May 26, 2011 – The alleged negligent entrustment of a vehicle, involved in an accident, does not constitute an independent concurrent cause of injuries sufficient to trigger insurance coverage, a Wisconsin Supreme Court majority recently ruled.
Jessica Koehler lent her boyfriend, Jesse Raddatz, her father’s car for the sole purpose of driving to the local convenience store. But the boyfriend picked up four friends, including Jessica Siebert, and cruised to a party in Rhinelander.
While attempting to pass a truck on the highway, Raddatz lost control of the car, which swerved into a ditch and flipped. All occupants were ejected from the vehicle. Raddatz and another occupant were killed. Jessica Seibert suffered severe injuries.
The car was insured under Koehler’s father’s insurance policy with Wisconsin American Mutual Insurance Company (American Insurance). Seibert filed a direct action against American Insurance, alleging Raddatz was negligent in operating the vehicle.
American Insurance raised an affirmative defense, asserting that Raddatz exceeded the scope of his permission to use the vehicle, and thus he did not qualify as an insured under the policy. A jury found that Raddatz exceeded the scope of his permission. The circuit court dismissed.
Siebert and the other passengers (as intervenors) amended the complaint to assert that Koehler, an insured, negligently entrusted the vehicle to Raddatz because she knew he had no valid driver’s license and should have known he would create an unreasonable risk of harm.
Wisconsin American argued that “Kohler’s act of entrusting the vehicle to Raddatz is not an independent concurrent cause of the injuries suffered by Jessica Siebert … that is, Kohler’s act requires the occurrence of a non-covered risk – Raddatz’s negligent operation of the vehicle – to be actionable.” The circuit court determined coverage was not available for negligent entrustment, and the appeals court reversed, holding coverage does exist.
But in Seibert v. Wisconsin American Mutual Ins. Co., 2011 WI 35 (May 24, 2011), the Wisconsin Supreme Court – in an opinion written by Justice Annette Ziegler – reversed (4-3) the appeals court, concluding there is no coverage for the negligent entrustment claim.
The majority explained that the independent concurrent cause rule - which extends insurance coverage to an excluded risk even if the excluded risk contributed to the loss - applies only if the covered risk would be actionable independently.
If the “covered risk is not actionable without the occurrence of an excluded risk, then the covered risk is not sufficiently independent to trigger coverage under the policy,” Justice Ziegler noted. The majority concluded that Koehler’s alleged negligent entrustment claim is not actionable without the occurrence of the excluded risk, Raddatz's negligent driving. But American Insurance had an affirmative defense to Raddatz's negligent driving.
“[W]hile negligent entrustment is a separate act of negligence, liability cannot ensue without the entrustee acting in a negligent manner and inflicting injury as a result,” Ziegler wrote.
Justice N. Patrick Crooks wrote a dissenting opinion (joined by Chief Justice Shirley Abrahamson and Justice Ann Walsh Bradley), concluding that the “policy language explicitly provides coverage for Seibert’s claim … no exclusion bars coverage,” and the “analysis ends there.”
“This policy does not exclude the risk of Raddatz’s alleged negligent operation when Koehler, as the ‘insured person,’ allegedly negligently entrusts an insured car to him,” Justice Crooks wrote. “[T]he independent concurrent cause rule extends coverage; the rule does not bar coverage where the policy language provides it, nor does it serve as a means to create an excluded risk.”
John M. Swietlik Jr. and Michael D. Aiken of Kasdorf, Lewis, and Swietlik S.C., Milwaukee, represented Wisconsin American Insurance Co. Rhonda Lanford of Habush, Habush & Rottier S.C., Rhinelander, represented Jessica Seibert.