Schuetta v. Aurora National Life Assurance Co.

30 F. Supp. 3d 800, 2014 WL 2616828, 2014 U.S. Dist. LEXIS 80069
Procedural entryThis page is a short order in Schuetta v. Aurora National Life Assurance Co.. Read the opinion of the Court — 27 F. Supp. 3d 949
District Court, E.D. Wisconsin·Decided June 12, 2014·No. Case No. 13-CV-1007-JPS·Published

Opinion

ORDER

J.P. STADTMUELLER, District Judge.

On May 8, 2014, 27 F.Supp.3d 949, 2014 WL 2873200 (E.D.Wis.2014), the Court issued an order granting in part and denying in part the defendant’s motion for summary judgment. (Docket # 44). However, the Court denied summary judgment with respect to only two issues and allowed the defendant,'Aurora National Life Assurance Company (“Aurora”), to further brief those issues. (Docket #44 at 22). The defendant took the Court up on its offer, and filed a brief arguing that it should be granted summary judgment on those two remaining claims. (Docket # 45). The plaintiff, Leo Schuetta (“Schuetta”), responded, arguing that the Court should deny summary judgment and hold a trial on the remaining matters. (Docket # 47). The defendant filed a reply brief (Docket # 49).

This matter now having been fully briefed, the Court turns to decide it. Because the Court amply set out the background facts in its prior summary judgment order, the Court will not delve into them again, here. Rather, the Court will address only the legal merits of the parties’ arguments.

1. EQUITABLE ESTOPPEL

The Court left open the issue of summary judgment on Mr. Schuetta’s equitable estoppel claim because the parties had not adequately addressed whether the doctrine of equitable estoppel may be used as a claim. (Docket # 44 at 17). It is clear from Wisconsin case law that equitable estoppel may be used as a defense — a “shield” as the Court and parties are referring to it; less clear to the Court was whether Wisconsin recognizes equitable estoppel as a claim, — a “sword.” See, e.g., Mohamed v. Reinhart Boerner Van Deuren, S.C., No. 10-CV-753, 2012 WL 1491860, *3 (E.D.Wis. Apr. 26, 2012) (citing Milas v. Labor Ass’n of Wisconsin, Inc., 214 Wis.2d 1, 11-12, 571 N.W.2d 656 (1997); Hocking v. City of Dodgeville, 326 Wis.2d 155, 174 n. 10, 785 N.W.2d 398 (2010); Kenseth v. Dean Health Plan, Inc., 610 F.3d 452, 456, 463 (7th Cir.2010)).

[802]*802In response to the Court’s invitation for further briefing, Aurora submitted several eases that clearly establish that Wisconsin does not recognize an equitable estoppel claim. Most importantly, in Utschig v. McClone, referring to equitable estoppel as “estoppel in pais,” the Wisconsin Supreme Court noted that: “ ‘The effect of an estoppel in pais is to prevent the assertion of what would otherwise be an unequivocal right ... Such an estoppel operates always as a shield, never as a sword .... and it does not of itself create a new right.’ ” 16 Wis.2d 506, 509, 114 N.W.2d 854, 855-56 (1962) (quoting 19 Am.Jur., Estoppel, sec. 40, p. 639; citing 31 C.J.S. Estoppel §§ 59, 62). The Wisconsin Supreme Court reaffirmed that position in Hoffman v. Red Owl Stores, Inc., pointing out that the traditional concept of estoppel “merely serves as a shield and cannot serve, as a sword to create a cause of action,” and distinguishing promissory es-toppel, which is a cause of action — but is not at issue, here. 26 Wis.2d 683, 696, 133 N.W.2d 267, 274 (1965) (citing Utschig, 114 N.W.2d at 855-56); see also Murray v. City of Milwaukee, 2002 WI App 62, ¶ 15 & n. 10, 252 Wis.2d 613, 642 N.W.2d 541. The Wisconsin Court of Appeals reiterated that point in Murray:

In his brief, Murray describes his claim of equitable estoppel as “an equitable cause of action based upon his reliance on the City’s historic practices.” However, equitable estoppel (estoppel in pais) is a bar to the assertion of what would otherwise be a right; it does not of itself create a right. Thus, Murray must establish his right to recover attorney fees from the City on some basis other than equitable estoppel; equitable estoppel does not establish that right.

Murray, 2002 WI App 62, ¶ 15 & nn. 9-10 (citing Utschig, 114 N.W.2d at 855-56; internal and other citations omitted). The Wisconsin Court of Appeals and judges in the Eastern District of Wisconsin have agreed. See, e.g., Baures v. North Shore Fire Dept., 2003 WI App 103, ¶ 30 & n. 7, 264 Wis.2d 815, 664 N.W.2d 113 (citing various cases that discuss the distinction between equitable and promissory estoppel and noting that equitable estoppel functions as a shield); Third Educ. Grp., Inc. v. Phelps, No. 07-C-1094, 2009 WL 2150686, at *10-*11 (E.D.Wis. May 15, 2009) (noting that equitable estoppel generally is not treated as a claim, but addressing the claim anyway, because it would still fail); Eivaz v. Edwards, No. 12-C-910, 2013 WL 989843, at *4 (E.D.Wis. Mar. 13, 2013) (noting that equitable estoppel “is an affirmative defense”).

To be sure, the legal issue has suffered over the years from a lack of clarity. See, e.g., Mohamed, 2012 WL 1491860, at *3 (citing Milas, 571 N.W.2d at 660 (1997); Hocking, 785 N.W.2d at 407 & n. 10; Kenseth, 610 F.3d at 456, 463). Mohamed perhaps best exemplifies the confusion, as it relies on two cases1 that implied the existence of an equitable estoppel claim (but then did not analyze the issue in great depth) and does so while also noting the limitation of its holding: “at this juncture of the proceedings, [the defendant] has not established that equitable estoppel is only an affirmative defense.” 2012 WL 1491860, at *3. In Hocking, the Wisconsin Supreme Court mentioned that the plaintiffs “argue[d] that they satisfy the requirements of an equitable estoppel claim,” but then noted the confusing nature of that argument and pointed out that the plaintiff “assert[ed] that they [were] not claiming equitable estoppel.” 785 N.W.2d at 407 & n. 10. In other words, the Wisconsin Supreme Court did not clearly recognize an [803]*803equitable estoppel claim, merely mentioned it in passing in describing the plaintiffs’ argument. In Kenseth, the Seventh Circuit assumed that an equitable estoppel claim existed, but did so cursorily on its way to affirming the dismissal of such a claim and without citing any Wisconsin case law on the topic.

However, despite the confusion, the Wisconsin Supreme Court’s holding in Ut-schig has never been questioned and, in fact, still stands as a crisp and clear statement of the law: equitable estoppel (or estoppel in pais) serves only as a defense or “shield,” and never as a claim or “sword.” See, e.g., Utschig, 114 N.W.2d at 855-56; Red Owl, 133 N.W.2d at 274; Murray, 2002 WI App 62, ¶ 15 & nn. 9-10. Meanwhile, Mr. Schuetta’s citations to the contrary are either wholly inapposite or not binding upon this Court. The Court, therefore, will apply Utschig’s holding, and dismiss Mr. Schuetta’s equitable estoppel claim, as the Court finds that Wisconsin does not recognize such a claim.

2. BREACH OF IMPLIED DUTY OF GOOD FAITH

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Schuetta v. Aurora National Life Assurance Co., 30 F. Supp. 3d 800, 2014 WL 2616828, 2014 U.S. Dist. LEXIS 80069 (E.D. Wis. 2014).

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