WI Court of Appeals rules jury cannot be told whether defendant has insurance for punitives.

Byline: David Ziemer

A jury considering whether to impose punitive damages cannot be told whether the defendant has insurance for such damages, the Wisconsin Court of Appeals held last week.

Further, a trial court may not prohibit a defendant found liable for such damages from pursuing such coverage from its insurer, the Court of Appeals said.

The opinion is also instructive regarding the danger of giving jurors a single punitive-damages question for two plaintiffs.

Facts

In the 1940s, Wisconsin Natural Gas, later acquired by Wisconsin Electric Power Company (WEPCO), used a refining process that produced a pollutant called oxide box waste (OBW).

Apparently, Wisconsin Natural Gas intentionally dumped large quantities of OBW on properties owned by the City of West Allis and Kearney and Trecker (K&T), now a subsidiary of Giddings & Lewis (G&L). OBW is a hazardous substance, particularly when it comes in contact with water.

In 1990, the City of West Allis discovered significant amounts of OBW on properties owned by itself, K&T, and WEPCO. All the properties were remediated pursuant to order by the DNR.

Procedure

In 1996, the city, G&L, and K&T sued WEPCO for the remediation costs and other damages. In 1999, the case went to trial before 14 jurors.

Milwaukee County Circuit Court Judge Patricia D. McMahon ruled that sufficient evidence was presented to permit the plaintiffs to seek punitive damages.

Although the plaintiffs' proposed verdict forms contained two separate punitive damage questions (one for the city and the other for G&L), McMahon fashioned a verdict form that combined the amounts into one question.

In lieu of live testimony from the chairman of WEPCO, the parties stipulated to the following: WEPCO's net income; its net worth; that it would be prohibited from paying any compensatory damages by raising rates; and that it had no insurance for punitive damages.

The jury awarded $1.216 million to G&L for remediation costs and $2 million for diminution in the value of an adjacent property; $1.252 million to the city for remediation costs; and $100 million in undivided punitive damages.

In answering the special verdict questions, two of the 14 jurors dissented from the finding that WEPCO was responsible for the pollutant on the city's property, and a third juror dissented from the amount of punitive damages.

After the verdict, WEPCO discovered that it might have coverage for punitive damages, and informed the court of that possibility.

The...