00-1232 Dahmen v. American Family Mutual Insurance Co.

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“The evidence necessary to support a claim of bad faith is very different from that necessary to support a claim for UIM benefits. While the Dahmens’ claim for UIM coverage will turn on the amount of their damages, a claim of bad faith will examine American Family’s handling of the Dahmens’ UIM claim.

“In litigating a claim of bad faith, the Dahmens will be entitled to discovery of American Family’s work product and attorney/client material containing information relevant as to how the Dahmens’ claim was handled. This information would include American Family’s internal determination to deny benefits, its evaluation as to how a jury may value the Dahmens’ claim and its approach to settlement. This information would not be available to the Dahmens if they were proceeding solely on a claim for UIM benefits. … Wisconsin Stat. sec. 805.05(2) provides that a trial court may order a separate trial ‘always preserving inviolate the right of trial in the mode to which the parties are entitled.’ The bifurcation of the Dahmens’ claims accomplishes this. American Family is entitled to the same discovery protections and privileges enjoyed by other litigants. …

“We conclude that the considerations bearing on the bifurcation decision weigh in favor of bifurcation for the following reasons: (1) the failure to bifurcate a claim of bad faith from an underlying claim for UIM benefits would significantly prejudice American Family; (2) the two distinct claims present differing evidentiary requirements that increase the complexity of the issues and the potential for jury confusion; and (3) a separate initial trial on the claim of UIM benefits increases the prospect of settlement and promotes economy by narrowing the issues for the jury and potentially eliminating the need for a later trial on the bad faith claim.”

Reversed and remanded.

Recommended for publication in the official reports.

Dist II, Racine County, Torhorst, J., Nettesheim, P.J.

Attorneys:

For Appellant: James T. Murray Jr., Milwaukee; Timothy J. Pike, Milwaukee; Michael J. Wirth, Milwaukee

For Respondent: Mark J. Leuck, Racine; Adrian P. Schoone, Racine; Chris G. Halverson, Racine