PUBLISHED OPINION
Case No.: 95-2932
†Petition to
review filed
Complete Title
of Case:
In the
Matter of Nicholas L.
Carpenter,
A Minor:
TOWER
INSURANCE COMPANY, INC.,
Plaintiff-Appellant,†
v.
GARY
CARPENTER,
Defendant-Third
Party
Plaintiff-Respondent,
v.
JEFFREY
SZALACINSKI,
Third
Party Defendant.
Oral Argument: July 31, 1996
COURT COURT OF APPEALS OF WISCONSIN
Opinion Released: October 2, 1996
Opinion Filed: October
2, 1996
Source of APPEAL Appeal from a judgment
Full Name JUDGE COURT: Circuit
Lower Court. COUNTY: Fond du Lac
(If
"Special", JUDGE: PETER L. GRIMM
so indicate)
JUDGES: Anderson, P.J., Brown and Snyder, JJ.
Concurred:
Dissented:
Appellant
ATTORNEYSOn behalf of the plaintiff-appellant, there were briefs
and oral arguments by Terry J. Booth of Fellows, Piper & Schmidt
of Milwaukee.
Respondent
ATTORNEYSOn behalf of the defendant-third party
plaintiff-respondent, there was a brief by James C. Herrick, Jr. and Michele
D. Miller of Herrick Law Office, S.C. of Fond du Lac. There were oral arguments by Michele D.
Miller.
Guardian
ad Litem
ATTORNEYSOn behalf of Nicholas L. Carpenter, there was a brief by
John A. Neal and Beth D. Osowski of Curtis, Wilde & Neal Trial
Lawyers of Oshkosh. There were oral
arguments by Beth D. Osowski.
COURT OF
APPEALS DECISION DATED AND
RELEASED October
2, 1996 |
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. 95-2932
STATE OF WISCONSIN IN
COURT OF APPEALS
In the
Matter of Nicholas L.
Carpenter,
A Minor:
TOWER
INSURANCE COMPANY, INC.,
Plaintiff-Appellant,
v.
GARY
CARPENTER,
Defendant-Third Party
Plaintiff-Respondent,
v.
JEFFREY SZALACINSKI,
Third Party Defendant.
APPEAL
from a judgment of the circuit court for Fond du Lac County: PETER L. GRIMM, Judge. Affirmed.
Before
Anderson, P.J., Brown and Snyder, JJ.
SNYDER,
J. Tower
Insurance Company, Inc., appeals from a judgment awarding Gary Carpenter
$50,000 in underinsured motorist (UIM) benefits on the following grounds: (1) that the Tower policy does not provide
UIM coverage; (2) that Tower is entitled to the return of its $50,000 payment
because it was a mistake; and (3) that the doctrine of accord and satisfaction
is not applicable. Because Tower's
payment of $50,000 was a final negotiated settlement of Carpenter's claim, we
affirm the trial court.
Carpenter's
wife, Sandra, was killed in an automobile accident in January 1994. American Family Mutual Insurance Company
insured the at-fault driver, and after negotiations with Carpenter's attorney,
James Herrick, American Family tendered the $100,000 limits of the bodily
injury portion of its policy in exchange for a complete release of American
Family and its insured. Prior to
Carpenter's acceptance of that payment, Herrick notified Carpenter's insurer,
Tower, of American Family's offer pursuant to Vogt v. Schroeder,
129 Wis.2d 3, 383 N.W.2d 876 (1986).
That notification consisted of a copy of a letter Herrick had sent to
American Family which memorialized their telephone conference discussing the
insurance company's offer to tender the limits of its bodily injury coverage,
and included the following paragraph:
[W]e
are hereby notifying [Tower] of the tentative settlement between our client,
Gary Carpenter, and American Family Mutual Insurance Company.
The copy sent to Tower also included a blind postscript:
Our client's claims have a value in excess of
$100,000. As is apparent, Tower
Insurance Company will be required to pay its underinsured motorist coverage
limits .... Please forward a copy of
the automobile policy that was in full force and effect on the date of the
subject accident of January 27, 1994.
This letter was dated July 1, 1994.
In
response to this letter, on August 19, 1994, Tower advised Herrick by telephone
that it would not substitute a payment from its UIM coverage for American
Family's payment.[1] A substitute payment would have been
necessary had Tower chosen to protect its subrogation rights. Tower also informed Herrick that it would
pay its $50,000 UIM coverage limit to Carpenter. These decisions followed an in-house discussion between the
following Tower employees: Jeffrey
Szalacinski, the claims representative who had reviewed the file; two claims
managers, one of whom directly supervised Szalacinski; and Geraldine Garrity, a
Tower vice-president and director of claims.
A check for $50,000 was mailed on August 29, 1994.
Upon
learning of the payment, Carpenter's insurance agent inquired of Tower whether
the payment had been properly made, based on the fact that American Family's
liability limit was greater than the Tower policy UIM coverage limit. On September 20, 1994, after reviewing its
policy, Tower requested that the check be returned.
Carpenter
declined to return the check and Tower commenced this action. Both sides brought motions for summary
judgment. The trial court ruled that
Tower was not entitled to a return of the $50,000 payment, finding that the
check represented a settlement, and awarded the check to Carpenter pursuant to
the doctrine of accord and satisfaction.
Tower now appeals.
We
review decisions on summary judgment de novo, applying the same methodology as
the trial court. Armstrong v.
Milwaukee Mut. Ins. Co., 191 Wis.2d 562, 568, 530 N.W.2d 12, 15 (Ct.
App. 1995), aff'd, 202 Wis.2d 258, 549 N.W.2d 723 (1996). That methodology, set forth in § 802.08(2),
Stats., has been recited often
and we need not repeat it here. See
Armstrong, 191 Wis.2d at 568, 530 N.W.2d at 15. This court is not bound by a trial court's
conclusions of law and decides such matters de novo. See First Nat'l Leasing Corp. v. City of Madison,
81 Wis.2d 205, 208, 260 N.W.2d 251, 253 (1977).
Tower
first claims that Carpenter should be required to return the payment because
its policy does not provide UIM coverage under these facts. Tower's policy defined an “underinsured
motor vehicle” as “a land motor vehicle ... to which a bodily injury liability
bond or policy applies at the time of the accident, but its limit for bodily
injury liability is less than the limit of liability for this coverage.” The at-fault driver carried an American
Family bodily injury policy with limits of $100,000. Under the terms of Tower's policy, the other driver was not
driving an underinsured motor vehicle.
While we agree with Tower's belated assessment of its own policy's
coverage, we conclude that this factor is not dispositive of the issue
presented.
Tower
next argues that the $50,000 payment was a mistake of fact and therefore should
be returned. Tower claims that the
check was tendered “because Tower did not read and know the applicable
provisions of its insurance policy.”
Carpenter counters this with his claim that the payment was a settlement
of a disputed amount, and as such, Tower should be held to its bargain under
the doctrine of accord and satisfaction.
Tower submits that the doctrine of accord and satisfaction is not
applicable to the instant case. In
support of this, Tower quotes the following language from Erickson v.
Gundersen, 183 Wis.2d 106, 116, 515 N.W.2d 293, 298 (Ct. App.
1994): “While the Clinic based its
cross-claim on accord and satisfaction, the rule does not normally give rise to
an affirmative claim or a cause of action.”
While
the more common usage of accord and satisfaction is as an affirmative defense
to a creditor's claim that money paid did not satisfy a debt, we see no reason
why the contract principles of accord and satisfaction would not be applicable
to the issue presented in the instant case.
Furthermore, the statement quoted from Erickson is
dicta. The court in the Erickson
case subsequently determined that the doctrine was inapplicable because the
parties did not have a disputed claim. Id.
at 116-17, 515 N.W.2d at 298. Thus, the
Erickson court did not make a determination as to whether accord
and satisfaction was applicable to the affirmative claim brought in that case.
Resolution
of the issue presented requires consideration of the legal bases for the
conflicting claims, as well as the undisputed facts leading up to the issuance
of the check.[2] The law in Wisconsin is well settled that a
payment in full settlement of a claim which is disputed as to amount discharges
the entire claim. Flambeau Prods.
Corp. v. Honeywell Info. Sys., Inc., 116 Wis.2d 95, 113, 341 N.W.2d
655, 664 (1984). Resolution of a
controversy involving something of monetary value and of interest to the
parties is sufficient consideration for such a claim. Id. The
common law rule of accord and satisfaction rests not only on principles of
contract law but also on principles of sound public policy. Id. at 110-11, 341 N.W.2d at
663. Such a rule promotes the public
interest in resolving disputes informally and without litigation. Id. at 111, 341 N.W.2d at 663.
The
trial court considered the undisputed facts and determined that Carpenter
entered into a settlement agreement with Tower. The trial court stated that it
place[d] great weight on the nature of the parties and
their position to each other .... On
the one hand, you had Gary Carpenter aided by skilled counsel well versed in
the law, and on the other hand you had an insurance company whose sole
business, at least in this context, is to review claims, make decisions, and
make payments on claims under their policies ....
The trial court also determined that the affidavits and
record of correspondence indicated that Herrick made a demand that Tower pay
its UIM coverage limits. In response to
that demand, Tower looked at the nature of the claim, reviewed its options and
then decided to pay $50,000. In
accepting Tower's offer, Carpenter made a decision to forego a possible
$100,000 claim. This provided
consideration for the agreement. On
Tower's part, the fact that this agreement resolved a claim operated as
consideration.
We
concur with the reasoning of the trial court. Correspondence between Herrick and Carpenter which predates
Herrick's demand that Tower tender the UIM coverage limits outlines pertinent
legal considerations relating to Carpenter's claim against American Family and
possible claims against his own UIM insurer.
As early as May 11, 1994, Herrick advised Carpenter that “based upon the
present status of the law you have at least a 50% opportunity to pursue a claim
successfully against [Tower].”
Herrick's
August 31 letter which followed Tower's offer of a $50,000 settlement clearly
outlined the relevant case law and analyzed Carpenter's claim against Tower in
relation to it. Herrick noted that
while Carpenter could pursue a potential claim of $100,000 from Tower,[3]
rejection of Tower's offer of $50,000 would result in arbitration. The Herrick analysis then considered the
fact that the outcome of such a hearing could result in the loss of the $50,000
if the arbiters were to adopt the reasoning of the Smith and Link
cases. See Smith v.
Atlantic Mut. Ins. Co., 151 Wis.2d 542, 444 N.W.2d 465 (Ct. App. 1989);
aff'd, 155 Wis.2d 808, 456 N.W.2d 597 (1990); see also Link
v. General Casualty Co., 185 Wis.2d 394, 518 N.W.2d 261 (Ct. App.
1994).
Additionally,
the record is clear that Tower held a meeting to discuss Herrick's July 1
letter which contained the demand for the tender of the UIM policy limits. That meeting included Szalacinski, two
claims managers and Garrity. While
their affidavits disavowed any discussion of whether the UIM coverage should be
tendered, Szalacinski admitted that when the decision was made to pay the
$50,000, “It was my opinion that a settlement was reached.” Furthermore, notes made by Patricia Lamon,
another Tower employee, during a telephone conference with Szalacinski on
September 6, suggest that there had been some consideration of a possible
“stacking” claim.
Based
on our independent review of the undisputed facts, we conclude, as did the
trial court, that Tower's payment of $50,000 was a settlement of a disputed
claim. As the trial court stated, “Even
though both parties don't verbally, aggressively bargain down each other, there
is a conscious process of sophisticated parties.” The affidavits support the conclusion that Tower made the payment
as a final settlement.[4]
Tower
argues that even with our conclusion that its payment was an accord and
satisfaction of a disputed claim, mistake is an exception to that
doctrine. Wisconsin follows the general
rule that “[a] party who has expended money by mistake of fact may ordinarily
recover such sum in an action for money had and received.” Amalgamated Ass'n of St. Elec. Ry.
& Motor Coach Employees v. Danielson, 24 Wis.2d 33, 36, 128 N.W.2d
9, 10-11 (1964). A mistake of fact has
been defined as “[a]n unconscious ignorance or forgetfulness of the existence
or nonexistence of a fact, past or present, material to the contract.” Grand Trunk West. R.R. Co. v. Lahiff,
218 Wis. 457, 461, 261 N.W. 11, 13 (1935).
Tower contends that the assumption it made regarding its liability under
the UIM portion of Carpenter's policy was a mistake of fact, and as such
operates to bar the application of the doctrine of accord and
satisfaction. We are unpersuaded.
We
conclude that the doctrine of accord and satisfaction is not defeated by
Tower's argument of mistake. Tower cites the following section of 66 Am. Jur.2d Restitution and Implied
Contracts § 119 (1973), in support of this contention:
It is a firmly established general rule that money paid
to another under the influence of a mistake of fact, that is, on the mistaken
supposition of the existence of a specific fact which would entitle the other
to the money, which would not have been paid if it had been known to the payor
that the fact was otherwise, may be recovered ....
Tower, however, fails to cite to the next section,
§ 120, which reads:
The rule above set forth, that money paid under a
mistake of fact is recoverable, is subject to certain well-defined
exceptions. Thus, a payment induced by
mistake cannot be recovered if ... the money is received in good faith in
satisfaction of an equitable claim ....
[Emphasis added.]
Based on our previous conclusion that the payment was
made as a settlement of a disputed claim, Tower cannot now rescind that
settlement on a theory of mistake. All
relevant information was available to both parties when the agreement was
reached. We cannot say that Carpenter
lacked good faith in receiving the settlement proceeds. Tower cannot now recover the $50,000 because
it determined that it made a bad bargain.
By
the Court.—Judgment affirmed.
[1] Jeffrey
Szalacinski, the claims representative, stated in his affidavit that before the
decision was made not to substitute payment for American Family, he hired a
firm “to conduct a financial investigation of the driver which had collided
with [Sandra Carpenter's] car.”
[2] Tower states in
its brief-in-chief that several of the trial court's recitations of fact are
inaccurate or incorrect when compared to the information provided in the
affidavits. However, Tower does not
specifically identify those factual statements which it believes to be
inaccurate. We have conducted an independent
review of the facts, and we have not found any material inaccuracies in the
trial court's recitations of fact.