenz in his bad faith claim against Rural.
Lorenz argues that the court erred when it directed the verdict because
there was credible evidence to support punitive damages.
On appeal, Rural argues
that the court properly directed the verdict on the punitive damages award but
erroneously denied a directed verdict on the bad faith claim, and the
submission of the punitive damages issue to the jury was prejudicial error. Rural challenges the denial of its
postverdict motions and argues that in the alternative a new trial should be
granted.
On cross-appeal, Rural
makes the following arguments: its
motions for summary judgment and reconsideration should have been granted, its
motion for a directed verdict or motions after verdict should have been
granted, discovery was wrongly denied, prejudice was caused and defenses were
denied to Rural by the lack of disclosure of the assignment and the terms of
the transfer of legal representation, prejudice was caused by a breach of the
rule prohibiting a lawyer as a witness, there was prejudicial evidence on the
punitive damages claim, and the question of jury intent was sufficiently raised
by the juror affidavits and circumstances of the trial to require an
inquiry.
We conclude that the
court properly denied a directed verdict on the bad faith claim, but because
there was credible evidence to support the punitive damages award, it erred
when it directed the verdict on the punitive damages claim. We reject the remainder of Rural's
arguments, and therefore reverse the judgment and remand with directions to
reinstate the punitive damages award.
Lorenz's bad faith claim
arose from an excess verdict awarded against Lorenz in a 1992 personal injury
case in which he and Rural were sued by Dennis Cottor. Cottor was represented by attorney Thomas
Bell. Lorenz designed and built a grain
storage structure for Cottor's farm.
When Cottor was working on the structure on October 25, 1991, it collapsed
and he fell twenty-five feet to the ground and was injured. Rural insured Lorenz under a $500,000
liability policy. Cottor's settlement
offers increased from $200,000 to $500,000 as the case developed. Rural's offer of judgment in the amount of
$90,000 was rejected. The parties were
unable to resolve the case and trial commenced.
The jury in the 1992
personal injury case rendered a total verdict of $652,213.18 to Cottor. As a result of the excess verdict, Lorenz
filed this bad faith lawsuit against Rural, alleging that Rural breached its
duty to defend him in the personal injury lawsuit, Rural acted in bad faith,
and Rural's conduct was outrageous.
Attorneys Bell and James Drill represented Lorenz. At trial, Lorenz presented evidence that
included the testimony of attorney Greg Conway and Aetna Insurance claims
manager David Glaza, both of whom testified that Rural acted in bad faith.
At the close of
evidence, the court denied Rural's motion for a directed verdict on the bad
faith claim, but took the motion under advisement with regard to the punitive
damages claim and submitted the punitive damages question to the jury.[1] The jury returned a verdict for Lorenz,
deciding that Rural breached its duties, acted in bad faith and engaged in
outrageous conduct in its representation of Lorenz. By stipulation, the damage award for the bad faith claim was the
amount of the excess verdict, plus interest.
Judgment in the amount of $177,634.48, together with costs and
disbursements, was entered on Lorenz's bad faith claim. The jury also awarded $110,000 to Lorenz,
plus costs, as punitive damages for Rural's outrageous conduct.
Relevant to this appeal,
Rural renewed its request for a directed verdict on the punitive damages
claim. The court granted the directed
verdict on the punitive damages award, finding no credible evidence to support
the jury's determination that the conduct of Rural, its agent and its attorney
were outrageous. It is from this ruling
that Lorenz now appeals.
DIRECTED
VERDICT STANDARD OF REVIEW
The court properly
grants a directed verdict when it considers "all credible evidence and
reasonable inferences therefrom in the light most favorable to the party
against whom the motion is made" and determines that "there is no
credible evidence to sustain a finding in favor of such party." See § 805.14(1), Stats.
Whether the trial court erroneously directed the verdict is a question
of law we review de novo. See Weiss
v. United Fire & Cas. Co., 197 Wis.2d 365, 541 N.W.2d 753 (1995).
The parties dispute the
facts of this case.[2] However, as explained by our supreme court,
"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.'" Id. at 389-90, 541 N.W.2d at
761-62 (1995) (citation omitted) (emphasis in the original). We must search the record for evidence to
support the jury's verdict and accept the inferences the jury could have drawn
from that evidence in order to reach its verdict. See id. at 398, 541 N.W.2d at 765.
BREACH
OF DUTY AND BAD FAITH
Rural argues that there
was insufficient evidence to support the bad faith claim. In Wisconsin, an insurer has the duty to
investigate and evaluate the claim against its insured, and to inform its
insured of all settlement offers and negotiations. See Baker v. Northwestern Nat'l Cas. Co., 26
Wis.2d 306, 310, 132 N.W.2d 493, 496 (1965), overruled on other grounds by
DeChant v. Monarch Life Ins. Co., 200 Wis.2d 559, 576, 547 N.W.2d
592, 598 (1996). The insurer uses its
judgment and experience in deciding whether to settle or contest a claim. Mowry v. Badger State Mut. Cas. Co.,
129 Wis.2d 496, 510, 385 N.W.2d 171, 178 (1986). However, for it to be made in good faith, "a decision not to
settle a claim must be based on a thorough evaluation of the underlying circumstances
of the claim and on informed interaction with the insured." Id.
In order to establish
the tort of bad faith, the insured must demonstrate the absence of a reasonable
basis for denying policy benefits and the insurer's "knowledge or reckless
disregard of the lack of a reasonable basis for denying the claim." DeChant, 200 Wis.2d at 578,
547 N.W.2d at 599 (quoting Anderson v. Continental Ins. Co., 85
Wis.2d 675, 691, 271 N.W.2d 368, 376 (1978)).
To satisfy the first prong, the insured must demonstrate that the
reasonable insurer, given the same facts and circumstances, would neither delay
nor deny payment of the claim. Id.
The second prong may be satisfied
by the inference of "a reckless disregard [or] a lack of a reasonable
basis for denial or a reckless indifference to facts or to proofs submitted by
the insured." Weiss,
197 Wis.2d at 392, 541 N.W.2d at 762-63 (citation omitted).
Rural challenges the
court's denial of its motion for a directed verdict on the bad faith
claim. Because there is credible
evidence in the record to support the bad faith claim, we disagree and affirm
the court's decision.[3] The parties rely on the testimony of
Lorenz's witnesses, Conway and Glaza, to support their bad faith arguments on
appeal. We have reviewed their
testimony and summarize it, in relevant part, below.
Conway testified that
Rural did not investigate and evaluate the claim properly. Specifically, Rural was not able to refute
the testimony of several of Cottor's important experts and lay witnesses
because it had not deposed them.
Included were economist Michael Behr, whose report concluded that Cottor
had sustained significant financial losses from the accident; Dr. Michael
Olson, Cottor's treating chiropractor, who determined that Cottor had sustained
a new injury in the accident; and two lay witnesses familiar with Cottor and
his farming operation, who testified that Cottor's ability to farm after the
accident was extremely different than before.
Conway also criticized
Rural for its reliance on Cottor's preexisting back problems as a defense to
its liability, in light of the testimony from medical experts that the accident
had a significant new impact on Cottor's preexisting back condition, and the
unrefuted testimony of Lorenz's engineering expert that the structure was
improperly designed and constructed by Lorenz.
Conway also testified
that Rural's damages evaluation significantly underestimated Cottor's costs and
losses, and described Rural's failure to admit Lorenz's negligence until two
years after the accident as unacceptable because it needlessly dragged out the
claim. Conway specifically criticized
Rural's failure to reevaluate the claim upon the occurrence of several events, including
the court's decision not to submit the question of Cottor's negligence to the
jury and the impeachment of Rural's economic expert on the stand. Finally, Conway criticized the failure of
Rural's trial attorney to be in contact with Rural during the trial, and
communicate adequately with Lorenz and his attorney about settlement demands
and other developments in the case.
Glaza testified that
Rural's investigation of the claim was inadequate because Rural did not
follow-up the claim and adjust or increase its initial reserve of $20,000 as
the claim developed. He criticized
Rural's failure to depose Cottor's experts and to advise Lorenz and Wachs of
the developments at trial. Glaza
testified that Rural failed to pursue settlement of the case.
Glaza testified that
Rural's decision to pursue the issue of Cottor's negligence in the accident was
not reasonable. He criticized Rural for
not having an insurance representative present at trial and not communicating
with Lorenz and Wachs at the time of trial.
Glaza testified that his impression was that hard feelings between Rural
and Cottor's attorney's law firm "clouded the judgment" of Rural with
regard to this file. Glaza testified
that Rural significantly disregarded Lorenz's rights and economic interests.
After hearing the testimony
of Conway and Glaza, the jury could have found that Rural acted in bad faith by
not conducting sufficient discovery, not adequately reevaluating the case as
more information became available, and by not accepting Cottor's offers to
settle the case within the policy limits.
Construing the evidence in the light most favorable to Lorenz, the jury
could have inferred that Rural had no reasonable basis to deny payment of the
claim or to fail to settle the case and that in doing so, Rural acted with reckless
disregard or indifference to Lorenz's rights and interests. Because there is credible evidence in the
record to support the bad faith claim, we affirm the court's decision to deny
Rural's motion for a directed verdict.
PUNITIVE
DAMAGES
Lorenz argues that the
court erred when it granted a directed verdict on the punitive damages claim
because there was credible evidence to support it. Punitive damages may be awarded at the jury's discretion when the
plaintiff proves its bad faith claim against its insurer and the jury has
awarded actual damages on the bad faith claim.[4] See Wis
J I—Civil 1707. The purpose of
punitive damages is to punish and deter the wrongdoer's outrageous
conduct. Anderson, 85
Wis.2d at 697, 271 N.W.2d at 379.
Punitive damages are
appropriate only when there are "aggravating circumstances beyond ordinary
negligence," necessitating "the added sanction of a punitive damage
[award] to deter others from committing acts against human dignity." Lievrouw v. Roth, 157 Wis.2d
332, 343, 459 N.W.2d 850, 853 (Ct. App. 1990) (citations omitted). According to our supreme court in Anderson,
punitive damages in a bad faith claim are warranted "only where the wrong
was inflicted 'under circumstances of aggravation, insult or cruelty, with
vindictiveness or malice.'" Id.
at 697, 271 N.W.2d at 379 (quoting Mid-Continent Refrig. Co. v. Straka,
47 Wis.2d 739, 747, 178 N.W.2d 28, 32 (1970)).[5]
The Anderson
court expressly noted a distinction between the intent or malice necessary to
maintain a bad faith action and the intent required to warrant punitive
damages. Id. An award of punitive damages must be
supported by "a showing of 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." Id. "For punitive damages to be awarded, a
defendant must not only intentionally have breached his duty of good faith, but
in addition must have been guilty of oppression, fraud, or malice in the special
sense defined by Mid-Continent v. Straka." Id.
However, punitive
damages may be awarded for outrageous conduct that falls short of malicious
conduct. Wangen v. Ford Motor Co.,
97 Wis.2d 260, 267, 294 N.W.2d 437, 442 (1980). Conduct warranting punitive damages also occurs when "the
defendant knows, or should have reason to know, not only that his conduct
creates an unreasonable risk of harm, but also that there is a strong
probability, although not a substantial certainty, that the harm will result but,
nevertheless, he proceeds with his conduct in reckless or conscious disregard
of the consequences." Loveridge
v. Chartier, 161 Wis.2d 150, 188, 468 N.W.2d 146, 159 (1991) (citation
omitted).
In Weiss,
the court rejected the insurer's argument that its conduct did not warrant
punitive damages because it did not rise to the level of the conduct described
in Anderson. According to
the Weiss court, "[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." Id. at 397, 541 N.W.2d at 765
(quoting Fahrenberg v. Tengel, 96 Wis.2d 211, 221, 291 N.W.2d
516, 521 (1980)).
Any perceived
discrepancy in the case law was addressed by the enactment of § 895.85(3), Stats., which provided a statutory
standard for punitive damages awards.
According to the statute, "The plaintiff may receive punitive
damages if evidence is submitted showing that the defendant acted maliciously
toward the plaintiff or in an intentional disregard of the rights of the
plaintiff." Section 895.85(3), Stats.
However, because § 895.85(3) applies only to civil actions commenced on
or after May 17, 1995, it does not affect Lorenz's bad faith lawsuit.
Instead, the jury was
properly instructed that it could award punitive damages if Rural's conduct was
"outrageous," defined in the jury instruction as action taken
"either maliciously or in wanton, willful, or reckless disregard of the
plaintiff's rights." See Wis J I—Civil 1707. We recognize that the "reckless
disregard of plaintiff's rights" language is common to the test for bad
faith and the test for punitive damages.
However, this does not mean that punitive damages are necessarily
warranted every time the plaintiff proves bad faith. When the court submits a punitive damages question to the jury,
the jury is instructed as follows:
A
plaintiff is not entitled to punitive damages as a matter of right. Even if you find that the defendant acted
maliciously or in wanton, willful, or reckless disregard of the plaintiff's
rights, you do not have to award punitive damages. Such damages may be awarded or withheld at your discretion.
Id. Punitive damages are appropriate in a bad
faith claim when the insurer's conduct has risen beyond ordinary bad faith to
outrageous conduct, showing a "[r]eckless indifference to the rights of
others and conscious action in deliberate disregard of them." Fahrenberg, 96 Wis.2d at 221,
291 N.W.2d at 521 (citation omitted).
Lorenz asserts that the
punitive damages award was supported by credible evidence. We agree.
After searching for evidence to sustain the jury's verdict, drawing the
inferences presumably drawn by the jury in arriving at that verdict, and
viewing the evidence in the light most favorable to Lorenz, we conclude that
there is credible evidence to support the jury's punitive damages award.[6]
Lorenz's theory was that
Rural failed to investigate and evaluate the claim, make reasonable settlement
offers, and adequately communicate with him.
Rural did not depose Cottor's lay and expert witnesses, whose testimony
at trial damaged Lorenz's case. Included
was economist Michael Behr, whose complex economic report concluded that Cottor
sustained significant present and future financial losses as a result of the
accident. Conway testified that the
report was not self-explanatory and that it was impossible to understand how
Behr arrived at his numbers without questioning him about the report. From Conway's testimony, the jury could have
concluded that Rural failed to take reasonable steps to investigate the claim
in reckless disregard of Lorenz's rights and interests.
Rural's strategy was to
argue to the jury that Cottor was contributorily negligent in the accident, and
that the accident resulted in no new injury to Cottor because of his numerous
and significant prior injuries and his preexisting back condition. However, the court decided that the issue of
contributory negligence would not go to the jury, in light of unrefuted
testimony by Cottor's engineering expert that the grain storage structure was
improperly designed and constructed by Lorenz.
Medical experts
testified to the seriousness of the injury sustained by Cottor in the
accident. Contrary to his written
report, the subsequent videotaped deposition testimony of Dr. Bruce Van Dyne,
the physician who conducted the independent medical examination of Cottor,
indicated that Cottor had sustained a new and permanent injury from the
accident, and that he would need physical therapy several times per week for
the rest of his life to treat the injury.
As Bell testified, the Van Dyne videotape was so favorable to Cottor
that Bell used it as part of his evidence.
Rural presented the
testimony of vocationalist Deborah Mathson and agricultural economist Vern
Elefson. According to Bell's testimony,
Mathson had not seen Van Dyne's videotaped deposition before she took the stand,
and did not know until Bell told her on cross-examination that Van Dyne had
testified that Cottor received permanent injuries from the accident. Elefson testified regarding Cottor's loss of
earning capacity, basing his conclusions exclusively on Cottor's tax
returns. He was impeached with his own
testimony from another case that tax returns were a totally unreliable basis
from which to determine the profitability of a farming operation. Even Rural's attorney described Elefson's
testimony as a disaster.
Nevertheless, Rural
refused Cottor's offers to settle within the policy limits, the last of which
was made as the jury deliberated. After
hearing testimony regarding these developments, the jury could have concluded
that Rural's conduct was outrageous because it knew or should have known that
there was an unreasonable risk of an excess verdict, and yet Rural did not
settle the case. Although Rural's
conduct was not malicious, there was evidence from which the jury could have
concluded that Rural knew or should have had reason to know, not only that its
conduct created an unreasonable risk of an excess verdict, but also that there
was a strong probability, although not a substantial certainty, that the excess
verdict would result but, nevertheless, Rural failed to settle the case in
reckless or conscious disregard of the consequences. See Loveridge, 161 Wis.2d at 188, 468 N.W.2d
at 159.
Next, Rural asserts that
it was prejudicial to submit the punitive damages question to the jury. This is a question of law that we review de
novo. Lievrouw, 157
Wis.2d at 344, 459 N.W.2d at 853-54.
The trial court should not submit the punitive damages question to the
jury if there is no evidence "warranting a conclusion to a reasonable
certainty" that the wrongdoer engaged in outrageous conduct. Id. (citation omitted). Because there was credible evidence to
support the punitive damages award, we conclude that the trial court's
submission of the question was neither erroneous nor unduly prejudicial to
Rural.
CROSS-APPEAL
ISSUES
Rural argues that its
motions for summary judgment and reconsideration should have been granted
because the undisputed facts established a defense to the negligence and bad
faith claims and Lorenz lacked the requisite expert testimony to establish bad
faith. Rural also challenges on
procedural and substantive grounds the sufficiency of an affidavit submitted by
Lorenz to support his bad faith claim.
We reject Rural's arguments and agree that the court properly denied the
motions.
We review summary
judgments do novo. Universal Die
Stampings, Inc. v. Justus, 174 Wis.2d 556, 560, 497 N.W.2d 797, 799
(Ct. App. 1993). Summary judgment is
appropriate only when "the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits ... show
that there is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law." Section 802.08(2), Stats. A complaint
should be dismissed as legally insufficient only if it is clear that under no
circumstances can the plaintiff recover.
Green Spring Farms v. Kersten, 136 Wis.2d 304, 317, 401
N.W.2d 816, 821 (1987).
Because summary judgment
is a drastic remedy, any reasonable doubt as to the existence of a genuine
issue of material fact must be resolved against the granting of the
motion. See Heck &
Paetow Claim Serv. v. Heck, 93 Wis.2d 349, 356, 286 N.W.2d 831, 834
(1980). If the evidence is subject to
different interpretations or reasonable people may disagree about its
significance, summary judgment should not be granted. Grams v. Boss, 97 Wis.2d 332, 339, 294 N.W.2d 473,
477 (1980).
We conclude that the
court properly denied summary judgment because material facts were in dispute
regarding the steps taken by Rural to investigate and evaluate the claim, and
to inform Lorenz of developments in the case and settlement negotiations. Reasonable people could disagree as to the
significance of these facts, including the testimony of the lay and expert
witnesses, Rural's decision not to depose Cottor's witnesses, Rural's rejection
of Cottor's settlement offer, and Rural's offer of judgment in the amount of
$90,000, which did not change as the case developed.
Rural argues that the
court should have granted its motion for reconsideration because Lorenz did not
present the requisite expert testimony to prove its bad faith claim. Rural challenges the sufficiency of and the
procedural steps taken by the court with regard to an affidavit submitted by
Lorenz. Expert testimony is not
required to establish a prima facie bad faith claim when the claim
"involves facts and circumstances within the common knowledge or ordinary
experience of an average juror." Weiss,
197 Wis.2d at 382, 541 N.W.2d at 758-59.
Because we are not persuaded that this case presented "unusually
complex or esoteric" insurance issues that were beyond the understanding
of the average juror, we reject Rural's argument and conclude that the court
properly denied the motion for reconsideration. See id. at 382-83, 541 N.W.2d at 759.[7]
Rural also argues that
the court should have granted its motion for disqualification because attorney
Bell represented Cottor in the underlying personal injury case, and then
represented Lorenz in the subsequent bad faith case against Rural. Cottor agreed to delay execution of his
judgment against Lorenz in exchange for an assignment of any proceeds from
Lorenz's bad faith claim against Rural.
Rural argues that this presented a conflict of interest prohibited by
SCR 20:1.7, sufficient to disqualify Bell and his law firm from representing
Lorenz. We reject this argument.
A motion to disqualify
an attorney on the grounds of conflict of interest is addressed to the sound
discretion of the trial court, and we will uphold the court's discretionary
decision if we conclude there is a reasonable basis for it. See Berg v. Marine Trust Co.,
141 Wis.2d 878, 887, 416 N.W.2d 643, 647 (Ct. App. 1987). In order to be subject to disqualification,
an attorney must first "represent[] a party in a matter in which the adverse
party is that attorney's former client."
Id. at 885, 416 N.W.2d at 647 (citation omitted) (emphasis
added).
The court decided that
because the interests of Lorenz and Cottor were not directly adverse, there was
no conflict of interest to preclude Bell and his firm's representation of
Lorenz in the bad faith claim. We
agree. Whereas Rural's interests were
adverse to those of Cottor in the personal injury case, and adverse to those of
Lorenz in the bad faith lawsuit, Cottor's interests in the bad faith claim were
not adverse to Lorenz's, nor were Lorenz's interests adverse to Cottor's. We conclude that the absence of adverse
interests was a reasonable basis for the denial of the motion.[8]
In a related argument,
Rural asserts that Bell should have been disqualified under SCR 20:3.7, the
lawyer-as-witness rule. This argument
is meritless. The rule prohibits a
lawyer from acting "as advocate at a trial in which the lawyer is likely
to be a necessary witness," with several exceptions. The rule also permits a lawyer to "act
as advocate in a trial in which another lawyer in the lawyer's firm is likely
to be called as a witness unless precluded from doing so by Rule 1.7 or Rule
1.9." Because Drill from Bell's
firm was trial counsel, and no violation of SCR 20:1.7 or 1.9 occurred by a
conflict of interest, we reject Rural's argument.
Next, Rural asserts that
the court should have granted its request for a hearing regarding jury intent
in setting the verdict. After the
verdict, eight jurors submitted identical affidavits, stating the following:
In
answering the Special Verdict on Bad Faith and punitive damages, it was my
understanding that the total monetary award which would be given to Timothy L.
Lorenz for the excess judgment in the prior case and for punitive damages was
to be a total of One Hundred Ten Thousand and No/100 Dollars ($110,000.00),
plus costs.
The first step in
determining whether a jury verdict may be impeached is to determine whether the
evidence offered is competent. State
v. Heitkemper, 196 Wis.2d 218, 223, 538 N.W.2d 561, 563 (Ct. App.
1995). If the proffered juror testimony
is not competent, no further inquiry is necessary. Id. at 224, 538 N.W.2d at 563. Section 906.06(2), Stats., sets the standard for determining whether the
evidence presented is competent.
According to the statute,
[A]
juror may not testify as to any matter or statement occurring during the course
of the jury's deliberations or to the effect of anything upon the juror's or
any other juror's mind or emotions as influencing the juror to assent to or
dissent from the verdict or indictment or concerning the juror's mental
processes in connection therewith, except that a juror may testify on the
question whether extraneous prejudicial information was improperly brought to
the jury's attention or whether any outside influence was improperly brought to
bear upon any juror.
Rural
has failed to meet its burden to demonstrate that the jury considered
extraneous information or that improper outside influence affected the
jury. See State v. Poh,
116 Wis.2d 510, 520, 343 N.W.2d 108, 114 (1984). In fact, neither party asserts that any extraneous information
existed or that improper influence was brought to bear on the jurors. In the absence of extraneous information or
outside influence, as required by Poh, we conclude that the
affidavits were not competent evidence, pursuant to § 906.06(2).
Rural relies on State
v. Williquette, 190 Wis.2d 677, 526 N.W.2d 144 (1995), to support its
argument. In Williquette,
the defendant was charged with two counts of sexual assault, each to a separate
victim. Id. at 681, 526
N.W.2d at 145. The jury inadvertently
returned a guilty verdict on the second count and a not guilty verdict on the
first count, when it had intended to do just the opposite. Our supreme court decided that the jurors
were competent to testify about this clerical error in the verdict. Id. at 683, 526 N.W.2d at
146.
This case is
distinguishable because the jurors did not make a clerical error in their
verdict. Instead, their affidavits
indicate that they misunderstood the consequence of their verdict. They did not understand that Lorenz would
receive any money they awarded in addition to any money he recovered on the bad
faith claim. Because Rural did not
establish that the affidavits were competent evidence, we conclude that the
court properly struck the affidavits and denied the hearing.
Next, Rural argues the
court should have granted its post-verdict motion for a new trial in the
interest of justice. We disagree. We possess the discretionary power to
reverse the judgment "if it appears from the record that the real
controversy has not been fully tried, or that it is probable that justice has
for any reason miscarried ...." See
§ 752.35, Stats. A new trial in the interest of justice is
warranted whenever the real controversy has not been fully tried, or whenever
it is probable that justice has for any reason miscarried and there is a
substantial probability of a different result on retrial. Vollmer v. Luety, 156 Wis.2d
1, 16, 456 N.W.2d 797, 804 (1990).
Because both parties submitted a substantial amount of evidence during a
four-day trial to a properly instructed jury, we conclude that the bad faith
claim was fully tried. Although the
jury drew inferences and conclusions adverse to Rural's interests, we are
persuaded that the trial resolved the controversy at issue and no miscarriage
of justice resulted. Rural has not
demonstrated the likelihood of a different result on retrial. Therefore, no new trial is warranted.
In conclusion, we have
determined that there was credible evidence to support Lorenz's bad faith claim
and the award of punitive damages. We
reject the remainder of Rural's appeal and cross-appeal arguments. We affirm the court with respect to all of
its decisions except to grant Rural a directed verdict on the punitive damages
award.
By the Court.—Judgment
affirmed in part; reversed in part, and cause remanded with directions to
reinstate the jury's punitive damages award.
Costs to Lorenz.
Not recommended for
publication in the official reports.
[2]
The parties dispute many of the facts associated with the adequacy of
Rural's representation of Lorenz in the underlying personal injury
lawsuit. However, it is the role of the
jury, and not this court, to assess the weight of the evidence and witnesses'
credibility. See Upthegrove
Hardware, Inc. v. Pennsylvania Lumbermans Mut. Ins. Co., 146 Wis.2d
470, 481, 431 N.W.2d 689, 694 (Ct. App. 1988).
We will not engage in factfinding.
See Wurtz v. Fleischman, 97 Wis.2d 100, 107 n.3, 293
N.W.2d 155, 159 n.3 (1980).
[3] Our conclusion here disposes of Rural's cross-appeal arguments that its motion for a directed verdict or judgment notwithstanding the verdict on the bad faith claim should have been granted because the evidence was insufficient to support a finding of bad faith.
[4] It is undisputed that actual damages of $177,634.48, together with costs and disbursements, were awarded to Lorenz.
[5] In Wisconsin, punitive damages have been assessed against insurance companies for acting in bad faith. See Davis v. Allstate Ins. Co., 101 Wis.2d 1, 10, 303 N.W.2d 596, 600-01 (1981) (the insurer's disagreement with a property valuation that was consistent with its agent's initial valuation was sufficient to support punitive damages); Upthegrove Hardware, Inc. v. Pennsylvania Lumbermans Mut. Ins. Co., 146 Wis.2d 470, 483, 431 N.W.2d 689, 695 (Ct. App. 1988) (upholding the jury's punitive damages award because of sufficient evidence that the denial of the insured's claim was based on grounds known by the insurer to be false, the insurer's investigators knowingly destroyed possibly crucial evidence, and the insurer lied in its investigation); Poling v. Wisconsin Physicians Service, 120 Wis.2d 603, 611, 357 N.W.2d 293, 298 (Ct. App. 1984) (affirming the punitive damages award based on the insurer's "waffling" as to the grounds for denying coverage, its ultimate selection of the incorrect grounds to deny coverage, and the impeachment of the insurer's principal witness on the date of production of an expert's report).
[6] Our conclusion here disposes of Rural's argument that the judge should have granted its postverdict motion for a judgment notwithstanding the verdict on the issue of punitive damages.
[7] Because we conclude that expert evidence was not necessary to establish Lorenz's bad faith claim, we do not address Rural's procedural and substantive arguments regarding the sufficiency of the expert's affidavit submitted by Lorenz. Even without expert testimony from Conway or Glaza, there was sufficient evidence in the record upon which summary judgment was properly denied.
[8] Because we have not found a conflict of interest in the assignment, we do not address the issue of the imputed disqualification of Bell's firm, nor do we address Rural's argument that it was denied discovery related to the assignment and the circumstances by which representation of Lorenz was transferred to Bell and his firm.