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COURT OF APPEALS
DECISION
DATED AND FILED
July 30, 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 No.
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STATE OF WISCONSIN
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IN COURT OF
APPEALS
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DISTRICT IV
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Vearl Miller, Wanda Miller and Ross, Dayne and
Wade Miller, by Guardian ad Litem Robert Mubarak,
Plaintiffs-Appellants-Cross-Respondents,
v.
The Hanover Insurance Company and
Massachusetts Bay Insurance Company,
Defendants,
Zurich American Insurance Company,
Defendant-Respondent-Cross-Appellant.
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APPEAL
and CROSS-APPEAL from orders of the circuit court for Monroe County: michael
J. McAlpine, Judge. Affirmed in part; reversed in part and
cause remanded with directions.
Before
Dykman, Lundsten and Bridge, JJ.
¶1 DYKMAN, J. Vearl Miller, Wanda Miller, and
Ross, Dayne and Wade Miller
appeal from an order for damages after they obtained a default judgment on
their amended complaint seeking underinsured motorist (UIM) coverage from Zurich
American Insurance Company. The Millers
contend that the court erred in limiting their damages based on the language in
their amended complaint and in prorating the damages award between the
plaintiffs.
¶2 Zurich
cross-appeals from the orders granting default judgment to the Millers, denying
its motion for relief from the default judgment, and determining the Millers’
damages. Zurich
argues that default judgment was improper because the Millers did not properly
file or serve the amended complaint, and neither the Millers nor the court
notified Zurich’s
attorney of the case’s proceedings. Alternatively,
it argues that it is entitled to relief from the default judgment based on
excusable neglect or in the interests of justice. Finally, Zurich argues that the trial court erred in
assessing damages following the default judgment.
¶3 We conclude, first, that the trial court properly granted
default judgment to the Millers and denied Zurich relief from the judgment, and
therefore affirm on this issue. Then,
addressing the parties’ arguments regarding the court’s damages award, we
conclude that the trial court properly limited the Millers’ award to $2,000,000
based on their complaint, but that no interested party has asserted a basis to
uphold the court’s decision to prorate the damages award. We also conclude that Zurich has conceded that the trial court properly
assessed the Millers’ damages.
Accordingly, we affirm the court’s orders granting default judgment to
the Millers and assessing their damages, and the part of its order limiting the
Millers’ damages award to $2,000,000. We
reverse the part of the court’s order prorating the damages award between the
Millers.
Background
¶4 The following facts are undisputed. In August 2003, Vearl Miller was seriously
injured in an automobile accident which occurred in the scope of his employment
with Car Quest. In June 2004, Vearl and
his wife, Wanda, sued the driver of the other vehicle, alleging negligence. Vearl claimed damages for his injuries and
Wanda claimed damages for loss of consortium, and society and companionship. The Millers included as defendants the other
driver’s insurer, and Vearl’s UIM insurer.
The Millers also named Zurich,
which had issued a policy to Car Quest’s parent company, General Parts, as a
party claiming subrogation for worker’s compensation it had paid or would pay to
Vearl.
¶5 When Zurich received the Millers’ summons and complaint, it
followed the special claims handling instructions of its insured, General
Parts, to forward the claim to GAB Robins Risk Management Services, a third-party
claims administrator. Zurich, represented by Attorney James Ratzel,
answered the complaint in July 2004. Zurich
affirmatively asserted a subrogation interest, and demanded judgment against
the other defendants to the full extent of the worker’s compensation benefits
it had paid or would pay to Vearl.
¶6 In November 2004, the Millers’ counsel, Jay Urban, wrote to
Ratzel as follows: “My understanding is
that you are representing Zurich
in a subrogation capacity, but are you also counsel on the potential UIM
claim? If so, kindly provide me with any
and all certified policies of possible UIM coverage ….” Ratzel wrote back later that month with this
response:
I only represent Zurich
to the extent of the worker’s compensation interest. I don’t know if the issue of UIM coverage has
ever been explored. In my discussions, I
am not aware of anyone raising that issue and as such, I cannot state one way
or another whether there is UIM coverage….
…. As you are aware, my worker’s compensation
interest attaches to the [tortfeasor’s insurance] policy limits … but would not
come into play as it pertains to any UIM claim.
In December 2004, Urban wrote
GAB as follows:
This is also to advise you
that [the tortfeasor’s insurer] has tendered its underlying liability policy
limits of $100,000 and their insured is supplementing this with $2,000 in
settlement of this claim. Please advise
pursuant to the Vogt case
whether you would like to substitute UIM funds from this policy in lieu of our
acceptance of this offer …. Please also
view this as a request for your position on the handling of the UIM claim that
we will be making against these UIM policy(ies) with Zurich ….
In letters dated January and
February 2005, GAB, represented by Attorney Timothy Lyons, wrote Urban that
there was no UIM coverage under the Zurich
policy.
¶7 By February 2005, the Millers had resolved their disputes
with the tortfeasor and his insurer, and those defendants were dismissed from
this case. The court entered a
stipulation and order for disbursement of the settlement funds provided by the
tortfeasor and his insurer. The order
provided for payments to both Zurich for its
subrogation claim and Ratzel as Zurich’s
counsel. Around the same time, co-counsel
for the Millers, Attorney Robert Mubarak, wrote a letter to the court stating: “We are keeping this case open as to all other
named defendants. There are potentially
other claims involving these defendants and other issues of UIM….” Urban then wrote the court a letter stating: “Kindly keep this case open for future
proceedings, and we will expect to have additional motions and/or pleadings in
the case within the next couple of months.”
The court wrote at the bottom of the letter: “Request approved,” and
notified plaintiff and defense counsel, but not Zurich or Ratzel.
¶8 On June 7, 2006, the Millers filed an amended complaint, naming
Zurich as a defendant and claiming Zurich provided UIM
coverage in the policy it issued to Car Quest. Vearl sought damages for his injuries, and
Wanda, Ross, Dayne and Wade sought damages for loss of consortium and society
and companionship. The amended complaint
asserted that Zurich
provided $2,000,000 of UIM coverage. It
demanded actual and punitive damages, attorney fees, costs, and any other
compensation deemed appropriate.
¶9 The Millers then attempted to serve Zurich
through Lyons, the attorney representing GAB in the Millers’ claims against Zurich. In response, Lyons wrote Urban as follows:
I have not made an official appearance in this
action. I am not authorized to accept
service on behalf of Zurich
…. You will need to serve Zurich through normal
channels, since I have not been authorized to accept service on their
behalf. Now that you have actually made
the claims against them, I do not know if I will even be the one that handles
the matter. You will need to serve them
directly and we’ll have to go from there.
¶10 Also on June 7, 2006, the Millers served Zurich with a complaint in a new and separate
case alleging medical malpractice. Zurich was named in the
medical malpractice action as a subrogated party.
¶11 On June 20, 2006, the Millers served Zurich with the amended summons and complaint
in this case. They served Zurich through its registered
agent, Stanley Lowe. According to standard
Zurich procedure, Lowe forwarded the amended summons
and complaint to Caroline Fountain, a Zurich
employee, for processing. Fountain
mistakenly believed that the amended summons and complaint in this case were duplicates
of the Millers’ medical malpractice pleadings she had processed several days
earlier, which also included Zurich
as a defendant. Therefore, she did not
send the pleadings in this case to GAB.
¶12 Zurich
did not timely answer the amended complaint, and the Millers moved for default
judgment. Several weeks later, Zurich, by Attorney Craig
Nelson, filed an answer and a motion for extension of time to file an
answer. After several hearings, the
court entered a default judgment in favor of the Millers. Zurich
moved for reconsideration, which the court denied. Zurich
then moved for relief from the default judgment in the interests of justice,
which the court also denied.
¶13 Following a damages hearing, the court found that the Millers’
damages were $9,666,314.98. It then
issued an order limiting the Millers’ recovery to $2,000,000, based on the
language in their amended complaint. It
also ordered the damages prorated between the Miller plaintiffs. The Millers appeal from the judgment award,
and Zurich
cross-appeals from the orders granting default judgment, denying it relief from
the judgment, and the judgment award.
Standard
of Review
¶14 We review an order granting default judgment under the
erroneous exercise of discretion standard.
See Pliss v. Peppertree Resort Villas,
2003 WI App 102, ¶8, 264 Wis.
2d 735, 663 N.W.2d 851. We apply the
same standard when reviewing rulings on motions for relief from default
judgment. See id. A proper exercise of
discretion requires the trial court to apply the facts in the record to the
correct legal standard and to reach a reasonable conclusion. Loy v. Bunderson, 107 Wis. 2d 400, 414-15, 320
N.W.2d 175 (1982).
¶15 The parties challenge the trial court’s damages award on
grounds that the trial court proceeded on erroneous legal theories. We review questions of law de novo. Carolina Builders Corp. v. Dietzman,
2007 WI App 201, ¶13, 304 Wis.
2d 773, 739 N.W.2d 53.
Discussion
¶16 The Millers appeal from the trial court’s damages award following
a default judgment against Zurich. Zurich
cross-appeals from the orders granting default judgment, denying relief from
the judgment, and determining the Millers’ damages. We first address Zurich’s arguments regarding the default
judgment. We then discuss the parties’
disputes over the damages award.
Default
¶17 Zurich argues that procedural errors rendered the Millers’
amended complaint a nullity, thus precluding a finding that Zurich was in
default for failing to answer it. We
disagree.
¶18 First, Zurich
argues that the amended complaint is a nullity because it was not properly
filed. Zurich
argues that the Millers did not properly obtain leave from the court to file an
amended complaint under Wis. Stat. § 802.09(1)
(2007-08),
because (1) the Millers did not file a motion to amend, (2) the court
did not enter an order granting their request, and (3) Zurich was not
notified that the Millers intended to file an amended complaint. Zurich also
argues that the amended complaint was not properly filed because the Millers
filed the amended complaint without first serving Zurich, contrary to Wis. Stat. § 801.14(4).
We reject these contentions.
¶19 Wisconsin Stat. § 802.09(1)
provides that separate from amendments as a matter of course, “a party may
amend the pleading only by leave of court or by written consent of the adverse
party; and leave shall be freely given at any stage of the action when justice
so requires.” The statute does not specify
a required method for a party to request or a court to grant leave to amend. It specifies that consent of an adverse party
must be in writing. Here, the record
reveals that the Millers’ counsel wrote to the court: “Kindly keep this case
open for future proceedings, and we will expect to have additional motions
and/or pleadings in the case within the next couple of months.” The court wrote at the bottom of the letter:
“Request approved.” Zurich has cited no authority for its
proposition that more was needed.
¶20 Moreover, we are not persuaded by Zurich’s contention that it had to be
notified that the court granted the Millers leave to amend. The record reveals that in the original
complaint, Zurich
was named only as a party with a subrogation interest. The Millers settled with the tortfeasor and
his insurer, and they were dismissed from the case. The court entered an order in February 2005
for disbursement of the settlement funds between the Millers and Zurich. The parties agree that this resolved Zurich’s worker’s
compensation interest in the case.
¶21 Zurich contends, however, that because
it was not dismissed from the case along with the other defendants, and because
the Millers requested the court to keep the case “open” as to them, the Millers
were required to notify Zurich
when the court granted them leave to amend their complaint. Thus, Zurich
argues, the Millers’ failure to notify Zurich
of the court’s granting the Millers leave to amend the complaint renders the
amended complaint a nullity. We
disagree.
¶22 It is undisputed that Zurich
was only named as a defendant in the original complaint for subrogation
purposes. The Millers settled with the
tortfeasor and his insurer, and the court approved a stipulation for
disbursement of those proceeds based on Zurich’s
subrogation interest. Thus, Zurich’s interest in the
proceedings concluded at that point.
This remains true regardless of the language the Millers used in requesting
leave from the court to file an amended complaint. Because Zurich’s
interest in the litigation had been resolved by the time the Millers obtained
leave to amend the complaint, we do not agree that Zurich was a party that needed to be notified
of that leave to amend.
¶23 We are also not persuaded that filing the amended complaint
prior to serving the amended complaint on Zurich
requires reversal of the default judgment.
While Zurich
is correct that Wis. Stat. § 801.14(4)
states that “[a]ll papers after the summons required to be served upon a party
… shall be filed with the court within a reasonable time after service,” and
that “[t]he filing of any paper required to be served constitutes a certification
by the party or attorney effecting the filing that a copy of such paper has
been timely served on all parties required to be served,” it is not established
that the failure to comply with subsection (4) with respect to timing means
that the amended complaint is a nullity.
We will not reverse a trial court judgment based on procedural error
absent a showing that the error affected the substantial rights of the
complaining party. Wis. Stat. § 805.18(2). Zurich
has not made that showing here.
¶24 Zurich cites Below v. Norton, 2007 WI App 9, 297 Wis. 2d 781, 728 N.W.2d 156, and Holman v. Family Health Plan,
227 Wis. 2d
478, 596 N.W.2d 358 (1999), in support of its contention that the default
judgment must be set aside because the Millers’ amended complaint was filed
before it was served on Zurich. In Below,
297 Wis. 2d
781, ¶21, the trial court granted Below’s motion to amend the complaint, and
directed Below to file and serve the amended complaint. Below did neither. Id. We therefore concluded that the amended
complaint, which had never been filed
or served, was a nullity. Id.,
¶23. It does not follow that the amended
complaint in this case—which was
filed and served, only in the improper order—was also a nullity.
¶25 In Holman, 227 Wis. 2d at 480, the supreme court addressed whether
Family Health Plan’s failure to answer the original complaint supported a
default judgment “when prior to the expiration of the 20-day period in which to
answer the original complaint, [the Holmans] filed an amended complaint in the
circuit court but did not serve it on Family Health Plan.” The Holmans argued that under Wis. Stat. § 801.02(1), they had
sixty days from filing the amended complaint to serve it on Family Health Plan,
and that an amended complaint is not operative until served. Holman at 489. Thus, the Holmans argued, their amended
complaint did not supersede the original complaint because their amended
complaint was never served on American Family, and thus never became
operative. Id.
The court explained that “[t]his argument fails because Wis. Stat. § (Rule) 801.02(1)
applies to an original summons and complaint to commence an action and not to
an amended complaint such as the one in this case.” Id. The court explained:
The plaintiffs have confused Wis. Stat. § (Rule) 801.02, which governs commencement of
actions, with Wis. Stat. § (Rule) 801.14(1) and (2) …. Thus the plaintiffs in the present case were
required to serve the amended complaint on Family Health Plan in accordance
with Wis. Stat. § (Rule)
801.14(1) prior to filing the amended complaint.
Id. at 490. The court also said:
The rules assume that the
parties will be served before the paper is filed with the circuit court. Section 801.14(4) further provides that “the
filing of any paper required to be served constitutes a certification by the
party or attorney effecting the filing that a copy of such paper has been
timely served on all parties required to be served ….” In this case counsel for the plaintiffs filed
affidavits of service on two defendants but no affidavit of service was filed
for service on Family Health Plan.
Id. at 490 n.16. The Holman
court, however, did not address whether a party’s failure to comply with the
requirement to serve an amended complaint before filing it rendered the amended
complaint a nullity. Instead, the court
concluded that, under the facts of the case, the amended complaint supplanted
the original complaint, and therefore the default judgment entered on the
original complaint was a nullity. Id. at
487. Holman therefore does not
guide our analysis of whether the Millers’ failure to serve the amended
complaint on Zurich
before filing, in and of itself, requires reversal of the default judgment.
¶26 We conclude that Zurich has not
shown that its rights were affected by the procedural defect of the Millers
filing the amended complaint before serving it on Zurich, and thus reversal is not
warranted. The record reveals that the
Millers filed their amended complaint on June 7, 2006. They served Zurich through its registered agent two weeks
later, on June 20, 2006. Without more,
we cannot conclude that this noncompliance with Wis. Stat. § 801.14(4) requires a reversal of the
default judgment.
¶27 Next, Zurich
contends that the amended complaint was not properly served. It points to Wis. Stat. § 801.14(2), which provides that “[w]henever
under these statutes, service of pleadings … is required or permitted to be
made upon a party represented by an attorney, the service shall be made upon
the attorney.” Zurich
argues that its attorney of record after it answered the original complaint was
Ratzel, and that therefore the Millers were required to serve Ratzel rather
than serve Zurich
directly. We conclude that the facts of
this case do not support Zurich’s
reliance on § 801.14(2).
¶28 The Millers named Zurich
in their original complaint as a party with a subrogation interest in their
action. Ratzel answered as Zurich’s attorney. The Millers then wrote to Ratzel and asked
him if he represented Zurich
as to a potential UIM claim. Ratzel
responded that he represented Zurich
only as to its subrogation interest. The
subrogation interest was then resolved. The Millers subsequently filed an amended
complaint asserting a UIM claim against Zurich,
and served Zurich
directly.
¶29 We are not persuaded that the Millers were required to serve
Ratzel with the amended complaint in light of Ratzel’s statement that his
representation of Zurich was limited to Zurich’s subrogation
interest. While we agree with Zurich that Wis. Stat. § 801.14(2) requires a
plaintiff to serve an amended complaint through a represented party’s attorney,
we do not agree that a plaintiff must do so after the represented party’s
attorney clearly expresses that his or her representation is limited to a
resolved claim under the original complaint.
After Ratzel informed the Millers that his representation of Zurich was limited to the
claim in the original complaint, and that claim was resolved, the Millers were
not required to serve Ratzel with an amended complaint asserting a separate
claim.
¶30 Finally, Zurich
argues that the default judgment should be vacated based on excusable neglect
and in the interests of justice. It argues
that the law disfavors default judgment; it favors allowing litigants their day
in court; and laws allowing courts to vacate default judgments should be
liberally construed. See Maier Construction, Inc. v. Ryan, 81
Wis. 2d 463,
472, 260 N.W.2d 700 (1978) overruled on
other grounds by J. L. Phillips &
Assocs., Inc. v. E. & H. Plastic Corp., 217 Wis. 2d 348, 577 N.W.2d
13 (1998). It argues that the trial
court failed to adequately consider its arguments to vacate the default
judgment based on excusable neglect or in the interests of justice, and
therefore did not properly exercise its discretion in denying Zurich relief. We disagree.
¶31 A trial court may grant a party relief from a default judgment based
on the party’s excusable neglect. See
Wis. Stat. § 806.07(1)(a). Excusable neglect is “that neglect which
might have been the act of a reasonably prudent person under the same
circumstances. It is not synonymous with
neglect, carelessness or inattentiveness.”
See Hedtcke v. Sentry Ins. Co.,
109 Wis. 2d
461, 468, 326 N.W.2d 727 (1982) (citation omitted).
¶32 Zurich
argues that it was entirely reasonable that Fountain would view the two
pleadings she received only several days apart and conclude that the second set
was a duplicate of the first. The
problem, however, is that the two sets of pleadings are not duplicates. It is true
that both pleadings name the Millers as plaintiffs and Zurich as a defendant, but additional
defendants differ between the sets. The
case numbers are different, and the stated causes of action are different. The trial court said:
The court considered whether
clerical error can be excusable neglect and the case law regarding the
opportunity for defendants to answer and the policy of disfavor in considering
this neglect and applying the facts and circumstances to the case law, and
cannot find that these are facts and circumstances that support a case of
“excusable” neglect under a reasonable review of Wisconsin law ….
¶33 We review a trial court’s finding on excusable neglect “not [for]
whether this court would or would not have granted … relief but rather [for] whether
the [trial] court [erroneously exercised] its discretion in reaching its
decision.” Id. at 470-71. Thus, the supreme court has upheld findings
of no excusable neglect where a client failed to forward service to others
responsible for answering, and where a lawyer failed to timely answer because
he was busy with other business. See Williams Corner Investors, LLC v. Areawide
Cellular, LLC, 2004 WI App 27, ¶12, 269 Wis. 2d 682, 676 N.W.2d 168. Similarly, we cannot say that it was an
erroneous exercise of the court’s discretion to decline to find excusable
neglect on the facts of this case.
¶34 Zurich
also argues that the trial court failed to address its argument that it was
entitled to relief from the default judgment in the interests of justice,
requiring reversal. It argues that the
court was required to analyze the following factors to undertake a complete
interests of justice analysis:
1. Whether the judgment was the result of
the conscientious, deliberate, well-informed choice of the claimant;
2. Whether the claimant received the
effective assistance of counsel;
3. Whether relief is sought from a judgment
to which there has been no judicial consideration of the merits and the
interest of deciding the particular case on the merits outweighs the finality
of judgments;
4. Whether there is a meritorious defense to
the claim; and
5. Whether there are intervening
circumstances making it inequitable to grant relief.
Allstate Ins. Co. v. Brunswick
Corp., 2007 WI App 221, ¶7, 305 Wis. 2d 400, 740 N.W.2d 888 (citation
omitted). Zurich argues that because the trial court
did not analyze these factors on the record, its discretionary determination
must be reversed.
¶35 However, the supreme court has explained that “[w]hen the
[trial] court sets forth no reason or inadequate reasons for its decision, [an
appellate court] may engage in its own examination of the record and determine
whether the [trial] court exercised its discretion and whether the facts
provide support for the [trial] court’s decision.” Hedtcke, 109 Wis. 2d at 471. “Because the exercise of discretion is
fundamental to the [trial] court’s functioning, an appellate court will
generally look for reasons to affirm discretionary decisions.” Allstate, 305 Wis. 2d 400, ¶5.
¶36 On our own review, we conclude that the record supports the
trial court’s exercise of discretion in denying Zurich’s motion for relief from the default
judgment in the interests of justice. We
agree that some of the factors weigh in Zurich’s
favor: there has been no determination
of UIM coverage under the policy on the merits, and Zurich claims there is none. However, other factors weigh against vacating
the default judgment: there are no
particular reasons to favor deciding this case on the merits over preserving
the finality of the judgment, and the default judgment followed a human error
in the course of Zurich’s
consciously chosen and deliberate system for processing complaints. Because there are factors weighing for and
against vacating in the interests of justice, we cannot say that the court
erroneously exercised its discretion in declining to grant Zurich relief.
Damages
¶37 The Millers argue that the trial court erred in limiting their
damages to $2,000,000 based on their amended complaint’s reference to Zurich’s $2,000,000 UIM
policy. They argue that the order
granting them a default judgment against Zurich
entitles them to the full amount of their damages as alleged in their amended complaint,
which were established at the damages hearing to be $9,666,314.98. They point to language in the amended complaint
alleging that Zurich
issued a policy or policies covering
the Millers’ damages, and setting forth the scope of those damages, as
entitling them to relief for the full extent of their damages.
¶38 Zurich
argues that the Millers are limited to recovering what they have demanded in
their amended complaint, and that their amended complaint clearly states they
are seeking recovery under a $2,000,000 UIM policy. It argues that the language in the Millers’ amended
complaint referring to other possible policies does not entitle them to a
damages award greater than the limits of the $2,000,000 coverage explicitly
stated.
¶39 The parties agree that, based on the default judgment, the
Millers are entitled to recover damages based on the claims in the amended complaint. See
Linker
v. Batavian Nat’l Bank, 271 Wis.
484, 490, 74 N.W.2d 179 (1956) (“A default judgment may be rendered for the
amount claimed in the complaint, but not for a greater amount.”). They disagree as to the amount claimed in the
amended complaint.
¶40 The disputed language in the Millers’ amended complaint reads
as follows:
PARTIES
….
4. Defendant,
Zurich American Insurance Company (Zurich), is an insurance company that issued
in Wisconsin a policy or policies of insurance, in full force and effect at all
times relevant hereto, to Car Quest purporting to provide underinsured motorist
[UIM] coverage to its insured, and therefore Car Quest employees, like
plaintiff Miller, driving in the scope of their employment, under the
declarations and terms and conditions of those policies, have coverage
including but not limited to the following: $[2],000,000
in commercial general liability and/or business auto and/or umbrella or other
excess coverage in consideration for premiums paid by Car Quest; defendant
Zurich is a proper party pursuant to direct action for issuing these policies
and then denying coverage.
….
CLAIMS
….
UIM Coverage on CGL or Business Auto Car
Quest Coverage From Defendant Zurich
For Granting UIM Coverage At Same Level As Liability Limits
….
42. At all times
relevant hereto, Car Quest/General Parts, Inc. was insured on those vehicles
[driven by Vearl Miller] for commercial general liability (CGL), business auto
and other liability and UM/UIM coverages for vehicles through said company as a
named insured under a policy or policies of insurance with defendant Zurich,
including but not limited to policy number BAP 8378227-11.
43. At
all times relevant hereto, Car Quest/General Parts, Inc. paid a premium for
said policy(ies) in the amount of $935,873 plus tax and surcharges for a period
of 10-01-02 to 10-01-03 and as a result received valid coverage, including UIM
coverage, for the Miller vehicle on the date in question as an insured under a
policy or policies of insurance with defendant Zurich.
44. Upon
information and belief, underinsured motorist (UIM) coverage was “included” at
the level of $2,000,000 in said premium at the same level of coverage as
liability based upon the plain language and/or ambiguities included within the
policy.
….
46. Upon
information and belief, defendant Zurich should
be deemed to provide coverage for UIM by the plain language of the declaration
page, and therefore the injuries sustained by plaintiffs Miller should result
in responsibility for coverage upon defendant Zurich which should be directly liable for
said damages under the terms and conditions of this insurance coverage.
….
49. As
a result of the foregoing, plaintiffs Millers demand relief against defendant Zurich in the form of
declaratory judgment determining that its insurance coverage applies under the
facts [and] circumstances of this loss.
50. As
a direct and proximate result of the foregoing, plaintiffs Miller[s] suffered
economic and non-economic losses all to their great harm.
….
CONCLUSION
WHEREFORE,
plaintiffs Miller[s] demand judgment against … Zurich for a monetary award of
fair and just damages for their injuries and damages and/or declaratory relief
as stated herein, together with attorneys fees, costs and other compensation to
be determined by the court or such other relief that the court may deem
appropriate.
¶41 The Millers argue that the language in their amended complaint
entitles them to relief for the full extent of their damages, despite the
language regarding a $2,000,000 policy limit.
They argue that the language at issue here is distinguishable from the
language at issue in Martin v. Griffin, 117 Wis. 2d 438, 344 N.W.2d
206 (Ct. App. 1984), where the plaintiffs were
limited to recovering the amount of damages pled following default, despite
proving that their damages far exceeded that amount. They further argue that the contract language
here is analogous to the contract language in Leonard v. Cattachach,
214 Wis. 2d
236, 571 N.W.2d 444 (Ct. App. 1997), where the
plaintiffs recovered a damages award for the full amount of their injuries, in
excess of the insurance policy’s limit, following a default judgment. Zurich responds that the
language here falls within the ambit of Martin rather than Leonard,
and thus the Millers are limited to a $2,000,000 recovery.
¶42 In Martin, 117 Wis. 2d at 440-41, the complaint alleged that Milbank
Mutual Insurance Company “‘had in effect a liability insurance policy covering
… Griffin … against liability imposed upon him by law for damages caused by his
negligent acts,’ and that Martin suffered $150,000 damages caused by Griffin’s
negligence.” Milbank’s answer was
untimely, and the court granted default judgment to Martin. Id.
at 440. Milbank appealed from the
$150,000 damages award, claiming it was entitled to a damages hearing. Id.
at 445. We concluded that “[t]he trial
court received proof by affidavit sufficient to support the $150,000 judgment
against Milbank,” and thus was not required to hold a damages hearing. Id. We also said: “The trial court found $313,454.55 damages
based on Martin’s affidavit. The court
properly limited the damage award to $150,000 as demanded by the
complaint.” Id. at 445 n.1.
¶43 In Leonard, 214 Wis.
2d at 250, the complaint
alleged that Dupont [Mutual Insurance Company] had
issued an insurance policy to [the tortfeasor] which was in effect at the time
of their injuries and which provided that the company would “pay all sums which
… [the tortfeasor] might become legally obligated to pay as a consequence of
injuries resulting from her negligent acts.”
Dupont failed to file a timely
answer, and the court granted default judgment to the Leonards. Id. at
241. Dupont appealed from the damages
award, which was in excess of its policy limits. Id. Dupont argued that the tortfeasor’s answer,
which was not stricken, alleged “that Dupont’s policy of insurance had terms
and limitations on DuPont’s obligation to pay,” and thus limited the Leonards’
recovery. Id. at 251. We disagreed, because we did not read the
tortfeasor’s answer “to plead Dupont’s policy limits and thereby increase her
exposure, if damages proved to be greater than those limits.” Id. We therefore concluded that the trial court
“properly entered judgment for the entire amount of damages proved.” Id.
¶44 We agree with the Millers that the language in their amended complaint
is not analogous to the language in Martin because they have not alleged
a specific amount of damages. However,
it does not follow that they are therefore entitled to a judgment against Zurich for the full extent
of their damages. The reason the
plaintiffs in Leonard recovered an award for the full amount of their damages
was that the complaint claimed the insurance company agreed to pay the full
extent of the tortfeasor’s liability, without stating the policy limits. The Millers’ amended complaint, read as a
whole, asserts a UIM claim against Zurich
under a $2,000,000 policy. The fact that
the complaint includes the term “policies” does not alter that fact. Because the Millers clearly alleged Zurich’s UIM policy limit
was $2,000,000, they are limited to recovering that amount.
¶45 Next, the Millers argue that there was no basis for the trial
court to prorate the damages between the Millers, because Wanda, Ross, Dayne
and Wade only asserted damages derivative of Vearl’s damages. Thus, the Millers assert, Vearl’s damages
should have been fully compensated before any award to the other Millers. Zurich argues
that Wisconsin law requires that the damages
award be prorated among the parties seeking recovery under the limited damages
award.
¶46 The problem with Zurich’s
argument is that it has not explained what interest it has in how the damages
it must pay the Millers are distributed.
Zurich is
liable for $2,000,000, regardless of how that amount is divided among the
Miller plaintiffs. The only parties with
any interest in how to divide the damages are the Millers themselves, and all
of the Millers have joined the argument against prorating the damages
award. Thus, there has been no response
by an interested party to Vearl and Wanda Miller’s appeal from the part of the
damages judgment prorating the award. We
therefore reverse this part of the trial court’s order. See
Charolais
Breeding Ranches, Ltd. v. FPC Sec. Corp., 90 Wis. 2d 97, 109, 279 N.W.2d 493 (Ct. App.
1979) (if respondent does not refute an argument, we will deem it conceded).
¶47 Finally, Zurich
argues in its cross-appeal that the court erred in assessing damages. It argues that only Vearl, and not the other
Miller plaintiffs, are entitled to UIM benefits under its policy. It also argues that the trial court erred in assessing
the Millers’ total damages by refusing to offset them by payments from worker’s
compensation benefits and the tortfeasor’s liability insurer, and in including
medical expenses which the Millers do not pay directly.
¶48 First, because we have already concluded that the Millers’
damages are to be awarded to Vearl first (rather than prorated), and Vearl’s
personal damages exceed the $2,000,000 recovery in this case, we need not
address Zurich’s
argument that the other Millers do not have valid derivative claims. Regardless, only Vearl will receive a damages
award following our decision. Next, as
to Zurich’s
remaining damages arguments, we conclude that it has not pursued those
arguments. The Millers responded to each
of Zurich’s
arguments, asserting that the trial court properly assessed their total
damages. In its reply brief, Zurich only addressed the
Millers’ arguments as to whether the court properly granted default judgment,
and did not take up its arguments concerning the damages assessment. Thus, we will deem it to have admitted that
the trial court properly assessed the Millers’ damages at the hearing. See
id. Accordingly, we affirm the trial court’s
orders granting default judgment to the Millers, denying Zurich relief from the judgment, and
determining the Millers’ damages, but reverse the part of the order prorating
the award between the Millers.
By the Court.—Orders affirmed in part;
reversed in part and cause remanded with directions.
Not
recommended for publication in the official reports.