Bryan Casper, Susan Casper, Michael Casper, a minor, by his Guardian ad Litem, Thomas Casper, a minor, by his Guardian ad Litem, Sara Janey, a minor, by her Guardian ad Litem and Sharon Janey, Plaintiffs-Respondents-Cross-Appellants,
American International South Insurance Company, Defendant-Appellant-Cross-Respondent, American Family Mutual Insurance Company and Milwaukee County Department of Health & Social Services, Involuntary-Plaintiffs, Claims Management Services, Inc., Intervenor.
from an order of the circuit court for Milwaukee County No.
2004CV5852: JEFFREY A. CONEN, Judge. Affirmed.
Brennan, P.J., Brash and Dugan, JJ.
American International South Insurance Company (AISIC)
appeals an order granting plaintiffs' summary judgment
motion and ordering AISIC to pay $684, 499.14 in interest on
its delayed payment on the underlying claim in this case. W S
. § 628.46(1) (2015-16) requires isconsin tat
insurer given proper notice to pay such interest when it does
not timely pay claims unless "the insurer has reasonable
proof to establish that the insurer is not responsible for
the payment[.]" The requirement applies to claims by
insureds and claims by third parties who satisfy certain
conditions as set forth in Kontowicz v. American Standard
Insurance Co. of Wisconsin. The trial court concluded
that plaintiffs, who are third-party claimants, were entitled
to such interest because in 2007 they satisfied the
Kontowicz conditions as to the underlying claim and
because AISIC was unable to provide "reasonable proof to
establish" that it was not responsible for the payment.
AISIC argues that both these conclusions are incorrect. AISIC
also argues that Wis.Stat. § 628.46 does not apply where
an insurer has contractual duties to multiple insureds, as
AISIC does here, because those legal obligations make it
impossible for AISIC to satisfy the statute. Plaintiffs
cross-appeal, arguing that in 2005 they satisfied §
628.46's requirements as interpreted in
Kontowicz and accordingly they are entitled to more
interest than the trial court awarded them. We reject those
arguments and affirm the order.
Plaintiffs are Bryan Casper ("Casper"), Susan
Casper, Michael Casper, Thomas Casper, Sara Janey and Sharon
Janey (collectively, "the Caspers"). In May 2003, the
Casper family's minivan, which had stopped at an
intersection for a red light, was rear-ended by AISIC's
insured, Mark Wearing, who was driving a tractor-trailer.
Casper v. American Int'l S. Ins. Co. (Casper
II), 2011 WI 81, ¶12, 336 Wis.2d 267, 800 N.W.2d
880. All five occupants of the minivan were injured, some
catastrophically-Sara Janey suffered injuries including a
traumatic brain injury, and Michael Casper suffered a spinal
injury that rendered him quadriplegic at age fifteen. Past
itemized special damages in medical payments for the five
exceeded $643, 000 on September 12, 2005; and future special
damages for Michael Casper alone were estimated at seven to
twelve million dollars.
At the time of the crash, Wearing was an employee of two
firms and was making a delivery on behalf of AIT, a customer
of one of his employers. Id., ¶¶15, 17.
Wearing was driving while under the influence of several
prescription drugs, id., ¶14, in violation of
federal trucking safety regulations. The route he was driving
was a 536-mile overnight route that was longer than federal
trucking safety regulations permit, id.,
¶¶17, 18. Wearing testified at a deposition that he
did not see the minivan prior to the collision. An off-duty
officer who witnessed the collision testified at a deposition
that just before the collision the minivan driven by Casper
had not accelerated normally from the intersection when the
light turned green, and an accident reconstruction expert
retained by defendants concluded based on that testimony that
the accident "would likely have been avoided" if
Casper had accelerated immediately when the light turned
The Caspers brought the underlying suit against seven named
defendants and their insurers, alleging negligence. With the
exception of AIT, the individuals and companies named as
defendants were all insureds of AISIC. AISIC's policy
limit was one million dollars, and AISIC's policy had a
provision stating that "the most [AISIC] will pay for
the total of all damages resulting from any one
'accident' is the Limit of Insurance for Liability
Coverage found in the Declarations."
From 2004 through 2012, the case proceeded through extensive
litigation, appeals,  a remand to the trial court, and
mediation. Notwithstanding the accident reconstruction
expert's opinion, AISIC's internal claim evaluations
and litigation plan reflected the expectation that this was a
policy limits case. This expectation was based on the high
damages and the fact that five of the six defendants were
AISIC's insureds. The possibility of some level of
contributory negligence on Casper's part was assumed. The
initial AISIC claims adjuster concluded that liability was
"unfavorable, " that the damages would far exceed
the policy limits, and that this was a "policy limits
case, " and in their depositions the three subsequent
AISIC claims adjusters did not dispute his assessment.
AISIC offered to settle for the policy limits in return for a
release, but plaintiffs declined the settlement on those
terms. The parties ultimately settled for the policy limits,
which AISIC paid on November 22, 2012. The settlement
released all defendants.
Following settlement, the sole issue that remained unresolved
was the question of whether the Caspers were entitled to
Wis.Stat. § 628.46 interest. After further discovery and
briefing, the Caspers moved for summary judgment on that
question. The parties agreed "that there are no genuine
issues of material fact to prevent [the trial court] from
determining whether AISIC is liable for Wis.Stat. §
The trial court granted the summary judgment motion, holding
that the Caspers had satisfied the conditions set forth in
Kontowicz for third-party claimants. It held that
the condition that there is no question of the insured's
liability was satisfied because, given the fact that Wearing
was driving while under the influence of prescription drugs,
no reasonable jury would find that he did not bear the
majority of the liability for the accident. It held that the
sum certain condition was satisfied by the Caspers'
Itemization of Special Damages, submitted September 12, 2005,
which included medical expenses and other damages for each
plaintiff. And it held that the written notice condition was
met on February 7, 2007, the date on which plaintiffs sent a
letter demanding payment of AISIC's one million dollar
policy limit and noting that "the damages sustained by
the Plaintiffs … well exceed the policy limit[.]"
Having determined that plaintiffs had satisfied the
Kontowicz conditions as third-party claimants, the
trial court turned to the question of whether AISIC had
reasonable proof that it was not responsible for the payment.
The trial court rejected AISIC's argument "that an
insurer has reasonable proof of non-responsibility any time
insurers can mount a non-frivolous defense." It
concluded that the defenses AISIC argued would not have
"convinced a reasonable insurer that it may not be
responsible for the payment, " applying the standard set
forth in Kontowicz. It concluded that in light of
the "excessive damages" present in this case, even
if defending the claim resulted in an apportionment of
liabilities among the parties, no "reasonable
apportionment" would bring the claims below the policy
limit. It noted that coverage was "not fairly
debatable" and that AISIC had filed no coverage motion.
For these reasons, it concluded that AISIC had not shown
reasonable proof that it was not responsible for the payment.
Concluding that the conditions had been met as of February 7,
2007, the trial court calculated interest from thirty days
after that date, with three days added to account for the
notice being served by mail, consistent with Wis.Stat. §
801.15(5)(a) and Kontowicz, 290 Wis.2d 302, ¶53
n.18. At a rate of twelve percent interest on the one million
dollar payment, beginning March 12, 2007, and ending November
22, 2012, the date AISIC made payment, the interest came to
AISIC appealed the award of interest, and the Caspers cross-
appealed, arguing that they satisfied the conditions in 2005,
not 2007, and that the interest must be re-calculated.
For the reasons given below, we reject these arguments and
Standard of review and relevant legal
Summary judgment principles.
This is an appeal of an order granting summary judgment. When
a party seeks summary judgment, "[t]he judgment sought
shall be rendered if the pleadings, depositions, answers to
interrogatories, and admissions on file … show that
there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of
law." Wis.Stat. § 802.08(2). "When this court
is called upon to review the grant of a summary judgment
motion … we are governed by the standard articulated
in section 802.08(2), and we are thus required to apply the
standards set forth in the statute just as the trial court
applied those standards." Green Spring Farms v.
Kersten, 136 Wis.2d 304, 315, 401 N.W.2d 816 (1987)
In opposing summary judgment here, AISIC does not argue that
there is a genuine issue as to any material fact. Rather,
AISIC argues that the trial court erred in applying Wis.Stat.
§ 628.46 to the facts because AISIC had knowledge of a
fact--namely that Casper failed to immediately accelerate at
the green light--that created "reasonable proof"
that AISIC was not responsible for payment of the claim, and
this, AISIC argues, precludes an award of interest as a
matter of law. Although there is no factual finding in the
record that Casper failed to immediately accelerate at the
green light, no party disputes it for the purposes of analysis
of the legal question on the "reasonable proof"
defense to the claim payment under the statute. Therefore,
the question we address is whether W . S . § 628.46
applies to these facts. That question presents a question of
is tat  law we review de novo. See
Teague v. Bad River Band of Lake Superior Tribe of Chippewa
Indians, 2000 WI 79, ¶17, 236 Wis.2d 384, 612
Law governing interest on untimely paid insurance
An insurer's liability for interest on claims that are
overdue is created by Wis.Stat. § 628.46(1). It defines
overdue claims as follows:
A claim shall be overdue 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.… Any
payment shall not be deemed overdue when the insurer has
reasonable proof to establish that the insurer is not
responsible for the payment, notwithstanding that
written notice has been furnished to the insurer.
Id. (emphasis added).
Several cases provide guidance on the interpretation of the
statute. First, in Fritsche v. Ford Motor Credit
Co., this court flatly rejected the insurer's
argument that "the only way damages could be determined
was by trial" or a settlement agreement, and that
without such a determination, no interest could be awarded.
See Fritsche v. Ford Motor Credit Co., 171 Wis.2d
280, 305, 491 N.W.2d 119 (Ct. App. 1992). This court stated
that to accept such a view "would effectively repeal the
statute." Id. The court stated that, for
purposes of the timely payment of claims statute, the time
that the insurer has "proof of loss or equivalent
evidence of the loss" can be "far in
advance of a judgment or award." Id.
In Kontowicz, 290 Wis.2d 302, ¶48, our supreme
court answered the question of whether Wis.Stat. §
628.46 interest can be awarded in cases of third-party
liability claims for personal injury such as here. It held
that the statute's language--"every insurance
claim"--encompassed such claims. Id., ¶27.
However, it limited the awards of § 628.46 interest to
third-party claimants "to only those situations in which
three conditions to trigger interest are met."
Id., ¶48. The conditions it imposed raise the
bar for such claimants. Rather than merely requiring
"written notice of the fact of a covered loss, "
see § 628.46(1), and of the amount, as for
first-party claimants, Kontowicz required
third-party claimants to show first, 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.
Kontowicz noted that the statute "does not
apply" if the insurer has reasonable proof it is not
responsible, and the court defined "reasonable
proof" for purposes of the statute 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." Id. It further noted that
the question of reasonable proof sufficient for purposes of
this statute is "generally equated" "with
whether the 'coverage issue was fairly
debatable."' Id. (citation omitted).
See also Upthegrove Hardware, Inc. v. Pennsylvania
Lumbermans Mut. Ins. Co., 146 Wis.2d 470, 484-85, 431
N.W.2d 689 (1988) (once adequate notice has been given,
"[t]he only way an insurer can avoid an interest
assessment under sec. 628.46(1) is when it had reasonable
proof that it was not responsible for the payment.").
Where damages are high and policy limits are low by
comparison, the potential for contributory negligence by a
party is not, in itself, sufficient to constitute
"reasonable proof" that will defeat an award of
interest. In Kontowicz, this principle was
acknowledged without further elaboration as follows:
"[D]ue to the severity of the injury suffered by
Kontowicz even the maximum reduction allowed by law [for
negligently failing to wear a seatbelt] would not appear to
be sufficient to bring her claim below the … policy
limit." Kontowicz, 290 Wis.2d 302, ¶53
n.17. Likewise, in Dilger, this court affirmed the
trial court's award of interest on the basis that the
Kontowicz conditions were met where "[t]he
[trial] court found that [plaintiff] had asserted estimates
of damages that far exceeded [the] policy limits,
regardless of any potential contributory negligence
on [plaintiff's] part[.]" See Dilger v.
Metropolitan Prop. & Cas. Ins. Co., 2015 WI.App. 54,
¶15, 364 Wis.2d 410, 868 N.W.2d 177');">868 N.W.2d 177 (emphasis added).
The Caspers have satisfied the Kontowicz
requirements for interest under ...