Assuming that Coverage Exists Does not Make a Contract

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Posted on August 19, 2022 by barryzalma

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Barry A. Lindsten appealed a circuit court order dismissing his action against Astronautics Corporation of America (Astronautics) and Robertson Ryan &Associates, Inc. and Michael R. Schulte (Robertson Ryan).

In Barry A. Lindsten, Sarah M. Lindsten v. Astronautics Corporation of America, Mayo Medical Plan, Trumbull Insurance Company, Hartford Casualty Insurance Company and Hartford Fire Insurance Company, Defendants, Robertson Ryan &Associates, Inc. and Michael R. Schulte, ABC Insurance Company, No. 2021AP115, Court of Appeals of Wisconsin, District I (August 16, 2022) the Court of Appeals resolved the issues raised by Lindsten.

BACKGROUND

On August 13, 2016, in Milwaukee County, a motor vehicle struck a rental vehicle driven by Lindsten. At the time of the accident, Lindsten was in Wisconsin to perform work for his employer, Astronautics, who provided and paid for the rental vehicle.

Lindsten alleged that Astronautics and its insurance agent/broker, Robertson Ryan, had failed to provide underinsured motorist (UIM) coverage. Astronautics moved to lift the stay for the limited purpose of addressing whether it was a proper party in the case.

The circuit court granted Astronautics’ motion to lift the stay and allowed the parties to conduct discovery on the following limited issues: (1) whether Lindsten was acting within the scope of his employment for Astronautics when the accident at issue took place; and (2) whether Astronautics entered into a contract with Lindsten to specifically provide UIM coverage.

Lindsten filed an amended complaint. Lindsten raised two causes of action against Astronautics: (1) breach of an oral contract; and (2) reformation. According to Lindsten, on or prior to the date of the accident, he was informed by Astronautics’ travel administrator that Astronautics “would provide full insurance coverage” and “would take care of all his insurance needs on rental cars.” Based on prior travel experience with previous employers, Lindsten assumed this included UIM coverage. Lindsten further alleged that the travel administrator informed him that he should sign an insurance waiver to specifically opt out of the insurance coverage offered by the rental agency in favor of the coverage provided by Astronautics.

In regards to Robertson Ryan, Lindsten also raised two causes of action: (1) breach of contract; and (2) negligence. Lindsten alleged that Astronautics had specifically requested that Robertson Ryan provide UIM coverage, and that Robertson Ryan had failed to procure a policy that would provide UIM coverage. Further, Lindsten alleged that if Robertson Ryan had procured the UIM coverage, Lindsten would have been a third-party beneficiary of any such insurance coverage.

Both Astronautics and Robertson Ryan filed a motion to dismiss. Astronautics contended that the allegation that Astronautics agreed to take care of all of Lindsten’s insurance needs was not specific enough to cover an offer to provide UIM coverage, thus, no contract was created. Further, Astronautics contended that only written contracts could be reformed.

The circuit court granted the motions to dismiss. The court explained that a “specific offer” is required to create an insurance contract, and that it is not enough to simply allege that there was an offer for “insurance,” “full coverage,” or “insurance needs.” Rather, the pleadings needed to specifically refer to UIM coverage.

DISCUSSION

A motion to dismiss for failure to state a claim tests the legal sufficiency of the complaint. To survive a motion to dismiss, a complaint must contain a short and plain statement of the claim, identifying the transaction or occurrence or series of transactions or occurrences out of which the claim arises and showing that the pleader is entitled to relief. In other words, a complaint must plead facts, which if true, would entitle the plaintiff to relief.

Whether a complaint states a claim upon which relief may be granted is a question of law that we review de novo, benefitting from the circuit court’s decision. The court will accept as true the factual allegations in the complaint but will not accept any legal conclusions. Factual allegations must be more than labels and conclusions or a formulaic recitation of the elements of a cause of action.

On appeal, Lindsten asserts that the circuit court erred in granting the motions to dismiss. When certain conditions exist, a statute provides the exclusive remedy for recovery for an employee against an employer. Lindsten’s brief-in-chief fails to address why this doctrine does not apply. We generally do not address undeveloped arguments, and we decline to do so here. The trial court’s decision was affirmed.

ZALMA OPINION

A person cannot create a contract without being able to prove that there was an offer, acceptance of the offer, and payment of consideration. Lindsten claimed that there was an oral contract to provide him all insurance he needed. Even if there was an offer and acceptance of that offer it was too vague to make sense or to be enforceable. Insurance is a contract between the insurer and the insured. Lindsten was neither an insurer nor was he an insured. He was the employee of the insured.

(c) 2022 Barry Zalma & ClaimSchool, Inc.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and [email protected].

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