PUBLISHED OPINION
Case No.: 94-3377-FT
† Petition for Review Pending
Complete Title
of Case:
FIRE INSURANCE EXCHANGE,
Plaintiff-Respondent,
v.
DALE M. BASTEN,
†
Defendant-Appellant.
Submitted on Briefs: May 9, 1995
COURT COURT
OF APPEALS OF WISCONSIN
Opinion Released: June 13, 1995
Opinion Filed: June
13, 1995
Source of APPEAL Appeal from a judgment
Full Name JUDGE COURT: Circuit
Lower Court. COUNTY: Brown
(If "Special", JUDGE: William M. Atkinson
so indicate)
JUDGES: Cane, P.J., LaRocque and Myse, JJ.
Concurred:
Dissented:
Appellant
ATTORNEYSOn
behalf of the defendant-appellant, the cause was submitted on the briefs of Avram
D. Berk of Robinson, Robinson, Peterson, Berk & Cross of
Appleton.
Respondent
ATTORNEYSOn
behalf of the plaintiff-respondent, the cause was submitted on the brief of Robert
N. Duimstra of Menn, Nelson, Sharratt, Teetaert & Beisenstein, Ltd.
of Appleton.
COURT OF APPEALS DECISION DATED AND RELEASED JUNE 13, 1995 |
NOTICE |
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, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 94-3377-FT
STATE
OF WISCONSIN IN COURT OF
APPEALS
FIRE INSURANCE
EXCHANGE,
Plaintiff-Respondent,
v.
DALE M. BASTEN,
Defendant-Appellant.
APPEAL from a judgment
of the circuit court for Brown County:
WILLIAM M. ATKINSON, Judge. Affirmed.
Before Cane, P.J.,
LaRocque and Myse, JJ.
CANE, P.J. Dale M. Basten appeals a declaratory
judgment finding that Fire Insurance Exchange had no duty to defend and
indemnify Basten in the lawsuit brought against him and others by Susan
Monfils.[1] Basten contends that the declaratory
judgment action was improper procedure.
Because we conclude that bringing a declaratory judgment action separate
from the underlying lawsuit was not improper, we affirm the trial court.
The facts are
undisputed. On May 26, 1993, the estate
of Thomas Monfils and his surviving spouse and children brought a wrongful
death lawsuit against Basten and six other defendants, not including Fire
Insurance, in Brown County Circuit Court.
The case was assigned to Judge Richard Greenwood in Branch I. The Monfils' lawsuit sought compensatory and
punitive damages against all defendants.
Basten tendered his
defense to his homeowner's insurance company, Fire Insurance, which refused to
defend Basten or pay for his defense.
Fire Insurance then filed a declaratory judgment action on the insurance
coverage issue, which was assigned to a separate branch of the Brown County
Circuit Court. That trial court found
that the declaratory judgment procedure was appropriate and that Fire Insurance
had no duty to defend or indemnify Basten in the Monfils case.
The sole issue on appeal
is whether Fire Insurance followed proper procedure by filing a separate declaratory judgment action
on the coverage issue.
This
issue involves application of the declaratory judgment statute, § 806.04, Stats.,[2]
as well as the permissive joinder of parties statute, § 803.04(2)(b), Stats.,[3]
to undisputed facts, which is a question of law that we review independently of
the trial court's conclusions. State
v. Williams, 104 Wis.2d 15, 21-22, 310 N.W.2d 601, 604-05 (1981).
Basten contends that
Fire Insurance's only proper course of action to resolve the issue of insurance
coverage is to intervene in the underlying lawsuit and then request a
bifurcated trial pursuant to § 803.04(2)(b), Stats. We are not persuaded.
Generally, the issue of
proper procedure turns on the status of the parties involved. If the insurance coverage involves a party
not named in the underlying lawsuit, coverage may be determined by either a
bifurcated trial or a separate declaratory judgment action. See Elliott v. Donahue,
163 Wis.2d 1059, 1066 n.3, 473 N.W.2d 155, 159 n.3 (Ct. App. 1991), rev'd on
other grounds, 169 Wis.2d 310, 485 N.W.2d 403 (1992). However, if the party seeking a
determination of insurance coverage is a named party, a bifurcated trial per
§ 803.04(2)(b), Stats., is
the proper procedure. Newhouse v.
Citizens Sec. Mut. Ins. Co., 176 Wis.2d 824, 836, 501 N.W.2d 1, 6
(1993).
Fire Insurance contends
that bifurcating the trial pursuant to § 803.04, Stats., is not the exclusive means by which determinations of
insurance coverage can be made. We
agree. Section 803.04(2) is a direct
action statute that allows the plaintiff to join an insurer as a party to an
action. Here, the plaintiff, Monfils,
chose not to join Fire Insurance to the action. Although Fire Insurance could have intervened and then moved to
bifurcate the trial, instead it sought a separate declaratory judgment on the
coverage issue.
The Uniform Declaratory
Judgments Act empowers courts to determine, among other issues, certain legal
relations or rights. See 3A Jay E. Grenig & Walter L. Harvey, Wisconsin Practice, Civil Procedure, §
604.1 (2d ed. 1994). Declaratory
judgment actions are often used in the context of insurance coverage involving
nonparty insurers. See, e.g., Newhouse,
176 Wis.2d at 831-32, 501 N.W.2d at 4.
Further, a declaratory judgment is a separate action; thus, it may take
place in a different circuit court branch due to court scheduling. Because of its status as a nonparty to the
underlying personal injury lawsuit, Fire Insurance's filing of a declaratory
judgment was not improper procedure.
However, the preferred
procedure in determining insurance coverage is the joinder or intervention of
all concerned parties, then bifurcation on the coverage and liability
issues. See id.
at 836, 501 N.W.2d at 6. This
procedure is consistent with the premise that insurance coverage issues should
be resolved within the context of the underlying lawsuit. This premise is supported by Newhouse
v. Citizens Sec. Mut. Ins. Co., 170 Wis.2d 456, 489 N.W.2d 639 (Ct.
App. 1992), where we concluded that the injured plaintiff is the real as well
as technical adversary of the insurance company; therefore, in general,
coverage questions should be resolved within the context of the underlying
personal injury case. Id.
at 466, 489 N.W.2d at 642.
Although intervention
and then bifurcation on the coverage issue is the preferred procedure, we
cannot say, however, that it is the exclusive procedure when the insurer is not
a named party in the underlying tort action.
Under these circumstances, where the insurer is not a named party, an
action for a declaratory judgment on the coverage issue remains an accepted
procedure.
By the Court.—Judgment
affirmed.
[2]
Section 806.04(1), Stats.,
states:
(1) Scope. Courts of record within their respective jurisdictions shall have power to declare rights, status, and other legal relations whether or not further relief is or could be claimed. No action or proceeding shall be open to objection on the ground that a declaratory judgment or decree is prayed for. The declaration may be either affirmative or negative in form and effect; and such declarations shall have the force and effect of a final judgment or decree, except that finality for purposes of filing an appeal as of right shall be determined in accordance with s. 808.03(1).
[3]
Section 803.04(2)(b), Stats.,
reads:
If an insurer is made a party defendant pursuant to this section and it appears at any time before or during the trial that there is or may be a cross issue between the insurer and the insured or any issue between any other person and the insurer involving the question of the insurer's liability if judgment should be rendered against the insured, the court may, upon motion of any defendant in the action, cause the person who may be liable upon such cross issue to be made a party defendant to the action and all the issues involved in the controversy determined in the trial of the action or any 3rd party may be impleaded as provided in s. 803.05. Nothing herein contained shall be construed as prohibiting the trial court from directing and conducting separate trials on the issue of liability to the plaintiff or other party seeking affirmative relief and on the issue of whether the insurance policy in question affords coverage. Any party may move for such separate trials and if the court orders separate trials it shall specify in its order the sequence in which such trials shall be conducted.