Grotelueschen by Doherty v. American Family Mut. Ins. Co., 90-2571

• Decision Date: 19 November 1992
• Docket Number: No. 90-2571,90-2571
• Citation: 171 Wis.2d 437,492 N.W.2d 131
• Court: Wisconsin Supreme Court
• Parties: Stephanie GROTELUESCHEN, by her Guardian ad Litem, Joseph G. DOHERTY, Keith T. Grotelueschen and Roxanne Grotelueschen, Plaintiffs-Respondents-Petitioners, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Defendant-Appellant, d Ronald E. Dimmer, Saukville Plumbing, Inc., and General Casualty Company of Wisconsin, Defendants, Cera-Mite Corporation, Defendant-Respondent-Petitioner.

Page 131

492 N.W.2d 131

171 Wis.2d 437

Stephanie GROTELUESCHEN, by her Guardian ad Litem, Joseph G.

DOHERTY, Keith T. Grotelueschen and Roxanne

Grotelueschen, Plaintiffs-Respondents-Petitioners, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY,

Defendant-Appellant, ^d

Ronald E. Dimmer, Saukville Plumbing, Inc., and General

Casualty Company of Wisconsin, Defendants,

Cera-Mite Corporation, Defendant-Respondent-Petitioner.

No. 90-2571.

Supreme Court of Wisconsin.

Argued Sept. 1, 1992.

Decided Nov. 19, 1992.

For the plaintiffs-respondents-petitioners there were briefs by Joseph G. Doherty, Patrick R. Griffin and Bunk, Doherty & Griffin, S.C., West Bend and oral argument by Joseph G. Doherty.

For the defendant-respondent-petitioner there was a brief by Gregg E. Bridge and Petrie & Stocking, S.C., Milwaukee.

For the defendant-appellant there was a brief by M. Christine Cowles, Terence B. Kelly and Borgelt, Powell, Peterson & Frauen, S.C., Milwaukee and oral argument by M. Christine Cowles.

CECI, Justice.

This case is before the court on petitions for review brought by both the plaintiff, Stephanie Grotelueschen (Stephanie), and by Cera-Mite Corporation, her health benefits payor, of a published decision of the court of appeals, Grotelueschen v. American Family Insr., 163 Wis.2d 666, 472 N.W.2d 544 (Ct.App.1991). A majority of the court of appeals, Judge Richard S. Brown, dissenting, reversed the order granting summary judgment in favor of Stephanie entered by the circuit court for Washington County, Richard T. Becker, Circuit Judge. The circuit court had granted Stephanie's motion for summary judgment, deciding that the insurance policy issued by American Family Mutual Insurance Company (American Family) to Ronald and Louise Dimmer as a partnership covered Ronald Dimmer's liability for damages to Stephanie, his granddaughter, while he was operating a lawn tractor. The circuit court had at that time denied the motion for summary judgment brought by American Family.

Stephanie and Cera-Mite contend that American Family's policy covers Dimmer's liability under two alternate theories: (1) the policy, which describes the insured as Dimmer and his wife and then designates the insured as a partnership, covers Dimmer's liability regardless of whether that liability relates to the partnership; and (2) Dimmer acted in the ordinary course of partnership business at the time of the accident. We agree with both arguments and therefore reverse the decision of the court of appeals.

The relevant facts are undisputed. Ronald and Louise Dimmer are partners in D & R Rentals, a partnership that owns and operates an eight-unit apartment building. In 1982, American Family issued a "businessowners [sic] package policy." The declarations page of the policy identifies "Named Insured-Address" as:

Dimmer, Ronald E & Louise J Dimmer

111 S Main St

Saukville WI 53080

and then goes on to identify the named insured as a partnership. Section I of the policy provides basic coverage for the eight-unit apartment building located at 417 Dries Street in Saukville. Section II provides comprehensive general liability coverage of $1,000,000.

The first paragraph of the policy states, "[T]his policy provides insurance against loss to property, business liability and other described coverages." Section II of the policy, entitled "Business Liability and Medical Expense Insurance," contains a subsection entitled "Comprehensive General Liability Insurance" which provides: "The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury or property damage or personal injury to which this insurance applies...." The "Persons Insured" provision of Section II--the center of one of the issues in this case--states:

Each of the following is an insured to the extent set forth below:

1. if the named insured is designated in the declarations as an individual, the person so designated but only with respect to the conduct of a business of which the individual is the sole proprietor, and the spouse, and the employees of the named insured with respect to the conduct of such a business;

2. if the named insured is designated in the declarations as a partnership or joint venture, the partnership or joint venture so designated and any partner, member, or employee thereof but only with respect to his liability as such 3. if the named insured is designated in the declarations as other than an individual, partnership or joint venture, the organization so designated and any executive officer, member of the board of trustees, directors or governors, stockholders or employee thereof while acting within the scope of his duties as such; ....

The policy defines "insured" as "any person or organization qualifying as an insured in the 'Persons Insured' provision of the applicable insurance coverage."

Besides the eight-unit apartment building, the Dimmers jointly owned two other properties: their home at 111 South Main Street and a lot which contained a twenty-four-foot by thirty-foot storage building which the Dimmers called the "red shed."

Of the three properties the Dimmers co-owned, the apartment building was the only property D & R Rentals operated. The partnership had a separate checking account under the name D & R Rentals.

Ronald and Louise Dimmer originally purchased the red shed to store personal items. The Dimmers paid the red shed's repair expenses, property taxes, and special assessments out of their personal funds. The red shed property was insured under the Dimmers' homeowner's policy with General Casualty Insurance Company. The Dimmers stored items in the red shed that they used in connection with personal activities, Saukville Plumbing (another business Dimmer co-owned and operated), the eight-unit apartment building, and a combination of those businesses and properties. For example, the items kept in the red shed included: water heating units for Saukville Plumbing's use; roofing material for use at home and at Saukville Plumbing; beds; and lumber used at home, at the red shed, and at the eight-unit apartment building.

Dimmer stored items he used at the apartment building in the red shed out of necessity because the apartment building had insufficient storage space--a four-foot by five-foot storage area. The items Dimmer used at the apartment building but stored in the red shed included wainscotting, insulation, gardening equipment, tree-trimming equipment, asphalt sealer, tools, lumber, and a forty-foot ladder.

Dimmer personally maintained his home, the red shed, and the apartment building. He used a tractor mower to cut the lawn at all three properties. Dimmer bought the tractor and paid for its repairs with personal funds. The partnership did not depreciate the tractor. Dimmer stored the tractor at both his home and the red shed. He kept the tractor's mower and snowblower attachments in the red shed.

On May 20, 1983, Dimmer decided to mow the lawn at the eight-unit apartment building. He had the tractor at his home that day, and Dimmer drove the tractor the five blocks from his home to the apartment building. He brought his four-year-old granddaughter Stephanie along on his lap.

When Dimmer finished his work at the apartment building, he placed Stephanie in the trailer which was hooked to the tractor and drove three blocks to the red shed. When he arrived at the red shed lot, Dimmer unhooked the trailer and left it on a strip of grass outside the gate. Dimmer then entered the red shed lot through the gate and began mowing the lawn. As Dimmer mowed, Stephanie climbed out of the trailer and wandered onto the lot. Dimmer negligently ran over Stephanie's leg while backing up the tractor. Stephanie was severely and permanently injured.

Stephanie and her parents sued Dimmer; General Casualty (the Dimmers' homeowner's insurance provider); Saukville Plumbing; Cera-Mite; and American Family. Upon motions duly made for summary judgment, the circuit court dismissed the complaint against Saukville Plumbing and General Casualty. Stephanie and American Family both moved for summary judgment on the issue of whether the American Family policy covered Dimmer's liability. The circuit court concluded that the American Family policy covered Dimmer's liability in two alternate ways. First, the policy covered Dimmer because the comprehensive general liability provision covered a partnership in which Dimmer was a partner; therefore, under the aggregate theory of partnership, the policy covered Dimmer as an individual. Second, the policy covered Dimmer because Dimmer had acted in the ordinary course of the partnership business at the time of the accident.

The court of appeals reversed. First, the court of appeals held that the comprehensive general liability provision did not cover Dimmer as an individual because such a result would "not reflect the intention of the parties, viewed from the standpoint of how a reasonable insured would understand the policy" and would transform a business-related policy into a personal liability policy. Grotelueschen, 163 Wis.2d at 677, 472 N.W.2d 544. Second, the court of appeals concluded that Dimmer had not acted as a partner at the time of the accident because mowing the red shed's lot had too tenuous a link to D & R Rentals' partnership. Id. at 680-83, 472 N.W.2d 544.

We review an order for summary judgment using the same methodology as a trial court. Green Spring Farms v. Kersten, 136 Wis.2d 304, 315, 401 N.W.2d 816 (1987). Summary judgment is appropriate if there is no genuine issue about both the material facts and the inferences that can reasonably be drawn from those facts. See sec. 802.08(2), Stats.; Grams v. Boss, 97 Wis.2d 332, 338-39, 294 N.W.2d 473 (1980). A motion for summary judgment carries with it the "explicit assertion that the movant is satisfied that the facts are undisputed and that on those facts he is entitled to judgment as a...