Wright v. Allstate Cas. Co.

Citation2011 WI App 37,331 Wis.2d 754,797 N.W.2d 531
Decision Date01 February 2011
Docket NumberNo. 2010AP385.,2010AP385.
PartiesElaine WRIGHT, Plaintiff–Appellant,v.ALLSTATE CASUALTY COMPANY, Defendant–Respondent,Rene Stermole and Maria Stermole, Defendants.
CourtCourt of Appeals of Wisconsin

OPINION TEXT STARTS HERE

On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Thomas R. Jacobson, Kay Nord Hunt, and Diane M. Odeen of Lommen, Abdo, Cole, King & Stageberg, P.A., of Hudson.On behalf of the defendant-respondent, the cause was submitted on the brief of Christine M. Benson and Stephanie Hanold Anacker of Hills Legal Group, Ltd., of Waukesha.Before CURLEY, P.J., FINE and KESSLER, JJ.CURLEY, P.J.

[331 Wis.2d 757] ¶ 1 Elaine Wright appeals an order granting summary and declaratory judgment to Allstate Insurance Company, which insured Rene Stermole—who, while mentally ill, fatally shot Wright's husband—and Rene's mother, Maria Stermole.1 Wright presents five bases for appeal, four of which pertain to Rene and one that pertains to Maria.

¶ 2 With regard to Rene, Wright contends that the trial court erred in determining that several exclusions in Maria's Allstate homeowner's policy excluded insurance coverage for the shooting. Wright first contends that the trial court erred in applying the policy's “intentional acts” exclusion because Rene was mentally ill when he shot her husband—indeed, the jury found that he had a mental disease or defect at the time of the shooting and therefore exonerated him from any criminal penalties— i.e., he argues that he was incapable of intending to cause injury or commit a criminal act. Second, Wright argues that the trial court erred in applying the policy's “mental capacity” exclusion, which excludes intentional acts, “even if such insured person lacks the mental capacity to govern his or her conduct,” because this exclusion does not encompass both portions of Wisconsin's insanity test. Third, Wright argues that the trial court erred in applying the “mental capacity” exclusion because it violates public policy. Fourth, in the event that her first three arguments fail, Wright claims in the alternative that the trial court erred in granting summary judgment because genuine issues of material fact exist concerning Rene's intent on the day of the shooting.

¶ 3 As to Maria, Wright argues that the trial court erred in finding Allstate did not have to provide coverage for Maria because Maria had an expectation that the policy would cover damages that arose from the shooting. Specifically, Wright argues that because Maria was merely negligent and committed no intentional acts, the intentional acts exclusion should not have applied to her.

¶ 4 We conclude that: (a) the intentional acts exclusion, as well as the mental capacity clause, “even if such person lacks the mental capacity to govern his or her conduct,” both excluded coverage because Rene intended to kill Wright's husband and he lacked the mental capacity to govern his conduct; (b) the mental capacity clause in the intentional acts exclusion is not void because it fails to track Wis. Stat. § 971.15(1) (2009–10), 2 our criminal procedure statute defining “insanity”; (c) the mental capacity clause is not against public policy; (d) there are no genuine issues of material fact; and (e) Maria could not have had a reasonable expectation of coverage for her son's murder of their next-door neighbor and she therefore has no insurance coverage because the policy exclusion applies to all insureds if the intentional act was committed by “any insured.” As a result, we affirm.

I. Background.

¶ 5 On a hot June day in 2007, Wright's husband, Mark, was in their backyard setting up a charcoal grill in order to barbeque. Rene, then fifty-six years of age, lived next door with his elderly mother. At his trial for first-degree intentional homicide, Rene testified and explained—through his delusional view of the world—what he thought had occurred.

¶ 6 According to Rene, Mark had been stalking him for some time and had made death threats against him. Rene also believed that Mark was somehow connected to the El Rukn gang. Rene was particularly fearful of El Rukn because its members had—according to Rene—tried to extort his parents' house from him at gunpoint in 1986.

¶ 7 On the day of the shooting, Rene claimed to have seen two alleged El Rukn members, the same men who had allegedly attempted to extort him at gunpoint decades earlier, on a shopping trip. Rene journeyed home shaken by this encounter. He felt exhausted and uncomfortable because, even on this very hot day, he was wearing several layers of clothing to conceal the loaded guns he always carried to protect himself from perceived danger.

¶ 8 As Rene returned to his residence, his feelings grew more intense when he saw neighbor Mark in his backyard talking on a cell phone. According to Rene, Mark's walking about the yard and talking on his phone was anything but benign; it was a confrontational “statement” communicating Mark's intent to kill him. Rene reacted, first, by secretly photographing Mark, a measure he considered necessary to prove to the FBI that Mark had been stalking him, and second, by praying for the strength to endure a violent encounter. Rene then approached Mark, who, at this point had grilling utensils in one hand and a trash bag in another hand. Believing the grilling utensils to be weapons and the trash bag a pretext, and also believing— based on conversations that he claimed to have overheard between Mark and other gang members—that Mark was wearing a bulletproof vest, Rene shot Mark numerous times, killing him. Rene explained to the jury that what he did was self defense.

¶ 9 As noted, Rene was charged with first-degree intentional homicide. Before the trial began, three doctors examined Rene and found him to have had a delusional disorder at the time of the shooting. A jury found him guilty of first-degree intentional homicide, but also found that, at the time of the murder, pursuant to Wis. Stat. § 971.15(1), he had a mental disease or defect which resulted in his lacking substantial capacity either to appreciate the wrongfulness of his conduct or to conform that conduct to the requirements of law. As a result, Rene was committed to the Department of Health and Family Services for life.

¶ 10 Wright sued Rene, Maria and Maria's homeowners insurance company, Allstate. The complaint stated that Rene “negligently shot and killed Mark A. Wright.” With respect to Maria, the complaint alleged, inter alia, that Maria knew that Rene was mentally unstable and that he kept guns and ammunition at her property. Consequently, she “was negligent in allowing a dangerous condition to exist on her property” and “was negligent in failing to exercise control over the conduct of Rene so as to prevent him from posing an unreasonable risk of harm to people located nearby.” Represented by separate attorneys, Rene and Maria filed answers to the complaint, as did Allstate. Allstate took the position in its answer, cross-claim and counterclaim that it had no duty to defend Rene and Maria and sought bifurcation of the coverage issue and a declaratory judgment stating it had no duty to defend. The trial court granted the bifurcation motion and stayed the underlying proceedings until the coverage issue was resolved. Ultimately, the trial court granted Allstate's motion for declaratory and summary judgment. This appeal follows.

II. Analysis.
Standard of Review

¶ 11 This appeal reviews the trial court's order granting Allstate's motion for declaratory judgment and summary judgment. Both declaratory judgments and summary judgments are proper procedural devices for resolving insurance disputes. See, e.g., Commercial Union Midwest Ins. Co. v. Vorbeck, 2004 WI App 11, ¶ 7, 269 Wis.2d 204, 674 N.W.2d 665. We review both summary and declaratory judgments de novo, applying the same methodology as the trial court. Westphal v. Farmers Ins. Exch., 2003 WI App 170, ¶ 9, 266 Wis.2d 569, 669 N.W.2d 166; see also Sentry Ins. v. Davis, 2001 WI App 203, ¶ 2, 247 Wis.2d 501, 634 N.W.2d 553.

¶ 12 Specifically, the resolution of this case requires interpretation of insurance policy exclusions to determine whether coverage exists. The construction and interpretation of an insurance policy is a question of law that we review de novo. Badger Mut. Ins. Co. v. Schmitz, 2002 WI 98, ¶ 50, 255 Wis.2d 61, 647 N.W.2d 223. Exclusions are narrowly construed against the insurer. Whirlpool Corp. v. Ziebert, 197 Wis.2d 144, 152, 539 N.W.2d 883 (1995).

A. The trial court correctly found that the intentional acts exclusion applied to Rene's actions even though he was mentally ill at the time.

¶ 13 Wright first contends that the exclusion in the policy should not apply to Rene because his mental illness prevented him from both “appreciat [ing] the wrongfulness of his conduct” or “conform[ing] his conduct to the requirements of law.” The exclusion reads, in pertinent part:

Losses We Do Not Cover Under Coverage X:

1. We do not cover any bodily injury or property damage intended by, or which may reasonably be expected to result from the intentional or criminal acts or omissions of, any insured person. This exclusion applies even if:

a) such insured person lacks the mental capacity to govern his or her conduct....

Wright submits that Rene's conduct in shooting Mark constituted an accident because Rene was mentally ill at the time of the shooting, and consequently, he did not “intend to cause injury.” Stated otherwise, Wright argues that Rene's mental illness prevented him from forming an intent to injure. Wright relies principally on a Minnesota case, State Farm Fire & Cas. Co. v. Wicka, 474 N.W.2d 324 (Minn.1991), for support. In that case, the Minnesota Supreme Court determined that an insured's mental status prevents application of the intentional acts exclusion. Wright uses this construction of the intentional acts policy...

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    ...we must determine whether § 66.0502 trumps the City's local ordinance. This is a question of law we review de novo. See Wright v. Allstate Cas. Co., 2011 WI App 37, ¶ 11, 331 Wis.2d 754, 797 N.W.2d 531 (“We review both summary and declaratory judgments de novo, applying the same methodology......
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    ...whether § 66.0502 trumps the City's local ordinance. This is a question of law we review de novo. See Wright v. Allstate Cas. Co., 2011 WI App 37, ¶11, 331 Wis. 2d 754, 797 N.W.2d 531 ("We review both summary and declaratory judgments de novo, applying the same methodology as the trial cour......
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    ...BAKER & LOGUE, supra note 124, at 413-14 (discussing intentional harm exclusions for domestic violence); Wright v. Allstate Cas. Co. 797 N.W.2d 531, 534 (Wis. Ct. App. 2011) (holding that an intentional act exclusion prevented the beneficiary, a victim of domestic violence, from (151) S......

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