The above title is not encouraging you to buy something to protect you from the rain! It refers to purchasing an umbrella insurance policy to protect you and your family from liability claims, and to provide you with ample coverage for your losses due to injuries sustained in an auto accident. The typical cost for a $1,000,000 umbrella policy can be as little as $200 or $300 per year. This is a bargain for an additional $1,000,000 in protection.

As attorneys, not only do we represent clients, we also counsel them. One of my favorite topics to discuss with clients is having adequate insurance, including the purchase of “umbrella” coverage. This coverage refers to an extra layer of protection on top of your existing insurance coverage, of at least $1,000,000 or more, to protect you in case you have personal liability in an auto accident or under your homeowner’s policy. The umbrella policy you purchase should also include an endorsement to apply to your underinsured and uninsured motorist coverage on your automobile insurance policy. Some insurance companies may offer an umbrella policy you can purchase, and some may not. Some insurance companies may sell you an umbrella policy that applies to liability coverage only, for example, if you are at fault under your homeowner or auto policy. However, you need to consider being insured by a company that offers an umbrella policy that covers liability and has an endorsement to cover underinsured and uninsured motorist coverage in case you sustain serious injuries in an auto accident. You need to specifically ask for all three of these protections to have the best protection possible.

The reason for having an umbrella policy is to simply provide a significant increase in insurance coverage for a very low cost. In our practice, we see all types of auto accidents, and homeowner’s liability issues, and the first thing we ask our clients when they come to us is what type of insurance is available from the other party, and from our client. All too often we must tell our clients that the person who ran into them with their vehicle either had no insurance, or minimum insurance limits. We then look to our client’s insurance policy for potential additional coverage, and if they have low underinsured or low uninsured coverage there may be very little we can do to obtain compensation for our clients for their significant losses. Given the high cost of medical care, injured parties can easily sustain tens of thousands or hundreds of thousands of dollars in medical bills, in addition to significant wage loss and potential permanent disability preventing future earnings. If you have an umbrella policy of at least $1,000,000 that applies to liability and uninsured motorist coverage and underinsured motorist coverage, you will have a better chance of protecting yourself and obtaining full compensation for your injuries.

In summary, go buy an umbrella policy to protect yourself and your family. In order to give yourself full protection, you need to tell your insurance agent that you need the umbrella policy to cover (1) liability for home and auto, and (2) an endorsement so that the umbrella applies to your underinsured and uninsured automobile coverage. If you have any questions about an umbrella policy, please feel free to contact me and I will be happy to discuss it further with you.

 

Mediation is a private process for resolving disputes by which an independent mediator assists the parties in reaching a mutually satisfactory settlement. While the courts can require that some cases go to mediation, the process remains voluntary in that the parties are not required to come to an agreement.

Issues That are Typically Mediated

When a lawsuit is filed, it is common for courts to require the parties to engage in some form of informal dispute resolution to attempt to settle their case. The types of cases that are typically mediated include disputes involving personal injuries, business transactions, real estate, insurance, construction, breach of contract, as well as family law and custody disputes, to name a few. It should be noted that a case does not have to be in the court system or in litigation for mediation to be utilized or to be effective. Informal disputes between businesses, neighbors, or among people within a workplace could also benefit from voluntary mediation even without being in a lawsuit.

The Role of the Mediator

Mediators are typically attorneys and retired judges. The mediator will not decide the outcome of the case. The mediator is neutral, impartial and does not choose one side’s position over the other. The mediator’s job is to help the parties resolve their issues through a process that encourages each side to air their dispute, identify their strengths and weaknesses, and to address potential solutions to the problem that will be satisfactory to all sides. The primary goal of a mediation is for all parties to work out a solution they can live with. Nothing will be decided unless both parties agree to it. The mediator will assess the case, highlight the strengths and challenges of each side, point out the risk and expense associated with continuing with the dispute and having a trial, and the uncertainty of leaving it in the hands of a judge or a jury to decide the parties’ fate.

Typical Mediation Procedure

There are different methods for how mediations are conducted. Mediations often take place at a mediator’s office or at the office of one of the attorneys involved in the dispute. Many mediations that take place in the context of a lawsuit are conducted with the parties in separate rooms for the entire mediation. Each side presents a statement to the mediator about the dispute and how they would like it resolved. It is typical for the parties and their attorney to file written submissions to the mediator at least a week in advance of the mediation so that the mediator will be familiar with the issues involved in the dispute. The mediator will then go from one room to the other to discuss potential avenues for resolution with each party with the goal of reaching an agreement. The discussions the mediator has with each side in separate rooms are completely confidential and are not disclosed to the other side. If an agreement is reached, it will then be reduced to a written document that can be enforced in court. Mediations can last a few hours to a full day, or even longer, depending on the complexity of the issues and the number of parties involved.

Other styles of mediation involve the parties having a joint session where they are all in the same room for the entire mediation and the parties discuss potential ways to settle their issues with the mediator facilitating that discussion.

The Benefits of Mediation

Mediation has many benefits when compared to a dispute that works its way through the court system and all the way through a trial. These benefits include the following: (1) Everything said by the parties at mediation is confidential and is not admissible in court; (2) The parties can resolve their dispute privately without having to testify in open court; (3) The parties can avoid the costs of ongoing litigation expense and trial; (4) The parties have total control over the outcome of their own dispute, without having to take the risk of presenting their issues to a judge or jury who will ultimately decide the parties’ fate; and (5) Mediation can be conducted even before a lawsuit is filed, which can significantly shorten the timeframe in which the parties can resolve their dispute.

Attorney Richard H. Fuller at Anderson O’Brien not only represents parties at mediations, but he also conducts mediations as part of his civil litigation practice. If you have any questions about mediations, please do not hesitate to contact him.

 

There has been a significant increase in home remodeling projects since the pandemic began over a year ago, and many people choose to hire a contractor to assist them. Not all contractors provide written contracts with the details of the project, such as total costs, start and completion dates, and the type and quantity of materials to be used. The lack of a written agreement sometimes leads to disputes after the project begins and may lead to arguments about payment at the end of the project. Fortunately for homeowners, Wisconsin has the Home Improvement Practices administrative code sections which set forth requirements and penalties if contractors fail to follow the rules. These rules can be found in Chapter ATCP 110 of the Administrative Code. The rules require a contract, and all changes to that contract, to be in writing and signed by the contractor and the homeowner if (1) the contractor requires money up front, prior to completing the project, or (2) if the contractor solicits a homeowner’s business away from the contractor’s regular place of business, by mail or telephone, or with brochures or circulars delivered or left at someone’s home.

The requirements under the code are applicable if the project involves “Home Improvement” which the code defines as follows:

“Home improvement” means the remodeling, altering, repairing, painting, or modernizing of residential or non-commercial property, or the making of additions thereto, and includes, but is not limited to, the construction, installation, replacement, improvement, or repair of driveways, sidewalks, swimming pools, terraces, patios, landscaping, fences, porches, garages, basements and basement waterproofing, fire protection devices, heating and air conditioning equipment, water softeners, heaters and purifiers, wall-to-wall carpeting or attached or inlaid floor coverings, and other changes, repairs, or improvements made in or on, attached to, or forming a part of, the residential or non-commercial property. The term extends to the conversion of existing commercial structures into residential or non-commercial property. “Home improvement” does not include the construction of a new residence or the major renovation of an existing structure.

As you can see, home improvement is defined in very broad terms. You should note that it does not apply to construction of a new residence or the major renovation of an existing structure.

If a written contract is required under the code based on the circumstances described earlier, the contract must contain the following information:

• The contractor’s name and address, and the name and address of the contractor’s sales representative or agent.
• A description of the work to be done and the principal materials to be used. If the contractor promises to install specific products or materials, the contract must clearly describe those products or materials.
• The total price, including finance charges. If the contract is for time and materials, it must clearly disclose the hourly labor charge.
• The dates by which, or the time period within which, the contractor will begin and complete the work.
• A description of any mortgage or security interest created in connection with the sale or financing of the home improvement.
• All warranties that the contractor makes for labor, services, products or materials furnished in connection with the home improvement.
• A description of every document incorporated in the home improvement contract.
• Insurance coverage included in the home improvement contract, if any.

Additional provisions in the Home Improvement Code require the contractor to provide the customer with a written notice advising that the customer has a right to receive lien waivers. The code also requires that the contractor inform the customer of all building and construction permit requirements, and the contractor must refrain from starting work until the permits have been issued.

Should a contractor fail to comply with these code requirements, a homeowner has several potential remedies including the following:

1. Cancel the contract;
2. Demand return of any payments which the contractor has not yet earned;
3. Demand delivery of all materials the homeowner already paid for;
4. Demand an accounting of all payments that were made by the homeowner;
5. The homeowner may be able to recover twice the amount of any damages they sustain as a result of the contractor’s violation of the Home Improvement Code;
6. A homeowner may be able to recover actual attorneys’ fees that they incur in pursuing claims against the contractor for violations of this code.

If a homeowner is in a position where they believe they have sustained damages because a contractor failed to comply with the Home Improvement Code, it is advisable that they consult with a litigation attorney to discuss their options.

 

Wisconsin has codified a “Theft by Contractor” statute under Wis. Stat. § 779.02(5) which imposes stiff penalties if violated.  There are several potential penalties for violating this statute.  If such a claim is proven, a contractor could be subject to criminal prosecution, be held liable in a civil suit for money damages and in certain cases corporate officers can be held personally liable.

In general, any money provided by a project owner to a contractor is to be held in trust by that contractor until all subcontractors’ claims for labor and materials are paid.  The elements of a theft by contractor claim pursuant to Wis. Stat. § 779.02(5) include the following:  (1) the contractor acted as a prime contractor; (2) the contractor received money for the improvement of land from the owner (or a lender); (3) the contractor intentionally used the money for purposes other than the payment of bona fide claims for labor or materials; (4) the use of the money was without the owner or lender’s consent and was contrary to the contractor’s authority; (5) the contractor knew the use of the money was without consent and contrary to its authority; and (6) the contractor used the money with the intent to convert it to its own use or the use of another.

A typical example of a violation of the statute is a contractor who gets behind on his bills and ends up using money from the newest project to pay off amounts owed to suppliers or subcontractors from the last project.  This type of behavior is prohibited under the statute.  It is important to understand that the Wisconsin Supreme Court has confirmed that this statute can be violated even if the contractor obtained no benefit from the use of the money.

The consequences for being found civilly or criminally liable under this statute are severe.  Under the statute, any officer, director, member or agent responsible for the misappropriation is liable in civil court for damages including up to three (3) times the unpaid amount, and reimbursement of attorney’s fees and costs incurred by the property owner in obtaining a judgment.  Not only can significant damages be awarded, which cannot be dischargeable in bankruptcy by the contractor, there are potential criminal penalties.  Criminal prosecution will lead to bad publicity, negative internet presence and the potential loss of licenses, and loss of security clearances and access to public projects.

Therefore, it is imperative that the contractor maintain the funds for a particular project separate from other projects and only utilize those funds for a proper purpose under the statutes.  Contractors should speak with an attorney to ensure that the system they have in place for handling client funds is in compliance with the statutory requirements.  Prime contractors should be aware of the elements and consequences of a theft by contractor claim and be mindful of their disbursement practices and procedures.  It is always a good practice to maintain strict payment procedures, detailed records and documentation of lien waivers.  Additionally, property owners who believe their funds have been misused also should consult with an attorney to discuss the options they have available for recovering those funds that were improperly used.

 

This article is a follow-up to my article of May 4, 2020, which addressed litigation and claims involving business losses as a result of COVID-19. Hundreds of lawsuits have been filed throughout the country by business owners who have been forced to close their doors or restrict their operations due to mandated governmental orders and closures due to the spread of the COVID-19 virus.

On July 2, 2020, the first court to make a substantive ruling on these insurance coverage issues held in favor of the insurance company and denied coverage under the business owner’s insurance policy under the “business interruption” coverage provision. In Gavrilides Management Company, et al. v. Michigan Insurance Company, the owner of the Soup Spoon Café and The Bistro in Lansing, Michigan filed a $650,000.00 claim with its insurance company for damages it incurred as a result of the government mandated closure of the inside dining in its restaurants due to COVID-19.

The restaurant owner argued that the government order restricted the operations of the restaurant and this amounted to a “direct physical loss” under the terms of the policy because the order blocked public entry to the property. The restaurant owner also argued that the “virus exclusion” in the policy did not apply because the loss of access was caused by the government order, not the virus. The Michigan court rejected both arguments and held that there has to be something that physically alters the integrity of the property and there has to be some tangible, physical damage to the property in order for it to be a “direct physical loss” which could provide coverage. The court further held that the virus exclusion in the policy excluded coverage caused by the impact of COVID-19.

While this case is not binding precedent on Wisconsin courts, because it is the first court to address the substantive provisions of business interruption insurance coverage in light of the COVID-19 virus, this case will likely be cited by insurance companies in all of the other pending cases throughout the country. Only time will tell if other jurisdictions will follow the reasoning of the Michigan court, or if it will take an alternative approach. It should be noted that each insurance policy must be evaluated based upon its particular language that is in effect, as well as the particular facts of the business owner’s circumstances. Therefore, simply because one court ruled in favor of the insurance company does not mean that this will be the same result in every other claim brought by a business owner who suffered losses as a result of the mandated government closures during the COVID-19 pandemic.