Court Opinion

ID: 8203523
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:49:31.933373+00
Date Added: 2024-06-11T16:41:03.086790
License: Public Domain

N. PATRICK CROOKS, J.
¶ 58. (dissenting). In my view, this case is controlled by a straightforward interpretation of the insurance policy language but has been complicated by arguments concerning the application of the independent concurrent cause rule. The majority opinion correctly begins with the policy language but takes a wrong turn by concluding that the circuit court's determination that Jesse Raddatz (Raddatz) is not an "insured person" under the policy is equivalent to a finding that his alleged negligent operation of the car is an excluded risk. The policy language explicitly provides coverage for Siebert's claim against Wisconsin American Mutual Insurance Company (Wisconsin American) for Koehler's alleged negligent entrustment, and no exclusion bars coverage. The analysis ends there. Therefore, I respectfully dissent.
¶ 59. This case involves direct action claims against Wisconsin American by Jessica Siebert and her mother Lynette Siebert, referred to collectively as "Siebert." Jessica Siebert suffered injuries in an auto accident involving an insured car Raddatz was driving with the permission of the insured's daughter, Jessica Koehler (Koehler). The car belonged to Koehler's father and was insured under an automobile liability policy issued by Wisconsin American.
¶ 60. Siebert's first claim against Wisconsin American, alleging that Raddatz negligently operated Koehler's father's car causing Siebert's injuries, was premised upon coverage for Raddatz as an "insured person" because Koehler gave him permission to use the car. In the coverage phase of a bifurcated trial, regarding whether Raddatz exceeded the scope of Koehler's permission, the following facts were developed. Koehler lent her father's car to Raddatz on the condition that he use it only to go to the Food Pantry and come right *570back. Instead, Raddatz picked up friends, including Jessica Siebert, to go to Rhinelander. On the way to Rhinelander, Raddatz got into an accident in which he was killed and Jessica Siebert was injured. The circuit court determined, based on the jury's special verdict finding, that Raddatz is not an "insured person" under the policy because the definition of "insured person" excludes a person using an insured car who exceeds the scope of the permission. Presented with the following special verdict question, the jury responded "yes": "At and immediately before the time of the accident, did Jesse Raddatz exceed the scope of permission that he was provided by Jessica Koehler to use the 1996 Chevrolet Lumina?"
¶ 61. As a result, Siebert amended the complaint against Wisconsin American to add a second claim premised upon coverage for Koehler's alleged negligent entrustment of her father's car to Raddatz. It is coverage for this claim that is at issue in this case. The circuit court granted summary judgment in favor of Wisconsin American, concluding that there was no coverage for Siebert's negligent entrustment claim. Because there are no disputed issues of material fact regarding coverage for this claim, this court reviews whether Wisconsin American's policy provides coverage as a matter of law. Kremers-Urban Co. v. Am. Emp'rs Ins. Co., 119 Wis. 2d 722, 733-34, 351 N.W.2d 156 (1984).
¶ 62. The majority appropriately begins with the language of the policy to determine whether coverage exists for Siebert's claim based on Koehler's alleged negligent entrustment. The interpretation of an insurance policy is a three-step process. Arnold E Anderson, Wisconsin Insurance Law § 1.25, at 34 (6th ed. 2010). The court examines, first, whether there is an initial grant of coverage by applying the facts to the policy's *571insuring agreement; second, whether any exclusions preclude coverage; and third, whether any exception to the exclusion reinstates coverage. Id. If the policy language provides coverage for the claim, and no exclusions apply, then coverage exists for that claim. "[W]hen the terms of an insurance policy are plain on their face, the policy must not be rewritten by construction." Id. (quoting Smith v. Atl. Mut. Ins. Co., 155 Wis. 2d 808, 811, 456 N.W.2d 597 (1990)). "Ambiguities in coverage are to be construed in favor of coverage, while exclusions are narrowly construed against the insurer." Smith, 155 Wis. 2d at 811.
¶ 63. The Wisconsin American policy provides in relevant part:
We will pay damages an insured person is legally liable for because of bodily injury and property damage due to the use of a car or utility trailer.
Insured person or insured persons means:
1. You or a relative.
2. Any person using your insured car.
But the following are not insured persons:
3.Any person using a vehicle with the permission of the person having lawful possession, but who exceeds the scope of that permission.
¶ 64. Applying the above policy language, there is coverage for Siebert's claim that Koehler allegedly negligently entrusted the car to Raddatz, causing Siebert's *572injuries. As the majority notes, it is undisputed that several elements of Siebert's claim for Koehler's alleged negligent entrustment are covered by the policy. The majority and the parties agree (1) that Koehler is an "insured person" because it is her father's policy — so under the policy language she is an "insured person" as a relative of the insured — and (2) that Koehler's father gave her possession of the car. It is also undisputed that Jessica Siebert suffered bodily injuries and the car involved in the accident was an insured car. Additionally, if Siebert can prove the elements of her negligent entrustment claim, Koehler would be legally liable for Jessica Siebert's bodily injuries caused by Raddatz's use of Koehler's father's car. The policy language does not require that the "insured person" be the person using the car, so under Siebert's negligent entrustment claim, it is Raddatz's use of the car for which the insured, Koehler, may be legally liable. Thus, the policy provides coverage for Siebert's negligent entrustment claim.
¶ 65. The only policy exclusion that is even arguably relevant is the one from the definition of "insured person" as a person using the insured car "who exceeds the scope of [the] permission." However, the jury has answered this in regard to Raddatz. Since Koehler is the "insured person" for the purposes of Siebert's negligent entrustment claim against Wisconsin American, that exclusion does not preclude coverage. As the majority notes and the parties agree, Koehler is clearly an insured person under the policy.
¶ 66. The claim we consider is Siebert's claim against Wisconsin American that Koehler allegedly negligently entrusted her father's car to Raddatz. Upon finding coverage and no relevant exclusions under the clear policy language, the analysis of coverage for that claim is complete. The majority erroneously concludes *573that the circuit court's determination that Raddatz is not an "insured person" under the policy means that Raddatz's alleged negligent operation is an excluded risk.
¶ 67. Regarding Siebert's initial claim that Raddatz, as an "insured person," was legally liable for his alleged negligent operation of Koehler's car, the circuit court determined that Raddatz was not an "insured person" based on the jury's finding that he exceeded the scope of Koehler's permission to use the car. The majority concludes that "[b]ecause Raddatz does not qualify as an 'insured person,' his alleged negligent operation of the vehicle falls outside the scope of the policy's initial grant of coverage. Stated otherwise, Raddatz's alleged negligent operation of the vehicle constitutes an excluded risk under the policy." Majority op., ¶ 36 (footnotes omitted).
¶ 68. Equating the jury's finding that Raddatz exceeded the scope of Koehler's permission with a finding that Raddatz's alleged negligent operation of the vehicle is an excluded risk is unsupported by the policy language or by controlling law.
¶ 69. Regarding Siebert's subsequent claim that Koehler, as an "insured person," is legally liable for allegedly negligently entrusting her father's car to Raddatz, the jury's finding on the initial claim — that Raddatz used the car outside the scope of Koehler's permission — is irrelevant. To establish negligent entrustment, Siebert must prove that Koehler knew or should have known that Raddatz intended or was likely to use her father's car "in such a manner as to create an unreasonable risk of harm to others." Bankert v. Threshermen's Mut. Ins. Co., 110 Wis. 2d 469, 476, 329 N.W.2d 150 (1983) (quoting Restatement (Second) of Torts § 308, at 100 (1965)). The Bankert court held that *574the underlying negligent act of the entrustee is an indispensible element of a negligent entrustment claim. Id. at 476-77.
¶ 70. This policy does not exclude the risk of Raddatz's alleged negligent operation when Koehler, as the "insured person," allegedly negligently entrusts an insured car to him. The circuit court's determination in the coverage phase of the trial on Siebert's claim against Wisconsin American for Raddatz's alleged negligent operation of the car was only a determination that Raddatz was excluded from the definition of "insured person" under the policy. It was not a finding that Raddatz was not negligent or that his act of negligence was not covered under the policy. The jury's finding and the circuit court's determination indicate not that Raddatz's alleged negligent operation was an "excluded risk" or "not covered" under the policy, but rather that Raddatz, as an "insuredperson," was not covered for his potential separate legal liability because he exceeded the scope of his permission from Koehler.
¶ 71. The majority concludes that a determination that a policy does not cover someone as an "insured person" is essentially a determination that there is no coverage for any of that person's acts and that the person's negligence is thus an excluded risk. This conclusion is premised upon the assumption that all policy exclusions are created equal. To the contrary, a policy that does not provide coverage for a claim because the allegedly negligent actor is not an "insured person" has a very different effect than a policy that excludes particular acts from all coverage under any claim. This is evident by comparing the policy language at issue here with the very different policy language at issue in Bankert, where this court held that the negligent en*575trustment claim could not proceed because the underlying negligent operation was an excluded risk.
¶ 72. The farmowners policy in Bankert was an occurrence-based policy that provided coverage for certain occurrences, defined as accidents that took place on the farm. Id. at 478-79. It explicitly excluded any coverage under the policy for any automobile accident that occurred away from the farm. Id. at 479. This is similar to other occurrence-based comprehensive general liability policies and distinct from automobile policies, which cover auto accidents generally. See id. at 479-80 (noting that construing the policy to provide coverage "would convert the farmowners liability policy into an automobile policy") (emphasis added). The policy exclusion in Bankert provided in relevant part:
This policy does not apply . . .
(b) under any of the coverages, to the ownership, operation, maintenance or use, including loading and unloading of
(1) automobiles while away from, the premises or the ways immediately adjoining.
Id. at 479 (emphasis added).
¶ 73. As it ought to be, the holding in Bankert was inextricably tied to the language of that particular policy exclusion. The motorcycle accident in Bankert took place off of the farm ("away from the premises"), but the plaintiff injured in that accident sought coverage for the parents' alleged negligent entrustment of the motorcycle to their son, the driver. Id. at 472. The policy exclusion in Bankert was explicit and wholesale, providing that the "policy does not apply" for accidents "away from the premises." Id. at 479. In this case, the policy excludes, only from the definition of "insured *576person," a person using an insured car who exceeds the scope of the permission. The application of the exclusion in Bankert created an excluded risk, while in this case the exclusion leads only to a lack of coverage for Raddatz as an "insured person." Raddatz's alleged negligent operation is still covered under a claim that Koehler, as the "insured person," allegedly negligently entrusted her father's car to Raddatz.
¶ 74. As we have noted previously, "[a]mbiguities in coverage are to be construed in favor of coverage, while exclusions are narrowly construed against the insurer." Smith, 155 Wis. 2d at 811. In this case, where the language in the policy indicates that coverage exists except for a claim premised upon Raddatz as an insured person, this court must interpret the policy in favor of coverage. It is Wisconsin American's argument regarding the independent concurrent cause rule that engenders unnecessary confusion in this case.
¶ 75. Unlike in Bankert, no excluded risk is implicated by Siebert's claim against Wisconsin American for Koehler's alleged negligent entrustment of her father's car to Raddatz. Thus, the independent concurrent cause rule should not be at issue in this case. "The independent concurrent cause rule operates to extend coverage 'to a loss caused by the insured risk even though the excluded risk is a contributory cause, [w]here a policy expressly insures against loss caused by one risk but excludes loss caused by another risk." Estate of Jones v. Smith, 2009 WI App 88, ¶ 5, 320 Wis. 2d 470, 768 N.W.2d 245 (emphasis added).
¶ 76. The majority summarily reaches the erroneous conclusion that the jury's finding that Raddatz exceeded the scope of Koehler's permission to use the car means that his alleged negligent operation is an excluded risk, by comparison to other negligent en*577trustment cases such as Bankert, where starkly different policy exclusions were applied. This error is compounded by the majority's reliance on the independent concurrent cause rule to bar coverage, which takes up a large part of the analysis. As noted above, the independent concurrent cause rule extends coverage; the rule does not bar coverage where the policy language provides it, nor does it serve as a means to create an excluded risk.
¶ 77. As explained above, in Bankert, the allegedly negligent act itself — driving a motorcycle off of the farm — was entirely excluded from any policy coverage. Bankert, 110 Wis. 2d at 480. The Bankert court concluded that there was no coverage for a negligent entrustment claim when the negligent act or occurrence was excluded because that act was a necessary component of the negligent entrustment claim. Id. at 478-80. In other words, after Bankert, the independent concurrent cause rule cannot extend coverage to a negligent entrustment claim if, for example, the policy language provides that the underlying negligent act— driving a vehicle away from the farm property — is an excluded risk. This holding is relevant to this case only if Raddatz's alleged negligent operation of Koehler's father's car is an excluded risk. As explained above, it is not. There is coverage under Wisconsin American's policy for Siebert's claim that Koehler negligently entrusted her father's car to Raddatz.
¶ 78. As the majority notes, "[b]ased upon its earlier determination that the insurance policy issued by Wisconsin American did not cover the driver's alleged negligent operation of the vehicle, the circuit court concluded that the policy likewise does not cover the plaintiffs' negligent entrustment claim." Majority op., ¶ 1. Based on the above analysis, I am satisfied that *578the circuit court's determination that there is no coverage for Siebert's negligent entrustment claim is wrong as a matter of law.
¶ 79. Because I would hold that the policy provides coverage for Siebert's negligent entrustment claim, I also briefly address Wisconsin American's argument that claim or issue preclusion bars Siebert's claim. The majority does not address these arguments because of its contrary coverage determination. Majority op., ¶ 6.
¶ 80. Issue preclusion prevents "relitigation in a subsequent action of an issue of law or fact that has been actually litigated and decided in a prior action." N. States Power Co. v. Bugher, 189 Wis. 2d 541, 550, 525 N.W.2d 723 (1995). Claim preclusion bars the relitigation of claims that were decided in an earlier action between the same parties or the litigation of claims that could have been raised in the earlier case. Id. A claim is barred where (1) the same parties or their privies are involved in both actions, (2) the causes of action are identical, and (3) there has been "a final judgment on the merits." Id. at 551.
¶ 81. It is important to remember that there has been no trial, and thus no final judgment, on the merits of either claim in this case. The jury trial was limited to the narrow question of whether Raddatz was an "insured person" under the policy. The circuit court concluded that Raddatz was not an "insured person" since the jury found that he exceeded the scope of Koehler's permission. None of the issues of law or fact — neither those regarding Koehler's alleged negligent entrustment, nor those regarding Raddatz's alleged negligent operation— has been litigated or decided. Therefore, neither issue preclusion nor claim preclusion bars Siebert's action against Wisconsin American for Koehler's alleged negligent entrustment of her father's car to Raddatz.
*579¶ 82. For the reasons set forth herein, I respectfully dissent.
¶ 83. I am authorized to state that Chief Justice SHIRLEY S. ABRAHAMSON and Justice ANN WALSH BRADLEY join this dissent.