Insurance – Negligence Claim

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WI Court of Appeals – District III

Case Name: Frank Hull v. John Glewwe, et al.

Case No.: 2017AP2485

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

Focus: Insurance – Negligence Claim

Frank Hull appeals a judgment dismissing his negligence claim against John Glewwe and Glewwe’s insurer, State Farm Fire and Casualty Company. Hull and Glewwe were both injured in an accident that occurred during a roofing project at Hull’s home. In a prior lawsuit, Glewwe had pursued claims for damages arising out of the accident directly against Hull’s liability insurer, Unitrin Auto and Home Insurance Company, without Hull being made a party to that action. That case terminated in a settlement agreement under which Glewwe released his claims against Hull and Unitrin in exchange for the payment of a designated sum.

Hull subsequently filed this negligence action against Glewwe and State Farm. The case was dismissed based upon the circuit court’s conclusion that Hull was required to assert his affirmative claim for damages in the earlier lawsuit, even though he was not a party to that action. The issue presented in this appeal is whether claim preclusion and the common law compulsory counterclaim rule operate so as to bar an injured person’s negligence claim against an alleged tortfeasor, when prior litigation arising out of the same accident has been settled by that injured person’s insurer without that injured person having been a party to the prior litigation.

We conclude that, under the circumstances present in this case, Hull is not precluded from pursuing a negligence claim against Glewwe and State Farm. Because Hull was not a party to the prior action, he could only be bound to the outcome in the earlier case if he was in privity with his insurer, Unitrin. Privity, in turn, requires a sufficient alignment of interests that is lacking in this case. Specifically, although Hull’s and Unitrin’s interests aligned for purposes of defending against the claims in the prior lawsuit, their interests did not align for purposes of advancing Hull’s affirmative claim for relief. Accordingly, we reverse the grant of summary judgment and remand for further proceedings.

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Derek A Hawkins is trademark corporate counsel for Harley-Davidson. Hawkins oversees the prosecution and maintenance of the Harley-Davidson’s international trademark portfolio in emerging markets.