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2011

Wisconsin Supreme Court accepts three new cases

Madison, Wisconsin - October 5, 2011

The Wisconsin Supreme Court has voted to accept three new cases. The Court also acted to deny review in a number of cases. The case numbers, issues, and counties of origin are listed below. Court of Appeals opinions available online for the newly accepted cases are hyperlinked.

2009AP2099 Admiral Ins. v. Paper Converting Machine Co. (withdrawn)
This case arises from a dispute over insurance coverage for a woman who was injured at an International Paper manufacturing plant on Feb. 22, 2005, while working on a machine made by Paper Converting Machine Co. The Supreme Court examines jurisdictional issues and lower court decisions that resulted in dismissal of the appeal of two insurance companies as untimely.

Some background: Admiral Insurance Co. and Chubb Custom Insurance Co. sought a declaration that no insurance coverage is available for the claim of Elizabeth Young against Paper Converting. The insurers sought reimbursement of a $3.3 million settlement payment. According to the trial court's decision, Paper Converting was self-insured for products liability at the time Young was injured. Following Young's accident, Paper Converting, which was bought out by another company, sought insurance.

In September 2005 Paper Converting purchased a retroactive claims-made policy covering claims made after the policy effective date, including injuries that occurred in the prior ten years, from Admiral. It also purchased an excess liability policy from Chubb.

Paper Converting was required to disclose all pending occurrences that could reasonably result in litigation that had taken place before coverage by Admiral and disclosed a number of occurrences, including Young's accident, to Admiral's policy department. Young had not yet made a claim.

On May 8, 2006, Young sued Paper Converting for her injuries. Paper Converting notified the claims department at Admiral. An agreement was reached settling the lawsuit for $3.5 million, signed only by Young and Paper Converting.

However, after the agreement was reached but before payment, Admiral discovered the incident occurred. Admiral paid the policy maximum $2 million, reserving its right to seek reimbursement from Paper Converting in a subsequent lawsuit. Chubb paid $1.3 million and joined Admiral's request for reimbursement. The parties agreed that payment would not constitute a waiver of the insurers' claim for reimbursement.

On March 26, 2009, the circuit court issued a “Decision and Order” that made findings of facts, conclusions of law, denied the insurers' summary judgment motions, and granted Paper Converting's summary judgment of dismissal. The court said that Paper Converting had disclosed the accident to the policy department and reasonably assumed the claims department knew the accident had occurred prior to the implementation of the insurance policy

 The decision stated the case was dismissed. However, it is undisputed this decision and order did not comply with Wambolt/Tyler directive. See Wambolt v. West Bend Mutual Insurance Co., 2007 WI 35, 299 Wis. 2d 723, 728 N.W.2d 670; Tyler v. RiverBank, 2007 WI 33, par. 25, 299 Wis. 2d 751, 728 N.W.2d 686 (final orders entered after September 1, 2007, must include a statement that the order or judgment is final for purposes of appeal).

On Dec. 7, 2010, the Court of Appeals affirmed the summary judgment but on Dec. 21, 2010, on its own motion, the Court of Appeals ordered its Dec. 7 decision withdrawn and dismissed the appeal as untimely. 

Admiral and Chubb ask the Supreme Court to review whether the March 26, 2009 judgment was final for purposes of appeal when it lacked the Wambolt language, and the prevailing party, which had asserted counterclaim for attorney fees, asked the court not to enter a final judgment until the attorney fee issue was resolved. They also ask the Court to review the issue of reimbursement under the circumstances here.

2009AP2752 Wadzinski v. Auto-Owners Ins. Co.
This case reviews whether language contained in an executive umbrella policy provides uninsured motorist coverage for a man killed in an accident while riding his motorcycle in Door County in 2006.

The Supreme Court examines principles of construction of the policy: whether an ambiguity in one provision may be sufficient to overcome the clear purpose and objective of the policy as a whole.

Some background: Steven Wadzinski was a covered insured under three separate Auto-Owners' policies, including the only policy that is subject of this appeal: an executive umbrella policy with $2 million limits issued to Wadzinski.

The circuit court concluded the policy language does not mention uninsured motorist (UM) coverage and can be reasonably interpreted in only one way. The circuit court said it is well established that an exception to an exclusion cannot create coverage when the coverage grant does not extend coverage.

Michelle B. Wadzinski, individually and as personal representative of the Estate of Steven M. Wadzinski (Wadzinski) appealed. The Court of Appeals found ambiguity and concluded that reading the endorsement as a whole suggests a grant of coverage, not an exclusion.

Auto-Owners claims the Court of Appeals' decision is the first and only decision in Wisconsin to hold a third party umbrella policy, that contains no mention of the UM coverage anywhere in the policy, must be construed to provide such coverage. It argues the decision transforms the nature of the risk insured under such third-party umbrella policies, subjecting excess insurers to a new class of claims.

Auto-Owners contends the Court of Appeals' decision conflicts with case law indicating umbrella policies providing excess third-party liability coverage cannot be construed to require payment of supplemental UM benefits by implication, unless the policy expressly mentions UM coverage. See § 809.62(1r)(d).

The disputed language reads:

EXCLUSION OF PERSONAL INJURY TO INSUREDS FOLLOWING FORM
We do not cover personal injury to you or a relative. We will cover such injury to the extent that insurance is provided by an underlying policy listed in Schedule A.

The Court of Appeals said the first sentence unambiguously informs the insured the executive umbrella does not provide first-party coverage. Nonetheless, it concluded the second sentence appears to limit the effect of the first by stating that, under certain circumstances, the insurer will provide first-party coverage.

Wadzinski argues Auto-Owners sold the commercial umbrella and executive umbrella policies in combination and they carry a single policy number. Thus, she argues, sold as a single policy and issued together, these umbrella coverages would naturally be read together. She says policyholders reasonably view umbrella coverage as an extension of underlying coverage and the title of the policy reinforces that natural impression. See Oelhafen v. Tower Ins. Co., 171 Wis. 2d 532, 538-39, 492 N.W.2d 321 (Ct. App. 1992). She says nothing in the declarations page advised that even though the underlying policy carried UM coverage, the executive umbrella policy did not.

2010AP784 State v. Tyler T.
This case examines the fairly narrow issue of whether it is improper for an assistant district attorney to appear at a waiver recommendation meeting when neither the juvenile nor his attorney was asked to attend.

Some background:  At age 15, a delinquency petition charged Tyler T. as a party to an armed robbery of a gas station, contrary to Wis. Stat. §§ 939.05 and 943.32(2). The state requested the juvenile court waive Tyler into adult court because armed robbery is a felony involving aggression and premeditation. Members of the Walworth County Department of Health and Human Services (WDHHS) held a staff meeting to decide whether to recommend that Tyler be tried as an adult. See Wis. Stat. § 938.18(2m). The assistant district attorney was invited to the meeting but Tyler and his defense counsel were not.

Although the assistant district attorney recommended at the meeting that Tyler be tried as an adult, the WDHHS made no recommendation in its report because the staff members could not reach a consensus. The circuit court ordered Tyler waived into adult court. However, the circuit court noted that it judged this on its “own feelings” and not based on any recommendation.

The Court of Appeals affirmed, rejecting Tyler's assertion that a waiver investigation report should be treated the same as a pre-sentence investigation (PSI) report. The Court of Appeals explained:

A waiver investigation report is distinct from a PSI report. A petition to waive a juvenile into adult court can be filed by the prosecution, the juvenile, or the court. See Wis. Stat. § 938.18(2). A PSI is ordered exclusively by the court. See § 972.15(1). In this case, the assistant district attorney filed the waiver petition. While § 938.18 does not address whether a prosecutor may be present at a waiver recommendation report meeting, there is nothing in the Wisconsin statutes or case law that precludes a prosecutor from appearing. Indeed, it is entirely appropriate for the prosecution to appear at this meeting given that the assistant district attorney was the one who requested that Tyler be tried as an adult.

The state says Tyler has not addressed any constitutional issue and there is no rule forbidding the waiver investigation report writer from communicating with either the district attorney or the juvenile's attorney. It says communication with the district attorney regarding waiver is compatible with the fluid roles both agencies share in the juvenile justice system.

Tyler argues that a waiver investigation report is comparable to a presentence investigation report (PSI), as both are to be prepared by a neutral author to provide information to the court. See Wis. Stat. § 938.18(2m); § 972.15. Tyler points out that case law emphasizes the critical importance of neutrality in preparing the PSI. See State v. Knapp, 111 Wis. 2d 380, 386, 330 N.W.2d 242 (Ct. App. 1983); see also State v. Howland, 2003 WI App 104, ¶¶32, 33, 264 Wis. 2d 279, 663 N.W.2d 340.

Tyler says the factual distinctions between previous cases and his situation does not address the problem whether the prosecutor's advocacy at the departmental meeting could consciously or subconsciously influence the author of the waiver investigation report. He claims in his case, the report's neutrality was compromised.

Review denied: The Supreme Court denied review in the following cases. As the state's law-developing court, the Supreme Court exercises its discretion to select for review only those cases that fit certain statutory criteria (see Wis. Stat. § 809.62). Except where indicated, these cases came to the Court via petition for review by the party who lost in the lower court:

Adams
2009AP1321 Zarnstorff v. Neenah Creek Custom Trucking - Chief Justice Shirley S. Abrahamson and Justice Ann Walsh Bradley dissent.

Dane
2010AP1220-CR State v. Burns - Justice Ann Walsh Bradley dissents.

Door
2010AP677-CR State v. Klotter - Chief Justice Shirley S. Abrahamson dissents.
2010AP974 Harbor Credit Union v. Samp - Justice Patience Drake Roggensack dissents.

Milwaukee
2010AP1712-CR State v. Matthews - Chief Justice Shirley S. Abrahamson and Justice David T. Prosser, Jr. dissent.
2010AP2039-CR State v. Woods - Chief Justice Shirley S. Abrahamson dissents.

Contact:
Tom Sheehan
Court Information Officer
(608) 261-6640

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