Lovelien v. Austin Mutual Insurance Co.

         APPEAL from an order of the circuit court for Trempealeau County No. 2015CV31 JOHN A. DAMON, Judge. Affirmed.

          Before Stark, P. J., Hruz and Seidl, JJ.

          SEIDL, J.

         ¶1 Curtis Lovelien and Timothy Kroening (collectively, Lovelien)^[1] appeal an order dismissing Austin Mutual Insurance Company and the other claimants from this personal injury action after Austin Mutual settled with some of the claimants and forwarded its remaining policy limits to the circuit court for allocation between Curtis Lovelien and Timothy Kroening. Lovelien argues Austin Mutual's payment of the remaining policy limits after the partial settlement violates Wisconsin's direct action statute, WIS. STAT. § 632.24 (2015-16),^[2]because the funds were not distributed on a pro rata basis according to the damages each claimant sustained. Austin Mutual contends this appeal is moot based upon a claimed accord and satisfaction between Austin Mutual and Lovelien.

         ¶2 We conclude Austin Mutual's payment of its remaining policy limits to the circuit court does not constitute an accord and satisfaction between Austin Mutual and Lovelien and, therefore, this appeal is not moot. We also conclude the direct action statute does not require distribution of an insurer's funds to claimants on a pro rata basis. We therefore affirm the circuit court's order of dismissal.

         BACKGROUND

         ¶3 Curtis Lovelien and Timothy Kroening were injured in an automobile accident on Highway 95 outside of Arcadia, Wisconsin. At the time, they were employed by Donald Lewallen's (Donald) drywall installation business, D. Lewallen Construction, Inc. On the morning of the accident, Donald was driving his work van on the way to a job site. Curtis Lovelien, Timothy Kroening, and Donald's fourteen-year-old stepson, Austin LeMon, were passengers in the van. Before reaching the work site, Donald's van collided with a vehicle driven by Patricia Hamerski. Donald, LeMon and Patricia Hamerski died at the scene of the collision, and Curtis Lovelien and Timothy Kroening sustained injuries.

         ¶4 Lovelien filed a negligence suit against Austin Mutual, the commercial automobile insurance carrier for Donald and D. Lewallen Construction. Candi Lewallen (Lewallen), Donald's wife and LeMon's mother, intervened to bring a claim for the wrongful death of her son. Patricia Hamerski's estate, her adult son, Greg Roskos (collectively, Hamerski), and her underinsured motorist carrier, Artisan and Truckers Casualty Company (Artisan), were joined as defendants.

         ¶5 Austin Mutual represented on various occasions to the circuit court that it was ready and willing to pay the full policy limits of $500,000 to the claimants.^[3] Thereafter, Hamerski settled with Artisan and assigned their claims to Artisan. After attempting to reach a global settlement, Austin Mutual settled with Lewallen for $185,000 and Artisan for $60,000. Austin Mutual then moved for the court to approve the settlements, for payment of the remainder of the policy limits into the court, and for its dismissal from the case. Curtis Lovelien and Timothy Kroening objected to the settlements and dismissal of Austin Mutual on the basis that they would be deprived of their pro rata shares of the policy limits. The court approved the settlements and denied Lovelien's subsequent motion for reconsideration.

         ¶6 Austin Mutual deposited the remaining $255,000 in policy limits with the clerk of circuit court to be distributed between Curtis Lovelien and Timothy Kroening. The circuit court then dismissed Austin Mutual, Artisan, Hamerski and Lewallen from the lawsuit. The court ordered Lovelien's attorney to file a proposed distribution of the remaining funds. Ultimately, the court ordered that $225,000 of the deposited policy limits be distributed to Curtis Lovelien and the remaining $30,000 paid to Timothy Kroening. The remaining parties, Curtis Lovelien and Timothy Kroening, now appeal the circuit court's dismissal of the settling parties.

         DISCUSSION

         A. Accord and satisfaction

         ¶l Austin Mutual argues this appeal is moot because Lovelien accepted the funds it offered, establishing an accord and satisfaction. An accord and satisfaction is an agreement to discharge an existing disputed claim and constitutes a defense to an action to enforce the claim. Flambeau Prods. Corp. v. Honeywell Info. Sys., Inc., 116 Wis. 2d 95, 112, 341 N.W.2d 655 (1984). "The interests of fairness dictate that a creditor who cashes a check offered in full payment should be bound by the terms of the offer." Id. After receiving an offer, the creditor's cashing of the full payment check constitutes an accord and satisfaction which discharges the entire debt. Id. at 101. Like other contracts, an accord and satisfaction requires an offer, an acceptance, and consideration. Id.

         ¶8 Here, Austin Mutual moved the circuit court for an order allowing it to deposit its remaining policy limits with the court, and for dismissal. Curtis Lovelien and Timothy Kroening opposed Austin Mutual's motion, arguing that this payment would deprive them of their respective pro rata shares of the policy limits. The court granted Austin Mutual's motion, and Austin Mutual deposited its remaining policy limits pursuant to the court's order along with a letter to the clerk of court stating the following: "Pursuant to the Court's Order dated May 31, 2016, enclosed please find The Main Street America Group's check no. [] payable to Clerk of Courts in the amount of $255,000.00 presenting the settlement being paid out in the above-noted matter. Please distribute accordingly." Austin Mutual contends its letter, coupled with the payment, constitutes a legally binding ...