United States District Court, E.D. Wisconsin
Stadtmueller U.S. District Judge
August 30, 2019, the Court granted a motion for a protective
order filed by Defendant, barring Plaintiff from proceeding
with discovery on his bad faith claim. (Docket #38). In
support of that motion, Defendant argued that during the
pendency of this case, it paid Plaintiff his undisputed
losses in accordance with the terms of the underlying
insurance agreement. Thus, in Defendant's view, Plaintiff
finds himself unable to establish a breach of contract claim,
and without that claim, he could not proceed with discovery
on his claim of bad faith. Without so much as any meaningful
argument to the contrary from Plaintiff, and in accordance
with Wisconsin Supreme Court precedent, the Court agreed with
Defendant. See Brethorst v. Allstate Prop. & Cas Ins.
Co., 798 N.W.2d 467, 483-84 (Wis. 2011) (a breach of
contract is a prerequisite to a bad faith claim, and to
obtain bad faith discovery, “[t]he court must be
satisfied that the claimed breach of contract is well founded
and can be proved in the future.”). Critically, the
Court found that Plaintiff had pointed to no authority
stating that delaying payment of an insurance claim
constitutes a breach of the insurance agreement, as opposed
to the separate matter of whether the delay would amount to
bad faith. (Docket #38 at 3-4).
then filed a motion for reconsideration of that decision,
which in fact appears to be a motion to clarify the
Court's analysis. (Docket #41). Plaintiff requests that
the Court explain whether 1) his breach of contract claim
still lives and discovery may continue thereon, and 2) his
bad faith claim is being deferred, rather than being
dismissed outright. Id. His arguments proceed as
follows. First, Plaintiff notes that Defendant did not
request, and the Court did not issue, dispositive relief.
(Docket #42 at 2-3). Second, Plaintiff states that he has
properly pleaded a breach of contract. Id. at 3-5.
This includes Plaintiff's contention that there
is legal support for the view that delay in payment
can be a breach in addition to being relevant to bad faith.
Id. at 4-5 (citing Anderson v. Continental Ins.
Co., 271 N.W.2d 368, 693 (Wis. 1978)). Third, Plaintiff
maintains that contrary to Defendant's position, he was
not required to produce any evidence of a breach in response
to the motion for a protective order, but rather could rest
on his allegations. (Docket #42 at 5-6).
responds that, in light of Brethorst, Plaintiff was
indeed obligated to come forward with some proof of a breach
of contract beyond his pleadings. In fact, Defendant
identifies its motion for a protective order as a
“Brethorst motion, ” (Docket #43),
implying that it imposed a special burden of response on
Plaintiff. As quoted above, Brethorst requires that
a plaintiff satisfy the Court that they could prove their
breach of contract claim in the future. Defendant notes that
it offered evidence that it had paid Plaintiff his undisputed
losses in this case, albeit after the case was filed.
Defendant reiterates that without a provable breach of
contract claim, there can be no discovery on a bad faith
claim. Defendant goes further, suggesting that the Court
should now dismiss both the breach of contract and bad faith
claims because they cannot be proven. Id. at 5.
Plaintiff was required to rebut this position either with
evidence that Defendant had not fully satisfied his contract
losses, or that Defendant's delay in payment could
arguably be characterized as a breach of the contract.
Plaintiff has made no attempt to prove the former. His
citation to Anderson might have given the reader the
impression that delay could form a breach, but Plaintiff
badly misreads the opinion. Plaintiff summarizes the case as
follows in his brief:
Unreasonable delay in paying a claim is also a breach of
contract. An insurer acts in violation of an insurance
contract when “under the circumstances [it has] denied
or delayed payment of the
claim.” [Emphasis supplied].” [Anderson,
271 N.W.2d at 377].
(Docket #42 at 4). But the cited portion of Anderson
in no way supports this assertion. Rather, it states the
common precept that the tort of bad faith can arise from
delay. Indeed, to complete the very sentence Plaintiff
The tort of bad faith can be alleged only if the
facts pleaded would, on the basis of an objective standard,
show the absence of a reasonable basis for denying the claim,
i.e., would a reasonable insurer under the circumstances have
denied or delayed payment of the claim under the facts and
Anderson, 271 N.W.2d at 377 (emphasis added).
Plaintiff offers no other legal support on this point.
been an unfortunate theme in this case, the Court is
confronted with poor reasoning and legal analysis that fails
to address the material issues at hand. Is Defendant correct
that there is such a thing as a “Brethorst
motion” which imposes a unique burden on plaintiffs
when it is filed? Is there any valid legal support for the
notion that merely delaying payment of a claim can breach an
insurance agreement? As explained in the August 30th
decision, and this Order, the Court finds that the Defendant
has the better argument on both questions. Inexplicably
Plaintiff failed to file a reply to his motion for
reconsideration, leaving Defendant's position unrebutted.
See (Docket #45) (a notice that Plaintiff will rely
on the arguments in his opening brief on the motion for
reconsideration and will not be filing a reply).
presented no valid reasons to reconsider the August 30th
Order, the Court must deny Plaintiff's instant motion. As
to the other items for relief Plaintiff seeks, they are not
properly posed as part of a motion for reconsideration.
Instead, the Court believes that an explanation of its view
of the case at this juncture will suffice. Both the breach of
contract and bad faith claims remain, at least technically,
active. The Court will not dismiss either at this juncture,
as Defendant has not sought dispositive relief through an
appropriate procedural vehicle.
may seek summary judgment on the breach of contract claim,
asserting that Plaintiff has been fully compensated on his
insurance claim, and thus cannot establish that the insurance
agreement was breached. That motion may well prove successful
unless Plaintiff is able to demonstrate that his insurance
claim has not been entirely paid or provide persuasive
authority that delayed payment of an insurance claim
constitutes a breach of the underlying insurance contract.
Should the breach of contract claim be dismissed then it
would also follow that the bad faith claim is also subject to
that the September 10th deadline for filing
dispositive motions has passed, the Court herewith sets a new
dispositive motion deadline of Monday, November 25,
2019. If dispositive motions are filed, the Court
will next schedule a new trial date and related deadlines
after addressing the motion.
IT IS ORDERED that Plaintiff's motion
for reconsideration (Docket #41) be ...