Payment of distress claims clarified

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The state Supreme Court has determined that a claim for emotional distress over the death of a loved one must be paid out of the bodily injury limits for the person who died, in line with the “limits of liability” wording on an insurance policy.

The Supreme Court’s July 1 ruling affirms a 1997 court of appeals ruling in another case, which established payment to bystanders for emotional distress from an insurance policy’s “each person” bodily injury limits for the person who died. Last week’s high court ruling affirmed and applied that to situations where the person alleging emotional distress was also injured in the accident.

The case is Joseph Mullen and the Estate of Renee K. Petit v. Douglas J. Walczak, et. al., Case no. 02-0129. Justice William A. Bablitch authored the court’s unanimous decision.

Background

According to the decision, in 1996, Walczak, who was uninsured, caused an automobile accident, which took Petit’s life and seriously injured Mullen, her husband. Mullen witnessed his wife’s death at the scene of the accident.

In 1999, Mullen commenced an action for the wrongful death of Petit and his own personal injuries. Those injuries included physical injuries as well as emotional distress from watching his wife die.

Mullen’s American Family policy’s “limits of liability” section indicated that the “limit for ‘each person’ is the maximum for all damages sustained by all persons as the result of bodily injury to one person in any one accident.” That policy established uninsured motorist limits of $100,000 per person and $300,000 per accident.

American Family settled the wrongful death claim for $100,000 and reached an agreement that the claim for Mullen’s physical injuries was $50,000. American Family and Mullen stipulated that his ongoing emotional distress arose solely from witnessing Petit’s death. As a result, American Family denied Mullen’s claim for emotion distress, noting that it had paid the per person limit for Petit’s death.

Mullen contended that the emotional distress was part of his bodily injuries, therefore, $50,000 remained under the UM policy’s limits. Lincoln County Circuit Court Judge J. Michael Nolan agreed with American Family, granting a motion for summary judgment. Nolan observed that the decision in Estate of Gocha v. Shimon, 215 Wis. 2d 586, 573 N.W.2d 218 (Ct. App. 1997), limited Mullen’s claim for emotional distress to his wife’s bodily injury limits.

Mullen appealed, maintaining that Gocha referred to the emotional distress of “bystanders,” whereas he was an injured party. Since Mullen and his wife were injured parties, he argued there should be two liability limits. Looking at Gocha, the court of appeals, in Mullen v. Walczak, 257 Wis.2d 929 (Ct. App. 2002), affirmed the trial court decision.

“[B]ut for the death of his wife, Mullen would not have an emotional distress claim based on witnessing her death,” the court observed. Later it concluded, “The parties settled Mullen’s claim for his physical injuries and any emotional distress that arose from them for $50,000. The only claim at issue is Mullen’s distress from witnessing his wife’s death. Under the policy, that damage is subject to her ‘each person’ limit.”

Per Person Limit

Mullen petitioned the Supreme Court for review.

The stipulation about Mullen’s emotional distress formed the focal point for the Supreme Court’s decision. The justices looked at that stipulation while discussing the 1997 court of appeals decision in Gocha.

Bablitch wrote, “In this case, even though Mullen was himself physically injured, his claim for emotional distress resulted from his wife’s injury. Under the terms of the policy, any damages sustained by all persons as the result of Petit’s death are covered by her ‘per person’ limit. Consequently, the emotional distress suffered by Mullen, solely as the result of witnessing his wife’s death, must be compensated out of her ‘per person’ limit, not Mullen’s.”

The Gocha decision focused on whether the “each person” or “each accident” liability limit applied to claims of emotional distress by family members who witness an individual’s death. Kyle Gocha was fatally injured when the bicycle he was riding was struck by a car. Four family members who were not involved in the accident, but witnessed it, filed claims for emotional distress.

The Gocha’s argued for payment under the “each accident” limit since the emotional distress suffered by each family member resulted in a separate action. The court of appeals found, “The bodily injury to Kyle includes all injury and damages to others resulting from
Kyle’s bodily injury. But for the bodily injury to Kyle, the Gochas would not have suffered any emotional injuries.” (emphasis original)

Mullen maintained that he was not a bystander the way Kyle’s family was, but the Supreme Court still found the per person limits applied.

Bablitch wrote, “We agree with Mullen that he was not a ‘bystander,’ as that term is used in Gocha, since he was physically injured in the accident in which Petit was killed. We also agree with Mullen that bodily injury may include emotional distress. Doyle v. Engelke, 219 Wis. 2d at 288. However, even though we agree with Mullen on these points, they are not dispositive for determining whose ‘per person’ limit applies to Mullen’s claim for emotional distress, resulting solely from witnessing the death of his wife. Rather, we must look to the relevant policy language and apply the limits of liability as provided in the policy.”

The Supreme Court looked at the policy language, which limited per person recovery to “all damages sustained by all persons as the result of bodily injury to one person in any one accident.” The court determined that Mullen’s emotional injury resulted in a claim that had to be compensated out of Petit’s per person limit.

Finally, the Supreme Court stressed the importance of the stipulation regarding the source of Mullen’s emotional distress. Bablitch pointed to the court’s 1972 decision in Redepenning v. Dore, 56 Wis. 2d 129, 143, 201 N.W.2d 580, where a mother tried to recover for injuries from a car accident. Her daughter died and the mother’s claim included emotional distress from her own injuries as well as watching her daughter die. The high court upheld the jury’s damage award, holding that it was impossible to separate the two causes of emotional distress.

Affirmation of Gocha

John A. Kramer of Zalewski, Klinner & Kramer LLP, in Wausau, represented American Family at oral arguments. Kramer noted the importance of the Supreme Court’s decision in Mullen and its impact on Gocha and several other court of appeals decisions, which followed it.

“The biggest significance it’s going to have is that it’s going to affirm what the court of appeals said in the Gocha case,” Kramer said. “So when you have a bystander claim where there is no physical injury sustained by the claimant, clearly it’s appropriate when there is emotional distress to take that out of the bodily injury limits of the injured person or the decedent.”

Kramer also noted the importance of the stipulation that Mullen’s emotional distress arose from watching his wife die. Because of that stipulation regarding the source of emotional distress, he said, the court was able to apply Gocha, even though Mullen wasn’t a bystander.

As a result of this decision, Kramer said, a defense attorney dealing with a case involving a husband and wife situation for a wrongful death situation where there is an emotional component to it needs to carefully determine the source of emotional injury. If the emotional injury results from the other person’s injury, it must be treated accordingly under the limits of liability language.

“You have to be in tune with what the policy says as far as where the limits of liability compensate in particular claims,” Kramer said. “Be careful to discover where that emotional injury comes from.”

D. James Weis of Habush Habush & Rottier, S.C., in Rhinelander, represented Mullen. He noted that “Gocha is now firm law” as a result of this decision. He also expects that plaintiff’s attorneys will approach discussions of emotional injury very cautiously after this decision.

“In light of this decision, a plaintiff’s lawyer should not stipulate as to what damages are caused from the emotional distress of seeing a loved one dying or a loved one who is injured and wh
at damages come from the distress relating to their own injuries,” Weis said.

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He also sees the court’s statement about Redepenning as an important clarification regarding the ability to separate the sources of emotional distress.

“A judge does not have a right to put two separate questions on a verdict, which would divide out what damages are what,” Weis said. “Whether damages are relating to the emotional distress from watching somebody die or whether it’s emotional distress from their own injuries. The court seems to very clearly say that those are not severable.”

Kramer challenged that interpretation stating, “I don’t read it that broadly at all … no doubt there are cases out there where the source of emotional distress cannot be separated out.” However, Mullen shows there are cases where it can be separated out, he said. If the parties won’t do it by stipulation, then it may be up to a court or a jury to make that determination.”

Tony Anderson can be reached by email.