Insurance Claim – Negligence

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WI Court of Appeals – District II

Case Name: Scott Dhein v. Frankenmuth Mutual Insurance Company and City Centre, LLC, et al., 

Case No.: 2019AP531

Officials: Neubauer, C.J., Reilly, P.J., and Davis, J.

Focus: Insurance Claim – Negligence

City Centre, LLC (City Centre) and Frankenmuth Mutual Insurance Company appeal from the summary judgment dismissal of City Centre’s claim for coverage against ACE American Insurance Company (ACE). ACE is the comprehensive general liability (CGL) carrier for Broadwind, Inc., d/b/a Tower Tech Systems (Broadwind), one of City Centre’s commercial tenants. City Centre is an additional insured on the ACE policy pursuant to its lease with Broadwind. The lease provided contractual indemnification, requiring Broadwind to hold City Centre harmless for any injury caused in whole or in part by Broadwind’s negligence. City Centre was sued by Scott Dhein, an employee of Broadwind, following an accident on September 9, 2013. The accident occurred on property owned by City Centre but used by Broadwind on a daily basis in the course of its business. City Centre tendered coverage to ACE. ACE refused to provide a defense or coverage to City Centre.

The circuit court granted summary judgment to ACE on the grounds that any coverage under the ACE policy was excluded as Dhein’s accident did not occur on premises rented by Broadwind and no evidence existed that Broadwind was causally negligent for Dhein’s injuries. City Centre argues that the court erred in granting summary judgment as coverage exists under both the “additional insured” and “insured contract” provisions of the ACE policy and a genuine issue of material fact exists as to Broadwind’s causal negligence.

We conclude that the additional insured endorsement provides coverage to City Centre for liability incurred for bodily injury caused by Broadwind’s “acts or omissions,” regardless of whether Broadwind is legally negligent. Even in the absence of our first conclusion, a genuine issue of material fact would exist as to Broadwind’s causal negligence so as to trigger coverage for any resulting liability under the additional insured endorsement to the extent, upon further appeal, negligence is deemed a required element for coverage under the endorsement. Moreover, Broadwind has coverage under the same policy for certain contractual indemnification obligations it may owe to City Centre as a result of Broadwind’s negligence. We also conclude, however, that City Centre cannot invoke the direct action statute to enforce Broadwind’s rights to that coverage as the direct action statute only permits an action against a liability insurer to recover insurance proceeds attributable to a negligence action, and, in this case, Broadwind’s underlying liability to City Centre can only result from contractual indemnity.

We recite the pertinent facts, address negligence and insurance law in Wisconsin, and analyze the additional insured and insured contract provisions of the ACE policy and how they apply in this case.

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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.