Wisconsin Legal Update

WDC Journal Edition: Summer/Fall 2007
By: Bernard T. McCartan
  • Joint & Several Liability; Common Scheme or Plan; §895.045(2), Wis. Stats.

Richards v. Badger Mut. Ins. Co.

2006 WI App 255, 727 N.W.2d 69

Petition for review granted.

Section 895.045(2), Wis. Stats., provides that “if 2 or more parties act in accordance with a common scheme or plan, those parties are jointly and severally liable for all damages resulting from that action….” Where an adult agreed to procure alcohol for two minors, after which one minor drove while intoxicated and caused the death of the plaintiff’s husband, there was no common scheme or plan that would trigger the application of §895.045(2) and render the adult procurer jointly and severally liable. The statutory reference to “common scheme or plan” refers to a scheme or plan to accomplish the result that caused the injury. Here the adult participated in a plan to procure alcohol for consumption by the minors, not a plan for the minor to operate a vehicle while intoxicated.

  • Workers Compensation; Exclusive Remedy Provision; Operation of Motor Vehicle Exception

McNeil v. Hansen

2007 WI 56, --- N.W.2d ---

The “operation of a motor vehicle” exception to the exclusive remedy provision of §102.03(2), Wis. Stats., did not apply where two employees were performing a radiator flush on a vehicle, which was connected to a machine in the garage such that it could not then be operated on the street, and one employee attempted to start the car while standing outside it, causing the vehicle to lurch forward and strike the co-employee.

  • Workers Compensation; Independent Contractor; Affirmative Negligence Exception; Joint & Several Liability; Common Scheme or Plan; §895.045(2), Wis. Stats.

Danks v. Stock Building Supply

2007 WI App 8, --- N.W.2d ----

Petition for review pending.

Where the employee of an independent contractor is injured on the job, the person who hired the independent contractor is not normally liable in tort to the injured employee in the absence of affirmative negligence on the part of that person which increases the risk to the employee. Under the facts of this case, there was no affirmative act of negligence upon which to base tort liability. Further, §895.045(2), Wis. Stats., provides no independent basis for liability on the part of the person who hired the independent contractor where that person has no liability to the claimant under substantive law applicable to the case. Section 895.045(2), simply creates joint and several liability among two or more defendants who are each legally liable to the claimant when they have engaged in a “common scheme or plan” that results in injury.

  • CGL Coverage; Absolute Pollution Exclusion; Carbon Monoxide

Langone v. American Family Mut. Ins. Co.

2007 WI App 121, 731 N.W.2d 334

Petition for review filed.

Carbon monoxide is not a pollutant under the absolute pollution of a CGL policy. Accordingly, a CGL policy issued to a landlord covered claims arising out of the serious injury to one tenant and death of another tenant caused by carbon monoxide build-up in an apartment due to simultaneous operation of a fireplace and a boiler. In reaching its decision, the Court of Appeals considered the Wisconsin Supreme Court’s treatment of the absolute pollution exclusion in Peace v. Northwestern National Insurance Co., 228 Wis.2d 106, 122, 596 N.W.2d 429 (Wis. 1999) and Donaldson v. Urban Land Interests, Inc., 211 Wis.2d 224, 233, 564 N.W.2d 728 (Wis. 1997). Ultimately, it held that the situation presented in this case was more akin to the situation in Donaldson than that in Peace.

  • Vehicle Liability Coverage; Negligent Operation; Negligent Entrustment; Separate Limits of Liability; Omnibus Statute - §632.32(3), Wis. Stats.; Anti-Stacking Statute - §632.32(5), Wis. Stats.

Progressive Cas. Ins. Co. v. Bauer

2007 WI App 122, 731 N.W.2d 378

A motorcycle passenger injured in a motorcycle accident sought damages against both the motorcycle’s operator and its owner alleging separate theories of liability, negligent operation against the operator and negligent entrustment against the owner. The owner’s liability carrier sought declaratory judgment at it owed only one per-person limit of liability. The court held that both the owner and the operator were entitled to a full limit of liability under Wisconsin’s Omnibus Statute, §632.32(3)(a), Wis. Stats., because separate acts of negligence were alleged against each. It was also held that the anti-stacking provisions found at §632.32(5)(f), Wis. Stats., did not apply to this case.

  • Recreational Immunity Statute - §895.52, Wis.Stats.; Maintenance of Land; Occupier of Land

Held v. Ackerville Snowmobile Club, Inc.

2007 WI App 43, 730 N.W.2d 428

Petition for review filed.

The Recreational Immunity Statute, §895.52, Wis.Stats., applied to bar tort liability on the part of the defendant snowmobile club for injuries sustained by snowmobilers who struck a grooming sled left on a trail. Here, the trail was used and maintained by the snowmobile club during the snowmobile season with the permission of the owners of the private property through which it ran. The grooming sled was used for trail maintenance and did not have to be in active use at the time of the accident for the statute to apply. The snowmobile club was an “occupier” of the land under the statute as construed in Leu v. Price County Snowmobile Trails Ass'n, 2005 WI App 81, 280 Wis.2d 765, 695 N.W.2d 889 (Wis.App. 2005), review denied, 2005 WI 136, 285 Wis.2d 629, 703 N.W.2d 379 (Wis. 2005).

  • Policy Rescission – Burden of Proof; Wrongful Rescission - Damages

Pum v. Wisconsin Physicians Service Ins. Corp.

2007 WI App 10, 727 N.W.2d 346

To rescind an insurance policy, an insurer must prove all of the statutory elements under §631.11(1)(b), Wis. Stats., by clear and convincing evidence. Damages recoverable for wrongful policy rescission must return the wronged party to his/her status before the rescission and are not necessarily limited to the amounts payable under the contract.

  • Excess Liability Coverage; Premium for Specific Risk

Bormann v. Sohns

2007 WI App 12, 727 N.W.2d 341

An excess liability policy did not provide automobile liability coverage where it showed that premiums were paid for homeowners and boat liability, but not for auto liability and the policy stated that auto liability coverage would only be provided if a premium was paid for such coverage.

  • Governmental Liability; Notice of Disallowance; Strict Compliance

Pool v. City of Sheboygan

2007 WI 38, --- N.W.2d ----

Governmental bodies must strictly comply with the service requirements of §893.80(1g), Wis.Stats., when serving notice of disallowance of a claim in order to claim the benefit of the shorter six-month limitation period for starting suit. Where the claimant’s daughter rather than the claimant signed as recipient of a certified letter conveying notice of disallowance, the service was insufficient.

  • Homeowners Liability Coverage; Duty to Defend; Bad Faith; Fairly Debatable Standard

Liebovich v. Minnesota Ins. Co.

728 N.W.2d 357, 2007 WI App 28

Petition for review granted.

An insured under a special homeowners liability policy was sued for damages arising out of alleged violations of setback requirements in the construction of the insured’s home. The policy was marketed to a high net worth clientele and purported to provide personal injury coverage for “wrongful entry” arising out of an “offense” or “accident.” The court found that a fairly debatable issue existed as to whether the policy in fact provided coverage for the insured’s exposure in the case. Under those circumstances the insurer was found to have breached its duty to defend the insured when it refused to defend the suit, but was not liable for bad faith in so doing. Under the “fairly debatable” standard, the insured received the benefit of the doubt on the question of the duty to defend, but the insurer received the benefit of the doubt on the question of bad faith. Accordingly, the insurer lost the right to contest coverage and was liable to the insured for (1) the damages awarded against the insured in the underlying suit, (2) the cost of defending the underlying suit, and (3) the insured’s attorney fees and costs for establishing his right to a defense.

  • Subrogation; Made Whole Doctrine

Muller v. Society Insurance

2007 WI App 44, 730 N.W.2d 668

Petition for review filed.

Where insureds and their property insurer each had claims against a tortfeasor arising out of a fire loss and the tortfeasor had sufficient liability limits to cover both claims, each party could manage and settle their respective claims as they saw fit, and the insured could not compel the insurer to disgorge part of its subrogation recovery on the theory that the insured’s settlement with the tortfeasor did not make them whole. While a subrogated insurer cannot generally recover until its insured is made whole, that rule is governed by equitable principles applied on a case-by-case basis. Here the insured and the insurer were not competing for limited funds and the insureds should not be able to take a part of the subrogation recovery after they made an independent decision to settle for less than the value of their claim and they had the first opportunity to recover their losses.

  • CGL Coverage; Advertising Injury; Copyright Infringement; Trademark Infringement

Acuity v. Bagadia

2007 WI App 133, --- N.W.2d ---

Petition for review filed.

Where the term “advertising” in a CGL policy could reasonably be construed either narrowly or broadly, the court construed it broadly in favor of the insured. The insured was a software liquidator that marketed and sold copyrighted software without permission. The court found that the insured violated the copyright of the software company that developed the software by offering samples of available software to potential customers and that doing so was a form of advertising. In addition, the use by the insured of the trademarked name of the software in other forms of advertising infringed on the software developer’s trademark. Since these offenses occurred in the course of the insured’s advertising activities, there was coverage under the CGL policy issued to the insured.

  • Economic Loss Doctrine; Other Property Exception; Integrated Systems Test; Disappointed Expectations Test

Foremost Farms USA Co-op. v. Performance Process, Inc.

2006 WI App 246, 726 N.W.2d 289

The manufacturer of a defoamer used to reduce foaming during production of dairy products was sued by a maker of dairy products for damages to the latter’s dairy products allegedly caused by contaminants in the defoamer. The court held that questions of fact precluded summary judgment in favor of the manufacturer. The case contains a concise summary of the economic loss doctrine and the relationship among the “other property” exception, the “integrated systems” test and “disappointed expectations” test. Briefly, the economic loss doctrine bars tort claims for damages when a product fails to meet a purchaser’s expectations, except when the damage is to property other than the product itself (the “other property” exception). However, when a defective product is a component integrated into a larger product or system, to which it causes damage, the larger product or system is not considered “other property” (the “integrated systems” test). Notwithstanding that, if the defective product is purchased to perform a particular function without integration into another product and it fails to perform as expected, causing damage to the other product, the economic loss doctrine can still be triggered even though the defective product is not integrated into the other product (the “disappointed expectations” test).

  • Economic Loss Doctrine; Real Estate; Misrepresentation

Below v. Norton

2007 WI App 9, --- N.W.2d ---

The purchasers of real estate sued the seller alleging five causes of action for misrepresentation: (1) intentional misrepresentation; (2) misrepresentation based on Wis. Stat. §§ 895.80 and 943.20(1)(d); (3) false advertising misrepresentation under Wis. Stat. § 100.18; (4) strict responsibility misrepresentation; and (5) negligent misrepresentation. The court held that all of the claims were barred by the economic loss doctrine except the third one, based on a violation of §100.18, Wis. Stats., citing Kailin v. Armstrong, 2002 WI App 70, 252 Wis.2d 676, 643 N.W.2d 132.