Customer’s Auto Insurer Must Defend Menards for Potential Employee Negligence
By Joe Forward, Legal Writer, State Bar of Wisconsin
Jan. 7, 2013 – An employee of Menard Inc. was considered a “permissive user” of a customer’s truck while loading lumber onto it with a fork lift, meaning the customer’s auto insurer must now defend and possibly indemnify Menard, a state appeals court has ruled.
Vicki Blasing was standing next to her truck in Menards’ lumber yard while a Menard employee maneuvered a forklift to load the truck with lumber she had purchased from the home improvement store. Several boards rolled off the forklift and injured Blasing’s foot.
Blasing has an auto insurance policy with American Family Insurance.
After Blasing sued Menard for negligence and violations of the state’s safe place statute, Menard argued that American Family must defend and possibly indemnify Menard for any liability it has related to Blasing’s injury, because its employee was “using” her truck.
Recently, in Blasing v. Menard Inc., 2012AP858 (Jan. 3, 2013), the District IV Wisconsin Court of Appeals agreed with Menard, concluding that state auto insurance law demands that result.
“If this is the result the legislature does not desire, it should amend the omnibus statute to prevent such results in the future,” wrote Judge Paul Lundsten for a three-judge panel, referring to Wis. Stat section 632. “For now, we are bound by the statute.”
Under Wis. Stat. section 632.32(3)(a), “[c]overage provided to the named insured applies in the same manner and under the same provisions to any person using any motor vehicle.” However, under section 632.32(5)(a), policies can limit coverage to use that is with permission of the named insured only. Blasing’s American Family policy limits coverage to “permissive users.”
“A number of courts have concluded that loading and unloading a vehicle constitutes ‘use,’” explained the panel, noting Menards’ employee had permission to load lumber onto it using a forklift and the parties agreed that “loading and unloading” constitutes “use” of a vehicle.
American Family argued that even if the employee is considered a “permissive user” under the statute, absurdity results, and statutes can’t be construed to work an absurd result. However, the appeals panel was not persuaded by American Family’s “absurdity” argument.
“The issue here involves providing coverage to a permissive vehicle user who is not a policyholder,” Judge Lundsten wrote. “The proposition that policyholders pay for insurance that is sometimes used to, in effect, assist a permissive user tortfeasor is nothing unusual.”
The panel likened the situation to one in which an insured person lends his or her car to an uninsured driver, now a permissive user, and the driver runs over the insured’s foot.
American Family also argued that, from Blasing’s point of view, requiring American Family to defend and possibly indemnify Menard, which has its own general commercial liability policy, could lead to raised insurance premiums for Blasing. Again, the panel was not convinced.
“[T]his is an odd absurdity argument because a raised premium would be an absurdity of American Family’s own making,” Judge Lundsten wrote in a footnote. “That is, American Family itself can avoid what it deems an absurd consequence by simply not raising Blasing’s premium.”
And contrary to American Family’s argument, the panel explained that a decision for Menard on the insurance question does not “open a door that has previously been thought closed.”
“This result may seem odd to some, but it does not rise to the level of being unreasonable or absurd,” wrote Judge Lundsten, noting the legislature can always amend the omnibus statute.