Estate – Insurance Claim – Liability

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WI Court of Appeals – District III

Case Name: Estate of Kevin L. Payette, et al., v. David E. Marx, et al.

Case No.: 2018AP627

Officials: Stark, P.J., Hruz and Seidl, JJ.

Focus: Estate – Insurance Claim – Liability

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.” Id.

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, 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 claims.

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.

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Derek A Hawkins is trademark corporate counsel for Harley-Davidson. Hawkins oversees the prosecution and maintenance of the Harley-Davidson’s international trademark portfolio in emerging markets.