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Wisconsin Supreme Court Holds the Made Whole Doctrine Does Not Apply

In Dufour v. Progressive Classic Ins. Co., 2016 WI 59 (Wis. July 6, 2016), a negligent motorist struck and injured Dennis Dufour while Dufour was operating his motorcycle. The tortfeasor's insurance company, American Standard, paid Dufour its $100,000 limits for Dufour's bodily injury, and Dufour gave American Standard and the tortfeasor a release. Dufour's insurer, Dairyland Insurance Company, then paid Dufour its $100,000 underinsured bodily injury limits and also paid Dufour $15,589.86 for his property damage. Subsequently, Dairyland received in subrogation from American Standard the amount in property damage Dairyland had paid to Dufour.

Dufour asserted that, because the value of his injuries exceeded the total insurance proceeds he had received, the made whole doctrine required Dairyland to pay him the subrogated property damage funds it had received from American Standard. When Dairyland declined to pay Dufour a second time for his property damage, Dufour asserted claims against Dairyland for breach of contract and bad faith.

The Wisconsin Supreme Court held the made whole doctrine did not apply under the circumstances and, therefore, permitted Dairyland to retain the subrogated property damage funds. The court observed that multiple circumstances led the equities to favor the insurer. First, Dairyland had paid Dufour its bodily injury limit of $100,000 and had paid him the full value of his property damage. Accordingly, Dufour had recovered "every dollar [he] was entitled [to receive] under his contract of insurance with Dairyland." Dufour, 2016 WI 59, ¶ 49. Second, Dufour was afforded priority in recovering from the tortfeasor: "Dairyland permitted Dufour to recover all benefits to which he was entitled under both policies before it pursued its separate subrogation claim against the tortfeasor's insurer." Id., ¶ 50. By allowing Dufour to recover all proceeds under both policies, the court observed that Dairyland and Dufour were not in competition for a limited pool of funds. Third, the policy Dairyland issued to Dufour provided separate coverages for bodily injury and for property damage, and the court "decline[d] to rewrite Dairyland's policy to provide for lump sum coverage where such coverage was not contemplated by the parties." Id., ¶ 51.

Because the Wisconsin Supreme Court held that Dairyland did not breach its contract when it declined to turn over to Dufour the subrogated property damage funds, the court also held that Dairyland did not commit bad faith. Id., ¶ 55.

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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...

Douglas Raines, Von Briesen Roper Law Firm, Milwaukee, Real Estate, Insurance And Litigation Law Attorney

Doug Raines is a Shareholder in the firm’s Litigation and Risk Management Practice Group. His practice focuses primarily on commercial litigation, insurance defense, and appellate work.

Doug has helped clients achieve positive outcomes through settlement of numerous cases ranging from slip-and-fall, breach of contract, landlord-tenant, and insurance coverage issues.

Before joining von Briesen, Doug served as the law clerk to the Hon. Patience D. Roggensack of the Wisconsin Supreme Court (2007 – 2008 term).

Doug is the author or co-author of multiple law review articles. His work on affirmative action jurisprudence, New Federalism, and Wisconsin’s risk contribution doctrine has been published in the Marquette Law ReviewBoston University Law Review (co-author with Scott A. Moss), and Pace Environmental Law Review (co-author with Peter G. Earle and Fidelma Fitzpatrick), respectively.