Siebert v. Wis. Am. Mut. Ins. Co.

• Decision Date: 24 May 2011
• Docket Number: No. 2009AP1422.,2009AP1422.
• Parties: Jessica L. SIEBERT, by her Guardian ad Litem, D.J. Weis and Lynette A. Siebert, Plaintiffs–Appellants,Steve Albrecht, Jr., by his Guardian ad Litem, Thomas W. Kyle, Steven Albrecht, Sr., Kari Sosnowski, by her Guardian ad Litem, Thomas W. Kyle and Cyndi Anderson, Intervening–Plaintiffs,Oneida County Department of Social Services, Involuntary–Plaintiff,v.WISCONSIN AMERICAN MUTUAL INSURANCE COMPANY, Defendant–Respondent–Petitioner,Interstate Brands Corporation, ACE American Insurance Company and Ryan Friberg, Defendants.
• Court: Wisconsin Supreme Court

797 N.W.2d 484

2011 WI 35

Jessica L. SIEBERT, by her Guardian ad Litem, D.J. Weis and Lynette A. Siebert, Plaintiffs–Appellants,Steve Albrecht, Jr., by his Guardian ad Litem, Thomas W. Kyle, Steven Albrecht, Sr., Kari Sosnowski, by her Guardian ad Litem, Thomas W. Kyle and Cyndi Anderson, Intervening–Plaintiffs,Oneida County Department of Social Services, Involuntary–Plaintiff,

v.WISCONSIN AMERICAN MUTUAL INSURANCE COMPANY, Defendant–Respondent–Petitioner,Interstate Brands Corporation, ACE American Insurance Company and Ryan Friberg, Defendants.

No. 2009AP1422.

Supreme Court of Wisconsin.

Argued March 2, 2011.Decided May 24, 2011.

For the defendant-respondent-petitioner there were briefs by John M. Swietlik, Jr., Michael D. Aiken and Kasdorf, Lewis, and Swietlik, S.C., Milwaukee, and oral argument by Mr. Swietlik.For the plaintiff-appellant there was a brief by D.J. Weis, Rhonda Lanford, and Habush, Habush & Rottier, S.C., Rhinelander, and oral argument by Ms. Lanford.ANNETTE KINGSLAND ZIEGLER, J.

¶ 1 This is a review of a published decision of the court of appeals, Siebert v. Wisconsin American Mutual Insurance Co., 2010 WI App 94, 325 Wis.2d 740, 787 N.W.2d 54, that reversed an order of the Oneida County Circuit Court ¹ granting summary judgment in favor of Wisconsin American Mutual Insurance Company (Wisconsin American) and dismissing the plaintiffs' direct action claim for negligent entrustment. Based 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.

¶ 2 Two of the plaintiffs, Jessica Siebert and her mother, Lynette Siebert (collectively, Siebert),² appealed, and the court of appeals reversed.

¶ 3 We granted Wisconsin American's petition for review. We now reverse the decision of the court of appeals.

¶ 4 Wisconsin American presents two issues for our review:

(1) Does the alleged negligent entrustment of the vehicle constitute an independent concurrent cause of Jessica Siebert's injuries sufficient to trigger coverage under Wisconsin American's insurance policy when no coverage exists for the driver's alleged negligent operation of the vehicle?

(2) Is Siebert's negligent entrustment claim barred by claim or issue preclusion by virtue of the fact that Siebert asserted the claim against Wisconsin American after the circuit court entered judgment on the jury verdict dismissing with prejudice Siebert's original complaint against Wisconsin American?

¶ 5 We conclude that the alleged negligent entrustment of the vehicle does not constitute an independent concurrent cause of Jessica Siebert's injuries sufficient to trigger coverage, when no coverage exists for the alleged negligent operation of the vehicle. Specifically, the alleged negligent entrustment of the vehicle is not actionable without the occurrence of an excluded risk—the alleged negligent operation of the vehicle. Therefore, there is no coverage for Siebert's negligent entrustment claim, and Wisconsin American is entitled to summary judgment.

¶ 6 Our conclusion that Wisconsin American is entitled to summary judgment by virtue of the lack of coverage for Siebert's negligent entrustment claim is dispositive in this case. Accordingly, we do not reach the issue of whether Siebert's negligent entrustment claim is barred by claim or issue preclusion.

I. FACTUAL BACKGROUND

¶ 7 On June 17, 2006, Jessica Koehler (Koehler) gave permission to her boyfriend, Jesse Raddatz (Raddatz), to drive her father's 1996 Chevrolet Lumina to a food pantry in Eagle River, the city in which Koehler and Raddatz lived. Koehler advised Raddatz that he and his friend “could use [the vehicle] as long as they went to the Food Pantry and came right back....”

¶ 8 Raddatz did not use the vehicle to drive to the food pantry. Instead, Raddatz and his friend picked up four more passengers, including Jessica Siebert, and headed to a party in Rhinelander.

¶ 9 While traveling south on two-lane Highway 17, Raddatz approached a Hostess truck also traveling south. The Hostess truck was nearing the intersection of Highway 17 and County Road A in the township of Sugar Camp. A passing lane to the right of southbound Highway 17 gave vehicles the opportunity to pass those vehicles turning left onto County Road A. According to deposition testimony, Raddatz attempted to pass the Hostess truck on the right when the truck suddenly swerved in and out of the passing lane. Raddatz lost control of the vehicle and drove into the ditch, causing the vehicle to roll. Raddatz and four of the other five passengers, including Jessica Siebert, were ejected from the vehicle.

¶ 10 Raddatz and one other passenger were killed in the accident. The other four passengers were injured, Jessica Siebert severely.

¶ 11 The vehicle was insured by Wisconsin American through an automobile insurance policy issued to Koehler's father.

II. PROCEDURAL POSTURE

¶ 12 On February 14, 2007, Siebert filed a direct action ³ against Wisconsin American, alleging that Raddatz's negligent operation of the vehicle caused Jessica Siebert to sustain serious injuries. The complaint further alleged that Jessica Siebert's injuries, in turn, caused Lynette Siebert to suffer the loss of her daughter's society and companionship and to incur medical expenses.

¶ 13 On May 9, 2007, two other surviving passengers (the intervening plaintiffs) filed an intervening complaint against Wisconsin American and similarly alleged Raddatz's negligent operation of the vehicle.

¶ 14 Wisconsin American answered both complaints by, inter alia, raising an affirmative defense that Raddatz exceeded the scope of permission to use the vehicle and therefore did not qualify as an insured under the policy issued to Koehler's father.

¶ 15 Wisconsin American moved the circuit court to bifurcate the issue of insurance coverage from the underlying issues of liability and damages. ⁴ The circuit court granted Wisconsin American's motion. ⁵

¶ 16 On June 23, 2008, the coverage issue proceeded to a two-day jury trial. The jury was asked the following question: “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?” The jury answered, “Yes.”

¶ 17 Soon after, on July 11, 2008, Siebert and the intervening plaintiffs filed a motion to amend their complaints against Wisconsin American to add a cause of action for Koehler's negligent entrustment of the vehicle to Raddatz. Wisconsin American opposed the motion, arguing that the new cause of action was barred by claim and issue preclusion.

¶ 18 On September 29, 2008, the circuit court entered judgment on the jury verdict and determined that “because Jesse Raddatz exceeded the scope of the permission that he was provided by Jessica Koehler to use the 1996 Lumina at and immediately before the time the accident occurred[,] there is no insurance coverage available under the Wisconsin American Mutual Insurance Company policy....” The circuit court therefore dismissed “on the merits and with prejudice” Siebert and the intervening plaintiffs' complaints against Wisconsin American.⁶

¶ 19 Subsequent to the judgment, however, the circuit court granted Siebert and the intervening plaintiffs' motion to amend their complaints. Siebert and the intervening plaintiffs then each filed a second amended complaint, asserting a cause of action against Wisconsin American for negligent entrustment. Specifically, the complaints alleged that Koehler entrusted her father's vehicle to Raddatz with full knowledge of the fact that Raddatz did not have a valid driver's license. As such, the complaints alleged, Koehler knew, or in the exercise of ordinary care should have known, that Raddatz intended or was likely to use the vehicle in a way that would create an unreasonable risk of harm to others. The complaints further asserted that Koehler's negligent entrustment was “a separate and distinct act of negligence from Jesse Raddatz'[s] negligent operation of the vehicle.”

¶ 20 Wisconsin American moved for summary judgment, arguing that there is no coverage under the policy for Koehler's alleged negligent entrustment. Specifically, Wisconsin American maintained that Koehler's act of entrusting the vehicle to Raddatz is not an independent concurrent cause of the injuries suffered by Jessica Siebert and the intervening plaintiffs; that is, Koehler's act requires the occurrence of a non-covered risk—Raddatz's negligent operation of the vehicle—to be actionable.

¶ 21 Alternatively, Wisconsin American argued that the jury's finding that Raddatz exceeded the scope of permission prevents Siebert and the intervening plaintiffs from being able to relitigate and prove an element of negligent entrustment, namely, whether Koehler permitted Raddatz to operate her father's vehicle.

¶ 22 On April 2, 2009, the circuit court held a hearing on Wisconsin American's motion for summary judgment and then granted the motion on April 20, 2009. The circuit court determined that coverage is not available under the policy for Koehler's alleged negligent entrustment. In particular, applying this court's decision in Bankert v. Threshermen's Mutual Insurance Co., 110 Wis.2d 469, 329 N.W.2d 150 (1983), the circuit court agreed with Wisconsin American that Koehler's alleged negligent entrustment does not constitute an independent concurrent cause of the injuries suffered by Jessica Siebert and the intervening plaintiffs:

Siebert's claim for negligent entrustment is dependent upon Raddatz's negligent operation of the vehicle. The alleged negligence of Raddatz is not covered under the policy pursuant to the jury's finding last summer when they found that Raddatz exceeded the scope of permission. And so Raddatz's negligent operation of the vehicle is an...