Appeals Court Clarifies Pleading Standard in Uninsured Motorist Case

By Joe Forward, Legal Writer, State Bar of Wisconsin

Oct. 23, 2012 – Louis Ullerich was involved in a car accident. His insurer denied a request for $250,000 under an uninsured motorist policy. Recently, a state appeals court ruled the insurer did not act in bad faith.

Ullerich asked Sentry to pay him the $250,000 limit under his uninsured motorist policy after the uninsured car in which he was riding collided with another vehicle. Under the policy, Sentry promised to pay Ullerich’s damages for bodily injury suffered while riding passenger in an uninsured car to the extent the driver was liable for the accident.

A jury later determined that the driver, Richard Goergen, was 50 percent liable for the accident.

However, at the time of Ullerich’s claim for coverage limits, Sentry denied the claim because Ullerich’s doctor said his shoulder injuries may have been from recurrent snow shoveling and not the accident. The doctor wasn’t completely sure. Sentry also questioned Goergen’s liability for the accident.

Sentry offered to settle for nearly $23,000 but Ullerich rejected the offer and filed claims for breach of contract and bad faith and a moved for discovery. He argued that prior case law on the pleading requirements necessary to pitch bad faith claims did not apply.

Specifically, Ullerich said the Wisconsin Supreme Court’s pleading requirements in Brethorst v. Allstate Property and Casualty Insurance Co., 2011 WI 41, 334 Wis. 2d 23, 798 N.W. 2d 467, were not applicable because he asserted both breach of contract and bad faith claims.

In Brethorst, the court held that plaintiff insureds claiming bad faith must show the insurer lacked a reasonable basis for denying benefits. The appeals court rejected Ullerich’s argument that Brethorst applies only to cases alleging bad faith without a breach of contract claim.

“So, contrary to Ullerich’s contentions, Brethorst, although factually and procedurally different, is applicable and instructive on the issue appealed here, namely, the pleading requirements in a first-party bad faith/breach of contract case,” wrote Judge Kitty Brennan wrote in Ullerich v. Sentry Insurance, 2011AP2875 (Oct. 23, 2012).

Under Brethorst, Ullerich was required to allege facts to show his insurance coverage claim was not fairly debatable and survive Sentry’s rebuttal. This he could not do.

“The undisputed facts show that his UM claim was fairly debatable because: (1) it was reasonable for Sentry to conclude that Ullerich’s shoulder injury was not caused by the motor vehicle accident but rather by recurrent snow shoveling; and (2) it was reasonable to question the extent of Goergen’s liability for the accident,” Judge Brennan explained.