Insurance Claim – Coverage and Duty to Defend

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WI Court of Appeals – District III

Case Name: James Klatt, et al. v. Penske Truck Leasing Co., LP, et al.

Case No.: 2017AP2064

Officials: Stark, P.J., Hruz and Seidl, JJ.

Focus: Insurance Claim – Coverage and Duty to Defend

This insurance coverage dispute is before us for the second time. In a previous appeal, we concluded Great West Casualty Company had a duty to defend Penske Truck Leasing Company against a lawsuit filed by James and Carol Klatt. We further concluded factual disputes precluded summary judgment on the issue of whether Great West had a duty to indemnify Penske. We therefore reversed the circuit court’s grant of summary judgment to Great West.

On remand, Penske moved for summary judgment, arguing Great West had breached its duty under its insurance policy to defend Penske by failing to provide a defense for Penske during a period when no stay of the underlying proceedings on liability was in place. As damages for the breach, Penske asked the circuit court to award Penske its defense costs and the amount of a settlement it had paid the Klatts while the prior appeal was pending. Great West, in turn, moved for a bench trial on the issue of its duty to indemnify Penske. The circuit court denied Penske’s summary judgment motion and held a bench trial on Great West’s duty to indemnify. The court ultimately concluded Great West had no duty to indemnify Penske and entered judgment in favor of Great West.

In the present appeal, Penske argues the circuit court erred because Great West breached its duty to defend Penske, and Penske is therefore entitled to recover from Great West both its defense costs and the amount of the settlement it paid the Klatts. In response, Great West argues it did not breach its duty to defend Penske because the circuit court never lifted the stay of the underlying proceedings on liability. In the alternative, Great West argues Penske forfeited its right to argue that Great West breached its duty to defend by failing to raise that argument prior to or during Penske’s previous appeal.

We agree with Penske that the stay of the underlying proceedings on liability was implicitly lifted on June 10, 2014, when the circuit court entered a scheduling order setting deadlines for the completion of discovery on the Klatts’ claims. We further assume, without deciding, that Penske did not forfeit its argument regarding Great West’s breach of the duty to defend, and that Great West breached that duty. Nevertheless, we conclude Penske cannot prevail because it has not met its burden to show what, if any, damages it sustained as a result of Great West’s alleged breach. We therefore affirm the circuit court’s judgment in favor of Great West.

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.