Shugarts v. Mohr, 894 N.W.2d 443

Background

On October 11, 2010, deputy sheriff Robert H. Shugarts II was injured when his squad car was struck by Dennis Mohr. Mohr's liability insurer was Progressive; Shugarts also had personal UIM coverage through Allstate and county vehicle coverage through WMMIC.
Progressive initially denied coverage in January 2012 (asserting intentional act), then disclosed a $50,000 bodily-injury limit and offered that limit in October 2014; Shugarts sued Mohr and Progressive in June 2013 and later added WMMIC and Allstate.
Shugarts’ counsel sent Allstate a notice of retainer on October 28, 2014 and a Vogt notice on February 9, 2015; Allstate asserted failure to give timely notice under its policy as an affirmative defense and moved for summary judgment.
The circuit court granted Allstate summary judgment, finding Shugarts failed to provide timely proof of claim under the Allstate policy and failed to rebut the presumption that Allstate was prejudiced by the untimely notice.
The court of appeals affirmed: it concluded the UIM endorsement’s proof-of-claim clause required notice "as soon as possible" after the incident or when the insured knew a UIM claim existed, and Shugarts learned of a UIM claim by August 2013 when Progressive’s limits were disclosed; his October 2014 notice was over one year late and the presumption of prejudice was not rebutted.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Allstate policy required earlier notice of a UIM claim (i.e., when claim must be "proof of claim")	Notice is not required until other insurer tenders policy limits; Vogt/Ranes show trigger is settlement or tender	Policy's UIM endorsement requires written proof of claim "as soon as possible" after the incident or once a UIM claim is known	Held: UIM endorsement required prompt written proof; insured knew of UIM claim by Aug 2013 when Progressive's $50,000 limit was disclosed
Whether providing Vogt notice after a settlement offer satisfies the policy's proof-of-claim requirement	October 2014 Vogt/notice complied with Vogt procedure and thus satisfied policy notice	Vogt/Ranes govern subrogation/settlement notice, not a policy's separate proof-of-claim timing	Held: Vogt/Ranes do not replace contractual proof-of-claim timing; Shugarts’ October 2014 notice was untimely under the policy
Effect of Wis. Stat. § 631.81(1) when notice is untimely (presumption of prejudice and one-year savings provision)	Insurer not prejudiced; evidence (availability of witnesses, records, IME) rebuts presumption	Untimely notice (over one year past required time) raises rebuttable presumption of prejudice; Allstate lost opportunity to investigate and participate earlier	Held: Because notice was more than one year late, presumption of prejudice arose and Shugarts failed to rebut it; summary judgment for Allstate affirmed
Whether public policy or practical considerations excuse earlier notice	Requiring earlier notice would be impractical and encourage insurer/third-party collusion; attorneys would need to change practices	No evidence that early notice would cause systemic problems; insurer's duty of good faith limits collusion concerns	Held: Public policy arguments insufficient to excuse contractual notice requirement

Key Cases Cited

Vogt v. Schroeder, 129 Wis. 2d 3 (1986) (establishes underinsurer's right to notice of proposed settlement to protect subrogation interests)
Ranes v. American Family Mut. Ins. Co., 219 Wis. 2d 49 (1998) (failure to give Vogt notice creates rebuttable presumption of prejudice to UIM carrier)
Martinson v. American Family Mut. Ins. Co., 63 Wis. 2d 14 (1974) (proof-of-claim must be filed as soon as practicable after incident giving rise to claim; distinct from notice of loss)
Neff v. Pierzina, 245 Wis. 2d 285 (2001) (timeliness and prejudice issues may be decided as matter of law where facts undisputed)
Yocherer v. Farmers Ins. Exchange, 252 Wis. 2d 114 (2002) (statute of limitations for UIM actions begins when underlying claim is finally resolved)