Three T's Trucking v. Kost

• Citation: 736 N.W.2d 239,2007 WI App 158
• Decision Date: 22 May 2007
• Docket Number: No. 2006AP2302.,2006AP2302.
• Parties: THREE T'S TRUCKING, d/b/a Jung Bros. Trucking, and Selective Insurance Company, Plaintiffs-Respondents, v. Gerald KOST, Jr., Gerald Kost/Trucksport, Inc., and Progressive Insurance Company, f/k/a ABC Insurance Company, Defendants-Appellants.
• Court: Court of Appeals of Wisconsin

736 N.W.2d 239

2007 WI App 158

THREE T'S TRUCKING, d/b/a Jung Bros. Trucking, and Selective Insurance Company, Plaintiffs-Respondents, v. Gerald KOST, Jr., Gerald Kost/Trucksport, Inc., and Progressive Insurance Company, f/k/a ABC Insurance Company, Defendants-Appellants.

No. 2006AP2302.

Court of Appeals of Wisconsin.

Submitted on Briefs May 1, 2007.

Opinion Filed May 22, 2007.

On behalf of the defendants-appellants, the cause was submitted on the briefs of Rick E. Hills and Michelle M. Stoeck of Hills Legal Group, Ltd., Waukesha.

On behalf of the plaintiffs-respondents, the cause was submitted on the brief of Patrick W. Brennan and Bryan J. Paradise of Crivello, Carlson & Mentkowski, S.C., Milwaukee.

Before WEDEMEYER, P.J., FINE and CURLEY, JJ.

¶ 1 FINE, J

Gerald Kost, Jr., Gerald Kost/Trucksport, Inc., and its insurer Progressive Insurance Company appeal the trial court's order granting summary judgment to Three T's Trucking, d/b/a Jung Bros. Trucking, and Selective Insurance Company, which insured Three T's Trucking.¹ The trial court determined that Kost and Progressive had a duty to defend and indemnify Three T's Trucking in connection with an Illinois personal-injury lawsuit, and that the duty was triggered by a letter dated August 15, 2001, from Selective Insurance to Gerald Kost, Jr. The trial court's order awarded $45,228.69 to Three T's Trucking and Selective Insurance "for legal fees and costs incurred" from the August 15, 2001, trigger date. It also appropriately provided that Progressive Insurance's "obligation to indemnify shall be limited to the applicable policy limits."

¶ 2 Kost and Progressive contend that: (1) the August 15, 2001, letter was not a proper tender; (2) Selective Insurance had no standing to sue Kost and Progressive Insurance; (3) the trial court misinterpreted the indemnification agreement; and (4) the trial court erred in not concluding that a $10,666.15 payment made by Progressive Insurance to Selective Insurance was an accord and satisfaction. We agree with the trial court on all of these issues. Accordingly, we affirm.

I.

¶ 3 This case arises out of an accident in Illinois. In August of 1999, Mark Hubacher was killed when he was driving a truck that collided with a truck driven by Ace Adkins. A lawsuit was filed in Illinois state court on August 28, 2001, seeking to recover for Hubacher's death. The Illinois complaint alleged, as material to this appeal, that the Adkins truck was owned by Kost and Gerald Kost/Trucksport, and that Adkins was employed by all of the following: Kost and Gerald Kost/Trucksport, and Three T's Trucking and Jung Bros. Trucking. Again, as material to this appeal, the complaint contended Hubacher's death was caused by the negligence of Adkins, Kost and Gerald Kost/Trucksport, and Three T's Trucking and Jung Bros. Trucking. This appeal concerns the indemnification obligations of Kost to Three T's Trucking and the effect of those obligations on the parties' respective insurers.

¶ 4 In July of 1999, Three T's Trucking and Kost executed an "Independent Operator Service Contract" under which Kost was to lease to Three T's Trucking "motor carrier equipment." (Uppercasing omitted.) In the agreement, Kost promised to indemnify Three T's Trucking, and, as material, provided that:

• Kost was not "the employee of" Three T's Trucking "for any purpose whatsoever."

• "Neither [Kost] nor the employees, agents or servants of [Kost] are to be considered employees or servants of [Three T's Trucking] at any time, under any circumstances, or for any purpose."

• Kost "hereby releases and holds [Three T's Trucking] harmless from any and all claims for damages or causes of action whatsoever arising from any personal injury or property damage suffered by [Kost], its employees or agents, while in or upon [Three T's Trucking] property or while performing services pursuant to this Agreement."

• Kost "further expressly agrees to indemnify and hold [Three T's Trucking] harmless for any loss, damage or expense, including attorney's fees, incurred by [Three T's Trucking], resulting from any acts or omissions by [Kost], its employees or agents, that may arise while [Kost] is operating the leased equipment, whether or not under the specific dispatch of [Three T's Trucking]."

• "Under any of the circumstances where [Three T's Trucking] has the right of indemnification, [Kost] shall be responsible for any and all reasonable sums expended by [Three T's Trucking] in the defense, settlement, or payment of claims."

¶ 5 Part of the dispute on appeal concerns when Three T's Trucking tendered defense of the Hubacher claim to Kost. When this lawsuit was started in Milwaukee by Three T's Trucking and Selective Insurance seeking a declaration that Kost had to defend and indemnify Three T's Trucking in connection with the Hubacher matter, all the parties apparently believed that Three T's Trucking had tendered its defense of the Hubacher claim to Kost on May 7, 2004. Subsequently, however, Three T's Trucking and Selective Insurance amended its pleadings to assert that the tender was actually made in a letter dated August 15, 2001, from a Selective Insurance "Claims Management Specialist" to Gerald Kost, Jr., which, as material, told Kost:

Selective Insurance has received notice of a loss occurring on 8/31/1999 in which your company was involved. Your driver, Ace E. Adkins, was the driver in the [Hubacher] accident. My insured, Three T's Trucking, was recently contacted by an attorney representing the deceased, Mark D. Hubacher. Attached to this letter are copies of correspondence received [from the firm representing the plaintiff in the Hubacher action], Along [sic] with a copy of the Certificate of Insurance my insured had with your company stating you were insured with Progressive Insurance with a combined single limit of $1,000,000.

I am tendering this claim to you at this time for you and your insurance carrier to handle to conclusion.

The trial court determined that this was the tender letter, and granted summary judgment to Three T's Trucking and Selective Insurance, holding that Kost and Progressive were obligated to pay Three T's Trucking's expenses running from that date.

II.

¶ 6 Our review of a trial court's grant or denial of summary judgment is de novo. Green Spring Farms v. Kersten, 136 Wis.2d 304, 315-317, 401 N.W.2d 816, 820-821 (1987). We address, in turn, the contentions asserted on this appeal by Kost and Progressive Insurance.

A. The tender.

¶ 7 Kost and Progressive Insurance argue that because the August 15, 2001, letter to Kost from Selective Insurance was to Progressive Insurance's insured rather than to Progressive Insurance, and was also sent before the Illinois action was filed, it was not a valid tender. We disagree.

¶ 8 Kost undertook in the July 1999 agreement to indemnify and defend Three T's Trucking, and hold Three T's Trucking harmless for, as we have seen, "any loss, damage or expense, including attorney's fees, incurred by [Three T's Trucking], resulting from any acts or omissions by [Kost], its employees or agents, that may arise while [Kost] is operating the leased equipment." Further, Kost promised to "hold[] [Three T's Trucking] harmless from any and all claims for damages or causes of action whatsoever arising from any personal injury or property damage suffered by [Kost], its employees or agents . . . while performing services pursuant to this Agreement." The agreement thus encompasses both "claims for damages" and "causes of action." If the two clauses were synonymous, one would be surplusage, and we generally construe contracts to avoid that result. See 1325 North Van Buren, LLC v. T-3 Group, Ltd., 2006 WI 94, ¶ 56, 293 Wis.2d 410, 442, 716 N.W.2d 822, 838 (recognizing the "`established rule that a contract is to be construed so as to give a reasonable meaning to each provision of the contract, and that courts must avoid a construction which renders portions of a contract meaningless, inexplicable or mere surplusage'") (quoted source omitted). Further, Kost's undertaking to hold Three T's Trucking harmless for "any loss" "or expense, including attorney's fees" that Three T's Trucking had as a result of anything done by Kost's "employees . . . while [Kost] is operating the leased equipment" is not restricted to losses, expenses, or attorney's fees incurred after the filing of a lawsuit.

¶ 9 As we have already seen, Selective Insurance's August 15, 2001, letter specifically told Kost that the law firm "representing the deceased, Mark D. Hubacher" had sent a "notice of a loss occurring on 8/31/1999 in which your company was involved" because Kost's "driver, Ace E. Adkins, was the driver in the above accident." Further, the letter told Kost that Selective Insurance was "tendering this claim to you at this time for you and your insurance carrier to handle to conclusion." This was an apparent reference to the requirements in the July 1999 indemnification agreement that Kost "have insurance to insure against any liabilities arising out of operations" and recited "that [Kost] is responsible to indemnify and hold [Three T's Trucking] harmless for any claims in excess of the insurance coverage."

¶ 10 Kost and Progressive Insurance assert, however, that under Towne Realty, Inc. v. Zurich Insurance Co., 201 Wis.2d 260, 548 N.W.2d 64 (1996), and Kenefick v. Hitchcock, 187 Wis.2d 218, 522 N.W.2d 261 (Ct.App.1994), the August 15, 2001, tender was ineffective because the Hubacher lawsuit had not yet been filed. In this case of apparent first impression, we disagree.

¶ 11 First, Towne Realty concerned a purported tender by insureds to their insurance carrier after a lawsuit against the insureds had already been filed. Id., 201 Wis.2d at 264, 548 N.W.2d at 65. It hardly establishes a rule that no tender is valid under any circumstances unless the tender comes after the filing of a lawsuit. Second, Kenefick interpreted the specific "claims-...