Case Title: Teske v. Wilson Mutual Insurance Co.

Citation: 

Docket Number: 2017AP001269

State: wisconsin

Court: Wisconsin Supreme Court

Date: 2019-06-04T00:00:00Z

Document:
2019 WI 62 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2017AP1269 
COMPLETE TITLE: 
John Teske, Julie A. Teske, Katherine Teske and 
Elle Teske, 
          Plaintiffs-Appellants, 
United HealthCare Insurance Company, 
          Subrogated Party-Plaintiff, 
     v. 
Wilson Mutual Insurance Company, 
          Defendant-Respondent-Petitioner. 
 
 
 
 
REVIEW OF DECISION OF THE COURT OF APPEALS 
Reported at 382 Wis. 2d 832,917 N.W.2d 233 
 (2018 – unpublished) 
 
 
OPINION FILED: 
June 4, 2019 
SUBMITTED ON BRIEFS: 
      
ORAL ARGUMENT: 
March 18, 2019 
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit 
 
COUNTY: 
Fond du Lac 
 
JUDGE: 
Peter L. Grimm 
 
 
 
JUSTICES: 
 
 
CONCURRED: 
      
 
DISSENTED: 
      
 
NOT PARTICIPATING: ABRAHAMSON, J. did not participate.     
 
 
 
ATTORNEYS: 
 
 
For the defendant-respondent-petitioner, there were briefs 
filed by Corrado Cirillo and Olsen, Kloet, Gunderson & Conway, 
Sheboygan. There was an oral argument by Corrado Cirillo. 
 
For the plaintiffs-appellants, there was a brief filed by 
Keith E. Trower and Warshafsky, Rotter, Tarnoff & Bloch, S.C., 
Milwaukee. There was an oral argument by Keith E. Trower.  
 
 
2019 WI 62
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.   2017AP1269 
(L.C. No. 
2016CV500) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
John Teske, Julie A. Teske, Katherine Teske and 
Elle Teske, 
 
          Plaintiffs-Appellants, 
 
United HealthCare Insurance Company, 
 
          Subrogated Party-Plaintiff, 
 
     v. 
 
Wilson Mutual Insurance Company, 
 
          Defendant-Respondent-Petitioner. 
 
FILED 
 
JUN 4, 2019 
 
Sheila T. Reiff 
Clerk of Supreme Court 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Affirmed in 
part, reversed in part. 
 
¶1 
ANN WALSH BRADLEY, J.   The petitioner, Wilson Mutual 
Insurance Company (Wilson), seeks review of an unpublished 
decision of the court of appeals reversing the circuit court's 
order that determined the Teskes' claims were barred by the 
No. 
2017AP1269 
 
2 
 
doctrine of claim preclusion.1  Wilson contends that the circuit 
court correctly dismissed the Teskes' claims because the claims 
could have been brought in a prior action between the same 
parties. 
¶2 
Specifically, Wilson asserts that claim preclusion 
applies to bar all of the plaintiffs' claims because all three 
elements of claim preclusion are established.  It contends that 
the parties to the first and second actions were the same, or 
were in privity.  Wilson argues next that identity of causes of 
action is present because the claims in this lawsuit and the 
previous lawsuit arose from the same common nucleus of operative 
facts.  Finally, it advances that there was a final judgment on 
the merits in the first action. 
¶3 
We conclude that claim preclusion bars the claims 
brought by Julie, Katherine, and Elle Teske in this second 
action.  Accordingly, we reverse that part of the decision of 
the court of appeals that allowed their claims to proceed.  
However, we are evenly divided as to whether claim preclusion 
bars the claims brought by John Teske.  As a result, we affirm 
                                                 
1 Teske v. Wilson Mut. Ins. Co., No. 2017AP1269, unpublished 
slip op. (Wis. Ct. App. May 9, 2018) (reversing order of the 
circuit court for Fond du Lac County, Peter L. Grimm, Judge). 
No. 
2017AP1269 
 
3 
 
the court of appeals' decision that allowed John's claims to 
proceed.2 
I 
¶4 
This case arises from a car accident in Fond du Lac 
County on November 24, 2013.  The underlying facts of the 
accident are undisputed. 
¶5 
Emily Teske was driving a vehicle in which her mother, 
Julie, and two sisters, Katherine and Elle, were passengers.  
John Teske, Julie's husband and Emily, Katherine and Elle's 
father, was not in the car.  Julie, Emily, Katherine, and Elle 
were all seriously injured after their vehicle was rear-ended by 
a car driven by Sabrina Srock.  The force of the collision 
propelled the Teskes' car into the oncoming lane, where it 
struck a vehicle driven by Patrice Rog, who was also injured. 
¶6 
Srock carried an automobile insurance policy with 
State Farm that provided a policy limit of $100,000 per person 
and $300,000 per accident.  The Teskes carried a policy with 
Wilson, which as relevant here contained underinsured motorist 
(UIM) coverage with a policy limit of $500,000 per person, per 
accident.  Importantly, the Wilson policy also incorporated a 
"reducing clause" which "permits a setoff from the insured's UIM 
                                                 
2 See Wingra Redi-Mix, Inc. v. Burial Sites Preservation 
Bd., 2018 WI 54, ¶1, 381 Wis. 2d 601, 912 N.W.2d 392 ("The 
decision of the court of appeals is affirmed by an equally 
divided court."); Gruhl Sash & Door Co. v. Chicago, M. & St. P. 
Ry. Co., 173 Wis. 215, 180 N.W. 845 (1921) (explaining that when 
the court is equally divided, the order appealed from is 
affirmed). 
No. 
2017AP1269 
 
4 
 
coverage [in] the amount paid to the insured by the underinsured 
tortfeasor."3 
¶7 
The accident resulted in two separate lawsuits.  In 
the first action, Julie Teske brought a negligence claim against 
Srock and her insurer, State Farm, in Milwaukee County circuit 
court.4  Katherine and Elle were also named as plaintiffs, 
although as minors they were represented by a guardian ad litem. 
¶8 
Pursuant to a minor settlement agreement,5 the parties 
settled the lawsuit and agreed how the money from the various 
insurers would be split.  State Farm tendered its $300,000 
policy limit, but the amount was insufficient to cover the full 
medical expenses incurred by Rog and the Teskes.  The amount was 
ultimately split between the Teskes and Rog, with the Teskes 
receiving $255,000 and Rog receiving $45,000. 
¶9 
Applying the policy's reducing clause, Wilson agreed 
to pay the Teskes $245,000.  It arrived at this amount by 
                                                 
3 Dowhower ex rel. Rosenberg v. West Bend Mut. Ins. Co., 
2000 WI 73, ¶1, 236 Wis. 2d 113, 613 N.W.2d 557. 
4 The Honorable David Hansher presided. 
5 Pursuant to Wis. Stat. § 807.10(1) (2013-14), 
A compromise or settlement of an action or proceeding 
to which a minor or individual adjudicated incompetent 
is a party may be made by the guardian, if the 
guardian is represented by an attorney, or the 
guardian ad litem with the approval of the court in 
which such action or proceeding is pending. 
All subsequent references to the Wisconsin Statutes are to the 
2013-14 version unless otherwise indicated. 
No. 
2017AP1269 
 
5 
 
beginning with its $500,000 UIM policy limit and subtracting the 
$255,000 the Teskes received from State Farm. 
¶10 Each member of the Teske family received proceeds from 
the insurance settlement as set forth in the minor settlement 
agreement.  Specifically, Julie received $264,000, Katherine 
received $40,000, Elle and Emily received $35,000 each, and John 
received $20,000. 
¶11 Also incorporated into the minor settlement agreement 
was a "Pierringer Release."6  Pursuant to the Pierringer Release, 
the Teskes released all of their claims against Srock and State 
Farm.  The Teskes partially released Wilson to the extent of the 
$245,000 it paid.  However, they explicitly "reserved the right 
to pursue further claims for UIM benefits against [Wilson] and 
[Wilson] has not waived any defenses to such future claims."  
The minor settlement agreement was signed by each member of the 
Teske family,7 as well as a representative of Wilson, and 
approved by the circuit court. 
                                                 
6 "A Pierringer release operates as a satisfaction of that 
portion of the plaintiff's cause of action for which the 
settling joint tortfeasor is responsible, while at the same time 
reserving the balance of the plaintiff's cause of action against 
a nonsettling joint tortfeasor."  Imark Indus., Inc. v. Arthur 
Young & Co., 148 Wis. 2d 605, 621, 436 N.W.2d 311 (1989); see 
Pierringer v. Hoger, 21 Wis. 2d 182, 184-85, 124 N.W.2d 106 
(1963).  It provides that the plaintiff "will assume or satisfy 
that portion of the liability that is determined to be the 
responsibility of the settling joint tortfeasor."  Imark Indus., 
148 Wis. 2d at 621. 
7 Although they were not named parties in the lawsuit, Emily 
and John each signed the minor settlement agreement, under which 
each received the stated proceeds.  See supra, ¶10. 
No. 
2017AP1269 
 
6 
 
¶12 After 
releasing 
Srock 
and 
State 
Farm, 
Julie, 
Katherine, and Elle amended their complaint and added Wilson as 
a defendant.  At issue in this amended declaratory action was 
whether the reducing clause in the Wilson policy was properly 
applied.  Venue was transferred to Sheboygan County, and the 
Sheboygan County circuit court8 determined that the reducing 
clause 
was 
unambiguous, 
valid, 
and 
applicable. 
 
Julie, 
Katherine, and Elle appealed and the court of appeals affirmed.  
Teske ex rel. Harding v. Wilson Mut. Ins. Co. (Teske I), No. 
2015AP208, unpublished slip op. (Wis. Ct. App. Aug. 19, 2015).  
The same three Teskes petitioned for review, which this court 
denied, thus ending the first action. 
¶13 Following the resolution of the first action, John, 
Julie, Katherine, and Elle brought this second lawsuit.  They 
alleged that Emily, as the driver at the time of the accident, 
was negligent in the operation of the Teske vehicle.  However, 
they sued Wilson directly as Emily's insurer pursuant to 
Wisconsin's direct action statute.9 
                                                 
8 The Honorable Angela W. Sutkiewicz presided. 
9 Wisconsin Stat. § 632.24, the "direct action" statute, 
"provides that any liability policy covering negligence makes 
the insurance company liable to the person entitled to recover 
against the insured up to policy limits.  Under the direct 
action statute, the complaining party may allege the insured's 
conduct, and the insurer's liability therefor, directly against 
the insurer."  Estate of Otto v. Physicians Ins. Co. of Wis., 
Inc., 2008 WI 78, ¶32, 311 Wis. 2d 84, 751 N.W.2d 805.  The 
statute provides: 
Any bond or policy of insurance covering liability to 
others for negligence makes the insurer liable, up to 
(continued) 
No. 
2017AP1269 
 
7 
 
¶14 Moving for summary judgment, Wilson argued that the 
Teskes' negligence action was barred by the doctrine of claim 
preclusion.  Focusing on the first two elements of claim 
preclusion, identity of parties and identity of causes of 
action, it asserted that there was identity between the parties 
in both lawsuits.  It based this argument on the observation 
that Wilson, Julie, Katherine and Elle were all named plaintiffs 
in the first action.  Wilson also observed that although John 
was not formally named a party in the first action, he 
participated and received proceeds from the minor settlement 
agreement. 
¶15 Wilson also contended that there was identity between 
the causes of action in both lawsuits.  Specifically, it argued 
that the actions arose from a single event——the November 24, 
2013 accident.10 
                                                                                                                                                             
the amounts stated in the bond or policy, to the 
persons entitled to recover against the insured for 
the death of any person or for injury to persons or 
property, irrespective of whether the liability is 
presently established or is contingent and to become 
fixed or certain by final judgment against the 
insured. 
§ 632.24. 
10 Wilson did not make a specific argument regarding the 
third element of claim preclusion, a final judgment on the 
merits, other than to assert that "[t]here is no dispute that 
the Sheboygan County Circuit Court entered a final judgment on 
the merits dismissing the Teskes' prior lawsuit." 
No. 
2017AP1269 
 
8 
 
¶16 The circuit court agreed with Wilson and granted the 
motion for summary judgment.  It determined that "there is no 
dispute as to the technical identity between the parties given 
the captions and pleadings of the suits and the involvement of 
the parties in the litigation and the minor settlement and 
executing documents and such." 
¶17 Additionally, the circuit court concluded that there 
was an identity of the causes of action in the first and second 
lawsuits, explaining:  "The methodology or the phraseology 
refers to a concept of a transaction which has a natural 
grouping of a common nucleus of operative facts, and here the 
facts are all consistent about the horrific accident on November 
24th, 2013, on Highway 23 near Mount Calvary."  Finally, it 
determined that a final judgment on the merits had been reached.  
Accordingly, the circuit court concluded that claim preclusion 
barred the second action. 
¶18 The 
Teskes 
appealed, 
and 
the 
court 
of 
appeals 
reversed.  Teske v. Wilson Mut. Ins. Co. (Teske II), No. 
2017AP1269, unpublished slip op. (Wis. Ct. App. May 9, 2018).  
Contrary to the circuit court, the court of appeals determined 
that claim preclusion did not bar the second action.  It 
reasoned that "[t]he current tort action involves litigation of 
different facts and legal theories, specifically the facts of 
the accident versus the interpretation of whether the reducing 
clause in Wilson's policy applied."  Id., ¶9.  As opposed to the 
first action, which "was a contract action . . . requir[ing] the 
court to interpret Wilson's UIM policy provisions[,]" the second 
No. 
2017AP1269 
 
9 
 
action "will examine Emily's alleged negligence and, if any, 
whether her negligence was a cause of the Teskes' injuries."  
Id. 
¶19 Accordingly, the court of appeals concluded that 
"[t]he two actions involve neither a common 'nucleus of facts' 
nor legal question."  Id.  Thus in the court of appeals' view, 
"there is no requirement in law or equity requiring these 
distinctly separate claims to be litigated together."  Id. 
II 
¶20 We are asked to review the court of appeals' decision 
concluding that claim preclusion does not bar the Teskes' second 
action.  Whether claim preclusion applies under a given factual 
scenario is a question of law we review independently of the 
determinations rendered by the circuit court and court of 
appeals.  Federal Nat'l Mortg. Ass'n v. Thompson, 2018 WI 57, 
¶28, 381 Wis. 2d 609, 912 N.W.2d 364. 
¶21 This question arises in the context of a motion for 
summary judgment.  We similarly review a summary judgment 
determination independently, without deference to the circuit 
court or court of appeals.  Shugarts v. Mohr, 2018 WI 27, ¶17, 
380 
Wis. 2d 512, 
909 
N.W.2d 402. 
 
Summary 
judgment 
is 
appropriate where there is no genuine issue as to any material 
fact and the moving party is entitled to judgment as a matter of 
law.  Id. 
No. 
2017AP1269 
 
10 
 
III 
¶22 To determine whether claim preclusion bars this second 
action, we address each of the three elements of claim 
preclusion with respect to the facts of this case. 
¶23 "The doctrine of claim preclusion provides that a 
final judgment on the merits in one action bars parties from 
relitigating any claim that arises out of the same relevant 
facts, transactions or occurrences."  Kruckenberg v. Harvey, 
2005 WI 43, ¶19, 279 Wis. 2d 520, 694 N.W.2d 879 (citations 
omitted).  Pursuant to claim preclusion, "a final judgment is 
conclusive in all subsequent actions between the same parties as 
to all matters which were litigated or which might have been 
litigated in the former proceedings."  Lindas v. Cady, 183 
Wis. 2d 547, 558, 515 N.W.2d 458 (1994) (quoting DePratt v. West 
Bend Mut. Ins. Co., 113 Wis. 2d 306, 310, 334 N.W.2d 883 
(1983)). 
¶24 Claim preclusion is "designed to draw a line between 
the meritorious claim on the one hand and the vexatious, 
repetitious and needless claim on the other hand."  N. States 
Power Co. v. Bugher, 189 Wis. 2d 541, 550, 525 N.W.2d 723 (1995) 
(quoting Purter v. Heckler, 771 F.2d 682, 689-90 (3d Cir. 
1985)).  The doctrine "provides an effective and useful means to 
establish and fix the rights of individuals, to relieve parties 
of the cost and vexation of multiple lawsuits, to conserve 
judicial resources, to prevent inconsistent decisions, and to 
encourage 
reliance 
on 
adjudication." 
 
Kruckenberg, 
279 
Wis. 2d 520, ¶20 (citations omitted).  It further recognizes 
No. 
2017AP1269 
 
11 
 
that "endless litigation leads to chaos; that certainty in legal 
relations must be maintained; that after a party has had his day 
in court, justice, expediency, and the preservation of the 
public tranquility requires that the matter be at an end."  Id. 
(citations omitted). 
¶25 Three 
elements 
are 
required 
to 
establish 
the 
application of claim preclusion to bar an action:  (1) an 
identity between the parties or their privies in the prior and 
present lawsuits; (2) an identity of the causes of action in the 
two lawsuits; and (3) a final judgment on the merits in a court 
of competent jurisdiction.  N. States Power Co., 189 Wis. 2d at 
551.  We address each in turn. 
A 
¶26 We begin our claim preclusion analysis by addressing 
the first element, identity between the parties or their privies 
in the prior and present lawsuits.  Id. 
¶27 This court has previously stated that there is an 
identity of parties when the parties are "for the most part, 
identical."  Wickenhauser v. Lehtinen, 2007 WI 82, ¶28, 302 
Wis. 2d 41, 734 N.W.2d 855 (citing Sopha v. Owens-Corning 
Fiberglas Corp., 230 Wis. 2d 212, ¶48 n.28, 601 N.W.2d 627 
(1999)).  For example, case law provides that this element is 
met when the two actions involve a closely-held corporation in 
one 
case 
and 
its 
principal 
shareholder 
in 
the 
other.  
Wickenhauser, 302 Wis. 2d 41, ¶29 n.12 (citing Manu-Tronics, 
Inc. v. Effective Mgnt. Sys., Inc., 163 Wis. 2d 304, 315, 471 
N.W.2d 263 (Ct. App. 1991)).  Similarly, an owner of property 
No. 
2017AP1269 
 
12 
 
and a successor in interest to that property are in privity for 
purposes of claim preclusion.  Kruckenberg, 279 Wis. 2d 520, 
¶23. 
¶28 With regard to the claims made by Julie, Katherine, 
and Elle, we need not reach a privity analysis because identity 
of parties is distinctly present.  Julie, Katherine, and Elle 
were named parties in both the first action and the present 
action.  Likewise, Wilson was a named party in both actions.  
Thus, because Julie, Katherine, Elle, and Wilson were all named 
parties in the two actions, identity of parties exists with 
respect to those named parties. 
¶29 However, we are equally divided as to whether the 
identity of parties element is met with regard to John.  Thus, 
we affirm the court of appeals' decision that allowed John's 
claims to proceed. 
B 
¶30 We turn next to address the second element of claim 
preclusion, identity of the causes of action in the two 
lawsuits.  See N. States Power Co., 189 Wis. 2d at 551.  Because 
we are equally divided as to whether the first element of claim 
preclusion is met with regard to John, we need only address the 
second element with respect to the claims made by Julie, 
Katherine, and Elle. 
¶31 For purposes of determining whether there is an 
identity of causes of action in two lawsuits, Wisconsin has 
No. 
2017AP1269 
 
13 
 
adopted 
the 
"transactional 
approach" 
set 
forth 
in 
the 
Restatement (Second) of Judgments § 24 (1982).11  Menard, Inc. v. 
Liteway Lighting Prods., 2005 WI 98, ¶30, 282 Wis. 2d 582, 698 
N.W.2d 738. 
 
The 
transactional 
approach 
"reflects 
the 
expectation that parties who are given the capacity to present 
their entire controversies shall in fact do so."  Kruckenberg, 
279 Wis. 2d 520, ¶27 (internal quotation and citation omitted).  
Pursuant to this analysis, "all claims arising out of one 
transaction or factual situation are treated as being part of a 
single cause of action and they are required to be litigated 
together."  A.B.C.G. Enters., Inc. v. First Bank Se., N.A., 184 
Wis. 2d 465, 480-81, 515 N.W.2d 904 (1994) (quoting Parks v. 
City of Madison, 171 Wis. 2d 730, 735, 492 N.W.2d 365 (Ct. App. 
1992)). 
                                                 
11 Restatement (Second) of Judgments § 24 (1982) provides: 
(1) When a valid and final judgment rendered in an 
action extinguishes the plaintiff's claim pursuant to 
the rules of merger or bar (see §§ 18, 19), the claim 
extinguished includes all rights of the plaintiff to 
remedies against the defendant with respect to all or 
any part of the transaction, or series of connected 
transactions, out of which the action arose. 
(2) What factual grouping constitutes a "transaction", 
and what groupings constitute a "series", are to be 
determined 
pragmatically, 
giving 
weight 
to 
such 
considerations as whether the facts are related in 
time, space, origin, or motivation, whether they form 
a convenient trial unit, and whether their treatment 
as a unit conforms to the parties' expectations or 
business understanding or usage. 
No. 
2017AP1269 
 
14 
 
¶32 The concept of a "transaction" connotes a natural 
grouping or common nucleus of operative facts.  Menard, Inc., 
282 Wis. 2d 582, ¶30 (citations omitted).  "In determining if 
the claims of an action arise from a single transaction, we may 
consider whether the facts are related in time, space, origin, 
or motivation."  Id. 
¶33 Relying on this second element of the claim preclusion 
analysis, the court of appeals determined that claim preclusion 
does not bar the Teskes' second lawsuit.  It concluded that 
despite the fact that the claims in both lawsuits arose from the 
November 24, 2013 car accident, the requirement of identity of 
causes of action was not fulfilled. 
¶34 The court of appeals' reasoned that "[t]he current 
tort action involves litigation of different facts and legal 
theories, specifically the facts of the accident versus the 
interpretation of whether the reducing clause in Wilson's policy 
applied."  Teske II, No. 2017AP1269, unpublished slip op., ¶9.  
"The current action will examine Emily's alleged negligence and, 
if any, whether her negligence was a cause of the Teskes' 
injuries."  Id.  In contrast, "[t]he prior action was a contract 
action, which required the court to interpret Wilson's UIM 
policy provisions."  Id. 
¶35 We disagree with the court of appeals.  Contrary to 
the court of appeals' conclusion, we determine that the causes 
of action in both lawsuits arise from a common nucleus of 
operative facts——namely, the November 24, 2013 car accident. 
No. 
2017AP1269 
 
15 
 
¶36 The court of appeals' error originates in its approach 
of examining the legal theories presented in the two actions 
rather than the underlying facts.  Following a transactional 
analysis, "it is irrelevant that 'the legal theories, remedies 
sought, and evidence used may be different between the first and 
second actions.'"  Menard, Inc., 282 Wis. 2d 582, ¶32 (quoting 
Kruckenberg, 279 Wis. 2d 520, ¶26).  Rather, "[t]he goal in the 
transactional approach is to see a claim in factual terms and to 
make a claim coterminous with the transaction, regardless of the 
claimant's substantive theories or forms of relief, regardless 
of the primary rights invaded, and regardless of the evidence 
needed to support the theories or rights."  Kruckenberg, 279 
Wis. 2d 520, ¶26. 
¶37 With our lens properly focused on the facts instead of 
the legal theories, it is apparent that the claims made in both 
the first and second actions arise from the same factual 
circumstances surrounding the November 24, 2013 car accident.  
Although the court of appeals viewed the UIM issue in the first 
action as separate and distinct from the tort claim in the 
second action, without an underlying tort there can be no UIM 
claim. 
¶38 This court's decision in State Farm Mut. Auto. Ins. 
Co. v. Gillette, 2002 WI 31, ¶31, 251 Wis. 2d 561, 641 
N.W.2d 662, sheds light on the connection between a UIM claim 
based on contract and the tort claim that necessarily underlies 
a UIM claim.  It explained:  "A claim against the insurance 
company for underinsured motorist coverage is 'an action on the 
No. 
2017AP1269 
 
16 
 
policy and sounds in contract,' although an underlying tortious 
injury is also involved."  Id., ¶25 (citing Sahloff v. W. Cas. & 
Sur. Co., 45 Wis. 2d 60, 70, 171 Wis. 2d 914 (1969)). 
¶39 As the Gillette court highlighted, "[w]hen an insured 
sues an insurance company for underinsured motorist coverage, 
contract law and tort law converge.  Contract law applies to 
interpret the insurance policy, but an insured's right to 
underinsured motorist benefits hinges on the existence of a tort 
cause of action against the underinsured motorist."  Id., ¶31. 
¶40 Although the tort cause of action here is against 
Emily Teske, and the tort underlying the UIM case was that 
committed by Srock, the two alleged torts arose as part of the 
same car accident, i.e. the same common nucleus of operative 
facts.  Thus, the negligence claim against Emily could have been 
litigated in the first action.  See Menard, 282 Wis. 2d 582, 
¶55.  We therefore conclude that the second element of claim 
preclusion, identity of causes of action, is fulfilled. 
C 
¶41 Finally, we address the third element of claim 
preclusion, a final judgment on the merits in a court of 
competent jurisdiction.  See N. States Power Co., 189 Wis. 2d at 
551. 
¶42 The parties exhaustively litigated the issue of 
whether the reducing clause in the Wilson policy applies.  
Initially, 
the 
Sheboygan 
County 
circuit 
court 
made 
a 
determination that the clause applies.  This conclusion was 
No. 
2017AP1269 
 
17 
 
affirmed by the court of appeals.  After Julie, Katherine, and 
Elle petitioned for review, this court denied the petition. 
¶43 A final judgment was accordingly reached on the issue 
of whether the reducing clause in the Wilson policy applies.  
Such a final judgment has preclusive effect on all matters 
"which were litigated or which might have been litigated in the 
former proceedings."  Kruckenberg, 279 Wis. 2d 520, ¶19.  We 
thus conclude that the third element of claim preclusion is 
fulfilled. 
¶44 In sum, all three elements of claim preclusion are met 
with regard to Julie, Katherine, and Elle's claims against 
Wilson.  We therefore conclude that claim preclusion bars the 
claims brought by Julie, Katherine, and Elle in this second 
action.  Accordingly, we reverse that part of the decision of 
the court of appeals that allowed their claims to proceed. 
¶45 However, we are evenly divided as to whether claim 
preclusion bars the claims brought by John.  As a result, we 
affirm the court of appeals' decision that allowed John's claims 
to proceed. 
By the Court.—The decision of the court of appeals is 
affirmed in part and reversed in part. 
¶46 SHIRLEY 
S. 
ABRAHAMSON, 
J., 
withdrew 
from 
participation. 
 
No. 
2017AP1269 
 
 
 
1