Court Opinion

ID: 8337853
Source: CourtListenerOpinion
Date Created: 2022-10-17 23:00:26.419375+00
Date Added: 2024-06-11T16:45:33.314774
License: Public Domain

In the

    United States Court of Appeals
                For the Seventh Circuit
                    ____________________
Nos. 22-1143, 22-1170 & 22-1172
T.H.E. INSURANCE COMPANY,
                                                   Plaintiff-Appellee,
                                 v.

TREY D. OLSON, as Special Administrator of the Estate of Tim-
othy L. Olson, et al.,
                                      Defendants-Appellants.
                    ____________________

        Appeals from the United States District Court for the
                   Eastern District of Wisconsin.
         No. 1:20-cv-01010 — William C. Griesbach, Judge.
                    ____________________

  ARGUED SEPTEMBER 21, 2022 — DECIDED OCTOBER 17, 2022
                ____________________

   Before FLAUM, SCUDDER, and KIRSCH, Circuit Judges.
   SCUDDER, Circuit Judge. Before us is a question of insurance
coverage under Wisconsin law arising out of injuries to two
volunteers at Fourth of July ﬁreworks displays in Land
O’ Lakes and Rib Lake, Wisconsin. The district court found
that the plaintiﬀ, T.H.E. Insurance, had no duty to defend or
indemnify its insured, the ﬁreworks distributor, for both
events. We aﬃrm.
2                              Nos. 22-1143, 22-1170 & 22-1172

                                I
                               A
    We resolve these coverage issues under Wisconsin law.
Like many states, Wisconsin distinguishes between a duty to
defend and a duty to indemnify. The state’s Supreme Court
has explained that an insurer’s duty to defend “is broader
than its duty to indemnify.” Olson v. Farrar, 809 N.W.2d 1, 7
(Wis. 2012); see also Choinsky v. Emps. Ins. Co. of Wausau, 938
N.W.2d 548, 555 (Wis. 2020). “The insurer is under an obliga-
tion to defend only if it could be held bound to indemnify the
insured, assuming that the injured person proved the allega-
tions of the complaint, regardless of the actual outcome of the
case.” Olson, 809 N.W.2d at 7 (quoting Grieb v. Citizens Cas. Co.
of New York, 148 N.W.2d 103, 106 (Wis. 1967)). Absent a duty
to defend, the insurer shoulders no duty to indemnify on the
alleged facts giving rise to the underlying injury or harm. See
Choinsky, 938 N.W.2d at 555 (“In contrast, if the complaint
does not allege a covered claim, the insurer has no obligations
under the policy.”).
    Wisconsin law also provides substantial guidance on in-
terpreting insurance policies. “An insurance policy is con-
strued to give eﬀect to the intent of the parties as expressed in
the language of the policy.” Folkman v. Quamme, 665 N.W.2d
857, 864 (Wis. 2003). Words are given the plain and ordinary
meaning as a reasonable insured would understand them. See
id. at 864–65. Ambiguous language is interpreted in the in-
sured’s favor. See id. at 865. Policy language is ambiguous
only if it is “susceptible [by a reasonable insured] to more than
one reasonable interpretation.” Id. at 864–65 (quoting Danbeck
v. Am. Fam. Mut. Ins. Co., 629 N.W.2d 150, 193 (Wis. 2001)).
Nos. 22-1143, 22-1170 & 22-1172                                3

                               B
    Timothy Olson and Todd Zdroik sustained injuries while
volunteering at Fourth of July ﬁreworks displays in the towns
of Rib Lake and Land O’ Lakes in 2018. Fireworks distributed
by Spielbauer Fireworks Company exploded prematurely at
both events, severely burning Zdroik and Olson. Olson later
passed away from unrelated causes. Both towns used teams
of volunteers to put on their Fourth of July displays. Olson
opened and closed a bin from which other volunteers re-
trieved ﬁreworks during the show in Rib Lake. Zdroik
worked at the Land O’Lakes event as a so-called “shooter,”
manually lighting the fuses on mortar shells.
    Olson’s estate and Zdroik sued Spielbauer in Wisconsin
state courts. From the outset, it was clear the parties disagreed
with Spielbauer’s insurer, T.H.E. Insurance, about whether
the claims for Olson and Zdroik’s injuries would be covered
under Spielbauer’s general and excess liability policies.
                               C
    As the state court litigation progressed, T.H.E. sought to
resolve the coverage issue in federal court under the Declara-
tory Judgment Act. See 28 U.S.C. § 2201(a). The district court
granted T.H.E.’s motions for judgment on the pleadings after
examining the insurance policy and the personal injury alle-
gations in Olson and Zdroik’s state court complaints. The dis-
trict court determined T.H.E. had no duty to defend—and by
extension, no duty to indemnify—Spielbauer because the pol-
icy in question excluded coverage for injuries sustained by
volunteers at ﬁreworks displays. In their respective state
court complaints, Zdroik and Olson admitted to volunteering
at the displays. Although Olson’s role as a container operator
4                              Nos. 22-1143, 22-1170 & 22-1172

was minimal, the district court concluded that the exclusion
in T.H.E.’s policy applied to any kind of volunteer work.
Zdroik, Olson’s estate, and Spielbauer all appealed.
                               II
   Our analysis of Spielbauer’s general and excess liability in-
surance policies turns on the “Shooters Endorsement,” a one-
sentence exclusion that reads:
       This policy shall NOT provide coverage of any
       kind (including but not limited to judgment
       costs, defense, costs of defense, etc.) for any
       claims arising out of injuries or death to shoot-
       ers or their assistants hired to perform ﬁreworks
       displays or any other persons assisting or aiding
       in the display of ﬁreworks whether or not any
       of the foregoing are employed by the Named In-
       sured, any shooter or any assistant.
    The key issue is whether the exclusion extends to any and
all volunteers or only to those assisting hired shooters or hired
assistants.
    Both parties focus on the middle of the block quote, oﬀer-
ing competing interpretations of the words “any other per-
sons assisting or aiding in the display of ﬁreworks.” They dis-
pute how this group relates back to the phrase about “shoot-
ers and their assistants hired to perform….” Zdroik, the estate,
and Spielbauer urge us to conclude that while “any other per-
sons” may include volunteers, the exclusion applies to volun-
teers only if they were assisting hired shooters or hired assis-
tants at the time they sustained their alleged injuries. At a
more practical and concrete level, that would mean the exclu-
sion does not apply to the estate and Zdroik’s claims because
Nos. 22-1143, 22-1170 & 22-1172                                5

there were no hired persons at either Fourth of July ﬁreworks
event. For its part, T.H.E. insists that the “other persons” cat-
egory is broader and includes any volunteer assistant regard-
less of whether anyone else at the display worked as a hired
employee or contractor.
                               A
   T.H.E. has the better reading. The Shooters Endorsement
plainly and unambiguously creates two distinct groups ex-
cluded from coverage. Go back to the block quote and focus
on who the language excludes. On one side are hired shooters
and their hired assistants. On the other is a large residual cat-
egory of “any other persons” who assist the ﬁreworks dis-
play, regardless of whether they assist hired persons. This
reading is compelled partly by the last-antecedent rule, which
takes the qualifying phrase “hired to perform ﬁreworks dis-
plays” and attaches it to the last antecedent only—shooters
and assistants. See In re Airadigm Commc’ns, Inc., 616 F.3d 642,
655 (7th Cir. 2010). The word “or,” following the phrase
“hired to perform other ﬁreworks displays,” introduces a sep-
arate, discrete group of other persons who assist the display.
That group, consisting of “any other persons assisting or aid-
ing in the display,” stands alone.
   A reasonable insured would interpret the policy the same
way. The expansive wording in and around the ﬁnal category
(“any other persons,” “assisting or aiding,” “whether or not
any of the foregoing are employed by the Named Insured, any
shooter, or any assistant”) puts a reasonable insured on notice
that all volunteers are excluded from coverage.
   Olson’s estate, Zdroik, and Spielbauer beg to diﬀer, urging
us to interpret the policy against the backdrop of the
6                              Nos. 22-1143, 22-1170 & 22-1172

Wisconsin workers’ compensation scheme. They view the
Shooters Endorsement exclusion as limiting coverage for
hired personnel who are already entitled to workers’ compen-
sation, contending that a reasonable insured would believe
the exclusion only applies if there are hired workers at the dis-
play. We are not persuaded.
    Whether we accept T.H.E.’s reading or the defendants’, the
provision plainly excludes coverage for at least some volun-
teers who presumably are ineligible for workers’ compensa-
tion. More fundamentally, a reasonable insured would under-
stand that the provision’s purpose is to exclude coverage for
high-risk work, not to account for alternative remedies for
persons who may have been injured at a ﬁreworks display.
This purpose explains why the provision sweeps up “any
other persons” involved in the risky work of putting on a ﬁre-
works display, and why hired shooters and assistants—in-
cluding all volunteers—are excluded irrespective of who em-
ploys them or asked them to help.
    No doubt the exclusion includes some surplus language.
See Goebel v. First Fed. Sav. & Loan Ass’n of Racine, 266 N.W.2d
352, 358 (Wis. 1978) (“[C]ourts must avoid a construction
which renders portions of a contract meaningless, inexplica-
ble or mere surplusage.”). Doubtless, too, T.H.E. could have
achieved the exact same result by scratching the words
“shooters or their assistants hired to perform,” since these in-
dividuals are already captured by the “other persons” cate-
gory. The placement of the phrase “whether or not any of the
foregoing are employed by the Named Insured, any shooter
or any assistant” at the end of the sentence is odd as well. The
words “any of the foregoing” suggest this phrase should mod-
ify shooters, assistants, and other persons, even though only
Nos. 22-1143, 22-1170 & 22-1172                                7

the shooters and assistants are required to have any employ-
ment relationship at all.
    But T.H.E.’s point does not become twisted or uncertain
just because the company used extra words in the exclusion
to make it. The surplusage canon informs how to choose be-
tween multiple reasonable interpretations. It does not require
injecting ambiguity into a wordy provision that is otherwise
clear. See id. at 679 (“[The canons of construction] necessarily
yield to any contrary intention of the parties, if such an inten-
tion could be ascertained from the contract as a whole.”); An-
tonin Scalia & Bryan A. Garner, Reading Law: The Interpretation
of Legal Texts 176 (2012) (explaining that the surplusage canon
only applies if the provision is susceptible of more than one
meaning). The exclusion here is at once bulky and plain: the
provision excludes anyone who assists a ﬁreworks display. If
anything, the extra words underscore the breadth of the ex-
clusion by punctuating just how many people the policy in-
tended to exclude—any hired shooter or any hired assistant
no matter who hired them, and any leftover assistant who was
not hired but pitched in anyway.
    Zdroik, Olson’s estate, and Spielbauer also see our reading
as in tension with the provision’s use of punctuation and
prepositions. To their eyes, the absence of commas—running
from the description of hired shooters through other persons
assisting in the display—means that the whole sentence forms
one continuous phrase. The clause describing “other persons”
therefore modiﬁes the phrase “hired to perform the ﬁreworks
display.” The result, they say, is that other persons assisting
the display are excluded only if they are assisting the same
display where hired shooters and hired assistants are work-
ing.
8                             Nos. 22-1143, 22-1170 & 22-1172

    But this is backwards. The defendants are essentially re-
versing the last-antecedent rule by turning “other persons”
into a qualifying phrase and “hired to perform” into its ante-
cedent. Indeed, the clause about other persons is not a quali-
fying phrase at all: it stands separately from the hired assis-
tants and shooters, commas or no.
    Finally, the defendants return us to the middle portion of
the block quote that explains that the shooters and assistants
must be “hired to perform ﬁreworks displays” while the
“other persons” must be “assisting or aiding in the display of
ﬁreworks.” The defendants invite us to read a great deal of
meaning into the word “the.” They take this word to mean
that other persons assisting the display must be assisting the
same display that hired shooters and assistants worked at. We
see things diﬀerently. At best, the phrase “the ﬁreworks dis-
play” indicates that anyone assisting (hired shooters, hired as-
sistants, or otherwise) must be assisting in the same ﬁreworks
display that gave rise to the insurance claim.
                               B
    Under this plain reading of the provision, T.H.E. had no
obligations to Spielbauer for Zdroik’s or Olson’s estate’s
claims. The district court stood on ﬁrm ground in reviewing
documents incorporated by reference in T.H.E.’s motions, in-
cluding both the estate’s and Zdroik’s state court complaints,
when it reached this conclusion. See United States v. Wood, 925
F.2d 1580, 1582 (7th Cir. 1991) (per curiam). The (undisputed)
admissions in those complaints allowed the district court to
determine there was no duty to defend, and therefore no duty
to indemnify. See Liebovich v. Minnesota Ins. Co., 751 N.W.2d
764, 765–66 (Wis. 2008) (observing that the duty to defend is
determined by the allegations in the underlying complaint).
Nos. 22-1143, 22-1170 & 22-1172                                 9

    Start with Zdroik. He admitted in his state court complaint
that he was a volunteer shooter, a major role in a ﬁreworks
display in Land O’Lakes. Zdroik’s contribution is clearly em-
braced by the ﬁnal category of other persons assisting the dis-
play, even if he could not be excluded under the ﬁrst category
of hired shooters.
    Likewise, the estate admitted in its complaint that Timo-
thy Olson operated a bin of ﬁreworks to assist other volun-
teers at the Rib Lake event. Olson played a minimal role, but
no one disputes what he was doing. And the Shooters En-
dorsement excludes coverage for all volunteers, even if they
made only small contributions.
                               III
    Spielbauer urges us to resist reaching the indemnity ques-
tion. It argues that the indemnity issue was not ripe for deci-
sion without a judgment on liability. But neither the law nor
the facts are on Spielbauer’s side.
    First, Wisconsin law allows us to reach T.H.E.’s indemni-
ﬁcation obligations because the duty to defend is broader
than the duty to indemnify. See Olson, 809 N.W.2d at 7. Spiel-
bauer does not argue that the district court’s decision on the
duty to defend was unripe. And where the district court has
found there is no duty to defend, the immediate legal conse-
quence is that there is also no duty to indemnify. See Choinsky,
938 N.W.2d at 555. This consequence is a product of Wiscon-
sin’s substantive law, which we are bound to apply in a diver-
sity case like this one. See Mayer v. Gary Partners & Co., 29 F.3d
330, 333 (7th Cir. 1994).
   Second, the facts before the district court do not support
Spielbauer’s position either. Ripeness doctrine is meant to
10                            Nos. 22-1143, 22-1170 & 22-1172

“prevent the courts, through avoidance of premature adjudi-
cation, from entangling themselves in abstract disagree-
ments.” Abbott Lab’ys v. Gardner, 387 U.S. 136, 148 (1967).
Whether an issue is ripe depends on the “ﬁtness of the issues
for judicial decision and the hardship to the parties of with-
holding court consideration.” Id. at 149. An issue is more
likely to be ﬁt for judicial review if it is purely legal rather
than factual. See id.
    In the insurance context, we have generally observed that
“decisions about indemnity should be postponed until the
underlying liability has been established.” Lear Corp. v. John-
son Elec. Holdings Ltd., 353 F.3d 580, 583 (7th Cir. 2003). That
preference reﬂects our concerns about wading into an abstract
dispute. See id. But the rule is not absolute. We have gone the
other way where indemniﬁcation issues did not hinge on re-
mote contingencies and facts. See Amling v. Harrow Indus.
LLC, 943 F.3d 373, 378–79 (7th Cir. 2019) (concluding that
“[t]here is nothing remote about a plaintiﬀ’s asking which of
two defendants she is currently suing is the right one to sue”
under the terms of an executed asset-purchase agreement);
Bankers Tr. Co. v. Old Republic Ins. Co., 959 F.2d 677, 680–81
(7th Cir. 1992) (ﬁnding an indemniﬁcation suit ripe where the
plaintiﬀ raised a legal issue by challenging the validity of a
settlement agreement between the insured and insurer that
limited the insurer’s indemniﬁcation obligations).
    But the dispute here was neither abstract nor remote.
Zdroik and Olson’s estate both sued Spielbauer and admitted
immediately to volunteer roles. If either party recovered any-
thing from Spielbauer, the state court would need to turn to
T.H.E.’s duty to indemnify generally and the application of
the Shooters Endorsement speciﬁcally. The federal district
Nos. 22-1143, 22-1170 & 22-1172                               11

court could settle that issue based on the parties’ admissions
and the text of the Shooters Endorsement. Because there was
no dispute that Zdroik and Olson were volunteers, the district
court’s conclusions hinged on policy interpretation—a legal
rather than factual issue. And at oral argument, the defend-
ants could not identify which evolving or unknown facts
would change the district court’s decision. There was no sug-
gestion, for instance, that the underlying liability trials might
reveal that Olson and Zdroik were bystanders or spectators,
not volunteers. Spielbauer’s coverage was therefore ripe for
review.
   For these reasons, we AFFIRM.