Estate of Kevin L. Payette, by its personal representative, Associated Trust Co., N.A., Alexis W. Payette and Natalie S. Payette, minors, by their guardian and parent, Heather Pagel, Plaintiffs-Respondents,
David E. Marx and 1st Auto Casualty Insurance Company, Defendants-Appellants. Secura Insurance, a mutual company, Involuntary-Plaintiff,
from a judgment of the circuit court for Brown County: No.
2015CV689 KENDALL M. KELLEY, Judge.
Stark, P.J., Hruz and Seidl, JJ.
In this wrongful death and survival action, David Marx and
his insurer, 1st Auto Casualty Insurance Company
(collectively, 1st Auto), appeal a judgment awarding
prejudgment interest at the rate of 12 percent per year under
Wis.Stat. § 628.46 (2015-16) to the Estate of Kevin
Payette and Payette's minor children, Alexis and Natalie
Payette. Section 628.46(1) requires an insurer to
"promptly pay every insurance claim" within thirty
days of an insurer being provided "written notice of the
fact of a covered loss and of the amount of the loss"
unless "the insurer has reasonable proof to establish
that the insurer is not responsible for the payment."
In Kontowicz v. American Standard Insurance Co., our
supreme court concluded that Wis.Stat. § 628.46 is
applicable in the context of, as here, third-party liability
claims. See Kontowicz v. American Standard Ins. Co.,
2006 WI 48, ¶2, 290 Wis.2d 302, 714 N.W.2d 105');">714 N.W.2d 105,
clarified on denial of reconsideration, 2006 WI 90,
¶3, 293 Wis.2d 262, 718 N.W.2d 111. However, the
Kontowicz court limited its "holding to only
those situations in which three conditions to trigger the
interest are met." Kontowicz, 290 Wis.2d 302,
¶2. Namely, a third-party claimant is entitled to
prejudgment interest under § 628.46 where: (1)
"there can be no question of liability on the part of
the insured"; (2) "the amount of the damages [is]
in a sum certain amount"; and (3) "the claimant
[provides] written notice of both liability and the sum
certain amount owed" to the insurer. Kontowicz,
290 Wis.2d 302, ¶2.
On appeal, 1st Auto contends the circuit court erred in
concluding that the Estate satisfied any of those three
conditions. In addition, 1st Auto argues the court erred by
concluding that 1st Auto lacked reasonable proof that it
would not be responsible for payment of the Estate's
We confine our analysis to Kontowicz's "sum
certain" condition, as we conclude it is the dispositive
issue in this appeal. We determine that this condition is not
satisfied where a third-party claimant relies upon an
assertion of general damages to support a demand that an
excess insurer pay a specific amount, and the insurer
reasonably concludes it is not certain the amount demanded is
the amount it may actually owe the claimant. Such was the
case here, as 1st Auto reasonably concluded that it would not
ultimately owe the Estate its demanded sum (1st Auto's
$1, 000, 000 policy limit). The reasonableness of 1st
Auto's conclusion was confirmed by-but not dependent
upon-the fact that a jury ultimately determined that 1st Auto
actually owed the Estate only $172, 806.42. Accordingly, we
reverse the judgment insofar as it awarded Wis.Stat. §
628.46 prejudgment interest on the jury's damages award.
On August 24, 2013, at approximately 5:50 p.m., Payette was
bicycling in the westbound lane of County Trunk Highway VV in
the Town of Seymour. At the same time, Marx was driving his
vehicle in the eastbound lane of County Trunk Highway VV,
directly behind a vehicle hauling a horse trailer. Marx then
decided to pass the vehicle and horse trailer and,
accordingly, moved his vehicle into the westbound lane.
Shortly thereafter, Marx's vehicle struck Payette
head-on. First responders found Payette deceased on the
shoulder of the roadway, with his left leg severed.
At the time of the accident, Marx had an automobile insurance
policy with SECURA Insurance, A Mutual Company (Secura), that
provided $500, 000 in liability coverage. He also had a
personal umbrella insurance policy through 1st Auto that
provided $1, 000, 000 in additional coverage.
On August 15, 2014, counsel for the Estate sent a summary
letter and demand package to 1st Auto. In its letter, the
Estate informed 1st Auto that it was making a "formal
demand under [Wis. Stat.] § 628.46" for payment of
1st Auto's "full policy limit [i.e., $1, 000, 000]
immediately." In support, the summary letter stated that
the Estate's "damages are conservatively in the $3,
500, 000 to $5, 000, 000 range."
In its demand package, the Estate addressed Marx's
liability, providing several reasons as to why Marx was
responsible for the accident. These reasons included: (1) a
Wisconsin Motor Vehicle Accident Report that concluded Marx
caused the accident by an "improper overtaking";
(2) a written statement that Marx provided to the Outagamie
County Sheriff's Department where he acknowledged that he
"did not see [Payette] until the last moment"; and
(3) photographs of Marx's vehicle showing that "he
had two large stickers on the lower left-corner of his
driver's side windshield," in apparent violation of
Wis.Stat. § 346.88(3)(a).
The demand package then addressed the Estate's damages.
Specifically, the package listed damages of: (1) $7, 806.42
in "Medical Specials/Funeral Expenses"; (2) $1,
988, 779 in "future damages"; and (3) an
unspecified amount of damages for "Conscious Pain and
Suffering." The Estate's explanation of its
potential damages for conscious pain and suffering stated:
No one knows how long Mr. Payette survived following impact
by Mr. Marx's vehicle. However it is important to note
that his most serious injuries were inflicted below his vital
organs, and he likely did not die instantly. The undisputable
truth is that if Mr. Payette lived for even a few minutes or
seconds following impact, those were the longest, most
excruciating, and terrifying minutes or seconds of his life.
One week later, counsel for the Estate sent 1st Auto an
e-mail correspondence. In that e-mail, counsel again demanded
1st Auto promptly pay its full policy limit. 1st Auto did not
do so, and the Estate filed its complaint in the present
action on April 30, 2015.
On August 1, 2017, 1st Auto made individual settlement offers
to Alexis, Natalie and the Estate, pursuant to Wis.Stat.
§ 807.01. Those offers were explicitly to settle the
Estate's collective claims against 1st Auto, and
therefore were extended independently and in addition to the
$500, 000 already paid to the Estate by Secura. The sum of
these settlement offers was $525, 000- $10, 000 to the Estate
and $257, 500 each to Alexis and Natalie. The Estate rejected
1st Auto's settlement offers.
The case proceeded to a six-day jury trial in September and
October of 2017. The jury ultimately returned a verdict
finding that Marx was negligent in the use of his motor
vehicle at or immediately prior to the accident, and that
such negligence was the sole cause Payette's
The jury then awarded the Estate a total of $672, 806.42 in
damages. That total consisted of: (1) $70, 000 in lost
inheritance and $75, 000 in loss of support to Alexis; (2)
$70, 000 in lost inheritance and $100, 000 in loss of support
to Natalie; (3) $350, 000 for the loss of Payette's
society and companionship jointly to Alexis and Natalie; and
(4) $7, 806.42 for funeral expenses to the Estate. Due to the
$500, 000 previously paid to the Estate by Secura, 1st Auto
was left owing $172, 806.42 to the Estate based on the
1st Auto subsequently moved the circuit court for an order
denying the Estate prejudgment interest under Wis.Stat.
§ 628.46. Three days later, the Estate filed its own
motion seeking an order granting prejudgment interest.
Following briefing, the circuit court issued a written
decision and order granting the Estate's motion for
Wis.Stat. § 628.46 prejudgment interest at 12 percent
per year. As pertinent here, the court determined that the
second Kontowicz condition was satisfied primarily
due to the fact that the Estate initially estimated its total
damages at $3, 500, 000 to $5, 000, 000 and, based upon this
estimate, demanded a specific sum of money-i.e., the 1st Auto
policy limit of $1, 000, 000.
In reaching this decision, the circuit court rejected 1st
Auto's argument that the jury's award, which rendered
1st Auto liable for a sum significantly lower than its policy
limit, overcame ...