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Danner v. Auto-Owners Insurance5/2/2000
APPEAL from a judgment of the circuit court for Oneida County: ROBERT A. KENNEDY, Judge. Affirmed.
. Auto-Owners Insurance appeals a judgment awarding Darci Danner, Frederick Danner and Rita Danner $142,967.10 for attorney fees they incurred pursuing this bad faith action against Auto-Owners. The judgment also awards $81,012.97 for attorney fees the Danners incurred pursuing the underlying underinsurance claim against Auto-Owners, including arbitration. Auto-Owners argues that it is entitled to judgment as a matter of law because: (1) no bad faith claim can arise when the parties to an insurance contract choose to arbitrate the insured's legal entitlement to recover damages; (2) the issues of negligence, causation and value of Darci's underinsurance claim were fairly debatable; (3) credible evidence supports the jury's findings respecting the amount of attorney fees incurred; and (4) the trial court erroneously changed the verdict answers. We reject Auto-Owners' arguments and affirm the judgment.
FACTS
. In April 1990, Darci Danner was injured when Tod Kraus collided into her car while he was attempting a left-hand turn in his pickup truck. Kraus was cited for failure to yield the right-of-way. Kraus claimed that after he activated his turn signal, he stopped to avoid hitting some bicyclists. Despite Kraus's contention, other witnesses stated that he did not signal his turn, there were no bicyclists and Kraus turned right in front of Danner's on-coming vehicle. Kraus carried a $25,000 liability policy with Dairyland Insurance.
. Auto-Owners insured the vehicle that Danner was driving. Danner lived with her parents, and Auto-Owners also insured two other family vehicles. Each of the three vehicles carried $100,000 underinsurance coverage. The parties do not dispute that under Wisconsin law at the time, the policies could be stacked to afford total underinsurance limits of $300,000. On May 21, 1991, Auto-Owners acknowledged receipt of Danner's notice of claim for underinsured motorist benefits.
. By November 1992, Auto-Owners had retained attorney Todd McEldowney to represent it regarding Danner's underinsurance claim. In April 1993, McEldowney transmitted the statements of three witnesses to Auto-Owners, stating: "In light of the contents of said statements, we will not be providing the same to opposing counsel or the court."
. In May 1993, McEldowney provided a case summary and evaluation to Auto-Owners, reporting that three witnesses at the scene indicated that Kraus did not have on his left turn signal, that Danner was operating at a prudent speed and that Kraus caused the accident. McEldowney advised that a 90/10 percent allocation of negligence was not inconceivable, a jury would likely believe that the accident caused Danner's present complaints and award her $22,000 in medical specials. On May 20, Auto-Owners gave McEldowney $10,000 settlement authority.
. In June 1993, McEldowney asked whether to invoke the policy's mediation provisions, and Auto-Owners advised, "leave it in litigation. We are not interested in mediation or arb." In August, the Danners invoked the policy's arbitration clause. In June, the court entered an order staying Auto-Owners' involvement in the underlying action until the underlying action was complete.
. In May 1994, McEldowney wrote Auto-Owners' Green Bay claims office that because of Danner's substantial medical expenses, Kraus's attorney was considering offering the policy limits; however, "I have attempted to talk her out of that telephonically and have followed up said conversations with the attached letter." His May 16 letter to Kraus's attorney stated:
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