"The trial court correctly concluded that [the primary insurer] has exhausted its liability by virtue of the Loy release. The effect of the settlement is that [the primary insurer] has discharged in toto its obligation to its insured."
How later courts described this case
- "The trial court correctly concluded that [the primary insurer] has exhausted its liability by virtue of the Loy release. The effect of the settlement is that [the primary insurer] has discharged in toto its obligation to its insured."
- “In Kranzush, we refused to extend the obligation of good faith beyond the relationship between the insurer and its insured.”
- “[W]e refuse[] to extend the obligation of good faith beyond the relationship between the insurer and its insured.”
Written by the judges who cited it.
Distinguished
Distinguished by Danbeck v. American Family Mutual Insurance, 245 Wis. 2d 186 (2001)
Second, Teigen is inapplicable because it did not concern the interpretation of an exhaustion clause in a UIM policy.
The opinion
STEINMETZ, J.
(concurring). I expressed my dissent with the decision in Loy v. Bunderson, 107 Wis. 2d 400 , 320 N.W.2d 175 (1982), in which this court gave birth to the phenomenon of stressing settlement over specific contractual terms. This court was created, designed, and hopefully operates as a collegiate or collegial body. I define such body as marked by the authority being vested equally in each of the number of colleagues, in this case, consisting of seven justices. The majority of the colleagues decided Loy and that is now the law. Therefore, I will not continue my dissent in this decided area of the law.
I concur in this case because I believe the majority opinion makes it clear that the method of settlement used by a primary carrier, if acceptable, will bring into effect the application of the excess carrier’s contract. The method of settlement the primary carrier uses will have to exhaust its potential coverage to avoid the duty to defend continuing beyond the settlement. The primary carrier’s contract will have to state, as this one did, that the duty to defend its insured ends when its contract’s limits have been exhausted either by payment of judgments, pledge of limits or settlements. Majority op. at page 8. 1 *13 The excess carrier’s exposure and limit of participation must be protectively limited to its coverage by the settlement entered into by the primary carrier. 2 The insured must receive full protection due from the primary carrier in the settlement pursuant to the terms of its policy. If all of those events occur in the settlement between the claimant and the primary carrier, then it does not matter whether the insured has a primary carrier and excess carrier or receives that protection fortuitously as in Loy , insofar as settlements are concerned.
Interpretation and application by the court of Gross v. Lloyds of London Ins. Co., 121 Wis. 2d 78, 84 , 358 N.W.2d 266 (1984) and Loy v. Bunderson, 107 Wis. 2d 400, 320 N.W.2d 175 (1982).
In this case, the excess carrier was protected in the settlement from “any potential bad faith claim against it since Jelco is no longer exposed to any judgment exceeding Mission’s policy limit which could later form a basis for such a claim.” Page 9.