Amicus Committee Activity - Cases Decided: Reid v. Benz

WDC Journal Edition: December 2001
By: James Naugler

Reid v. Benz, 2001 WI 106, ___ Wis. 2d ___, 629 N.W. 2d 262

Under the American Rule, the losing party does not pay the winner's legal fees. A rare exception to the American Rule arises when an insurer breaches its duty to defend its insured while challenging coverage.

Here American Family satisfied its duty to defend, followed the bifurcation and stay procedure for contesting coverage outlined by the Wisconsin Supreme Court, and unsuccessfully contested coverage. The trial court still said American Family had to pay legal fees the insured incurred to establish coverage. American Family appealed. The court of appeals certified the issue to the Wisconsin Supreme Court, which reversed the trial court.

CTCW member Arnold P. Anderson of Moore & Anderson, S.C. successfully argued on behalf of CTCW that the American Rule prevents shifting attorneys fees to insurance companies that follow the bifurcation and stay procedure in coverage litigation.