Wisconsin Partners Obtain Decision Affirming Summary Judgment for Insurance Client

On September 6, 2023, the Wisconsin Court of Appeals affirmed our Milwaukee partners Mark W. Rattan and Ericka C. Hammett’s motion for summary judgment, entered by the Circuit Court of Brown County, Wisconsin, in favor of our defendant insurance company client and against its insured commercial building owner for its claim that our client declined to increase the limits of liability on their claim that a fire loss constituted negligence, breach of contract and bad faith. Plaintiff/Appellant also sought policy reformation to increase the limits to the alleged $3.5 million replacement cost of the building. Our client issued the initial policy about a decade prior to the fire loss, and paid those policy limits following the fire.

Plaintiff/Appellant contended our client breached a supposed duty to have advised Plaintiff/Appellant to increase its limits of liability prior to the fire to the replacement cost of the building. Plaintiff/Appellant also contended the agency contract between our client and the insurance agent who sold the policy required our client to advise the insurance agent to increase the limits, and that Plaintiff/Appellant was considered a third party beneficiary of the agency agreement. In the reformation claim, Plaintiff/Appellant asserted the failure to increase the limits to the approximate $3.5 million to replace the building resulted from a mutual mistake of fact as to what the amount of the limits should be.

The Court of Appeals rejected Plaintiff/Appellant’s negligence claim, affirming the rule of law that insurers have no duty to advise the insured of the type or amount of coverage to purchase absent a special relationship between the insurer and the insured, and holding Plaintiff/Appellant failed to establish a special relationship as a matter of law. It further rejected the third party beneficiary claim, affirming the rule of law that third party beneficiary status is established only when the insured shows it was a direct and intended beneficiary of the agency agreement, and holding Plaintiff/Appellant failed to make the necessary showing as a matter of law.

Finally, the court rejected Plaintiff/Appellant’s reformation claim, holding it failed to show a mutual mistake of fact on the amount of the limits, because there was no communication between our client and Plaintiff/Appellant indicating it requested an increase in the limits. Consequently, the court held, Plaintiff/Appellant received the initial limits it requested and there was no mutual mistake of fact.

After prevailing in the trial court on summary judgement, our client submitted a bill of costs, which the trial court denied. The Court of Appeals held that our client was entitled to an award of costs as a matter of law when it prevailed on summary judgment, and remanded the case to the trial court for entry of a costs judgment in our client’s favor. Further, the court also awarded our client costs on the appeal.

Mark practices in all areas of insurance coverage litigation and insurance defense litigation. His insurance litigation work includes breach of contract and bad faith and regulatory issues, as well as policies such as comprehensive general liability, professional liability, environmental liability, homeowner and automobile policies. Mark’s insurance defense litigation includes handling breach of contract, product liability, general negligence and motor vehicle accident matters.

Ericka concentrates her practice on insurance coverage matters, including advising insurers on first-party property, third-party commercial general liability, professional liability, toxic tort and bad faith claims. She also defends insurer-clients and their insureds at the trial and appellate court level against claims for property damage, personal injury and professional liability. Ericka is a current member of Litchfield Cavo LLP’s nationwide COVID-19 Resource Team.