October 15, 2021

Volume XI, Number 288

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Supreme Court of Wisconsin Expands Bad Faith Law

On June 22, 2010, the Supreme Court of Wisconsin issued a unanimous decision in Roehl Transport, Inc. v. Liberty Mutual Insurance Co., 2010 WI 49 (“Roehl Transport”), in which the court held that an insurer “may be liable for the tort of bad faith when [it] fails to act in good faith and exposes the insured to liability for sums within the deductible amount.” Id., ¶57.

In Roehl Transport, the insured negotiated a $2 million Truckers/Auto Insurance Policy with a $500,000 deductible. After a personal injury claim against the insured resulted in a $830,400 judgment, the insured brought a bad faith claim, asserting insurer mishandling of the claim resulted in a failure to settle for less than the deductible amount. The bad faith claim went to trial, with the jury finding the insurer’s conduct was in bad faith and awarding the insured $127,000 in compensatory damages. The jury verdict and resulting judgment were appealed directly to the supreme court.

On appeal, the Roehl Transport noted that Wisconsin law already recognized three types of bad faith claims:

  • In the third-party context for failure to settle where the ultimate judgment exposes the insured to a judgment in excess of the policy limit;
  • In the first party context for failure to satisfy the insured’s claim; and
  • In the worker’s compensation context for failure to reimburse the claimant.

The supreme court rejected the argument that Wisconsin law of bad faith was limited to these three categories, and held that Wisconsin law recognizes a bad faith claim when a verdict against an insured in an underlying third-party liability claim is less than policy limits but costs the insured its deductible. The Roehl Transport court also determined that public policy did not preclude this type of bad faith claim, and found that the jury’s verdict was supported by credible evidence in the record.

The court also made two additional rulings on damages. First, the Roehl Transport court held that the insured was entitled to attorney fees as a matter of law upon a jury finding of bad faith, and that the trial court had erred in not entering an award of attorney fees. In addition, the supreme court affirmed the trial court’s dismissal of the punitive damages claim.

©2021 von Briesen & Roper, s.cNational Law Review, Volume , Number 216
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About this Author

Heidi Vogt, von Briesen Roper Law Firm, Milwaukee, Insurance and Litigation Law Attorney

Heidi Vogt is a Shareholder and Co-Chair of the Litigation and Risk Management Practice Group as well as the Chair of the Insurance Coverage and Risk Management Section. Her practice focuses on insurance coverage litigation, commercial disputes, constitutional law, and complex litigation. She has represented insurance companies in Wisconsin and across the country in both state and federal courts in complex insurance coverage matters for more than 20 years.

She represents and counsels insurance clients on a wide variety of...

414-287-1258
Philip Reid, Von Briesen Roper Law Firm, Milwaukee, Environmental, Insurance and Litigation Law Attorney

Phil Reid is an equity shareholder in the Litigation and Risk Management Practice Group. His practice focuses solely on litigation, with a particular emphasis on asbestos and toxic tort matters, insurance coverage and the defense of commercial and personal injury claims. Phil represents both product manufacturers and insurance companies. He has tried personal injury, professional liability, insurance coverage, engineering, premises liability, employment and police liability cases. He has successfully argued cases before the Seventh Circuit Court of Appeals, the Wisconsin...

414-287-1430
David A. Westrup, von Briesen Roper Law Firm, Milwaukee, Corporate, Health and Litigation Law Attorney

David Westrup is an equity shareholder and member of the firm’s Litigation and Risk Management Practice Group and Chair of the Drug and Medical Device Litigation Section. He advises insurers and corporations in minimizing product, environmental, and antitrust risks. He is panel counsel (Environmental, Life Sciences) for national insurance companies. He acts as special counsel on U.S. products and insurance law in overseas matters, including in matters before the House of Lords and the High Court of Australia. He is AV Preeminent rated with Martindale-Hubbell....

414-287-1528
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