T.H.E. Ins. Co. v. Olson
| Docket Number | s. 22-1143,22-1170 & 22-1172 |
| Decision Date | 17 October 2022 |
| Citation | 51 F.4th 264 |
| Parties | T.H.E. INSURANCE COMPANY, Plaintiff-Appellee, v. Trey D. OLSON, as Special Administrator of the Estate of Timothy L. Olson, et al., Defendants-Appellants. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Dena Economou, Douglas Garmager, Attorneys, Karbal, Cohen, Economou, Silk & Dunne, Chicago, IL, for Plaintiff-Appellee.
Jay M. McDivitt, Edward Everett Robinson, Attorneys, Cannon & Dunphy, Brookfield, WI, for Defendant-Appellant Trey D. Olson, as Special Administrator of the Estate of Timothy L. Olson.
Timothy S. Trecek, Attorney, Habush, Habush & Rottier S.C., Milwaukee, WI, Peter M. Young, Attorney, Habush, Habush & Rottier S.C., Wausau, WI, for Defendant-Appellant Todd R. Zdroik.
George Burnett, Attorney, Law Firm of Conway, Olejniczak & Jerry, S.C., Green Bay, WI, for Defendant-Appellant Spielbauer Fireworks Company, Inc.
Before Flaum, Scudder, and Kirsch, Circuit Judges.
Before us is a question of insurance coverage under Wisconsin law arising out of injuries to two volunteers at Fourth of July fireworks displays in Land O' Lakes and Rib Lake, Wisconsin. The district court found that the plaintiff, T.H.E. Insurance, had no duty to defend or indemnify its insured, the fireworks distributor, for both events. We affirm.
We resolve these coverage issues under Wisconsin law. Like many states, Wisconsin distinguishes between a duty to defend and a duty to indemnify. The state's Supreme Court has explained that an insurer's duty to defend "is broader than its duty to indemnify." Olson v. Farrar , 338 Wis.2d 215, 809 N.W.2d 1, 7 (2012) ; see also Choinsky v. Emps. Ins. Co. of Wausau , 390 Wis.2d 209, 938 N.W.2d 548, 555 (2020). "The insurer is under an obligation to defend only if it could be held bound to indemnify the insured, assuming that the injured person proved the allegations of the complaint, regardless of the actual outcome of the case." Olson , 809 N.W.2d at 7 (quoting Grieb v. Citizens Cas. Co. of New York , 33 Wis.2d 552, 148 N.W.2d 103, 106 (1967) ). Absent a duty to defend, the insurer shoulders no duty to indemnify on the alleged facts giving rise to the underlying injury or harm. See Choinsky , 938 N.W.2d at 555 ().
Wisconsin law also provides substantial guidance on interpreting insurance policies. "An insurance policy is construed to give effect to the intent of the parties as expressed in the language of the policy." Folkman v. Quamme , 264 Wis.2d 617, 665 N.W.2d 857, 864 (2003). Words are given the plain and ordinary meaning as a reasonable insured would understand them. See id. , at 864–65. Ambiguous language is interpreted in the insured's favor. See id. , at 865. Policy language is ambiguous only if it is "susceptible [by a reasonable insured] to more than one reasonable interpretation." Id. , 864–65 (quoting Danbeck v. Am. Fam. Mut. Ins. Co. , 245 Wis.2d 186, 629 N.W.2d 150, 193 (2001) ).
Timothy Olson and Todd Zdroik sustained injuries while volunteering at Fourth of July fireworks displays in the towns of Rib Lake and Land O' Lakes in 2018. Fireworks distributed by Spielbauer Fireworks Company exploded prematurely at both events, severely burning Zdroik and Olson. Olson later passed away from unrelated causes. Both towns used teams of volunteers to put on their Fourth of July displays. Olson opened and closed a bin from which other volunteers retrieved fireworks during the show in Rib Lake. Zdroik worked at the Land O'Lakes event as a so-called "shooter," manually lighting the fuses on mortar shells.
Olson's estate and Zdroik sued Spielbauer in Wisconsin state courts. From the outset, it was clear the parties disagreed with Spielbauer's insurer, T.H.E. Insurance, about whether the claims for Olson and Zdroik's injuries would be covered under Spielbauer's general and excess liability policies.
As the state court litigation progressed, T.H.E. sought to resolve the coverage issue in federal court under the Declaratory Judgment Act. See 28 U.S.C. § 2201(a). The district court granted T.H.E.'s motions for judgment on the pleadings after examining the insurance policy and the personal injury allegations in Olson and Zdroik's state court complaints. The district court determined T.H.E. had no duty to defend—and by extension, no duty to indemnify—Spielbauer because the policy in question excluded coverage for injuries sustained by volunteers at fireworks displays. In their respective state court complaints, Zdroik and Olson admitted to volunteering at the displays. Although Olson's role as a container operator was minimal, the district court concluded that the exclusion in T.H.E.'s policy applied to any kind of volunteer work. Zdroik, Olson's estate, and Spielbauer all appealed.
Our analysis of Spielbauer's general and excess liability insurance policies turns on the "Shooters Endorsement," a one-sentence exclusion that reads:
This policy shall NOT provide coverage of any kind (including but not limited to judgment costs, defense, costs of defense, etc.) for any claims arising out of injuries or death to shooters or their assistants hired to perform fireworks displays or any other persons assisting or aiding in the display of fireworks whether or not any of the foregoing are employed by the Named Insured, any shooter or any assistant.
The key issue is whether the exclusion extends to any and all volunteers or only to those assisting hired shooters or hired assistants.
Both parties focus on the middle of the block quote, offering competing interpretations of the words "any other persons assisting or aiding in the display of fireworks." They dispute how this group relates back to the phrase about "shooters and their assistants hired to perform...." Zdroik, the estate, and Spielbauer urge us to conclude that while "any other persons" may include volunteers, the exclusion applies to volunteers only if they were assisting hired shooters or hired assistants at the time they sustained their alleged injuries. At a more practical and concrete level, that would mean the exclusion does not apply to the estate and Zdroik's claims because there were no hired persons at either Fourth of July fireworks event. For its part, T.H.E. insists that the "other persons" category is broader and includes any volunteer assistant regardless of whether anyone else at the display worked as a hired employee or contractor.
T.H.E. has the better reading. The Shooters Endorsement plainly and unambiguously creates two distinct groups excluded from coverage. Go back to the block quote and focus on who the language excludes. On one side are hired shooters and their hired assistants. On the other is a large residual category of "any other persons" who assist the fireworks display, regardless of whether they assist hired persons. This reading is compelled partly by the last-antecedent rule, which takes the qualifying phrase "hired to perform fireworks displays" and attaches it to the last antecedent only—shooters and assistants. See In re Airadigm Commc'ns, Inc. , 616 F.3d 642, 655 (7th Cir. 2010). The word "or," following the phrase "hired to perform other fireworks displays," introduces a separate, discrete group of other persons who assist the display. That group, consisting of "any other persons assisting or aiding in the display," stands alone.
A reasonable insured would interpret the policy the same way. The expansive wording in and around the final category ("any other persons," "assisting or aiding," "whether or not any of the foregoing are employed by the Named Insured, any shooter, or any assistant") puts a reasonable insured on notice that all volunteers are excluded from coverage.
Olson's estate, Zdroik, and Spielbauer beg to differ, urging us to interpret the policy against the backdrop of the Wisconsin workers' compensation scheme. They view the Shooters Endorsement exclusion as limiting coverage for hired personnel who are already entitled to workers' compensation, contending that a reasonable insured would believe the exclusion only applies if there are hired workers at the display. We are not persuaded.
Whether we accept T.H.E.'s reading or the defendants', the provision plainly excludes coverage for at least some volunteers who presumably are ineligible for workers' compensation. More fundamentally, a reasonable insured would understand that the provision's purpose is to exclude coverage for high-risk work, not to account for alternative remedies for persons who may have been injured at a fireworks display. This purpose explains why the provision sweeps up "any other persons" involved in the risky work of putting on a fireworks display, and why hired shooters and assistants—including all volunteers—are excluded irrespective of who employs them or asked them to help.
No doubt the exclusion includes some surplus language. See Goebel v. First Fed. Sav. & Loan Ass'n of Racine , 83 Wis.2d 668, 266 N.W.2d 352, 358 (1978) (). Doubtless, too, T.H.E. could have achieved the exact same result by scratching the words "shooters or their assistants hired to perform," since these individuals are already captured by the "other persons" category. The placement of the phrase "whether or not any of the foregoing are employed by the Named Insured, any shooter or any assistant" at the end of the sentence is odd as well. The words "any of the foregoing" suggest this phrase should modify shooters, assistants, and other persons, even though only the shooters and assistants are required to have any employment relationship at all.
But T.H.E.'s point does not become twisted or uncertain just because the company used extra words in the exclusion to make it. The surplusage canon informs how to choose...
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