Leinweber v. Wirth

• Citation: 856 N.W.2d 346 (Table),358 Wis.2d 712
• Decision Date: 02 October 2014
• Docket Number: No. 2014AP552.,2014AP552.
• Parties: Nathan J. LEINWEBER and John Doe, Plaintiffs–Co–Appellants, United Healthcare of Wisconsin, Inc., Involuntary–Plaintiff, v. Andrew J. WIRTH, Defendant–Appellant, Rock Bottom, Inc. d/b/a Vinnie's Rock Bottom Bar & Grill and Wilson Mutual Insurance Company, Defendants, State Farm Fire and Casualty Company, Intervenor–Defendant–Respondent.
• Court: Wisconsin Court of Appeals

358 Wis.2d 712
856 N.W.2d 346 (Table)

Nathan J. LEINWEBER and John Doe, Plaintiffs–Co–Appellants
United Healthcare of Wisconsin, Inc., Involuntary–Plaintiff
v.
Andrew J. WIRTH, Defendant–Appellant
Rock Bottom, Inc. d/b/a Vinnie's Rock Bottom Bar & Grill and Wilson Mutual Insurance Company, Defendants
State Farm Fire and Casualty Company, Intervenor–Defendant–Respondent.

No. 2014AP552.

Court of Appeals of Wisconsin.

Oct. 2, 2014.

Opinion

¶ 1 KLOPPENBURG, J.

Nathan Leinweber and John Doe (collectively referred to as Leinweber) and Andrew Wirth appeal from an order granting State Farm Fire and Casualty Company's motion for declaratory judgment. The order dismissed State Farm from the underlying tort action and relieved State Farm of the duty to defend and indemnify Wirth.

¶ 2 Leinweber and Wirth raise multiple arguments on appeal. Wirth argues that declaratory judgment was not procedurally appropriate after State Farm intervened in the underlying tort action. Leinweber argues that the circuit court erroneously exercised its discretion in deciding that issue preclusion does not apply to this case. Both Leinweber and Wirth argue that if issue preclusion does not apply, as the circuit court held, then there are issues of material fact that preclude declaratory judgment.

¶ 3 We conclude that declaratory judgment was procedurally proper, and that the circuit court did not err in deciding that issue preclusion does not apply or in granting declaratory judgment in favor of State Farm. Therefore, we affirm the order.

BACKGROUND

¶ 4 Wirth was convicted after a jury trial of two counts of homicide by negligent handling of a dangerous weapon, relating to the deaths of Jennifer Luick and Gregory Peters during an altercation with Wirth at a bar. The relevant undisputed underlying facts are set forth in the unpublished decision of Wirth's appeal from his conviction:

¶ 4 Wirth and his friend drove to Vinnie's Rock Bottom Saloon in Jefferson. Soon after arriving, [Jennifer] Luick approached Wirth from behind and, according to Wirth, “grabbed his ass” and pushed her finger “towards the crack of [his] butt.” Wirth became upset and irritated and told Luick, “[D]on't fucking touch me.” Wirth claimed that Luick seemed very upset by his strong reaction to her “grabbing” action. Shortly after, Luick's boyfriend, [Gregory] Peters, approached Wirth, tapped him on the shoulder, and asked him to go outside. Once outside, Peters told Wirth to apologize to Luick, who was standing next to Wirth. Wirth refused to apologize. Peters took a step closer to Wirth, coming within two feet of Wirth's face. Peters lifted his left arm as if to touch Wirth and, according to Wirth, reached behind his back. Wirth testified that Peters' movements led Wirth to believe that Peters was going to pull out a knife and stab him. Wirth grabbed Peters by the throat with his left hand, pulled out his loaded gun with his right hand and pointed the gun at Peters' head. Wirth discharged three rounds from his gun: one round struck Peters' chest, resulting in his death; one round grazed Peters' neck and struck Luick's chest, resulting in her death. Wirth claimed that he could not recall shooting the gun but “figured [Peters] was shot.” Wirth did not believe that anyone else had been shot.

....

¶ 7 At trial, the parties did not dispute that Wirth discharged the gun three times or that Peters and Luick died as a result of Wirth's firing the gun.

State v. Wirth, No.2012AP208–CR, unpublished slip op. at 1–2 (WI App Feb. 21, 2013).

¶ 5 Leinweber commenced the underlying wrongful death suit against Wirth.¹ State Farm subsequently filed a motion to intervene and to bifurcate and stay proceedings, and the circuit court granted the motion. At the time of the events that led to Wirth's criminal conviction, State Farm insured Wirth under a Renter's Insurance policy. The policy provided coverage for an “occurrence,” which it defined as:

an accident, including exposure to conditions, which results in:

a. bodily injury; or

b. property damage;

during the policy period. Repeated or continuous exposure to the same general conditions is considered to be one occurrence.

The policy excluded coverage for bodily injury or property damage that was “expected or intended” by the insured. After State Farm intervened, it filed a motion for declaratory judgment, asking the circuit court to declare that State Farm had no continuing duty to defend or to indemnify Wirth in this action because there was no coverage under the policy for Wirth's conduct in this case.

¶ 6 At the motion hearing, the court reviewed the details surrounding the three shots that Wirth fired. Based on the allegations in the complaint and Wirth's deposition testimony, the parties agreed that the gun that Wirth discharged was a Bersa 0.380 semiautomatic handgun, which required Wirth to overcome a safety mechanism (also characterized by the parties as a “long pull”) in order to fire the first shot. Each of the subsequent shots required an actual pulling of the trigger, but with less force than the “long pull” required for the first shot.

¶ 7 Each of the parties argued that the circuit court was bound by the jury's determinations in the underlying criminal case for different reasons. The circuit court rejected all of the parties' arguments and held that issue preclusion did not apply because the underlying criminal case had a different burden of proof from the present wrongful death case. The circuit court reasoned that the jury in the criminal case

reach[ed] its verdict beyond a reasonable doubt, so if [the jury] failed to reach a verdict beyond a reasonable doubt on a criminal conduct that involved both intent and intentional conduct, ... it doesn't mean by a preponderance of the evidence that wouldn't happen [in the present case].

The circuit court proceeded to decide the motion using “traditional tests and laws that relate[ ] to definitions within the traditional insurance law.”

¶ 8 Upon review of the above facts, the circuit court held that Wirth's conduct was not accidental and, therefore, that there was no occurrence and no coverage under the State Farm policy. The circuit court further decided that even if there was an occurrence so as to invoke coverage, the exclusion for intentional acts applied to bar coverage. The court granted State Farm's motion for declaratory judgment, relieving State Farm of the duty to defend and indemnify Wirth.

DISCUSSION

¶ 9 As noted above, Leinweber and Wirth argue that the circuit court erred in granting State Farm's motion for declaratory judgment for several reasons. Wirth argues that declaratory judgment was not procedurally appropriate after State Farm intervened in the underlying tort action. Leinweber argues that the circuit court erroneously exercised its discretion in deciding that issue preclusion does not apply to this case. Both Leinweber and Wirth argue that if issue preclusion does not apply, as the circuit court held, then there are issues of material fact that preclude declaratory judgment. In the three sections that follow, we address and reject each of these arguments in turn.

A. Declaratory Judgment After Intervention by Insurer

¶ 10 Wirth argues that the circuit court erred in granting State Farm's motion for declaratory judgment because declaratory judgment was an inappropriate procedural approach after State Farm intervened in the underlying tort action. We review de novo the question of whether declaratory judgment was procedurally proper. See Fire Ins. Exchange v. Basten, 202 Wis.2d 74, 81–82, 549 N.W.2d 690 (1996) (whether an insurer followed the proper procedural approach in seeking a determination of coverage is a question of law reviewed de novo).

¶ 11 Wirth argues that declaratory judgment was not procedurally proper on two grounds. First, Wirth cites Basten for the proposition that once an insurer is joined in the underlying action, the insurer is barred from seeking declaratory judgment. However, nothing in Basten supports such a proposition. The court in Basten recognized two alternate means of determining insurance coverage in cases in which coverage is disputed: (1) the “preferred procedure” of “joinder or intervention of all concerned parties followed by bifurcation of the coverage and liability issues, under Wis. Stat. § 803.04(2)(b) ;” and (2) where the insurer is not named in the underlying lawsuit, the filing by the insurer of a separate declaratory judgment action. Basten, 202 Wis.2d at 89–90, 549 N.W.2d 690. The court stated that, if the latter alternative is pursued, then the declaratory judgment action and the underlying lawsuit should generally be consolidated. Id. at 95–6, 549 N.W.2d 690. Thus, a declaratory judgment as to coverage generally comes before the circuit court in the underlying lawsuit, with the insurer as a party, regardless of whether the declaratory judgment motion is filed in the underlying lawsuit or in a separate action.

¶ 12 As State Farm notes, intervention by an insurer followed by a motion for declaratory judgment is routine practice in insurance coverage litigation. See,...