Talley v. Mustafa
Citation | 381 Wis.2d 393,911 N.W.2d 55,2018 WI 47 |
Decision Date | 11 May 2018 |
Docket Number | No. 2015AP2356,2015AP2356 |
Parties | Archie A. TALLEY, Plaintiff-Appellant, v. MUSTAFA MUSTAFA, d/b/a Burleigh Liquor, a/k/a Burleigh Food Market and Adams Foods, LLC, Defendants, Auto–Owners Insurance Company, Defendant-Respondent-Petitioner. |
Court | United States State Supreme Court of Wisconsin |
For the defendant-respondent-petitioner, there were briefs filed by Justin F. Wallace, William R. Wick, and Nash, Spindler, Grimstad, & McCracken, LLP, Manitowoc. There was an oral argument by Justin F. Wallace.
For the plaintiff-appellant, there was a brief filed by George E. Chaparas and Carlson, Blau & Clemens, S.C., Milwaukee. There was an oral argument by George E. Chaparas.
An amicus curiae brief was filed on behalf of The Wisconsin Insurance Alliance by James A. Friedman, Mark W. Hancock, and Godfrey & Kahn, S.C., Madison.
¶ 1 In this insurance coverage dispute, we consider whether a business-owners liability policy covers a negligent supervision claim arising out of an alleged employee's1 intentional act of physically punching a customer in the face. We hold that this insurance policy does not provide coverage under these circumstances. When the negligent supervision claim pled rests solely on an employee's intentional and unlawful act without any separate basis for a negligence claim against the employer, no coverage exists. Accordingly, we reverse the decision of the court of appeals,2 which reversed the circuit court's3 grant of summary judgment in favor of Auto–Owners Insurance Company (Auto–Owners) on the coverage issue. The circuit court correctly concluded that there is no coverage under this business liability insurance policy for either the employee's intentional act or the negligent supervision claim against the employer arising solely out of the employee's intentional act.4
¶ 2 The insurance coverage issue in this case arises from an incident that occurred in July 2009 at a neighborhood convenience store, Burleigh Food Market. Mustafa Mustafa owned and operated the store, and at the time carried a "Businessowners' Liability Policy" with Auto–Owners.5
¶ 3 The provisions in the business liability insurance policy provide, as material:
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¶ 4 On July 24, 2009, Archie A. Talley walked into Mustafa's store to buy beer. Talley claims that while he was inside the store, Mustafa's security guard, Keith Scott, punched him in the face twice.
Talley left the store and called police to report the assault. Talley was taken to the hospital where he was treated for a broken jaw
.
¶ 5 On July 17, 2012, Talley filed suit against Mustafa, Keith Scott,7 and Mustafa's insurer, Auto–Owners. The complaint alleged, as material:
¶ 6 Auto–Owners hired counsel to represent Mustafa. Auto–Owners filed an Answer and conducted discovery, which revealed issues related to coverage. In January 2014, Auto–Owners notified the insured that it was defending the case under a reservation of rights letter. In October 2014, Auto–Owners filed a motion to bifurcate the issues of coverage and liability and stay the proceedings on the latter so that the coverage issue could be decided before the liability issues were tried.
¶ 7 The circuit court granted the motion to bifurcate and stayed the trial on the merits to "allow the defendant to seek a declaratory judgment with regard to insurance coverage issues." Mustafa hired his own lawyer to represent him on the coverage issue. In February 2015, Auto–Owners filed its motion for declaratory and summary judgment, asking the circuit court to declare that the insurance policy does not provide coverage, and to grant summary judgment dismissing Auto–Owners from the lawsuit. Auto–Owners asserted that no coverage existed under the policy because: (1) Scott was not Mustafa's employee, and therefore not an insured; (2) even if a factual dispute about Scott's status exists, Mustafa did not believe Scott was an employee; (3) an intentional assault—punching someone in the face—is not an "occurrence" under the insurance policy and excluded by the intentional acts exclusion; (4) there can be no coverage for a negligent supervision claim based on an assault, and no negligent supervision claim exists because Scott was not an employee.
¶ 8 The circuit court held two hearings on the motion and both times concluded the Auto–Owners insurance policy did not provide coverage for Scott or for Mustafa. The circuit court addressed the intentional act at the May 2015 hearing and held:
¶ 9 The circuit court held a second hearing in September 2015 to address whether coverage existed for the negligent supervision claim, which was not discussed at the May 2015 hearing. The circuit court held:
¶ 10 The circuit court entered judgment in favor of Auto–Owners and dismissed the insurer from the case. Talley appealed. The court of appeals reversed in a split decision, with Judge Paul F. Reilly in dissent. See Talley v. Mustafa, 2017 WI App 31, 375 Wis. 2d 757, 897 N.W.2d 55. The majority of the court of appeals held that a reasonable insured would expect coverage for the negligent supervision...
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