Madsen v. Threshermen's Mutual Insurance

439 N.W.2d 607, 149 Wis. 2d 594, 1989 Wisc. App. LEXIS 294
CourtCourt of Appeals of Wisconsin
DecidedMarch 14, 1989
Docket88-1060
StatusPublished
Cited by11 cases

This text of 439 N.W.2d 607 (Madsen v. Threshermen's Mutual Insurance) is published on Counsel Stack Legal Research, covering Court of Appeals of Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Madsen v. Threshermen's Mutual Insurance, 439 N.W.2d 607, 149 Wis. 2d 594, 1989 Wisc. App. LEXIS 294 (Wis. Ct. App. 1989).

Opinion

CANE, P.J.

This insurance controversy stems from an insured’s arson of a local tavern. Thresher-men’s Mutual Insurance Company (Threshermen) appeals a summary judgment denying its claims for attorney fees, punitive damages, and reimbursement for an amount paid to its insured’s land contract vendor. The insureds, Robert and Nancy Madsen, cross-appeal, arguing that the trial court erred by denying Nancy, the spouse and innocent insured, a portion of the insurance proceeds and by denying a new trial on the issue of bad faith. We affirm in part, reverse in part, and remand the cause for further proceedings consistent with this opinion.

In 1979, Robert and Nancy Madsen purchased a bar, home, and outbuildings from Mary Ann Schmidt on a land contract. The Madsens assigned the land contract to Madsen Leisure Enterprise, Inc. (MLE, Inc.), a corporation owned equally by Robert and Nancy.

The Madsens purchased a fire insurance policy from Threshermen, naming Robert and Nancy Madsen, d/b/a Pit Stop Bar & Grill, and MLE, Inc., as the *601 insureds. The policy contained an exclusionary clause denying Threshermen liability for intentional acts caused by the insured. Specifically, the clause absolved Threshermen of liability for any “loss occurring while the hazard is increased by any means within the control or knowledge of the insured.” The policy also contained a standard mortgage clause naming Mary Ann Schmidt as mortgagee 1 and authorizing payments by Thresher-men to the mortgagee for any “loss to buildings as interest may appear.”

On June 14,1982, a fire destroyed the Pit Stop Bar & Grill. Initially, Threshermen denied the Madsens’ claim, alleging that Robert intentionally set the fire. Shortly after the fire, Schmidt began a foreclosure action on the land contract. The Madsens owed $33,050.81 on the land contract at the time of the fire.

Approximately six months after Robert and Nancy filed the claim, Threshermen paid $33,050.81 2 to Schmidt without informing the Madsens of the payment. Thereafter, Schmidt foreclosed against Nancy and Robert, and the Madsens claimed they lost the opportunity to raise as an affirmative defense the issue that this payment satisfied the land contract. Subsequently, Nancy and Robert commenced this action against Threshermen.

Specifically, Robert and Nancy sued Threshermen on the insurance contract for bad faith for failure to timely pay Schmidt’s claim, failure to notify them of the payment, and for punitive damages. Threshermen counterclaimed against Robert and MLE, Inc., for the *602 amount it paid to Schmidt, and attorney fees, costs, disbursements, and interest.

The jury found that Robert intentionally set the fire but awarded Nancy and Robert $7,500 in punitive damages, even though it did not answer a special verdict question whether Threshermen’s actions in delaying payment to Schmidt amounted to express malice. The trial court found the damage to the building amounted to $32,235.21, and the value of the building’s lost contents amounted to $12,791.23. 3

In response to post-verdict motions, the trial court granted a new trial on the bad faith issue. The trial court reasoned that the bad faith instruction was in error because the jury never considered the issue 4 and that the interest of justice required a new trial. The trial court also found the verdict to be perverse because the jury awarded punitive damages without first finding that Threshermen acted in bad faith. Finally, the trial court accepted that part of the verdict finding Robert committed the arson. Robert does not challenge this finding.

Subsequently, the trial court allowed Threshermen to amend its counterclaim. In addition to its original counterclaim, Threshermen sought attorney fees, adjusting expenses, costs, and punitive damages against Robert for defending a claim caused by Robert’s arson, and attorney fees and costs against both Robert and *603 Nancy pursuant to sec. 814.025, Stats., the frivolous claims statute. Threshermen then moved for summary judgment on its amended counterclaim.

The trial on the bad faith issue never occurred. Instead, the trial court issued a judgment that:

1. denied Nancy’s motion for judgment on the verdict, reasoning that the Hedtcke rationale did not apply in this instance. Hedtcke v. Sentry Ins. Co. 109 Wis. 2d 461, 326 N.W.2d 727 (1982), allows an innocent insured to collect insurance proceeds even if another insured caused the damage;
2. denied Nancy’s motion for a new trial on bad faith because:
a. she is not entitled to actual damages under Hedtcke;
b. Threshermen’s delay involved Thresher-men and Schmidt only;
c. recovery under Hedtcke was debatable and therefore the delay was justifiable;
3. denied Threshermen’s counterclaim for reimbursement of the amount paid to Schmidt because the subrogation issue relating to it was never tried and because Threshermen offered no proof of damages at trial;
4. dismissed Threshermen’s counterclaim for attorney fees, adjusting expenses, costs, and punitive damages for defending suit against Robert because it offered no proof at trial;
5. denied Threshermen’s counterclaim for sums that Nancy may be awarded because it is a claim for possible future damages;
6. found that the claims filed by Robert and Nancy against Threshermen were not frivolous.

AMENDED COUNTERCLAIM

We begin first by examining Threshermen’s amended counterclaim. For some reason not apparent *604 from the record, the trial court ignored the validity of Threshermen’s amended counterclaim. Because the trial court allowed Threshermen to file an amended counterclaim, that is the correct pleading to examine on summary judgment.

Summary judgment is governed by sec. 802.08, Stats. Appellate and trial courts apply the same summary judgment methodology that has been stated in numerous appellate opinions. See Preloznik v. City of Madison, 113 Wis. 2d 112, 115-16, 334 N.W.2d 580, 582 (Ct. App. 1983). We need not restate it here.

The amended counterclaim alleges that Thresher-men is entitled to indemnification from Robert and MLE, Inc., for damages to the building based on Robert’s fraud and arson. The answer admits that Threshermen is entitled to indemnification from Robert individually, but denies that Threshermen is entitled to indemnification from Nancy or MLE, Inc.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Century-National Insurance v. Garcia
246 P.3d 621 (California Supreme Court, 2011)
Hutson v. State Farm Fire & Casualty Company
954 So. 2d 514 (Court of Appeals of Mississippi, 2007)
Continental Divide Insurance Co. v. Western Skies Management, Inc.
107 P.3d 1145 (Colorado Court of Appeals, 2004)
World Wide Prosthetic Supply, Inc. v. Mikulsky
2001 WI App 133 (Court of Appeals of Wisconsin, 2001)
Allstate Insurance v. LaRandeau
622 N.W.2d 646 (Nebraska Supreme Court, 2001)
Red Arrow Products Co. v. Employers Insurance of Wausau
2000 WI App 36 (Court of Appeals of Wisconsin, 2000)
Tower Ins. Co., Inc. v. Chang
601 N.W.2d 848 (Court of Appeals of Wisconsin, 1999)
Rhiel v. Wisconsin County Mutual Insurance
568 N.W.2d 4 (Court of Appeals of Wisconsin, 1997)
LaSalle National Bank v. Massachusetts Bay Insurance
958 F. Supp. 384 (N.D. Illinois, 1997)
Kersten v. H.C. Prange Co.
520 N.W.2d 99 (Court of Appeals of Wisconsin, 1994)

Cite This Page — Counsel Stack

Bluebook (online)
439 N.W.2d 607, 149 Wis. 2d 594, 1989 Wisc. App. LEXIS 294, Counsel Stack Legal Research, https://law.counselstack.com/opinion/madsen-v-threshermens-mutual-insurance-wisctapp-1989.