Sanctions for failure to appear

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The sanctioning of an insurance company for not personally appearing at a mediation was upheld by the Wisconsin Court of Appeals on Sept. 29.

Noting that the insurer could have either sought court approval or a stipulation from opposing counsel that it need not appear, but did neither, the court held that the trial court acted within its authority in imposing sanctions.

Valarie Lee filed a personal injury suit after an automobile accident against Ceree King and her insurer, GEICO Indemnity Company.

The scheduling order provided in relevant part, “Each corporate party or other legal entity which is a party shall appear by an individual other than the attorney, which individual shall have full authority to negotiate in this matter, unless the parties and the mediator agree otherwise. … In the event either party fails to appear or appears at the mediation without full authority to negotiate a resolution, the party so responsible may be ordered to pay all costs of the mediation and be subject to further sanctions determined by the court.”

Lee and her attorney attended, as did GEICO’s attorney. However, the GEICO representative with authority to enter settlement was available only by phone. No settlement was reached.

Lee did not object at the time, but after the mediation, she moved for sanctions based on the violation of the scheduling order.

Milwaukee County Circuit Court Judge Jean W. DiMotto granted the motion, awarding a total of $695.70 in sanctions.

After the jury ruled in favor of Lee, GEICO asked the court to vacate its sanction order. Instead, the court imposed $900 more in sanctions for filing the motion.

GEICO appealed. In an opinion by Judge Kitty K. Brennan, the Court of Appeals affirmed the initial sanction award, but reversed the second.

Scheduling order

The court first held that the trial court had the authority to order sanctions for violating the scheduling order. Section 805.03 expressly authorizes sanctions for violation of scheduling orders.

The court also held that the trial court’s inherent powers authorized the sanction.

Second, the court rejected GEICO’s argument that the motion for sanctions was just a disguised request for sanctions based on failure to settle the case, and upheld the amount of the sanction.

Third, the court rejected GEICO’s argument that the order was unreasonable. GEICO contended that, even if it technically violated the order, its actions were reasonable because: a GEICO representative appeared by phone; it was standard operating procedure to appear by phone; and personal appearance would have been counter-productive to settlement because of the cost of travel from Georgia to Milwaukee for the mediation.

The court wrote, “GEICO had notice that its unilateral decision to disregard the mediation appearance requirement could lead to sanctions. GEICO could have asked the trial court for permission to appear by phone. It did not. It could have sought a stipulation from Lee’s counsel and the mediator for a representative to appear by phone, but it did not.”

Judge Joan F. Kessler dissented from this part of the opinion, concluding that Lee forfeited her objection to GEICO’s failure to appear personally by failing to raise it at the mediation.

Milwaukee attorney Thomas Kent Houck, who represented the plaintiff, said that personal appearance requirements are common in scheduling orders, as are stipulations that an insurer need not appear personally.

“Typically, the defense will work out an arrangement in advance to appear by phone,” Houck said. “I’m very agreeable to that, and would have stipulated to it. I do frequently. … But I’ve never seen a case before where an insurance company defendant said it is ‘standard operating procedure’ to disobey a local court order.”

Reconsideration

The court unanimously agreed that it was inappropriate to order sanctions for filing the motion after verdict to vacate the earlier sanction, because there was no finding of bad faith or egregious conduct.

The majority opinion reads, “Here, GEICO’s conduct was simply filing a motion to reconsider. … Even though the court found that the motion lacked support, GEICO’s conduct, without a finding of bad faith, fraud or purposeful delay, does not justify imposition of an attorney fee sanction.”