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    Court of Appeals Digest

    In this column, Profs. Daniel D. Blinka and Thomas J. Hammer summarize select published opinions of the Wisconsin Court of Appeals. Full-text decisions are linked below.

    Daniel D. Blinka & Thomas J. Hammer

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    Insurance

    Denial of Coverage – “Four-Corners” Rule – Extrinsic Evidence

    Stimac Family Tr. v. Wisconsin Power & Light Co., 2017 WI App 33 (filed 19 April 2017) (ordered published 31 May 2017)

    HOLDING: If an insurer alleges that its policy does not provide coverage but provides a defense to its insured and bifurcates the matter while coverage is contested, then the court considers the complaint, the policy, and any extrinsic evidence to determine whether coverage exists; the four-corners rule does not apply.

    SUMMARY: West Bend Mutual Insurance Co. (West Bend) insured Aquire Contracting and Restoration Inc. (Aquire). Aquire was hired to perform restoration work on a residence owned by the Stimac Family Trust (Stimac) and allegedly failed to do the work in a good and workmanlike manner. Stimac sued Aquire for damages.

    West Bend alleged that its policy did not cover the claim, but West Bend provided counsel for Aquire and bifurcated the coverage question. West Bend then moved for summary judgment on the ground that its policy did not provide coverage to Aquire because of policy exclusions. The circuit court concluded that it could not consider extrinsic evidence offered by Aquire regarding the scope of damage to the Stimac residence as well as the scope of the work done on the project because of the four-corners rule, and it granted summary judgment to West Bend.

    In a decision authored by Judge Reilly, the court of appeals reversed the circuit court. It concluded that “[i]f an insurer alleges that it has no duty to defend its insured and does not provide its insured with a defense, then the four-corners rule applies and the only documents utilized by the court [to determine coverage] are the insurance policy and the complaint. No extrinsic evidence may be considered. In contrast, if an insurer alleges that its policy does not provide coverage but provides a defense to its insured and bifurcates the matter while coverage is contested, then the court considers the complaint, the policy, and any extrinsic evidence to determine whether coverage exists” (¶ 1).

    “[W]here an insurer has satisfied its initial duty to defend by providing counsel, Wisconsin permits introduction of extrinsic evidence to resolve the coverage question” (¶ 8). Accordingly, in this case, the circuit court erred in making its summary judgment determination based solely on the four corners of the complaint (see ¶ 13).

    Coverage – Failure to Supervise – Special Relationship

    Talley v. Mustafa, 2017 WI App 31 (filed 5 April 2017) (ordered published 31 May 2017)

    HOLDING: A genuine issue of material fact existed as to whether a store owner had a “special relationship” with a man who struck a customer and whether the owner had a duty to supervise the man.

    Daniel D. Blinkaedu daniel.blinka marquette Prof. Daniel D. Blinka, U.W. 1978, is a professor of law at Marquette University Law School, Milwaukee.

    Thomas J. Hammeredu thomas.hammer marquette Prof. Thomas J. Hammer, Marquette 1975, is a law professor and Director of Clinical Education at Marquette University Law School, Milwaukee.

    SUMMARY: Talley, the plaintiff, was struck and injured by Scott while shopping at Mustafa’s store. The circuit court granted summary judgment dismissing the store’s insurer from the lawsuit on grounds that Scott had acted intentionally.

    The court of appeals reversed in an opinion authored by Judge Gundrum. Material issues of fact exist that require a trial. The complaint alleged that Mustafa had negligently failed to supervise or train Scott, who allegedly frequented and helped out in the store. Based on the factual record and case law, a reasonable insured in Mustafa’s position would expect coverage based on a customer’s allegation that a failure to train or supervise a “representative” of the store caused the customer’s injuries (see ¶¶ 30, 32). In sum, the claims were not limited to intentional acts.

    Second, the insurer was not entitled to summary judgment merely because Mustafa stated that Scott was not an employee. The record raised factual issues as to whether Scott had a “special relationship” with Mustafa that created a duty to supervise and train Scott (¶ 37).

    Juvenile Law

    Delinquency Proceedings – Consent Decrees – Consent of District Attorney Required

    State v. C.G.B., 2017 WI App 32 (filed 19 April 2017) (ordered published 31 May 2017)

    HOLDING: In a delinquency case the juvenile court does not have the authority to enter a consent decree under Wis. Stat. section 938.21(7) over the objection of the district attorney.

    SUMMARY: The district attorney filed a delinquency petition against C.G.B. The defendant thereafter filed a motion requesting that the circuit court enter an order either 1) dismissing the delinquency petition and referring the case back to the intake worker for a deferred prosecution agreement (DPA), or 2) placing him on a consent decree pursuant to Wis. Stat. section 938.21(7). This statute provides that “[i]f the court determines that the best interests of the juvenile and the public are served, the court may enter a consent decree under [Wis. Stat. section] 938.32 or dismiss the petition and refer the matter to the intake worker for deferred prosecution in accordance with [Wis. Stat. section] 938.245.”

    The state objected to C.G.B.’s motion, acknowledging that the juvenile court had the authority to dismiss the case and send it back for a DPA but disagreeing that the court could enter into a consent decree without approval from the district attorney under Wis. Stat. section 938.32.

    The juvenile court found that a DPA was not appropriate for C.G.B. given the facts of the case, but it concluded that it did have the authority to enter a consent decree over the objection of the district attorney.The district attorney did not sign the consent decree entered by the court and brought this appeal (see ¶ 4).

    In a decision authored by Judge Reilly, the court of appeals reversed the juvenile court. The appellate court noted that under State v. Lindsey A.F., 2003 WI 63, 262 Wis. 2d 200, 663 N.W.2d 757, a juvenile court has the authority under Wis. Stat. section 938.21(7) to dismiss a juvenile delinquency petition and refer the matter for deferred prosecution over the objection of the district attorney (see ¶ 5).

    But this case involved a consent decree which, under Wis. Stat. section 938.32, requires the consent, approval, and participation of the district attorney (see ¶ 6). Accordingly, the appellate court concluded that “a juvenile court does not have the authority to enter a consent decree under Wis. Stat. § 938.21(7) over the objection of the district attorney” (¶ 9).