Wisconsin Supreme Court Rules Excessive Punitive Damages Unconstitutional

On April 22, the Wisconsin Supreme Court issued a decision (4-2) in Kimble v. Land Concepts, Inc., 2014 WI 21, holding that $1 million in punitive damages against a title insurance company violated due process and therefore was unconstitutional. Justice Annette Ziegler authored the decision, and was joined by Justices Patrick Crooks, Patience Roggensack, and Michael Gableman. Chief Justice Shirley Abrahamson authored a dissenting opinion and was joined by Justice Ann Walsh Bradley.

Wisconsin Insurance Alliance, Wisconsin Civil Justice Council, and Wisconsin Manufacturers & Commerce filed an amicus brief in the case arguing that the $1 million award of punitive damages was unconstitutional.

The issue in the case was whether the $1 million in punitive damages awarded against First American Title Insurance Company violated the Wisconsin Constitution or the common law of the state of Wisconsin.

Facts

The case involved a jury verdict awarding the plaintiff-property owners $1 million in punitive damages against First American Title Insurance Company for bad faith in denying the insureds’ requested defense of title and claim.

The plaintiffs purchased property in Door County that was land-locked on three sides and surrounded by water on the other side. The plaintiffs-buyers believed they had an easement over adjoining property allowing access to the nearest road. However, it was determined after the purchase of the property that the plaintiffs did not have an easement and therefore filed suit against First American Title Insurance Company when it denied that the policy coverage had been triggered.

The case went to trial and the court awarded the plaintiffs $29,738 in compensatory damages against First American. The jury also awarded the plaintiffs $1 million in punitive damages against First American for its bad faith in denying the claim. The court of appeals upheld the punitive damages.

The sole issue before the Wisconsin Supreme Court is whether the $1 million is unconstitutional. (The new caps under 2011 Wisconsin Act 2 are not implicated because this case was commenced prior to enactment of Act 2.)

Wisconsin Supreme Court’s Decision

The court held that the award of $1 million did “not bear a ‘reasonable relationship’ to either the compensatory damages award or the potential harm faced by the plaintiff.” According to the court, the punitive damages award was excessive and deprived the First American its right to due process under the constitution. Therefore, the court reversed the lower court and held that appropriate amount of punitive damages was $210,000, plus compensatory damages.

 

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