In Download Brethorst v. Allstate Property & Casualty Insurance Co. (Wis. Opinion Filed June 14, 2011) PUBLIC ACCESS, also published as 2011 WI 41, 798 N.W.2d 467 (2011)(authorized password required to access Westlaw), the Supreme Court of Wisconsin addressed a case of first impression. The question in the case, as framed by the Supreme Court, was whether discovery could proceed in a case where the only claim against the Uninsured Motorist Carrier Defendant was an alleged common law Bad Faith Claim, and there was no Breach of Contract Claim. Allstate requested bifurcation of all Contract-Coverage Issues from the Bad Faith Issues even though there was only one Claim alleged, and that one Claim was alleged for Bad Faith. Alternatively, Allstate requested a stay of all discovery until the Plaintiff proved that her claim to coverage was wrongly denied.
The Wisconsin Supreme Court held that the Plaintiff-Policyholder in this First-Party Bad Faith case bore the Burden of Proof that she had a Covered Claim, as a part of proving her Bad Faith Claim. Brethorst v. Allstate Property & Casualty Insurance Co., 798 N.W.2d at ¶ 78, p. 484. This holding is squarely in accord with the nearly unanimous holdings in other cases in other jurisdictions by Courts across the nation. See generally Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" §§ 9:17-9:18, 11:17 (West Third Edition scheduled for pubilcation in July, 2011).
In the end, the Supreme Court affirmed the Trial Court's ruling denying Allstate's motion for bifurcation and denying Allstate's motion for a stay of discovery until breach of contract was proven in this case. The Plaintiff-Policyholder would be required to adduce evidence, which was in the record of this case according to the Supreme Court, that the Plaintiff would be likely to prove a breach of contract, i.e., that the Defendant denied a covered claim. (In all such cases, the Defendant Insurance Company would then be free not only to file a responsive pleading denying any breach of contract, but also to file a "motion," i.e., to "show" that the Plaintiff is not likely to prove denial of a covered claim.) Once the Plaintiff in such a case makes this preliminary showing, the Plaintiff will be entitled to take discovery on a Bad Faith Claim even though there is no accompanying Claim for Breach of Contract, as in this case, the Supreme Court held. Id. at ¶¶ 76 & 77, pp. 483-84.
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