Prospect of Contributory Negligence Does Not Protect Against Section 628.46 Interest

Wisconsin Statute § 628.46 is an important statute in Wisconsin insurance law – it provides that an insurer is subject to penalty interest for liability on claims “if not paid within 30 days after the insurer is furnished written notice of the fact of a covered loss and of the amount of the loss . . .”  Importantly, the statute also provides that “[a]ny payment shall not be deemed overdue when the insurer has reasonable proof to establish that the insurer is not responsible for the payment . . .”  So, what is this “reasonable proof”?

In Casper v. American International South Insurance Company, 2015AP2412 (Ct. App. Dist. I, May 16, 2017), the court reviewed the application of § 628.46 under circumstances which indicated liability would likely be apportioned between the plaintiffs and defendants at trial, meaning the defendant insurer was considered to have a liability defense at trial.  The plaintiffs were severely injured in an auto accident and made a demand in 2007 for the defendants’ $1,000,000 policy limits, which the defendants ultimately tendered in 2012.  The plaintiffs’ medical bills at the time of their demand exceeded $643,000, and claimed future treatment totaled more than $7,000,000.

The plaintiffs also sought almost $700,000 in interest under Wis. Stat. § 628.46 for the time period between their demand and the ultimate tender.  The defendants argued, however, that payment had not been due under Wis. Stat. § 628.46 because they had a reasonable defense – there was evidence that the plaintiff driver had not proceeded normally through the intersection upon a green light and thereby may have contributed to causing the accident.

In reviewing Kontowicz v. American Standard Ins. Co. of Wisconsin, 2006 WI 48, the court explained that for third-party claims to trigger the interest provision of Wis. Stat. § 628.46, the claimants had to show “that there is ‘no question’ of the insured’s liability; second, that there is a ‘sum certain’ of plaintiffs’ damages; and third, that the insurer received written notice of liability and the ‘sum certain’ damages.”  Regarding the first prong (which is the focus here) – interest would not be triggered “if the insurer has reasonable proof it is not responsible,” which was defined in Kontowicz as “that amount of information which is sufficient to allow a reasonable insurer to conclude that it may not be responsible for payment of a claim.”  Several factors inform this calculus, including whether there are reasonable coverage issues and whether there are high damages compared to relatively lower limits.  Importantly, regarding the latter, “the potential for contributory negligence by a party is not, in itself, sufficient to constitute ‘reasonable proof’ that will defeat an award of interest.”

The defendant driver in Casper admitted that he was under the influence of prescription drugs at the time of the collision and that he neither saw the plaintiffs’ vehicle nor slowed down before the collision.  This, the court reasoned, showed that there was no question of liability on the part of the defendant driver, even though some apportionment could have been possible later at trial.  Based upon the clear liability and amount of claimed medical specials far exceeding the limits, the defendants’ duties under Wis. Stat. § 628.46 were triggered and the penalty interest was found appropriate by the court.

Court of Appeals Holds That Public Policy Does Not Shield Insurer From Potential Liability For Heroin Overdose

A tragic series of events, most of them disputed, led to a recent published decision from the Court of Appeals on insurance coverage issues related to intentional conduct, occurrences, and the application of public policy. See Oddsen v. Henry, 2015AP000765 (recommended for publication).

On February 2, 2010, Jason Oddsen went to a party at a friend’s home. During the course of the party, Oddsen, who was a regular abuser of drugs, consumed a mixture of heroin, methadone, oxycodone, and alprazolam that proved fatal early the next morning. At some point during the evening, Oddsen became incoherent but then regained consciousness. Another party guest, Elizabeth Henry, became concerned and brought Oddsen to her mother’s house sometime between 1:00 a.m. and 1:30 a.m.  It was there that Oddsen “began to show signs of having overdosed.” Oddsen was pronounced dead at the hospital at 7:28 a.m.

Continue reading

Court of Appeals Rules That “Known Danger” Exception to Governmental Immunity Is Inapplicable to Law Enforcement Investigation of Sexual Abuse

The Wisconsin Court of Appeals recently examined the “known danger” exception to governmental immunity available under Wis. Stat. § 893.80(4). In Recore v. County of Green Lake, 2015AP001301 (recommended for publication) the court held that a police department’s investigation of sexual abuse allegations “falls within a discretionary analysis” and as such is entitled to immunity. It further held that the “known danger” exception cannot apply when no one actually knew that the perpetrator of the abuse was dangerous. Finally, it held that a County’s investigation under Wisconsin’s mandatory reporting law, Wis. Stat. § 48.981, was entitled to immunity.

The facts giving rise to the case are certainly tragic, as they involve the sexual abuse of a minor. In 2011, D.B. was a first-grader in Berlin, Wisconsin. He began to exhibit sexualized behavior toward classmates that was understandably concerning to his school’s principal. The principal contacted the Police School Liaison Officer about the incident and also advised the officer that when questioned about the behavior, D.B. reported that his “Uncle Rob” told him about it and showed him pictures of naked people on his cell phone.

Continue reading

Prisoner Litigation Reform Act’s Exhaustion Requirement Is Inapplicable When An Inmate Is Not Informed Of The Grievance Process

Failure to exhaust administrative remedies pursuant to the Prison Litigation Reform Act (“PRLA”), 42 U.S.C. § 1997e(a), is a common defense in prisoner civil rights litigation. Federal courts strictly enforce this requirement, and therefore it is often a dispositive defense. However, the Seventh Circuit recently held that an inmate-plaintiff had no duty to follow a corrections facility’s grievance process when the facility failed to inform him of its process. In such instances, an administrative remedy is unavailable. And when an administrative remedy is unavailable, the PLRA’s requirements are inapplicable. See Hernandez v. Dart, No. 15-2493 (7th Cir. 2016).

Hernandez raised Section 1983 claims against the Cook County Department of Corrections (“CCDOC”) including an allegation of excessive force. A car accident in 2012 rendered Hernandez a quadriplegic. He has no use of his legs, limited use of his arms, and cannot write. On the day he was taken into custody, Hernandez was hospitalized for treatment of pressure wounds that had developed during his stay at a nursing home. Pursuant to Cook County Sheriff’s Office policy, one of his hands and one of his feet were shackled to the hospital bed. Hernandez orally complained to correctional and hospital personnel, as he believed it stunted his recovery by preventing him from moving so his sores could heal.

CCDOC’s Inmate Information Handbook sets forth a grievance process, which requires inmates to file a written grievance within fifteen days of the alleged incident. Once a response is received, the inmate has 14 days to appeal the decision. However, Hernandez never received a copy of the Handbook. Nor did anyone from CCDOC tell Hernandez about the grievance process. Rather, Hernandez claimed that he later learned about the process from fellow inmates after being discharged from the hospital.

Continue reading

Defamation Down Under: Online Publications and Personal Jurisdiction

Recently, in Salfinger, et al. v. Fairfax Media, Ltd., et al., the Wisconsin Court of Appeals considered “whether a Wisconsin Court may exercise jurisdiction over foreign defendants whose only real connection to the State of Wisconsin is in having published an article online that is ostensibly available to anyone in the world and that also provides for targeted advertising based upon the user’s location and interests.”  ¶ 11.

Plaintiff Roderick Salfinger, an Australian claiming to be a resident of Shorewood, WI, brought a defamation claim against the Sydney Morning Herald for an article it ran about the family behind Yellow Tail wine, which noted his connection to them and contained other individuals’ descriptions and opinions about him which were “less than flattering.”  ¶¶ 2-4.  Of primary concern to the plaintiff was a statement that he “faces prosecution in the [United States] after allegedly producing a revolver at his daughter’s wedding.”  ¶ 4.

Continue reading

Boy is it Cold! How is your Automatic Fire Sprinkler System?

A recent publication by NFPA, Hall, J. R. (2010). “U.S. Experience with Sprinklers and Other Automatic Fire Extinguishing Equipment” reports the analysis of data from a single calendar year reveals approximately 120 inadvertent automatic fire sprinkler discharges per day.  Inadvertent discharges result in millions of dollars in damage per year.

Sprinklers inadvertently discharge for a number of reasons, the most common of which are: (1) non-fire related overheating; (2) freezing; (3) mechanical damage; (4) corrosion; (5) sabotage; and (6) component manufacturing defects. Blum, A., Long, R.T., Dillon, S., “Investigating Inadvertent Automatic Fire Sprinkler System Discharges,” Forensic Engineering, 2012.  Commercial properties are most likely to see an inadvertent discharge, followed by manufacturing facilities, homes and warehouses.  Id.

Critical aspects of evidence collection include the discovery and collection of each piece of the failed component. Blum, et al. at 530.  As usual, preparation for this type of investigation is critical.  As much as possible, be prepared in advance to look for the right components.  Consult the as-built drawings.  Look at the spare heads in the spare sprinkler box, and study the appearance of the activation elements, caps and seals.  Try to get there prior to the commencement of cleanup efforts.  If they have begun before you are invited, do your best to document what has been cleaned up and by whom, as the duty to preserve evidence attaches at the time a claim is evident.  Preservation of fracture surfaces is critical, as those surfaces often tell the story of the failure.

Continue reading

Falsely Induced “As-Is” Clause Will Not Defeat Statutory Claim of Deceptive Representation

A recent decision by the Court of Appeals examined how Wisconsin’s deceptive representation statute, Wis. Stat. § 100.18(1), applies to “as-is” sales and contractual exculpatory clauses. While sellers may rely on “as-is” language to avoid liability for problems or defects that are discovered down the road, this new decision confirms that, just as with common law claims for misrepresentation, a falsely induced “as is” clause does not preclude liability under section 100.18.

In Fricano v. Bank of America NA, 2015AP20 (recommended for publication), the bank acquired a home in foreclosure. After acquiring the home, the bank’s real estate agent discovered that the property had suffered severe water damage. The real estate agent emailed the bank’s asset manager photos of the damage, which included pooling water and fallen ceilings. The bank’s asset manager said that “quick clean up would save the property from any mold issues.”

However, the remediation and repair was not completed for seven months and the real estate agent found the work to be unsatisfactory. The real estate agent had warned the bank throughout the process that mold could develop, although by the time the remediation was complete and the house was listed, the real estate agent had not seen or smelled any signs of mold. Nevertheless, the house was listed and the plaintiff set up a showing. Her real estate agent took her through the home and noticed discoloration in the basement that looked like mold. Although they noticed mold elsewhere in the basement, they did not see any evidence of mold anywhere else in the home.

Continue reading

Addressing Claims after a Product Rollout (I’m looking at you, Hoverboard)

My news feeds this morning are alive with the re-posting of tweets and other social media blasts related to injuries suffered by the recipients of, generically, the Hoverboard. These products remind me of the rollout of the Segway, and the inevitable claims and lawsuits for injuries that followed a truly revolutionary concept in human transportation.

The Segway was expensive, though. Really expensive.  And they have handles.

Hoverboards, on the other hand, are running about $400. Price, and a steady stream of media stories leading up to Christmas made the product a hot gift this year.  A large sales volume of a relatively revolutionary concept in personal travel (without handles!) over a short time will mean that these manufacturers will be inundated with claims, and attempts to certify class action lawsuits, in the coming year.

Responding to those claims, evaluating accidents their causes, categorizing injuries and organizing the response to the inevitable claims will directly affect the bottom line of these manufacturers and their insurers over the coming several years.

Continue reading

Statute of Limitations in Facebook Defamation Claim Based on “Active Use”

A recent published Court of Appeals decision has added some guidance for litigating defamation claims arising from use of social media. In Laughland v. Beckett, 2015 WI App 70, 14AP002393, the court examined a claim for defamation related to a fake Facebook account and posts made by the fake account that spanned several months. “Active use” of the social media account, which included “actively publish[ing] material” on the fake account, constituted a “continuing course of conduct” for purposes of the statute of limitations. See ¶18. As such, the “single publication rule” established in Ladd v. Uecker, 2010 WI App 28 was not outcome determinative. The court applied the statute of limitations based on the date of the last Facebook post and held that the claim was timely filed. The facts are as follows:

Continue reading

Emergency Doctrine Does Not Apply to Dog Owner Who Intervened When Family Pet Was Attacked

Well, as summer vacation comes to a close, it’s time to set down my piña colada, fold up my hammock, and get back to work.  Thank goodness the legal industry takes a hiatus during these warmer months so we can all enjoy days on end in the sun with friends and family.

Or not. But at least I’m not the only one trapped in an office on these gorgeous, fleeting days. The Wisconsin Court of Appeals has been busy at work, too.  A recent decision focused on the importance of the temporal element when determining whether the emergency doctrine applies as a defense to a given fact situation. In Kelly v. Berg, 2014AP001346 (recommended for publication), the court of appeals remanded the case for a new trial after the jury was instructed on the emergency doctrine and returned a verdict in favor of the plaintiff who had suffered a dog bite.

While the defendants argued that the emergency doctrine should not apply to the actions of a person who is attempting to prevent damage to property (in this case, the plaintiff’s dog), the court did not reach this issue. Instead, the appellate court focused on the time in which action is required. For the doctrine to apply, “the person’s reaction to the danger must be “practically instinctive or intuitive.” The court compared two previous cases in which the time to react was two seconds (the doctrine applied) and seven seconds (the doctrine did not apply).

In this case, the appellate court did not refer to or rely upon any specific computation of time that elapsed before the plaintiff reacted. Nevertheless, the record demonstrated that the plaintiff had sufficient time to make a deliberate and intelligent choice whether to intervene in a fight between her dog and the defendants’ dog. The court also held that “when considered as a whole,” the instructions together did not convey the correct legal standard and therefore the erroneous instruction was prejudicial.

The facts are as follows:

Joan Kelly was drawn outside on the evening of June 16, 2011 when she heard her chocolate lab, Moosie, screeching and yelping. [Author’s note: awesome dog name.] Joan found Moosie under attack by her neighbor’s pitbull, Princess. Joan screamed for Princess’s owners, Amanda Berg and Adam Finkler, to come help but they did not respond. When it became apparent to Kelly that Princess would likely kill Moosie if she did not intervene, Kelly grabbed Princess’s jaws and pried them open, releasing Moosie’s neck and allowing Moosie to escape toward the back door of Kelly’s home.

Continue reading