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COURT OF APPEALS DECISION DATED AND FILED June 17, 2014 Diane M. Fremgen Clerk of Court of Appeals |
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NOTICE |
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This opinion is subject to further editing. If published, the official version will appear in the bound volume of the Official Reports. A party may file with the Supreme Court a petition to review an adverse decision by the Court of Appeals. See Wis. Stat. § 808.10 and Rule 809.62. |
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APPEAL from a judgment of the circuit court for Milwaukee County: christopher r. foley, Judge. Affirmed.
Before Curley, P.J., Fine and Kessler, JJ.
¶1 PER CURIAM. Basil E. Ryan, Jr., d/b/a Ryan Management Inc., Basil E. Ryan, Jr.,
individually, Basil E. Ryan, III, and Blake Ryan (collectively, the Ryans)
appeal a declaratory and summary judgment in favor of American Family Mutual
Insurance Company. The circuit court
concluded that American Family had no duty to defend the Ryans against claims
alleged in a civil complaint filed by Pumpkin, Inc., Glen Roethle, and Susan
Joy Roethle.[1] We affirm.
BACKGROUND
¶2 According to the complaint, Pumpkin,
Inc. is a corporation in the business of providing crane equipment and crane
operators to third parties, Roethle is an employee of Pumpkin, Inc., and Susan
Joy Roethle is his wife. The complaint
further alleges that Pumpkin, Inc. contracted to provide Ryan, Jr. with
equipment and personnel during the period from November 2010 through December
2011. Pumpkin, Inc. and the Roethles state
six causes of action against the Ryans arising during the contract term: (1) breach of contract; (2) conversion; (3)
theft; (4) battery; (5) conspiracy to cause injury; and (6) malicious and
outrageous conduct warranting punitive damages.
The Ryans filed an answer denying the allegations, asserting
self-defense in regard to the battery, and stating counterclaims.
¶3 During
the time period described in the complaint, American Family insured the Ryans
under a continuous series of farm/ranch insurance policies. Upon receiving the complaint in this case,
American Family assumed defense of the Ryans and assigned outside counsel for
them. American Family then successfully
moved to intervene in the action, to bifurcate the proceedings, and to stay
litigation of the Ryans’ liability until the circuit court determined coverage
issues.
¶4 After
the parties conducted discovery, American Family moved for summary and
declaratory judgment. As relevant here, American
Family argued that it had no duty to defend the Ryans because the governing insurance
policies do not provide coverage for the intentional acts alleged by Pumpkin,
Inc. and the Roethles. The circuit court
agreed with American Family. Accordingly,
the circuit court granted American Family summary and declaratory judgment, and
the Ryans appeal.
DISCUSSION
¶5 Summary judgment is appropriate only
when no genuine dispute exists as to any material fact, and the moving party is
entitled to judgment as a matter of law.
Wis. Stat. § 802.08(2)
(2011-12).[2] Whether the circuit court properly granted
summary judgment is a question of law that we consider independently of the
circuit court’s determination. See Brown
Cnty. v. OHIC Ins. Co., 2007 WI App 46, ¶9, 300 Wis. 2d 547, 730
N.W.2d 446.
¶6 The
decision to grant or deny a declaratory judgment rests in the circuit court’s
discretion. Olson v.
Farrar, 2012 WI 3, ¶24, 338 Wis. 2d 215, 809 N.W.2d 1. When the circuit court’s exercise of
discretion turns on a question of law, however, we review the legal question de novo.
Id. The circuit court’s decision
to grant declaratory judgment here turned on the interpretation of an insurance
policy, which presents a question of law.
See id. We therefore review
the grant of declaratory judgment de novo. See
id.
¶7 The
Ryans assert that American Family has a duty to defend them against the six
causes of action alleged by Pumpkin, Inc. and the Roethles. “[A]n insurer must defend all suits where
there would be coverage if the allegations were proven, even if the allegations
are ‘utterly specious.’” Id.,
¶29 (citation omitted). Moreover, “[i]f
an insurance policy covers one claim, the insurer must provide a defense for
the entire action.” State v. GE-Milwaukee, LLC,
2012 WI App 5, ¶6, 338 Wis. 2d 349, 808 N.W.2d 734. On appeal, the Ryans rely on a theory that
American Family must defend them because the insurance policies at issue
provide coverage for the battery claim.
¶8 “An
insurer’s duty to defend its insured is determined by comparing the allegations
of the complaint to the terms of the insurance policy.” Estate of Sustache v. American Family Mut.
Ins. Co., 2008 WI 87, ¶20, 311 Wis. 2d 548, 751 N.W.2d 845. The nature of the claim is controlling. See id.
¶9 The
relevant contractual terms are not in dispute.
American Family agreed to provide coverage for an “occurrence,” defined
in the policies as an “accident.”
Further, no dispute exists that the policies exclude coverage “for
damages due to bodily injury or property damages expected or intended from the
stand-point of the insured.” As to the
nature of the battery claim, the complaint alleges that Roethle was at the Ryan
property for business purposes on June 1, 2011, when Ryan, Jr. “intentionally
engaged in battery upon [] Roethle, with intent to cause bodily harm to him.”
¶10 Because
the duty to defend is triggered by the allegations in the complaint, the duty
is initially assessed pursuant to the “four corners” rule. Id., ¶27. The rule provides: “‘when a complaint alleges facts that, if
proven, would constitute a covered claim, the insurer must appoint defense
counsel for its insured without looking beyond the complaint’s four corners.’” Id. (citation and brackets
omitted). In this case, of course,
American Family did appoint counsel and provide a defense for the Ryans, and
the materials for and against summary and declaratory judgment include not only
the complaint and the insurance policies but also affidavits and deposition
testimony. Under these circumstances,
the purpose of the four corners rule is served and the rule is not further
implicated. See Olson, 338 Wis. 2d 215, ¶70. Accordingly, extrinsic evidence may be
considered when determining whether American Family would provide coverage if Pumpkin,
Inc. and the Roethles prove the battery claim.
See id., ¶39.
¶11 The
extrinsic evidence presented by the parties includes the deposition testimony offered
by Roethle and Ryan, Jr. in regard to their June 1, 2011 encounter. Roethle testified that Ryan, Jr. “pound[ed
Roethle] in the side of the head.”
Roethle added that he was “n[o]t claiming any of this was
accidental.” Ryan, Jr. testified that he
had “a struggle” with Roethle when Roethle arrived at the Ryan property. As summarized in the Ryans’ appellate brief,
Ryan, Jr. said that he “tried to keep Mr. Roethle from exiting his
vehicle.... As Mr. Roethle continued to
try to exit the vehicle, Mr. Ryan[, Jr.] continued to push him back in.” The Ryans characterize Roethle as “an
uninvited trespasser” and the encounter between Roethle and Ryan, Jr. as “a
shoving match.”
¶12 The
Ryans contend that the differing descriptions of the June 1, 2011 incident
render summary and declaratory judgment inappropriate and require a trial on
the coverage issue. They insist that if
they are afforded such a trial, the fact-finder might believe Ryan, Jr. and
conclude that the June 1, 2011 incident was a covered occurrence because his
actions were privileged as self-defense or as a reasonable effort to “remove an
uninvited trespasser from his property.”
We reject this approach. The law
is clear that “[t]he insurer’s duty to continue to defend is contingent upon
the court’s determination that the insured has coverage if the plaintiff proves his case.”
See Sustache, 311 Wis. 2d 548, ¶29 (emphasis added). The materials submitted here reflect that the
Ryans do not have coverage if Pumpkin, Inc. and the Roethles prove the
intentional battery that they have alleged.
We therefore conclude that American Family has no further obligation to defend
the Ryans.
¶13 Our
conclusion is dictated by Sustache. There, the supreme court considered an
insurance company’s duty to defend a suit in which the insured was accused of
committing an intentional battery causing death, and the insured answered that
he acted in self-defense. Id.,
¶¶6-7. In Sustache, as here, the
policy provided coverage for “an occurrence,” defined as “an accident,” and the
policy, as here, excluded coverage for intentional bodily injury. See id., ¶¶9-10. The insurer in Sustache, again as here,
provided an initial defense and engaged in discovery under a reservation of
rights, then moved for summary judgment declaring that the insurer had no duty
to defend because the policy excluded coverage.
See id., ¶¶7,12.
¶14 The
supreme court in Sustache compared the coverage provided under the policy to the
allegations in the complaint, supplemented by affidavits and deposition
testimony. See id., ¶¶30, 51. The court
determined that the policy term “accident” referred to “an unintended and
unforeseen injurious occurrence.” See id.,
¶¶32, 54. The court further determined
that the plaintiff in Sustache did not allege injury from
an “accident” when claiming damages that flowed from the insured’s “volitional
assault that was intended, anticipated, and expected.” See id., ¶53. Because “the plaintiffs’ suit was not brought
... for damages caused by an occurrence to which the policy applies, [the
insurer] ha[d] no duty to continue to defend.”
Id., ¶60 (quotation marks and one set of brackets omitted).
¶15 In
the instant case, Pumpkin, Inc. and the Roethles allege that Ryan, Jr.
intentionally assaulted Roethle. The
allegation is inconsistent with the term “accident.” See
id.,
¶54. Sustache teaches that
American Family therefore has no duty to continue to defend.
¶16 The
Ryans respond by pointing to language in another case, Olson. There, the supreme court observed: “[s]ometimes ... the facts bearing on coverage
are disputed, and coverage cannot be determined until these factual disputes
are resolved in the circuit court.” Id.,
338 Wis. 2d 215, ¶36. The Ryans
believe that this statement supports their view that, because they dispute the
accuracy of the battery allegation, they are entitled to a continuing defense from
American Family and a coverage trial to resolve the dispute. The Ryans misconstrue Olson. While that case acknowledges the unremarkable
reality that circuit courts must sometimes resolve factual disputes relevant to
coverage, Olson expressly confirms the long-standing Wisconsin rule that
“‘[t]he duty of defense depends on the nature of the claim and has nothing to
do with the merits of the claim.’” Id.,
¶29 (citing Elliott v. Donahue, 169 Wis. 2d 310, 321, 485 N.W.2d 403
(1992)). Thus, under Olson,
the Ryans’ contention that a factual dispute exists about the merits of the
battery claim neither demonstrates a duty by the insurer to defend nor requires
a trial to resolve coverage. See id.
¶17 The
Ryans nonetheless insist that “[a]s in Olson, this case should be remanded
for a coverage trial.” Their position is
perplexing given the supreme court’s resolution of the issues in Olson
and the marked dissimilarity between that case and this one. In Olson, which involved a property
damage dispute, the supreme court examined a circuit court’s decision to
relieve an insurer of the duty to defend and determined that the circuit court
had based its decision on ambiguous language in the applicable insurance
policy. See id., ¶¶20, 71. Because well-settled rules of insurance
policy interpretation require construing ambiguous policy language in favor of
an insured seeking coverage, the Olson court rejected the circuit
court’s analysis and construed two ambiguous policy exclusions in favor of
coverage. See id., ¶¶42, 71. This aspect of Olson offers neither support for the Ryans nor guidance for this court
because the parties here do not contend that any material provisions of the governing
policies are ambiguous.
¶18 The
Olson
court next considered a third policy exclusion and observed that “there
may be genuine issues of material fact” as to that exclusion, but, as Olson
explains, the circuit court failed to address this exclusion during the
summary judgment proceedings. See id.,
¶69. The supreme court therefore
remanded the matter, not for a coverage trial as the Ryans claim, but for
further proceedings to address the exclusion that the circuit court had previously
disregarded. Id., ¶¶69, 72. This final aspect of Olson offers no
assistance in resolving issues in the instant case because the parties do not
contend that the circuit court overlooked an applicable policy provision.
¶19 In
short, Olson involved an ambiguous insurance policy and an incomplete
circuit court review, conditions that are not present here. Accordingly, nothing in Olson suggests that
further factual exposition is required to determine whether American Family has
a continuing duty to defend the Ryans.
The undisputed material facts—including the terms of the policies, the
allegations in the pleadings, and the testimony submitted to the circuit
court—demonstrate that, as a matter of law, the Ryans do not have coverage if
Pumpkin, Inc. and the Roethles prove their claim that Ryan, Jr. intentionally
battered Roethle. See Sustache, 311
Wis. 2d 548, ¶22. “Where it is
clear that the policy was not intended to cover the claims asserted, the
inquiry ends.”[3] Id., ¶57.
¶20 Before
we close, we acknowledge that the Ryans’ appellate brief includes an additional
contention. Specifically, the Ryans
assert that American Family must continue to defend them because, they say, at
a trial to resolve their liability, the circuit court might decide to include
negligence questions on the verdict. See Wis.
Stat. § 802.09(2) (providing that issues not raised in the
pleadings but tried by the parties shall be treated as if raised in the
pleadings). To preserve a claim for
appellate review, however, a litigant must first present the claim to the
circuit court and must do so in a way that ensures the circuit court
understands it is asked to make a ruling.
See Ladwig v. Ladwig, 2010 WI App 78, ¶28 n.14, 325 Wis. 2d
497, 785 N.W.2d 664. The Ryans fail to
show that they cited Wis. Stat. § 802.09(2)
in circuit court, much less that they presented the statute as a basis to deny American
Family’s motion for summary and declaratory judgment. Accordingly, we decline to address the
issue. See Ladwig, 325
Wis. 2d 497, ¶28 n.14.
By
the Court.—Judgment affirmed.
This opinion will not be published. See Wis. Stat. Rule 809.23(1)(b)5.
[1] In the remainder of this opinion, we refer to Glen Roethle by his surname and we refer to Susan Joy Roethle by her full name.
[2] All references to the Wisconsin Statutes are to the 2011-12 version unless otherwise noted.
[3] Although it is not necessary for resolution of this appeal, we add that the American Family insurance policies here would not provide coverage for damages resulting from the altercation on June 1, 2011, even if Pumpkin, Inc. and the Roethles adopted Ryan, Jr.’s description of the incident as a “shoving match” between a trespasser and a property owner. “‘[A] result, though unexpected, is not an accident; the means or cause must be accidental.’” Estate of Sustache v. American Family Mut. Ins. Co., 2008 WI 87, ¶53, 311 Wis. 2d 548, 751 N.W.2d 845 (citations omitted). The testimony that Ryan, Jr. offered in his deposition reflects intentional acts, not “‘an event or condition occurring by chance or arising from unknown or remote causes.’” See id., ¶53 (citations omitted). Thus, his testimony does not describe an accident and fails to suggest that the June 1, 2011 incident gave rise to a covered claim, notwithstanding his contention that his actions were privileged because he acted either in self-defense or to repel a trespasser. As the Sustache court notes, “even if privileged, ‘an injury deliberately caused by an act of self-defense is still not an injury that was caused by an accident.’” Id., ¶53 n.13 (citation omitted).