COURT OF APPEALS DECISION DATED AND FILED February 25, 2009 David
R. Schanker Clerk of Court of Appeals |
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NOTICE |
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This opinion is subject to further editing. If published, the official version will appear in the bound volume of the Official Reports. A party may file with the Supreme Court a petition to review an adverse decision by the Court of Appeals. See Wis. Stat. § 808.10 and Rule 809.62. |
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APPEAL
from a judgment of the circuit court for
Before Brown, C.J., Snyder and Neubauer, JJ.
¶1 PER CURIAM. Norris Pegues appeals from a judgment confirming an arbitration decision in favor of his automobile insurer, Progressive Northern Insurance Company. We affirm because we agree that Progressive’s spoliation of Pegues’ van was not intentional or egregious and that Pegues is judicially estopped from challenging as unconscionable the arbitration provision he earlier invoked.
¶2 On December 17, 2003, Pegues, a Wisconsin resident, was
seriously injured in a motor vehicle rollover accident while on business in
¶3 In May 2004, Progressive denied UM coverage based on its expert’s opinion that Pegues’ vehicle had made no contact with another. Days later, Progressive commenced a declaratory judgment action seeking a determination of rights under the policy. Pegues timely invoked the policy’s arbitration clause and the circuit court dismissed the declaratory action. Progressive appealed, the court of appeals affirmed and the matter proceeded to arbitration.
¶4 Meanwhile, Progressive had taken steps to secure Pegues’ van
due to his claim of contact by a semi. After its expert examined and
photographed the van, Progressive had the vehicle shrink-wrapped and segregated
at a
¶5 A year later, the arbitration panel ruled on the merits. The panel was unanimous in its conclusion that the accident occurred due to icy conditions, not a phantom vehicle, and that Pegues’ damages were approximately $1.3 million. While the panel confirmed its earlier decision regarding spoliation, it found that Progressive’s conduct was not egregious or intentional. The panel majority wrote:
Consul [sic] for Norris maintains that our finding therefore must begin with the assumption that the production of the van for inspection would have yielded evidence detrimental to the position of Progressive. In short[,] to find that an examination of the van would have found evidence of contact with the phantom (semi) vehicle.
The panel unanimously agrees that if, in fact, that were a legal mandate, our finding on liability would have to be reversed. [Two arbitrators] do not agree with Norris’ position. ([The third arbitrator] does so agree and authors a dissenting opinion herein. A review by the circuit court may be requested).
Norris relies on Insurance Co. of N. America v. Cease Elec., 2004 WI App 15, [¶]16, 269 Wis. 2d 286, 674 N.W.2d 886[:]
“Spoliation remedies advance truth by assuming that the destroyed evidence would have hurt the party responsible for the destruction of evidence and act as a deterrent by eliminating the benefits of destroying evidence.”
Norris is incorrect. He would … elevate the word “assumption” to the level of a “presumption.” In legal parlance a “presumption” is a term used by the Legislature and/or the Supreme Court to shift a burden of proof. An “assumption” cannot rise to that level. Also, in this case the panel has not found intentional or egregious conduct herein on the part of Progressive.
¶6 As a result, the UM coverage was not triggered, and Pegues’ recovery was limited to $25,000. Pegues then commenced this action to have the circuit court vacate the arbitrators’ decision pursuant to Wis. Stat. § 788.10 (2007-08).[1] He claimed the decision represented a manifest disregard of spoliation law; the award was procured through undue means; public policy demanded vacation of the award; and the policy’s arbitration clause was ambiguous and unconscionable. Progressive moved to confirm the decision pursuant to Wis. Stat. § 788.09. The circuit court issued a written decision, decided upon briefs, confirming the arbitration panel’s decision. Pegues appeals.
¶7 Pegues resurrects the same four issues on appeal. We treat the first three together because, essentially, they attack the arbitrators’ decision as to the spoliation sanction. In other words, the manifest disregard, undue means and public policy arguments all boil down to Pegues’ claim that the panel was required to apply a presumption that the lost evidence would have favored him. The fourth issue challenges the arbitration clause itself.
¶8 Our review of an arbitration award is highly deferential to
the arbitrators. Steichen v. Hensler, 2005
WI App 117, ¶12, 283
¶9 Pegues argues that the arbitrators’ decision represents a
manifest disregard of spoliation law because the panel recognized but refused
to apply “the mandated assumption/inference/presumption” that the van’s
production would have yielded evidence detrimental to Progressive. See
City
of Madison v. Local 311, Int’l Ass’n of Firefighters, 133
¶10 Here on appeal, Pegues turns to Estate of Neumann v. Neumann,
2001 WI App 61, ¶81, 242 Wis. 2d 205, 626 N.W.2d 821, where the court remarked
that the spoliation inference derives from the maxim omnia praesumuntur contra spoliatorem, or “All things are presumed
against a despoiler or wrongdoer.” A
simple observation about the phrase’s Latin derivation does not persuade us
that the panel showed manifest disregard for spoliation law or that Pegues is
entitled to a spoliation inference that the destroyed evidence would have been
unfavorable to Progressive. Indeed, the Neumann
court makes clear that
¶11 Whether to impose sanctions for spoliation of evidence at all and
what sanctions to impose are matters committed to the judicial body’s
discretion, here the arbitration panel. See Garfoot v. Fireman’s Fund Ins. Co.,
228
¶12 From there, Pegues argues the presumption he seeks is reasonable
because it is far less harsh a penalty than the dismissal Garfoot authorizes for
egregious spoliation. His logic is flawed,
though, because the sanction of dismissal is proper only for egregious conduct,
see id., and the panel here found
that Progressive’s conduct was not egregious, but negligent. Pegues either glosses over or tries to
revisit that determination, arguing that a spoliation inference instruction is
proper “[w]here there is clear and
convincing evidence that the spoliator acted egregiously.” (Emphasis Pegues’.) We do not review the evidence to decide if it
constitutes a preponderance for or against the arbitrators’ decision, nor do we
disturb the arbitrators’ judgment on weight, credibility or competency of
evidence. Madison Teachers, Inc. v. Madison
Metro. Sch. Dist., 2004 WI App 54, ¶20, 271
¶13 While we do not weigh the evidence, we note that numerous
entries in the record catalog Progressive’s efforts to segregate the van and
document and preserve its post-accident condition pending transport to
¶14 Pegues nonetheless asks us to infer that Progressive’s delay in
bringing this information to light reveals a conscious attempt to influence the
outcome of the litigation or a flagrant knowing disregard of the judicial
process. The evidence of record is to
the contrary. Furthermore, even were we
to conclude it is a reasonable inference, it is not the only reasonable
inference, nor is it the one the panel adopted.
It is the function of the panel, sitting as the factfinder, to determine
which inferences to draw. See Garfoot, 228
¶15 Pegues also attacks the award as having been procured through
“undue means.” See Wis. Stat. § 788.10(1)(a). “Undue means” contemplates an attempt to
influence the arbitrators through inappropriate, unjustified or improper
methods, see City of Manitowoc v.
¶16 Pegues has not established this critical link. He acknowledges that his counsel learned of the evidence destruction in September 2004. Vigorous discovery and briefing ensued and in February 2006 the panel agreed that spoliation had occurred, warranting sanctions. More briefing followed; the panel rendered its decision on the merits in February 2007. Given the panel’s full knowledge of the chain of events, Pegues simply does not show how the award “was procured by” Progressive’s alleged undue means.
¶17 Drawing another arrow from the same quiver, Pegues next raises
a public policy challenge to the spoliation sanction the panel saw fit to
impose. He asserts that public policy
demands that we vacate the award because not to would condone Progressive’s egregious,
intentional conduct. Again, the
arbitration panel determined that Progressive’s conduct was not egregious or
intentional. Pegues does not assert
error in the arbitration process. Therefore,
regardless of whether or not the panel’s decision was correct as a matter of
fact or of law, the parties must live with the arbitration result, since arbitration
is what they contracted for, and that is what they got. See
¶18 Pegues’ last claim is that the arbitration clause in the Progressive policy is unconscionable and that he should be relieved of the decision and allowed a jury trial. We agree with Progressive and the circuit court that Pegues is judicially estopped from raising this issue because it was he who invoked the arbitration clause in the first instance.
¶19 Judicial estoppel is an equitable rule applied at the
discretion of the court to prevent a party from adopting inconsistent positions
in legal proceedings. State
v. English-Lancaster, 2002 WI App 74, ¶18, 252
¶20 Pegues’ current contention that the arbitration provision is unconscionable clearly contradicts his earlier position when he invoked it. He also convinced the circuit court, over Progressive’s objection, to dismiss the case in favor of arbitration and then prevailed on appeal. Pegues suggests the facts are different when, in a footnote, he reminds us that he learned of the spoliation only after he invoked the arbitration clause. We miss his point. The language of the provision remains unchanged. He does not explain how later-acquired facts render the unaltered provision unconscionable if it was not unconscionable when he invoked it. Except for that footnote, his entire argument is that the arbitration provision is substantively unconscionable because it unfairly favors Progressive, the drafter, who offered it without negotiation on a “take-it-or-leave-it” basis. Pegues might have selected a different strategy had he possessed all of the facts, but that does not make the provision intrinsically unconscionable. He is estopped from pursuing that position.
By the Court.—Judgment affirmed.
This opinion will not be published. See Wis. Stat. Rule 809.23(1)(b)5.
[1] All references to the Wisconsin Statutes are to the 2007-08 version.
[2] An
arbitration award must be vacated “[w]here the award was procured by
corruption, fraud or undue means.” Wis. Stat. § 788.10(1)(a). The meaning of a general phrase following the
enumeration of specific classes is limited to things of the same kind, class,
character or nature as those enumerated.
Cheatham v. State, 85