Robert L. Kimble v. Land Concepts, Inc.

2014 WI 21

SUPREME COURT OF WISCONSIN
CASE NO.: 2011AP1514
COMPLETE TITLE: Robert L. Kimble and Judith W. Kimble,
Plaintiffs,
v.
Land Concepts, Inc., John E. Stevenson and Jane
E.
Stevenson, Trustees of the John E. and Jane E.
Stevenson
Revocable Trust, Dorene E. Dempster and Mark F.
Herrell,
Defendants,
John E. Stevenson and Jane E. Stevenson,
Defendants-Respondents,
First American Title Insurance Company,
Defendant-Appellant-Petitioner.

REVIEW OF A DECISION OF THE COURT OF APPEALS
Reported at 345 Wis. 2d 60, 823 N.W.2d 839
(Ct. App. 2012 – Unpublished)

OPINION FILED: April 22, 2014
SUBMITTED ON BRIEFS:
ORAL ARGUMENT: December 19, 2013

SOURCE OF APPEAL:
COURT: Circuit
COUNTY: Door
JUDGE: D. Todd Ehlers

JUSTICES:
CONCURRED:
DISSENTED: ABRAHAMSON, C.J., BRADLEY, J., dissent. (Opinion
filed.)
NOT PARTICIPATING: PROSSER, J., did not participate.

ATTORNEYS:
For the defendant-appellant-petitioner, there were briefs
by J. Bushnell Nielsen, Rebecca Leair, and Reinhart Boerner Van
Deuren S.C., Waukesha, and oral argument by J. Bushnell Nielsen.

For the defendants-respondents, there was a brief by David
H. Weber, T. Wickham Schmidt, and Conway, Olejniczak & Jerry,
S.C., Green Bay, and oral argument by David H. Weber.
 An amicus curiae brief was filed by James A. Friedman,
Kerry L. Gabrielson, and Godfrey & Kahn, S.C., Madison, on
behalf of the Wisconsin Insurance Alliance, the Wisconsin Civil
Justice Council, Inc., and Wisconsin Manufacturers & Commerce.

2
 2014 WI 21
NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2011AP1514
(L.C. No. 2009CV188)

STATE OF WISCONSIN : IN SUPREME COURT

Robert L. Kimble and Judith W. Kimble,

Plaintiffs,

v.

Land Concepts, Inc., John E. Stevenson and Jane
E. Stevenson, Trustees of the John E. and Jane FILED
E. Stevenson Revocable Trust, Dorene E.
Dempster and Mark F. Herrell, APR 22, 2014
Defendants, Diane M. Fremgen
Clerk of Supreme Court
John E. Stevenson and Jane E. Stevenson,

Defendants-Respondents,

First American Title Insurance Company,

Defendant-Appellant-Petitioner.

REVIEW of a decision of the Court of Appeals. Reversed

and cause remanded.

¶1 ANNETTE KINGSLAND ZIEGLER, J. This is a review of an

unpublished decision of the court of appeals, Kimble v. Land
Concepts, Inc., No. 2011AP1514, unpublished slip op. (Wis. Ct.
 No. 2011AP1514

App. Oct. 11, 2012), affirming the judgment of the Door County

Circuit Court,1 upholding a jury award of punitive damages

against First American Title Insurance Company ("First

American").

¶2 First American argues that the punitive damages award

against it was excessive and violated its right to due process

under the United States and Wisconsin constitutions.2

¶3 John E. and Jane E. Stevenson ("Stevensons")3 argue

that First American had no right to appeal the punitive damages

award because it filed its post-verdict motion late. The

Stevensons also argue that the award was reasonable in light of

First American's bad faith conduct, and the harm that they might

have suffered as a result of that bad faith. The Stevensons

further contend that punitive damages were appropriate because

First American's conduct needed to be deterred.

¶4 We conclude that the punitive damages award in this

case was excessive and deprived First American of its right to

due process. We therefore reverse the court of appeals'

1
The Honorable D. Todd Ehlers presided.
2
First American's petition for review addressed four
issues. We granted review, however, solely on the issue of
whether the punitive damages award was unconstitutionally
excessive.
3
The original plaintiffs in this action, Robert L. Kimble
and Judith W. Kimble, assigned their rights under their title
insurance policy, including any claims against First American,
to the Stevensons as part of a settlement agreement.

2
 No. 2011AP1514

decision and remand this case to the circuit court for entry of

a judgment against First American in the amount of $239,738.49.

I. BACKGROUND FACTS

¶5 On October 26, 2004, Robert L. Kimble and Judith W.

Kimble ("Kimbles") purchased a lakefront lot located in the Town

of Nasewaupee in Door County ("Kimble Lot") from Dorene Dempster

("Dempster") and Mark Herrell ("Herrell").4 A private cut-off

road that crossed the property immediately to the west provided

access to the Kimble Lot. That property was owned by Land

Concepts, Inc. ("Land Concepts").

¶6 The deed executed by Dempster and Herrell conveying

the Kimble Lot to the Kimbles warranted that the property was

benefitted by two easements. One easement purported to grant

the Kimble Lot use of a private driveway connecting it to County

Highway M across property to the north ("North Easement"). That

private driveway had not been used in many years at the time of

the sale. The other easement purported to grant the Kimble Lot

access to County Highway M across Land Concepts' property ("West
Easement").5 It is undisputed that the cut-off road was not

within the boundaries of either of these easements.

¶7 On October 27, 2004, First American issued the Kimbles

a title insurance policy for the Kimble Lot. The policy

4
Dempster and Herrell had originally purchased the lot from
the Stevensons. All were initially defendants in the Kimbles'
lawsuit.
5
The West Easement traversed property belonging only to
Land Concepts, while the North Easement traversed property
belonging to both Land Concepts and other owners.

3
 No. 2011AP1514

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." The policy did not insure any

specific route of access.

¶8 In early 2008, the Kimbles listed their property for

sale with a real estate agent.6 On March 5, 2008, the Kimbles'

agent received a letter from Land Concepts stating that the

Kimbles "do not own——and cannot convey——any access rights to

County Highway M" from the Kimble Lot. The letter instructed

the agent to make prospective purchasers of the Kimble Lot aware

of lack of access rights "[i]n order to avoid possible future

misunderstandings and/or confusion." On March 17, 2008, the

Kimbles' attorney contacted the Kimbles' local insurance agent,

Marilyn DeNamur ("DeNamur"), about the dispute. DeNamur

forwarded the matter to Donald Schenker ("Schenker"), an

assistant vice president at First American.

¶9 On March 18, 2008, DeNamur provided Schenker with the
deeds and other recorded documents purportedly granting the

North and West Easements to the Kimbles' predecessors in title.

In a follow-up message to Schenker on March 28, DeNamur noted

that there appeared to be a problem with the deeds purporting to

grant and convey the North Easement. DeNamur asked Schenker

6
The precise date of the real estate listing is not a part
of the record.

4
 No. 2011AP1514

whether she should "continue to dig for more documentation?"

Schenker never asked for more research.7

¶10 On March 31, 2008, Schenker, on behalf of First

American, sent the Kimbles a letter which addressed the access

issue. Schenker indicated in his letter that he believed the

West Easement was defective.8 Schenker asserted, however, that

the North Easement continued to provide the Kimble Lot access to

the highway, and because the title remained as insured, First

American had no duty to intervene in the dispute. In his

letter, Schenker described the chain of title he claimed

supported the North Easement, but made no mention of the

problems identified by DeNamur.

¶11 On May 27, 2008, the Kimbles forwarded Schenker a copy

of a letter they intended to send to Land Concepts asserting

their right to use the cut-off road. The Kimbles asked Schenker

whether the letter jeopardized their title insurance policy. On

May 28, 2008, Schenker assured the Kimbles that it did not,

again implicitly asserting that another right of access existed.
¶12 On June 13, 2008, the Kimbles received a response

letter from Land Concepts, wherein Land Concepts threatened to

"close the access over [its] property" if the dispute was not

7
The record is devoid of any direct response from Schenker
to DeNamur's March 28, 2008 e-mail message.
8
Specifically, Schenker wrote that the document recording
the easement failed to identify the property benefitted, and
thus failed to comply with Wis. Stat. § 706.02(1) (2009-10).
All subsequent references to the Wisconsin Statutes are to the
2009-10 version unless otherwise indicated.

5
 No. 2011AP1514

"promptly resolved." On June 18, 2008, the Kimbles contacted

Schenker regarding the threatened closure. The Kimbles asked

Schenker whether First American would insure the North Easement

under the title policy if the Kimbles constructed a new driveway

following the route of that easement.

¶13 On June 25, 2008, Schenker reiterated to the Kimbles

that their title policy did not insure any particular route of

access. Schenker again asserted that the North Easement

provided access and stated, "[w]hether there is some legal

defense to prevent the Kimbles from using it, which falls under

some exclusion or exception in the policy, we do not know."

Schenker further recommended that the Kimbles have a survey of

the North Easement performed before constructing any driveway.

¶14 The Kimbles continued to market their property

throughout 2008, relying on Schenker's assurances that it had

good access to the highway. Land Concepts continued to dispute

the Kimbles' right of access, but did not follow through on its

threat to physically close the cut-off road.
¶15 On January 12, 2009, the Kimbles received a cash offer

to purchase their property. The sale was made contingent on the

access issue being resolved. Despite an extension on the

original 30-day time limit, the Kimbles were unable to negotiate

a resolution with Land Concepts and lost the sale.

II. PROCEDURAL POSTURE

¶16 On June 3, 2009, the Kimbles filed suit against Land

Concepts and the Stevensons. The Kimbles sought a declaration
that the North Easement was valid and sought a prescriptive
6
 No. 2011AP1514

easement for their use of the cut-off road. The Kimbles also

claimed that Land Concepts, in recording the West Easement, had

slandered the title to the Kimbles' property.

¶17 On October 23, 2009, the Kimbles amended their

complaint adding breach of warranty claims against Dempster,

Herrell, and the Stevensons, and a breach of contract claim

against First American for failing to defend the title to their

property.

¶18 On July 21, 2010, the Kimbles settled their claims

against all the defendants except First American. As part of

the settlement, the Kimbles and the Stevensons paid Land

Concepts $40,000 to secure an easement over the route of the

existing cut-off road. The Stevensons paid an additional

$10,000 to the Kimbles for an assignment of the Kimbles' rights

under the title insurance policy, including any claims against

First American.

¶19 On August 6, 2010, the Stevensons filed a cross-claim

against First American, alleging breach of contract and breach
of fiduciary duty and bad faith in First American's refusal to

defend the title to the Kimble Lot.

¶20 On December 1, 2010, First American filed a motion for

declaratory and summary judgment, asking the court to dismiss

the Stevensons' cross-claim. First American argued that the

Stevensons were not "insureds," and thus had no rights under the

title policy. First American also contended that the Kimbles

were not permitted to settle their claims against other

7
 No. 2011AP1514

defendants without the written consent of First American. First

American asserted that the title policy was void as a result.

¶21 The Stevensons argued that the Kimbles were permitted

to assign their rights under the title policy, and that the

partial settlement was proper under the terms of the insurance

contract. The Stevensons also asserted that, to the extent

summary judgment was warranted, it should be granted against

First American on the Stevensons' breach of contract claim.

¶22 On January 18, 2011, the circuit court denied First

American's motion for declaratory and summary judgment. The

court concluded that the assignment of rights from the Kimbles

to the Stevensons was proper and that there were issues of fact

to be tried regarding the Stevensons' breach of contract and

breach of fiduciary duty and bad faith claims.

¶23 On February 4, 2011, the Stevensons filed a motion in

limine which asked the court to exclude any evidence of the

monetary terms of the settlement agreements between the Kimbles

and the other defendants.
¶24 On February 21, 2011, First American filed a motion in

limine asking the court to exclude evidence that the Kimbles'

title was unmarketable as a result of the access problems.

First American argued that, while the access issues might have

impaired the value of the property, they did not constitute a

defect in the title.

¶25 On March 1, 2011, the circuit court granted the

Stevensons' motion in limine to exclude evidence of the terms of
the settlement between the Kimbles and the other defendants.
8
 No. 2011AP1514

Additionally, the circuit court denied First American's motion

in limine to exclude evidence of unmarketability. In denying

First American's motion, the court determined that the issue of

marketability was a legal question to be determined by the court

prior to trial. The court concluded that title to the Kimble

Lot was rendered unmarketable by the access dispute. As a

result, the court concluded that coverage was triggered under

the title insurance policy. The court determined that it was

for the jury to decide whether First American's decision not to

defend the Kimbles under the policy constituted breach of

contract and breach of fiduciary duty and bad faith.

¶26 On March 2, 2011, the jury trial began. At trial, the

Stevensons presented evidence that First American was obligated

to defend the Kimbles' title and failed to do so. The

Stevensons further presented evidence that First American knew

the North Easement was defective and concealed that information

from the Kimbles. First American presented evidence that it had

a good faith belief that the North Easement provided access, and
that as a result, its failure to disclose the defect to the

Kimbles was merely a mistake.9

¶27 On March 3, 2011, the jury returned a verdict in favor

of the Stevensons. The jury found that First American breached

9
As we have granted review only on the legal issue of
whether the punitive damages award in this case was excessive,
this opinion does not provide a detailed description of the
arguments presented at trial. The evidence in the record is
assumed to be sufficient to support the jury's findings in all
respects except the size of the punitive damages award.

9
 No. 2011AP1514

its contract and exercised bad faith in refusing to defend the

Kimbles' title. The jury awarded the Stevensons $50,000 in

compensatory damages for the breach of contract, and $1,000,000

in punitive damages to punish First American's bad faith.

¶28 On March 24, 2011, First American filed three motions

after the verdict with the circuit court.10 Initially, First

American asked the court, pursuant to Wis. Stat. § 805.14(5)(c),

to reduce the compensatory damages award. Next, First American

asked the court to change the jury's answer to the bad faith

question to "no" and delete the jury's punitive damages award.

First American asserted that there was insufficient evidence

supporting the findings. Finally, First American asked the

court, in the alternative, to set aside the punitive damages

award, which First American argued was excessive, and order a

new trial on damages.

¶29 The Stevensons opposed First American's post-verdict

motions. The Stevensons argued that the jury's award was

appropriate, and that First American's conduct justified
punitive damages. Further, the Stevensons argued that the

jury's punitive damages award was not excessive.

¶30 On June 14, 2011, the circuit court granted First

American's motion regarding the compensatory damages award,

reducing it to $29,738.49. The court denied First American's

10
The Stevensons argue that First American waived its right
to appeal the punitive damages award by filing its post-verdict
motions late. See Wis. Stat. § 805.16(1). We address this
argument in part IV(A) of this opinion.

10
 No. 2011AP1514

other motions, however, allowing the bad faith finding and the

punitive damages award to stand. The court then entered

judgment against First American in the amount of $1,029,738.49.

¶31 On June 29, 2011, First American filed its notice of

appeal. On July 11, 2011, First American filed a motion with

the circuit court requesting the court stay the effect of the

judgment pending appeal. On August 3, 2011, the circuit court

granted First American's motion.

¶32 Before the court of appeals, First American made four

arguments. First, it argued that the Kimbles were not permitted

to assign their rights under the title insurance policy to the

Stevensons. Second, First American argued that the circuit

court improperly determined that coverage under the policy was

invoked prior to trial. Third, First American argued that there

was insufficient evidence to support the jury's finding of bad

faith. Finally, First American argued that the punitive damages

award was excessive.11

¶33 The Stevensons argued that the Kimbles' assignment of
their rights under the insurance policy was valid, and that the

circuit court properly found coverage under the title policy as

a matter of law. The Stevensons also contended that First

11
First American also argued that the compensatory damages
award should be further reduced. Because this argument was not
raised in First American's post-verdict motion, however, the
court of appeals declined to address the issue. Kimble v. Land
Concepts, Inc., No. 2011AP1514, unpublished slip op., ¶37 (Wis.
Ct. App. Oct. 11, 2012) (citing Segall v. Hurwitz, 114
Wis. 2d 471, 489, 339 N.W.2d 333 (Ct. App. 1983)).

11
 No. 2011AP1514

American's conduct supported the jury's finding of bad faith,

and that the punitive damages award was not excessive.

¶34 On October 11, 2012, the court of appeals affirmed the

circuit court. Kimble, No. 2011AP1514, slip op., ¶1. First,

the court of appeals concluded that the Kimbles were permitted

to assign their rights under the title policy to the Stevensons,

and that they had not violated the terms of the policy in

agreeing to a partial settlement. Id., ¶¶16-17. Second, the

court of appeals affirmed the circuit court's determination

that, as a matter of law, there was coverage under the title

policy. Id., ¶¶24-28. Third, the court appeals affirmed the

circuit court's determination that the jury's finding of bad

faith was supported by sufficient evidence. Id., ¶¶33-35.

Finally, the court of appeals summarily affirmed the jury's

punitive damages award, finding First American's argument

regarding excessiveness of the award to be "insufficiently

developed." Id., ¶41.12

12
Given that the availability of "'meaningful and adequate
review by the trial court' and subsequent appellate review" of
punitive damages awards is necessary to ensure that such awards
are not imposed in an arbitrary manner, see Honda Motor Co.,
Ltd. v. Oberg, 512 U.S. 415, 420 (1994), the court of appeals'
lack of analysis is remarkable. We take this opportunity to
remind courts, both trial and appellate, of their obligation to
ensure that punitive damages awards comply with due process.

12
 No. 2011AP1514

¶35 On December 28, 2012, First American petitioned this

court for review, which we granted on July 18, 2013.13

¶36 On September 3, 2013, the Stevensons filed a motion

for summary disposition in this court, arguing that by filing

its post-verdict motion late, First American had waived its

right to appellate review. See Wis. Stat. §§ 805.14(5) and

805.15(1). We held the motion in abeyance.14

III. STANDARD OF REVIEW

¶37 "[T]he constitutional issue of punitive damages merits

de novo review." Trinity Evangelical Lutheran Church & Sch.-

Freistadt v. Tower Ins. Co., 2003 WI 46, ¶47, 261 Wis. 2d 333,

661 N.W.2d 789 (citing Cooper Indus., Inc. v. Leatherman Tool

Grp., Inc., 532 U.S. 424, 431 (2001)). "[I]n determining

whether a jury's award [is] excessive, . . . the reviewing court

properly review[s] the entire record 'ab inito' . . . ." Id.,

¶48 (citing Mgmt. Computer Servs. v. Hawkins, Ash, Baptie & Co.,

206 Wis. 2d 158, 192 n.32, 557 N.W.2d 67 (1996)).

13
Because we granted review solely on the issue of whether
the punitive damages award was excessive, this opinion assumes,
without deciding, that the assignment was valid, that there was
coverage under the insurance policy, and that the jury's finding
of bad faith was supported by the evidence.
14
In response to the Stevensons' motion for summary
disposition, First American filed a motion to supplement the
record, purporting to show that its post-verdict motion was
filed timely, and a motion to strike the Stevensons' reply brief
on the motion for summary disposition. The motion for summary
disposition, as well as these additional motions are rendered
moot by our decision and thus are not addressed.

13
 No. 2011AP1514

¶38 We recognize that our prior case law, particularly

Jacque v. Steenberg Homes, Inc., 209 Wis. 2d 605, 563 N.W.2d 154

(1997), has created confusion with respect to the standard of

review in punitive damages cases. Jacque, however, predates

both Cooper, wherein the United States Supreme Court clarified

that de novo is the appropriate standard of review, and Trinity,

wherein this court explicitly adopted that standard. While

judges "serve as gatekeepers before sending a question on

punitive damages to the jury," Strenke v. Hogner, 2005 WI 25,

¶40, 279 Wis. 2d 52, 694 N.W.2d 296,15 once the issue of punitive

damages is properly before the jury, its decision to award

punitive damages is accorded deference. The size of the award,

however, is subject to de novo review to ensure it accords with

the constitutional limits of due process. Trinity, 261

Wis. 2d 333, ¶¶47-49.

IV. ANALYSIS

A. Post-Verdict Motion

¶39 As an initial matter we address the argument, raised
by the Stevensons in their motion for summary disposition, that

First American lost its right to appeal the punitive damages

award when it failed to timely file its post-verdict motion

under Wis. Stat. § 805.16(1).

15
Strenke v. Hogner interpreted Wis. Stat. § 895.85(3)
(2001-02), the predecessor to the current punitive damages
statute. 2005 WI 25, ¶2, 279 Wis. 2d 52, 694 N.W.2d 296; see
also Wis. Stat. § 895.043(3).

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 No. 2011AP1514

¶40 Wisconsin Stat. § 805.16(1) provides that "[m]otions

after verdict shall be filed and served within 20 days after the

verdict is rendered, unless the court, within 20 days after the

verdict is rendered, sets a longer time by an order specifying

the dates for filing motions, briefs or other documents."

Further, a litigant's failure to comply with the statute causes

"the circuit court [to] 'los[e] competency to exercise its

jurisdiction.'" Hartford Ins. Co. v. Wales, 138 Wis. 2d 508,

513, 406 N.W.2d 426 (1987) (quoting Jos. P. Jansen v. Milwaukee

Area Dist. Bd., 105 Wis. 2d 1, 10, 312 N.W.2d 813 (1981)).

¶41 The circuit court's inability to consider a post-

verdict motion, however, does not deprive this court of

appellate jurisdiction. Failure to comply with Wis. Stat.

§ 805.16 "limit[s] the issues that may be asserted as a matter

of right on the appeal . . . ." Wales, 138 Wis. 2d at 510-511.

"A trial court's failure to conform with sec. 805.16, Stats.,

however, does not strip this court of its discretionary power[]"

to review the case. Brandner v. Allstate Ins. Co., 181
Wis. 2d 1058, 1071, 512 N.W.2d 753 (1994).

¶42 The merits issue in this case is of constitutional

dimension and has been fully briefed and argued by both parties.

We therefore exercise our discretion and address whether the

punitive damages award against First American was

unconstitutionally excessive.

B. Punitive Damages Award

¶43 Punitive damages are not intended to compensate the
plaintiff, but rather are awarded "to punish the wrongdoer, and
15
 No. 2011AP1514

to deter the wrongdoer and others from similar conduct."

Trinity, 261 Wis. 2d 333, ¶50. "Punitive damages may properly

be imposed to further a State's legitimate interests in

punishing unlawful conduct and deterring its repetition." BMW

of N. Am., Inc. v. Gore, 517 U.S. 559, 568 (1996).16

¶44 In Wisconsin, punitive damages are authorized by

statute, see Wis. Stat. § 895.043, 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." Wis. Stat. § 895.043(3). The

judge has the duty to act as the "gatekeeper" when determining

whether the issue of punitive damages is properly before the

jury. Strenke, 279 Wis. 2d 52, ¶40. Once the judge has

determined that the issue of punitive damages is properly before

the jury, whether to actually award punitive damages "in a

particular case is entirely within the discretion of the jury."

Jacque, 209 Wis. 2d at 626. Both the judicial determination

regarding whether punitive damages is a proper jury question and
the size of the jury's punitive damages award are subject to

review. The Due Process Clause of the Fourteenth Amendment

16
Because punitive damages serve the State's interests,
rather than serving to compensate a party, punitive damages
awards do not implicate a plaintiff's right to a remedy or to a
jury trial. See Wis. Const. art. I, §§ 5 and 9; compare Ferdon
ex rel. Petrucelli v. Wis. Patients Comp. Fund, 2005 WI 125,
¶69, 284 Wis. 2d 573, 701 N.W.2d 440 (suggesting that a
statutory cap on noneconomic compensatory damages might
implicate a plaintiff's right to a jury trial and to a remedy
under the Wisconsin Constitution).

16
 No. 2011AP1514

"imposes substantive limits on the size of a punitive damages

award." Trinity, 261 Wis. 2d 333, ¶49 (citing Mgmt. Computer

Servs., 206 Wis. 2d at 193).17

¶45 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."

Trinity, 261 Wis. 2d 333, ¶50. "Elementary notions of fairness

enshrined in our constitutional jurisprudence dictate that a

person receive fair notice not only of the conduct that will

subject him to punishment, but also of the severity of the

penalty that a State may impose." BMW, 517 U.S. at 574; see

also Trinity, 261 Wis. 2d 333, ¶51.

¶46 The United States Supreme Court has applied a three-

part test to determine whether an award of punitive damages is

excessive. See BMW, 517 U.S. at 574-75; State Farm Mut. Auto

Ins. Co. v. Campbell, 538 U.S. 408 (2003). This test asks the

reviewing court to weigh: "(1) the degree of egregiousness or
reprehensibility of the conduct; (2) the disparity between the

17
We have previously stated that "the evidence must be
viewed in the light most favorable to the plaintiff, and a
jury's punitive damages award will not be disturbed, unless the
verdict is so clearly excessive as to indicate passion and
prejudice." Trinity, 261 Wis. 2d 333, ¶56; Jacque, 209
Wis. 2d at 626-27. Given that punitive damages awards mandate
de novo review, see Trinity, 261 Wis. 2d 333, ¶47, this language
should not be read to require deference to the amount of the
jury's award. Rather, stating that an award is "so clearly
excessive as to indicate passion and prejudice" is simply
another way of referring to an award that violates due process.

17
 No. 2011AP1514

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." Trinity, 261 Wis. 2d 333, ¶52 (citing BMW, 517

U.S. at 575).

¶47 Wisconsin case law calls on courts to apply a

substantively identical test applying six factors rather than

three:

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.
Trinity, 261 Wis. 2d 333, ¶53; Mgmt. Computer Servs., 206

Wis. 2d at 194. Wisconsin courts are called upon to analyze

only "those factors which are most relevant to the case, in

order to determine whether a punitive damages award is

excessive."18 Id.

18
While Wisconsin courts are free to apply these six
factors flexibly, based upon their relevancy to a given case,
they should be analyzed in conjunction with the three
constitutional "guideposts" described by the Supreme Court in
BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 575 (1996). The
factors are not intended to supplant the test mandated by the
Constitution.

18
 No. 2011AP1514

1. Reprehensibility

¶48 "'[T]he most important indicium of the reasonableness

of a punitive damage[s] award is the degree of reprehensibility

of the defendant's conduct.'" Trinity, 261 Wis. 2d 333, ¶57

(quoting Jacque, 209 Wis. 2d at 628). "This principle reflects

the accepted view that some wrongs are more blameworthy than

others." BMW, 517 U.S. at 575.

¶49 In Campbell, the Supreme Court explained the standard

courts should apply in determining the reprehensibility of a

defendant's conduct:

We have instructed courts to determine the
reprehensibility of a defendant by considering
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. The existence of any one of these
factors weighing in favor of a plaintiff may not be
sufficient to sustain a punitive damages award; and
the absence of all of them renders any award suspect.
538 U.S. at 419 (citation omitted); see also BMW, 517 U.S. at

576-77.

¶50 Turning to the case at issue, we must acknowledge that

First American's conduct in the case at issue is reprehensible.

First American knew that the North Easement did not provide

access to the Kimble Lot and that there was no reasonable

alternative access point, and yet refused to honor its

obligation to assist the Kimbles in defending their title.
First American further withheld the information it had in its

19
 No. 2011AP1514

possession from the Kimbles, causing them to waste valuable time

and resources. These circumstances support an award of punitive

damages.19 The question, however, is whether the degree of

reprehensibility supports the punitive damages actually awarded.

¶51 In that regard, it is noteworthy that none of the

reprehensibility factors identified by the Supreme Court in

Campbell are present in this case. 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.20 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.

The punitive damages award against First American is therefore

suspect. Campbell, 538 U.S. at 419.

¶52 Further, the degree of reprehensibility in this case

falls short of that found in prior Wisconsin cases supporting
substantial punitive damages awards.

19
The failure of an insurer to diligently investigate
before denying a claim and concealing material information from
an insured clearly meet this standard. See, e.g., Trinity, 261
Wis. 2d 333, ¶62.
20
While Judith Kimble testified at trial that a dire
financial situation faced by her elderly parents caused the
Kimbles to reduce their asking price and be "more aggressive" in
selling their home, the record does not contain any indication
that the Kimbles themselves were in any financial trouble.

20
 No. 2011AP1514

¶53 For example, in Trinity, the insurance company

defendant denied a claim based on an omission in coverage,

despite knowing that the omission in the policy was the result

of its own error. 261 Wis. 2d 333, ¶¶7-8. This court held that

the insurance carrier not only "engaged in prohibited conduct

while knowing or recklessly disregarding the lack of a

reasonable basis for denying the claim," but further was a

recidivist, having previously been the subject of a lawsuit

involving precisely the same kind of conduct. Id., ¶¶57-59.

These facts allowed the defendant to be subjected to a more

severe punitive damages award without offending due process:

$3,500,000 in a case where only $490,000 in harm or potential

harm had been established.21 Id.

¶54 Here, there is no indication from the record that

First American engaged in repeated conduct. Neither does the

record support any finding of malicious intent. First

American's conduct, while "sufficiently reprehensible to give

rise to tort liability, and even a modest award of exemplary
damages does not establish the high degree of culpability that

warrants a substantial punitive damages award." BMW, 517 U.S.

at 580.

2. Disparity

21
"'[O]ur holdings that a recidivist may be punished more
severely than a first offender recognize that repeated
misconduct is more reprehensible than an individual instance of
malfeasance.'" Trinity, 261 Wis. 2d 333, ¶58 (quoting Campbell,
538 U.S. at 423).

21
 No. 2011AP1514

¶55 "When compensatory damages are awarded, the reviewing

court is to consider whether the [punitive damages] award bears

a reasonable relationship to the award of compensatory damages."

Trinity, 261 Wis. 2d 333, ¶63. "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." Id. (citations omitted).

"However, we have held that in the appropriate case, a

comparison of the compensatory damages and the punitive damages

award is important." Id. (citing Jacque, 209 Wis. 2d at 629).

¶56 In the case at issue, the compensatory damages

ultimately awarded were $29,738.49. Using the compensatory

damages award as a baseline thus represents a ratio of

approximately 33:1. Such a ratio is transparently problematic

under the United States Constitution.

¶57 The Supreme Court, however, has declared that

reviewing courts can consider not only the compensatory damages
award, but also "'the harm likely to result from the defendant's

conduct.'" BMW, 517 U.S. at 581 (quoting TXO Prod. Corp. v.

Alliance Res. Corp., 509 U.S. 443, 460 (1993)). Similarly,

where it is relevant and appropriate, our prior case law

supports consideration of "potential damage" that might have

been caused by a defendant's acts. Trinity, 261 Wis. 2d 333,

¶53.

¶58 The Stevensons argue that the appropriate figure to
use in assessing the disparity, in light of the sale the Kimbles
22
 No. 2011AP1514

lost during the dispute, is the full $1,300,000 sale price of

the Kimbles' home. We disagree. The Stevensons can point to no

indication in the record that the full value of the Kimbles'

property was ever in danger.22 Case law does not support this

type of speculative "potential damage," particularly where it is

unsupported by the record.

¶59 For example, in TXO, the petitioner fraudulently

attempted to undermine the title to a tract of land in order to

avoid paying royalties for oil and gas extraction. 509 U.S. at

448-50. The respondent received a judgment for common law

slander of title in its favor, including $19,000 in compensatory

damages and $10,000,000 in punitive damages. Id. at 453.

Petitioner appealed, arguing that the 526:1 ratio of

compensatory to punitive damages rendered the award

unconstitutionally excessive. Id. A plurality of the Supreme

Court held that, in addition to the compensatory damages award,

it was appropriate to consider the "between $5 million and $8.3

million" in lost royalties that the respondent would have
suffered had petitioner's plan succeeded. Id. at 460-61.

¶60 Similarly, in Trinity, this court accepted that the

appropriate figure for comparison was not the $17,000

compensatory damages award, but rather was the $490,000 in

potential damages at risk in the underlying negligence suit.

22
On December 26, 2013, the Stevensons filed a motion to
supplement the record by judicial notice, asking this court to
take into account the eventual sale price of the Kimbles' home.
We deny that motion. The supplemental information was not part
of the record before the trial court.

23
 No. 2011AP1514

¶61 Notably, the "potential harm" in both of these cases

is grounded in record and is not merely speculative. Had the

plaintiff in Trinity lost its case, $490,000 was the amount it

would have had to pay. Had the petitioner's scheme in TXO

succeeded, it was undisputed that the respondent would have been

deprived of millions of dollars in royalties. These analyses

were firmly rooted in fact, and the amounts in question were

derived from the record.

¶62 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.
¶63 We share Justice Kennedy's concern that, without a

meaningful standard, a court can end up "relying upon nothing

more than its own subjective reaction to a particular punitive

damages award in deciding whether the award violates the

Constitution." TXO, 509 U.S. at 466-67 (Kennedy, J.,

concurring).

¶64 Fortunately, there is no need to speculate about

potential harm, or to rely on subjective reactions, in order to
appropriately assess the disparity in this case. The record
24
 No. 2011AP1514

reveals that the Kimbles spent $40,000 to purchase the access to

their property that their title policy was supposed to insure.23

Given that the compensatory damages award merely accounted for

legal expenses, it is appropriate to add the compensatory

damages together with the cost of purchasing the access for

purposes of assessing the disparity of the punitive damages

award. This $69,738.49 figure, however, still represents a

problematic ratio of approximately 14:1.

¶65 "[I]n practice, few awards exceeding a single-digit

ratio between punitive and compensatory damages, to a

significant degree, will satisfy due process." Campbell, 538

U.S. at 425. Even a punitive damages award of just four times

compensatory damages can come "'close to the line'" of violating

due process. BMW, 517 U.S. at 581 (quoting Pac. Mut. Life Ins.

Co. v. Haslip, 499 U.S. 1, 23 (1991)).24

¶66 In the case at issue, there are no special

circumstances calling for a high ratio punitive damages award.

This becomes especially apparent when the conduct here is

23
Although this evidence was not before the jury at trial,
it was before the circuit court and was made a part of the
record on appeal. We may, therefore, properly consider it in
"review[ing] the entire record 'ab inito' . . . ." Trinity, 261
Wis. 2d 333, ¶48.
24
Additionally, the Wisconsin Legislature recently enacted
a law limiting punitive damages awards. See 2011 Wis. Act 2
§ 23m. The new statute caps punitive damage awards at a 2:1
ratio of compensatory damages or $200,000, whichever is greater.
Wis. Stat. § 895.043(6) (2011-12). While the statute is not
applicable to this case, it is nonetheless appropriate to
consider the legislature's judgment of a reasonable disparity of
punitive to compensatory damages.

25
 No. 2011AP1514

compared to other cases where courts have upheld high ratio

awards. See, e.g., Trinity, 261 Wis. 2d 333; J.K. v. Peters,

2011 WI App 149, 337 Wis. 2d 504, 808 N.W.2d 141 (upholding a

high ratio punitive damages award against a social worker who

sexually assaulted his minor client); Strenke v. Hogner, 2005 WI

App 194, 287 Wis. 2d 135, 704 N.W.2d 309 (upholding a high ratio

punitive damages award against a drunk driver who caused

substantial injuries to another motorist).25 These prior cases

involve the kind of especially egregious conduct identified by

the Supreme Court in Campbell, including "physical as opposed to

economic" harm, and "indifference to or a reckless disregard of

the health or safety of others." 538 U.S. at 419. As we have

discussed, the case at issue does not involve such conduct.

¶67 In sum, the award in this case does not bear a

"reasonable relationship" to either the compensatory damages

award or the potential harm faced by the Kimbles. We conclude,

therefore, that the award does not comport with due process.

3. Civil or Criminal Penalties
¶68 Finally, "we engage in a comparison of the punitive

damages award and the civil or criminal penalties that could be

imposed for comparable misconduct." Trinity, 261 Wis. 2d 333,

¶66 (citing Jacque, 209 Wis. 2d at 630). In this case, as in

Trinity, First American could be subject to a criminal penalty,

25
The court of appeals upheld the damages award in Strenke
on remand from this court. This court was equally divided on
the question of whether the award of punitive damages was
excessive. See Strenke, 279 Wis. 2d 52, ¶58.

26
 No. 2011AP1514

including a fine of up to $10,000, for the violation of "any

insurance statute or rule of this state." Wis. Stat.

§ 601.64(4). The Stevensons argue that First American violated

Wis. Admin. Code § Ins. 6.11(3)(a), which prohibits unfair

settlement practices.

¶69 In this case we conclude, as we did in Trinity, that

"a criminal penalty has 'less utility' when used to determine

the dollar amount of the punitive damages award." 261

Wis. 2d 333, ¶68 (citing Campbell, 538 U.S. at 428). We

nonetheless note that "[t]he existence of a criminal penalty

does have bearing on the seriousness with which a State views

the wrongful action." Id., ¶66 (quoting Campbell, 538 U.S. at

428).

4. Application

¶70 Applying the relevant factors to the case at issue, we

conclude that the punitive damages award against First American

is excessive. First, First American's conduct "is sufficiently

reprehensible to give rise to tort liability, and even a modest
award of exemplary damages does not establish the high degree of

culpability that warrants a substantial punitive damages award."

BMW, 517 U.S. at 580. Second, there is no especially egregious

conduct supporting a high ratio punitive damages award. Absent

such egregious conduct, even the 7:1 ratio imposed in Trinity

would be unconstitutionally excessive. Finally, the existence

of an additional civil or criminal penalty has "limited utility"

27
 No. 2011AP1514

in determining the reasonableness of the punitive damages

award.26 See Trinity, 261 Wis. 2d 333, ¶68.

¶71 We conclude, in consideration of the case law, that

the appropriate amount of punitive damages in this case is

$210,000. Comparing the amount of this award to the $69,738.49

amount of compensatory and potential damages results in a ratio

of approximately 3:1, below the ratio we upheld in Trinity, and

just below the constitutional "line" mentioned by the Supreme

Court in BMW, 517 U.S. at 581, and Haslip, 499 U.S. at 23.

Because "[t]he precise award in any case, of course, must be

based upon the facts and circumstances of the defendant's

conduct and the harm to the plaintiff," Campbell, 538 U.S. at

425, we conclude that this amount effectively punishes First

American's misconduct, while acknowledging that its conduct did

not rise to level of egregiousness found in prior punitive

damages cases.

V. CONCLUSION

¶72 We conclude that the punitive damages award in this
case was excessive and deprived First American of its right to

26
We note here, as we did in Trinity that "[t]he factors
discussed are the ones most relevant in this case . . . [and]
there are other factors that may be relevant given the nature of
the case at hand." 261 Wis. 2d 333, ¶69. In particular, we
note that while the "[d]efendant's wealth is oftentimes a
significant factor," id., it is not significant in this case.
The record indicates First American would likely be able to pay
the amount specified by the jury. Standing alone, however, the
"wealth of a defendant cannot justify an otherwise
unconstitutional punitive damages award." State Farm Mut. Auto
Ins. Co. v. Campbell, 538 U.S. 408, 427 (2003) (citing BMW, 517
U.S. at 585).

28
 No. 2011AP1514

due process. We therefore reverse the court of appeals'

decision and remand this case to the circuit court for entry of

judgment against First American in the amount of $239,738.49.

By the Court.—The decision of the court of appeals is

reversed, and the cause is remanded to the circuit court.

¶73 DAVID T. PROSSER, J., did not participate.

29
 No. 2011AP1514.ssa

¶74 SHIRLEY S. ABRAHAMSON, C.J. (dissenting). The

majority opinion reaches a shocking result: It makes First

American's wrongdoing an efficient way of doing business. 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. Under the majority

opinion, the combined punitive and compensatory damages amount

to $239,738.49——a sum smaller than the title insurance policy

limit of $370,000. This result directly contravenes the entire

purpose of punitive damages——making wrongdoers pay and deterring

future wrongful conduct.

¶75 Trinity Evangelical Lutheran Church & School-Freistadt

v. Tower Insurance Co., 2003 WI 46, 261 Wis. 2d 333, 661

N.W.2d 789, is the leading case for determining whether punitive

damages are unconstitutionally excessive as a violation of due

process. The majority opinion dutifully recites the Trinity

factors.1 Yet the majority opinion jettisons Trinity, turning
the test on its head in favor of the reasoning set forth in

Trinity's dissent.

¶76 The majority opinion achieves a result in which the

wrongdoer was enriched by its wrongdoing. This result, in my

opinion, cannot stand.

¶77 The test in Trinity applies six factors to assess

whether a punitive damages amount is justified:

1. The grievousness of the acts;

1
Majority op., ¶48.

1
 No. 2011AP1514.ssa

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
conduct; and

6. The wealth of the wrongdoer.
Majority op., ¶48; Trinity, 261 Wis. 2d 333, ¶53.

¶78 It is perverse not to apply the Trinity test to the

instant case. The instant case is on all fours with Trinity.

In both cases an insurance company refused to pay the insured's

claim (breach of contract); the court found that the insurance

company breached the insurance contract; the insurance company

was found to have acted in bad faith; and the fact-finder found

that the misconduct justified a punitive damage award.2

2
Here are the facts of Trinity: An employee of Trinity
Church, the insured, was in a motor vehicle accident, and
Trinity Church was liable for damages of $490,000.

An agent of Tower Insurance erred by not providing Trinity
Church the coverage that Trinity Church requested.

Tower Insurance refused to reform the policy to cover
Trinity Church (as the law required it to do) and to pay
$490,000 on behalf of Trinity Church. Trinity Church sued Tower
Insurance for breach of contract, bad faith, and punitive
damages.

Tower Insurance paid $490,000 on Trinity Church's behalf.

2
 No. 2011AP1514.ssa

¶79 In Trinity, the court held that due process was

satisfied by a punitive damages amount of $3,500,000 based on a

potential harm of $490,000, a 7:1 ratio.

¶80 Because the majority opinion fails to apply Trinity

properly, I dissent.

I

¶81 The first factor of the Trinity test is the

grievousness of the acts. The insurance company's misconduct

was substantially the same in Trinity and in the present case:

• In each case, an insurance company was sued by its

insured (or someone standing in the insured's shoes);

• In each case, the insurance company had failed to pay

the claim of its own insured;

• In each case, the insurance company was given repeated

opportunities to pay the claim and refused to do so,

The Trinity court used the $490,000 figure as harm to
Trinity Church to calculate the punitive damages. Had Tower
Insurance's misconduct not been discovered, Trinity Church would
have had to pay the full $490,000 from its own funds; Tower
Insurance would have received a net gain of $490,000. In
calculating the harm to Trinity Church, the Trinity court did
not take into account that Tower Insurance's agent might
ultimately be responsible for paying the $490,000.

Here are the facts in the instant case: First American
erred in not providing the Kimbles with their policy limits of
$370,000 when First American discovered that the Kimbles' title
was not marketable. Had First American's misconduct not been
discovered, the Kimbles could not have sold their property,
leaving them with a loss of both the $1.3 million sale price of
the property and the $370,000 policy limits of the First
American title insurance policy. First American would have
received a net gain of $370,000.

3
 No. 2011AP1514.ssa

despite knowing the facts justifying payment of the

claim;

• In each case, the insurance company was found to have

acted in bad faith; and

• In each case, a jury awarded over $1 million in

punitive damages.

¶82 The Trinity court held that the insurance company's

misconduct constituted a "continuing, egregious, and flagrant

pattern of disregard toward [the insurance company's] duty owed

to its insured," which justified the punitive damages in that

case.3

¶83 The majority opinion in the present case characterizes

First American's conduct as not as reprehensible as that of the

insurance company in Trinity. Majority op., ¶¶53-55, 71.

¶84 The majority opinion's conclusion does not square with

the facts of the two cases.

¶85 First, as in Trinity, the legislature has made the

insurance company's misconduct a crime, demonstrating the public
policy of this state regarding the misconduct's

reprehensibility. See majority op., ¶69; accord Trinity, 261

Wis. 2d 333, ¶57.

¶86 Second, as in Trinity, First American's misconduct was

repeated; First American was a recidivist.4 In Trinity, the
3
Trinity, 261 Wis. 2d 333, ¶62.
4
Majority op., ¶53 n.20 (quoting Trinity, 261 Wis. 2d 333,
¶58: "'[O]ur holdings that a recidivist may be punished more
severely than a first offender recognize that repeated
misconduct is more reprehensible than an individual instance of
malfeasance.'") (internal citation omitted).
4
 No. 2011AP1514.ssa

court noted that the insurance company's agent "made a series of

decisions that illustrate bad faith" and chastised the insurance

company's repeated misconduct and failure to investigate.5

¶87 The majority opinion erroneously states that First

American's misconduct was "an isolated incident," and that

"there is no indication from the record that First American

engaged in repeated conduct." Majority op., ¶51. On the

contrary, First American in the instant case demonstrates a

pattern of repeated misconduct. After discovering its initial

error, First American had many opportunities to remedy its

misconduct and instead continued to act improperly:

• When the Kimbles first inquired about their road

access, First American asserted that an easement gave

them access, when it in fact knew that the easement

granted to the Kimbles was invalid.6

• When the Kimbles inquired whether they could assert a

claim to the easement, First American assured them

that they had road access.7
• At trial, First American's agent admitted that it

discovered the deed that rendered the Kimbles'

easement invalid, and chose never to inform the

Kimbles about the deed.8

5
Trinity, 261 Wis. 2d 333, ¶60.
6
Majority op., ¶9.
7
Majority op., ¶10.
8
The trial yielded the following testimony:

5
 No. 2011AP1514.ssa

• At trial, First American's agent admitted that it

deliberately failed to investigate the alleged title

defect.9

• Each time the Kimbles inquired as to their access,

First American insisted that the Kimbles could access

the road, variously stating that the Kimbles could go

across a 25-foot strip to which they had no access,10

[KIMBLES' COUNSEL]: Now, at your——at your deposition,
I asked you whether you made any mention of the Cofrin
deed [which rendered the easement invalid] to [the
Kimbles' agent] in March of 2008. Do you recall that?

[FIRST AMERICAN'S AGENT]: Yes.

[KIMBLES' COUNSEL]: And we talked about your letters
that you sent back and forth with him, correct?

[FIRST AMERICAN'S AGENT]: Yes.

[KIMBLES' COUNSEL]: And you acknowledge that it's true
that you never told [the Kimbles' agent] about the
Cofrin deed at any time in any of your conversations
or in any of your letters?

[FIRST AMERICAN'S AGENT]: That is correct.
9
At trial, an investigator employed by First American
testified that she asked First American's agent whether she
should investigate further. The investigator suggested problems
with the validity of the deed, and asked, "What does all of this
mean for us?" and "Do you want me to dig for more
documentation?" The investigator testified that she never
received a response.
10
The access to the south depended on an easement across a
25-foot strip of property. First American testified at trial
that "Land Concepts [which does not want to give access] owns
the fee simple interest to the 25-foot strip."

6
 No. 2011AP1514.ssa

through a wetland that was barred from road

construction,11 and confusingly, "by water."12

¶88 The majority opinion maintains that the repeated

misconduct here is less reprehensible than the repeated

11
See court of appeals brief of defendant-appellant at 21.
The access to the south also needed to cross lands marked as
wetlands. The trial record reflects the following exchange:

[KIMBLES' COUNSEL]: And did you take the position
that the [Kimbles] had a right of access to their
property to the south?

[FIRST AMERICAN'S AGENT]: Yes.

[KIMBLES' COUNSEL]: Through an area of forest and
wetlands, correct?

[FIRST AMERICAN'S AGENT]: Yes.

Yet, government regulations prohibited development on the
forest and wetlands, as the defendant's agent testified:

[KIMBLES' COUNSEL]: And you know from reading [the
government official's] deposition that the area that
you've described is defined as wetlands according to
Door County Planning, right?

[FIRST AMERICAN'S AGENT]: That's correct.

[KIMBLES' COUNSEL]: And that, in fact, Door County
Planning has indicated that that area could not be
developed into any road or opened or cleared, true?

[FIRST AMERICAN'S AGENT]: That is correct.
12
The trial record reflects the following exchange:

[KIMBLES' COUNSEL]: Well, you recall testifying at
that court trial regarding whether the company was, in
fact, at that time on Tuesday going to assert that the
Kimbles enjoyed a right of access by water. Do you
recall that testimony?

[FIRST AMERICAN'S AGENT]: It came up. I recall it
coming up.

7
 No. 2011AP1514.ssa

misconduct in Trinity because the insurance company in Trinity

had committed similar misconduct in another case 30 years

previously. Majority op., ¶53.

¶89 Yet the key factor for the reprehensibility of the

insurance company's misconduct in Trinity was not that a 30-

year-old prior court case existed or that the insurance company

knew about it, but rather that the insurance company's

"decisions, acts, and omissions . . . illustrate a continuing,

egregious, and flagrant pattern of disregard toward [the

insurance company's] duty owed to its insured . . . ." Trinity,

261 Wis. 2d 333, ¶62.

¶90 The record in the present case demonstrates that First

American exhibited a similar continuing, egregious, and flagrant

pattern of misconduct.

II

¶91 The second factor is whether there was "intentional

malice."

¶92 The majority opinion in the present case states that
"there is no indication of intentional malice on the part of the

First American or its employees." Majority op., ¶52.

Similarly, the Trinity court concluded that there was no

indication of intentional malice in that case either. Indeed

Trinity does not require malice in order for punitive damages to

be awarded. Rather, Trinity justified the amount of the

punitive damages award on the insurance company's "intentional

disregard of its duty to investigate diligently to ascertain and

8
 No. 2011AP1514.ssa

evaluate the facts and circumstances . . . ." Trinity, 261

Wis. 2d 333, ¶59.

¶93 The jury in the instant case found sufficient grounds

to justify a finding that punitive damages should be awarded,

based on the evidence presented and the jury instructions. The

jury instructions stated that the jury should award punitive

damages if it found that "the defendant acted maliciously toward

the plaintiff or in an intentional disregard for the rights of

the plaintiff."13 With a $1 million jury award of punitive

13
Wis JI——Civil 1707.1, which was given to the jury, reads
in relevant part:

Punitive damages may be awarded, in addition to
compensatory damages, if you find that the defendant
acted maliciously toward the plaintiff or in an
intentional disregard of the rights of the plaintiff.

A person's acts are malicious when they are the result
of hatred, ill will, desire for revenge, or inflicted
under circumstances where insult or injury is
intended.

A person acts in an intentional disregard of the
rights of the plaintiff if the person acts with the
purpose to disregard the plaintiff's rights, or is
aware that his or her acts are substantially certain
to result in the plaintiff's rights being disregarded.
Before you can find an intentional disregard of the
rights of the plaintiff, you must be satisfied that
the defendant's act or course of conduct was:

(1) deliberate;

(2) an actual disregard of the plaintiff's right to
safety, health, or life, a property right, or some
other right; and

(3) sufficiently aggravated to warrant punishment by
punitive damages.

. . . .

9
 No. 2011AP1514.ssa

damages, the jury found the "high degree of culpability" that

could justify a punitive damages award.14 Credible evidence

supports the jury's finding of either malicious intent or

intentional disregard of the rights of the insured. The

majority opinion does not state that the evidence was

insufficient for the jury to make such a finding. The jury

finding is sufficient to satisfy Trinity.

III

¶94 The Trinity test's third factor (ratio of compensatory

damages to punitive damages) and fourth factor (potential damage

to the plaintiff) are linked.

¶95 Trinity examined the ratio between potential harm and

punitive damages to determine the appropriateness of the award.

Trinity, 261 Wis. 2d 333, ¶65. "Wisconsin law expressly rejects

the use of a fixed multiplier . . . ." Trinity, 261

Wis. 2d 333, ¶63.

Factors you should consider in answering Question No.
6 [awarding the amount of punitive damages] include:

1. the grievousness of the defendant's acts,

2. the degree of malice involved,

3. the potential damage which might have been done by
such acts as well as the actual damage, and

4. the defendant's ability to pay. You may consider
the defendant's wealth in determining what sum of
punitive damages will be enough to punish the
defendant and deter the defendant and others from the
same conduct in the future.

See also Wis. Stat. § 895.043(3).
14
Majority op., ¶54.

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¶96 Despite the lack of a fixed multiplier, Trinity

provides a benchmark for the court. If a 7:1 ratio of punitive

damages to potential harm ($3,500,000 punitive; $450,000

potential harm) and a 200:1 ratio of punitive damages to actual

damages ($3,500,000 punitive; $17,570 actual damages) were

permissible in Trinity, the instant case, so similar in facts,

also supports an identical or similar ratio.

¶97 The amount of potential harm is calculated by

analyzing "'the harm likely to result from the defendant's

conduct as well as the harm that actually has occurred.'" TXO

Production Corp. v. Alliance Resources Corp., 509 U.S. 443, 460,

(1993) (quoted source omitted).

¶98 In the instant case, the Kimbles were harmed. They

had an offer to buy their property for $1.3 million. They

wanted to sell. They chose to reduce the asking price to secure

the sale because they needed to care for aging parents who had

lost their home. The Kimbles introduced evidence that the sale

failed because of the lack of road access, a defect in
marketable title that had been insured by First American.

¶99 The Kimbles had purchased title insurance to protect

them from damages arising out of the unmarketability of their

title. The policy limit was $370,000. The value of the

property with marketable title was about three times the policy

limit.

¶100 The majority opinion erroneously asserts that a

consideration of the loss of value of Kimbles' home would force
the court "to depart from the facts of the record and speculate

11
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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." Majority op., ¶62.

¶101 Yet this potential harm is borne by the record. The

lack of access constituted "unmarketability of the title."15 The

policy itself defines "unmarketability of the title" as "an

alleged or apparent matter affecting the title to the

land . . . which would entitle a purchaser of the estate [or the

Kimbles] to be released from the obligation to purchase by

virtue of a contractual condition requiring the delivery of

marketable title." As First American's agent stated in a

deposition entered into evidence at trial, the risk of wrongly

denying the claim was that the Kimbles "would have had a real

big claim on the policy . . . ."

¶102 In Trinity, the facts were similar. The insured in

Trinity would have incurred a potential loss of up to $490,000

(damages in the auto accident case), had the insurance company

successfully continued to deny Trinity Church's claim. The
majority opinion in Trinity used the $490,000 figure for

evaluating the punitive damages award.

¶103 In the instant case, the Kimbles would have

potentially incurred a loss of up to $1.3 million, the sale

price of the property if they had marketable title, and would

15
"[E]ven if the policy does not expressly cover lack of a
right of access, if it insures against unmarketability of the
title, the title insurer will be liable if no legal access to
the land exists. The majority rule is that lack of access makes
title unmarketable." 1 Joyce D. Palomar, Title Insurance Law
§ 5:8 (West 2013-2014).

12
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not have recovered First American's title policy limits

($370,000), had First American successfully denied the Kimbles'

claim.

¶104 The majority opinion refuses to use the $1.3 million

sale price or $370,000 policy limit figures to calculate

punitive damages. Instead the majority opinion adopts the

reasoning of the dissent in Trinity.

¶105 Justice Sykes' dissent in Trinity argues that the

insured "was never at risk for the auto accident damages,

because either the agent (that is, his error and omissions

carrier) or [the insurance company] was responsible for the

mistake in the insurance application. The actual compensatory

damages in the bad faith claim consisted of the attorneys' fees

Trinity [Church] incurred in the coverage dispute, not the

personal injury damages in the underlying lawsuit, which Trinity

[Church] would not and did not have to pay." Trinity, 261

Wis. 2d 333, ¶106.

¶106 The majority opinion in the present case follows
Justice Sykes' approach by severely limiting what is actual and

potential harm, rather than employing the correct Trinity

majority opinion approach of using "the harm that is likely to

result."16

¶107 When title is not marketable, the significantly

reduced value of the property and the inability of an insured to

collect from the title insurance company are exactly "the

16
TXO Production Corp. v. Alliance Resources Corp., 509
U.S. 443, 460 (1993).

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harm[s] that [are] likely to have occurred" when a title

insurance company fails to pay a worthy claim. Thus, the proper

potential harm is at least the policy limits of $370,000, if not

the lost sale of the house ($1.3 million), or both, rather than

the mere $40,000 used by the majority opinion.

¶108 As to the proper ratio here, the majority opinion

relies upon its mistaken "reprehensibility of conduct" analysis

to justify a lower ratio than the Trinity 7:1 ratio of punitive

damages to potential harm and the 200:1 ratio of punitive

damages to actual damages that this court held constitutional.

Trinity, 261 Wis. 2d 333, ¶¶65, 68, 105; majority op., ¶66.

¶109 Even though the misconduct of First American here is

essentially analogous to the misconduct in Trinity and may even

be more egregious, the majority opinion applies only one guiding

principle: High numbers for compensatory and punitive damages

are bad; low numbers are good.

¶110 The majority settles on its 3:1 ratio for no

ostensible reason other than that it is lower than the 7:1 and
200:1 ratios in Trinity and the 4:1 ratio in Pacific Mutual Life

Insurance Co. v. Haslip, 499 U.S. 1, 23-24 (1996). Yet in

Pacific Mutual Life Insurance Co., the United States Supreme

Court held that the 4:1 ratio was "close to the line," not over

it.

¶111 The majority opinion also looks to a newly adopted

state statute, which fixes $200,000 or a 2:1 ratio of punitive

damages to compensatory damages as the limits for punitive
damages awards. Majority op., ¶66 n.23. The statute is

14
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irrelevant. The majority opinion deliberately defies the

legislative direction that the statute does not apply to the

present case. Furthermore, the constitutional due process

doctrine that we must apply in the present case rejects a fixed

amount for punitive damages or a fixed multiplier. "Excessive"

for due process purposes is a "fluid concept" that takes

"substantive content from the particular context[] in which the

standard[] [is] being assessed."17

¶112 What was good enough for the Trinity court seems to no

longer be good enough for the majority opinion in the present

case.

IV

¶113 The fifth Trinity factor is "a comparison of the

punitive damages award and the civil or criminal penalties that

could be imposed for comparable misconduct." Trinity, 261

Wis. 2d 333, ¶66. I agree with the majority opinion that the

imposition of criminal or civil fines does not directly impact

the amount of punitive damages in the instant case, for the same
reasoning we used in Trinity. See majority op., ¶69.

¶114 Nevertheless, the prohibited conduct's punishment by

criminal sanctions under Wis. Stat. § 601.64(4) evinces the

legislative determination of the reprehensibility of First

American's misconduct.

V

17
Cooperman Indus., Inc. v. Leatherman Tool Group, Inc.,
532 U.S. 424, 436 (2001).

15
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¶115 The sixth Trinity factor is the wealth of the

wrongdoer. The United States Supreme Court has also recognized

the wealth of the wrongdoer as a factor to be considered in

gauging the constitutionality of a punitive damage award.18

¶116 The purpose behind the wealth factor is to punish

wrongdoers and make the penalty for wrongdoing sufficiently high

for wealthy wrongdoers that they are deterred from engaging in

future misconduct.19

18
The wealth and financial position of the defendant are
examined to assess the excessiveness of the punitive damages
award. See, e.g., TXO Production Corp., 509 U.S. 443, 462
(1993); Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 23-24
(1996).
19
The majority opinion states the purpose of punitive
damages as follows:

[Punitive damages] are awarded "to punish the
wrongdoer, and to deter the wrongdoer and others from
similar conduct." Trinity, 261 Wis. 2d 333, ¶50.
"Punitive damages may properly be imposed to further a
State's legitimate interests in punishing unlawful
conduct and deterring its repetition." BMW of N. Am.,
Inc. v. Gore, 517 U.S. 559, 568 (1996).

Majority op., ¶43.

Justice Steinmetz articulated the reasoning behind
considering the wealth of the parties in his dissent in Brown v.
Maxey, 124 Wis. 2d 426, 452, 369 N.W.2d 677 (1985) (Steinmetz,
J., dissenting). He stated:

The policy justifications for punitive damages are
generally considered to be: punish the wrongdoer and
specifically deter him and generally deter others from
engaging in similar conduct. . . . It is almost
universally accepted that money talks. By tailoring
the amount of punitive damages to the relative wealth
of the individual, every wrongdoer is more or less
equally affected by the sanction.

16
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¶117 In the instant case, the record demonstrates that in

2010, First American had revenues over $2 billion and net

profits of $65 million. First American easily had the ability

to pay the $1 million the jury awarded as punitive damages and

then some.

¶118 Yet in the instant case, the majority opinion's

result, as I noted previously, creates a final combined punitive

and compensatory damages amount of $239,738.49——a sum smaller

than the title insurance policy limit of $370,000. The majority

opinion makes First American's wrongdoing an efficient course of

business. 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. This result directly contravenes the

entire purpose of punitive damages, let alone the purpose of

awarding punitive damages against a wealthy defendant.20

¶119 The majority opinion again strays from Trinity.

Trinity held, contrary to the majority opinion in the instant
case, that evidence of the insurance company's wealth and

ability to pay the full amount was "sufficient to justify the

size of the punitive damages award." Trinity, ¶69. In Trinity,

20
This rationale was echoed by the court in Jacque v.
Steenberg Homes, 209 Wis. 2d 605, 631, 563 N.W.2d 154 (1997),
which explained the need to eliminate the profit motive for
wrongdoing:

Punitive damages, by removing the profit from illegal
activity, can help to deter such conduct. In order to
effectively do this, punitive damages must be in
excess of the profit created by the misconduct so that
the defendant recognizes a loss.

17
 No. 2011AP1514.ssa

the company would have had to liquidate assets to pay the

award.21 First American has no similar concern here.

¶120 The majority opinion dismisses the wealth factor in

the present case in a footnote, flouting Trinity and the United

States Supreme Court cases. The majority opinion states simply

that "it is not significant in this case." Majority op., ¶70

n.25. Why is the wealth of First American not significant in

this case? The majority opinion does not explain, other than to

cryptically state that "[t]he record indicates that First

American would likely be able to pay the amount specified by the

jury." Id. Is the majority opinion implying that First

American's ability to pay means the punitive damages were too

low or that the punitive damages can never be high enough to

deter First American's misconduct in the future? Is First

American too big, too well-to-do to punish?

* * * *

¶121 The majority opinion has ignored and misapplied the

Trinity test to substantially similar facts in the present case
and reaches an outcome contrary to Trinity.

¶122 The majority opinion achieves a result in which the

wrongdoer is enriched by its wrongdoing. First American ends up

paying less in damages for acting improperly than it would have

paid had it acted properly and paid the claim. This result, in

my opinion, cannot stand.

¶123 For the foregoing reasons, I dissent.

21
Trinity, 261 Wis. 2d 333, ¶69 n.8.

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¶124 I am authorized to state that Justice ANN WALSH

BRADLEY joins this dissent.

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