885 N.W.2d 591
Wis. Ct. App.2016Background
- Fairview Auto (insured by Addison) purchased a 2002 Ford Explorer and consigned it to Badger State Auto Auction (BSAA), whose employees (insured by West Bend) drove and handled vehicles at BSAA's auction site.
- On August 25, 2011, BSAA employee Francis Yeager drove Fairview's Explorer into the auction house and struck plaintiffs, causing severe injuries; plaintiffs settled Romero's claim for $5 million, paid by West Bend.
- West Bend sought indemnity from Addison, arguing Yeager was an insured under Fairview’s Addison policy because he was acting as Fairview’s agent; Addison denied coverage because Yeager had other insurance and was not Fairview’s agent.
- Addison’s policy included a Garage Coverage Form and a Wisconsin Changes Endorsement with sections A.2 (limits coverage for non-officers/agents/employees unless they lack other insurance) and A.3 (permits coverage for permissive users — “anyone else”).
- The circuit court ruled for West Bend, finding Yeager was Fairview’s agent and that Addison breached its duty to indemnify; the appellate court reversed, holding the endorsement’s A.2 controlled and Yeager was not Fairview’s agent.
Issues
| Issue | Plaintiff's Argument (West Bend) | Defendant's Argument (Addison) | Held |
|---|---|---|---|
| Whether the Wisconsin Changes Endorsement supplants the Garage Coverage Form's Who Is An Insured provision | Endorsement does not supplant; A.3 or Garage Form provide coverage regardless | Endorsement (A.2) supplants Garage Form and limits coverage for non-officers/agents/employees who have other insurance | Endorsement supplants Garage Form; A.2 is primary and limits coverage |
| Whether Yeager was an "agent" of Fairview when driving the Explorer | Yeager acted as Fairview's agent during auction activities, so A.2’s agent exception permits coverage under A.3 | Yeager was BSAA’s employee/independent contractor under BSAA control when driving, not Fairview’s agent; thus A.2 bars coverage because he had other insurance | Yeager was not Fairview’s agent when driving; no coverage under Addison because West Bend’s policy applied |
| Whether ambiguity in the term "agent" requires construing policy in favor of coverage | "Agent" is ambiguous and should be resolved in favor of coverage | "Agent" has settled common-law meaning requiring control; not inherently ambiguous here | Term not ambiguous in this context; agency requires control and fiduciary relation; no agency found |
| Whether circuit court properly awarded Addison’s policy limits and West Bend’s fees and bond relief | West Bend sought policy limits, fees, and enforcement of bond | Addison contested coverage, appealed the judgment and bond requirement | Judgment reversed: Addison not liable for policy limits or fees; bond issue moot |
Key Cases Cited
- Pemper v. Hoel, 271 Wis. 2d 442 (interpreting identical endorsement language to supplant main policy's insured definition)
- Ruppa v. American States Ins. Co., 91 Wis. 2d 628 (rule that specific contract provisions control over general ones)
- Stanhope v. Brown County, 90 Wis. 2d 823 (prefer contract constructions giving meaning to all provisions)
- Kettner v. Wausau Ins. Cos., 191 Wis. 2d 723 (discussion of ambiguity in the term "agent" in statutory context)
- Hoeft v. Friedel, 70 Wis. 2d 1022 (adoption of Restatement definition of agency)
- Thorp Sales Corp. v. Gyuro Grading Co., 107 Wis. 2d 141 (auctioneer generally an agent of seller for sale-related functions)
- Mutual Fed. S. & L. Ass'n v. Wisconsin Wire Works, 58 Wis. 2d 99 (technical words in contract interpreted by professional usage)