Kimble v. Land Concepts, Inc.: Punitive Damages Against Title Insurer in Bad Faith Case Held Unconstitutionally Excessive

WDC Journal Edition: Summer 2014
By: Bridget M. Hubing

The Wisconsin Supreme Court recently issued a decision in Kimble v. Land Concepts, Inc.1, holding that a jury's punitive damage award of 33 times compensatory damages, in a fairly benign coverage case, was unconstitutionally excessive. The court reduced the award to three times the potential harm in a decision that may even have significance for other states.

Background Facts of Kimble

Robert and Judith Kimble (the “Kimbles”) bought a house on Lake Michigan in Door County, Wisconsin in 2004. The driveway in use by their sellers and their neighbors, John and Jane Stevenson (the“Stevensons”), which the Stevensons had graveled, crossed land owned by Land Concepts, Inc. (“LandConcepts”). Land Concepts had given an easement, but part of the driveway had been built outside the path of the easement. A second easement ran to the north, across a different neighbor’s land, but was no longer in use. The land also abutted a platted street that ran to the south, but the street had never been built.

First American Title Insurance Company (“First American”) issued the Kimbles a title insurance policy in the amount of $370,000 for the Kimble property. The policy obligated First American to defend and indemnify the Kimbles for any covered loss, including losses resulting from “[u]nmarketability of the title” and “[l]ack of a right of access to and from the land.” However, the policy did not insure any specific route of access.

The principal of Land Concepts had wanted to own the Kimble land for 20 years. When the Kimbles put a “for sale” sign at the road, he wrote to the Kimbles, threatening to cut off the driveway. He built posts for a gate, but never installed one.

The Kimbles made a claim on their title insurance policy from First American. The company denied the claim, because the use of the driveway was not insured in the policy, the driveway had not been blocked, and the insured held other access rights. The Kimbles then sued everyone, including their sellers, Land Concepts, and First American. Their sellers sued the Stevensons.

The matter was settled when the Stevensons paid $40,000 to buy an easement at the location of the existing driveway. First American had been asked to contribute to this payment and had not expressly declined the request. However, the Stevensons instead elected to buy the Kimbles’ claim against First American for an additional $10,000.

The Stevensons then continued the lawsuit against First American, the sole remaining defendant, for breach of contract and bad faith. The trial judge ruled as a matter of law that the threatening letters from Land Concepts both proved that the property had no access and rendered the title to the property unmarketable. The judge gave the case to the jury for what was effectively a trial on bad faith and damages only. The jury awarded the Stevensons, cloaked as the Kimbles, $50,000 in compensatory damages (although the Kimbles had actually paid nothing to buy access), and $1,000,000 in punitive damages.

After verdict, the trial judge reduced the compensatory damages down to about $30,000, the Kimbles’ actual attorneys’ fees and survey cost. This increased the ratio of punitive damages to 33 times compensatory damages. However, the trial judge passed on the issue of the propriety of the punitive damages amount, saying he assumed there would be an appeal anyway. On appeal, the Wisconsin Court of Appeals refused to consider the constitutionality of the award, saying that the issue had somehow not been developed well enough in the briefing.

First American then petitioned the Wisconsin Supreme Court for review. The court took the case on the issue of the constitutionality of the award only. Ultimately, the court reduced the award to three times the compensatory damages, including potential harm, which it said was the cost of buying the easement. In the majority opinion written by Justice Annette Kingsland Ziegler, the court said that the Stevensons had not proven any of the aggravating factors that would support a high ratio of punitive damages, and that the punitive damages award of $1 million was not reasonably related to either the compensatory damages award of $30,000 or the potential harm faced by the Kimbles.

Application of the Punitive Damages Test

The majority opinion in Kimble contains a very scholarly and common sense discussion of well- established case law in Wisconsin, as well as decisions from the United States Supreme Court about the limits on punitive damage awards imposed by the Due Process Clause of the United States Constitution.

In Wisconsin, punitive damages are authorized by statute, and may be awarded “if evidence is submitted showing that the defendant acted maliciously toward the plaintiff or in an intentional disregard of the rights of the plaintiff.”2 The judge is the “gatekeeper,” and must first determine whether the issue of punitive damages is properly before the jury.3 If so, the decision to actually award punitive damages in any particular case is entirely within the discretion of the jury.4 Both the judicial determination regarding whether punitive damages is a proper jury question and the size of the jury’s punitive damages award are issues reviewed de novo.5

The Due Process Clause of the Fourteenth Amendment “imposes substantive limits on the size of a punitive damages award.”6 A punitive damages award “is excessive, and therefore violates due process, if it is more than necessary to serve the purposes of punitive damages, or inflicts a penalty or burden on the defendant that is disproportionate to the wrongdoing.”7

Wisconsin case law calls on courts to apply a six factor test to determine whether an award of punitive damages is excessive:

1. The grievousness of the acts;

2. The degree of malicious intent;

3. Whether the award bears a reasonable relationship to the award of compensatory damages;

4. The potential damage that might have been caused by the acts;

5. The ratio of the award to civil or criminal penalties that could be imposed for comparable misconduct; and

6. The wealth of the wrongdoer.8

Wisconsin courts are required to analyze only “those factors which are most relevant to the case, in order to determine whether a punitive damages award is excessive.”9 However, this six-factor test is to be analyzed in conjunction with the following three constitutional “guideposts” described by the United States Supreme Court:

1. The degree of egregiousness or reprehensibility of the conduct;

2. The disparity between the harm or the potential harm suffered and the punitive damages award; and

3. The difference between the punitive damages and the possible civil or criminal penalties imposed for the conduct.10

In Kimble, all three of these guideposts made it clear to the majority that the 33:1 punitive damages award against First American was unconstitutionally excessive.

As to reprehensibility, courts must consider whether: “the harm caused was physical as opposed to economic; the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; the target of the conduct had financial vulnerability; the conduct involved repeated actions or was an isolated incident; and the harm was the result of intentional malice, trickery, or deceit, or mere accident.”11 The Wisconsin Supreme Court was hard pressed to find any of these factors in Kimble:

The damage suffered by the Kimbles was indisputably economic, not physical. First American’s bad faith did not endanger the health or safety of any person. There is no indication in the record that the Kimbles were financially vulnerable. The conduct complained of was an isolated incident. And while First American’s conduct indisputably involved deception, there is no indication of intentional malice on the part of the company or its employees.12

As to disparity, the court noted that “Wisconsin law expressly rejects the use of a fixed multiplier, either a fixed ratio of compensatory to punitive damages or of civil or criminal penalties to punitive damages, to calculate the amount of reasonable punitive damages.”13 Yet the court in Kimble acknowledged that a comparison of the compensatory and punitive damages amounts is an important factor.14 The compensatory damages ultimately awarded totaled $29,738.49 and the punitive damages award was $1 million. Thus, the ratio was approximately 33:1, which the court stated was “transparently problematic under the United States Constitution.”15

However, the court also decided, based on prior case law, that it was appropriate to add any “potential damage” that might have been caused by First American’s acts to the compensatory damage award to calculate the ratio.16 After much discussion, the court added the $40,000 that the Stevensons paid for the access easement to the $29,738.49 compensatory damages award. The increase in compensatory and potential damages to $69,738.49 still produced a problematic ratio of 14:1 for the court.17 The court declined to consider further “potential harm” based on a contract sale price, although the Kimbles lost that sale.18 The court held that the land and its value were never in danger.19

Lastly, as to civil or criminal penalties, the court acknowledged that “[t]he existence of a criminal penalty does have bearing on the seriousness with which a State views the wrongful action.”20 However, the court concluded that the potential criminal penalty of a fine of up to $10,000 had “less utility” when used to determine the actual dollar amount of the punitive damages award, and therefore, the court virtually ignored the last “guidepost” in its analysis.21

Ultimately, the Wisconsin Supreme Court reduced the $1 million punitive damages award to $210,00022 which, according to its calculations, resulted in an approximate ratio of 3:1 when compared to the$70,000 in both compensatory damages ($30,000) and “potential harm” ($40,000).23 Without the added $40,000 in “potential harm,” the ratio would have been 7:1, which the court explicitly stated was unconstitutionally excessive.24


In 2011, the Wisconsin Legislature capped punitive damages at twice compensatory damages or $200,000, whichever is greater.25 The legislature’s promulgation of a strict 2:1 ratio and $200,000 cap, with one limited exception,26 was in response to excessive and arbitrary punitive damages awards in Wisconsin similar to the one in Kimble. Unfortunately, the Kimble trial was conducted just one month after the law went into effect. Had the lawsuit been filed a short time later, the statute would have applied, further reducing the punitive damages award to $200,000.

As a result of the legislative change, the huge impact that the Kimble decision could have made on future punitive damages awards is somewhat diminished. Yet, the case still has very important implications for other title insurance cases because it expressly rejected the notion that the value of the property itself could support a high dollar award. The Stevensons adduced testimony that the Kimbles lost a sale for $1.3 million due to the threat to access by the neighbor. However, the Wisconsin Supreme Court said that the contract price did not represent potential harm:

The Stevensons can point to no indication in the record that the full value of the Kimbles’ property was ever in danger. Case law does not support this type of speculative “potential damage,” particularly where it is unsupported by the record.

Here, the Stevensons invite this court to depart from the facts of the record and speculate that, had the Kimbles failed to discover First American’s bad faith, they would have been completely unable to sell their property, rendering it valueless. We decline this invitation. Many factors enter into a completed sale of real estate, and to attribute full responsibility for the lost sale to First American is highly speculative. There is no clear indication in the record of what impact the access dispute had on the value of the Kimbles’ property.27

As a result, the Kimble decision will remain a very significant decision, even if its import with respect to punitive damages is now somewhat limited due to recent legislative changes.

Bridget M. Hubing is a shareholder in the law firm of Reinhart Boerner Van Deuren s.c. and a member of the firm’s Real Estate practice. She also works closely with the firm’s Litigation and Environmental Law practices. Ms. Hubing serves a variety of clients including commercial and residential property owners, title companies, land surveyors, real estate developers, construction firms, and lending institutions. Her diverse practice includes: resolving real estate disputes through litigation, including arbitration, civil trials, and appeals; negotiating, drafting and recording real estate documents, such as deeds, easements, rights of way, options to purchase, rights of first refusal, and assignments, releases, and terminations of rights; serving as legal counsel for title insurers and agents on policy coverage and title issues; and representing property owners on boundary disputes and easement issues. Ms. Hubing received her B.A. degree, cum laude, from Ripon College and her J.D. degree from the University of Notre Dame Law School. She is a member of the Waukesha County Bar Association, State Bar of Wisconsin, American Bar Association, Wisconsin Land Title Association, and the Wisconsin Society of Land Surveyors.


1 2014 WI 21, 353 Wis. 2d 377, 845 N.W.2d 395.
2 Kimble, 353 Wis. 2d 377, ¶ 44 (quoting Wis. Stat. § 895.043(3) (internal quotations omitted)).
3 Id. (citing Strenke v. Hogner, 2005 WI 25, ¶ 40, 279 Wis. 2d 52, 694 N.W.2d 296).
4 Id. (citing Jacque v. Steenberg Homes, Inc., 209 Wis. 2d605, 626, 563 N.W.2d 154 (1997)).
5 Id., ¶¶ 37, 38, 44.
6 Id., ¶ 44 (quoting Trinity Evangelical Lutheran Church & Sch.-Freistadt v. Tower Ins. Co., 2003 WI 46, ¶ 49, 261 Wis. 2d 333, 661 N.W.2d 789 (citing Mgmt. Computer Servs. v. Hawkins, Ash, Baptie & Co., 206 Wis. 2d 158, 193, 557 N.W.2d 67) (internal quotations omitted)).
7 Id., ¶ 45 (quoting Trinity, 261 Wis. 2d 333, ¶ 50 (internal quotations omitted)).
8 Id., ¶ 47 (quoting Trinity, 261 Wis. 2d 333, ¶ 53; Mgmt. Computer Servs., 206 Wis. 2d at 194 (internal quotations omitted)).
9 Id. (citing Trinity, 261 Wis. 2d 333, ¶ 53; Mgmt. Computer Servs., 206 Wis. 2d at 194).
10 Id., ¶ 46 (quoting Trinity, 261 Wis. 2d 333, ¶ 52 (citing BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 575 (1996)) (internal quotations omitted)).
11 Id., ¶ 49 (quoting State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 419 (2003) (internal quotations omitted); citing Gore, 517 U.S. at 576-77).
12 Id., ¶ 51 (citation omitted).
13 Id., ¶ 55 (citing Trinity, 261 Wis. 2d 333, ¶ 63).
14 Id. (citing Trinity, 261 Wis. 2d 333, ¶ 63; Jacque, 209 Wis. 2d at 629).
15 Id., ¶ 56.
16 Id., ¶ 57 (citing Trinity, 261 Wis. 2d 333, ¶ 53).
17 Id., ¶ 64.
18 Id., ¶ 62.
19 Id.
20 Id., ¶ 69 (quoting Trinity, 261 Wis. 2d 333, ¶ 66; Campbell, 538 U.S. at 428 (internal quotations omitted)).
21 Id. (citing Trinity, 261 Wis. 2d 333, ¶ 68; Campbell, 538 U.S. at 428).
22 The dissenters, Chief Justice Shirley S. Abrahamson and Justice Ann Walsh Bradley, felt that the punitive damages award of $210,000 was grossly inadequate to the “wrongdoing,” and that the majority’s decision to limit the award actually enriched the wrongdoer, stating: “For all its reprehensible conduct, First American in fact pays less by acting in bad faith and wrongfully refusing to pay the Kimbles’ claim than it would have paid had it honored the claim in good faith after discovering its error.” Kimble, 353 Wis. 2d 377, ¶ 74 (Abrahamson, C.J., dissenting).
23 Id., ¶ 71.
24 Id., ¶ 70.
25 Wis. Stat. § 895.043(6), created by 2011 Wisconsin Act 2, § 23m.
26 The 2:1 ratio or $200,000 maximum punitive damages cap does not apply to a defendant who acted maliciously towards a plaintiff or in an intentional disregard of the rights of the plaintiff while operating a vehicle under the influence of an intoxicant to a degree that rendered the defendant incapable of safe operation of the vehicle. See Wis. Stat. § 895.043(6).
27 Kimble, 353 Wis. 2d 377, ¶¶ 58, 62.

© 2014 Wisconsin Defense Counsel. All rights reserved. Hubing, Bridget M., Kimble v. Land Concepts, Inc: Punitive Damages Against Title Insurer in Bad Faith Case Held Unconstitutionally Excessive, Wisconsin Civil Trial Journal (Summer 2014)