Vol. 73, No. 4, April 2000

Previous Page

Court of Appeals Digest

by Prof. Daniel D. Blinka & Prof. Thomas J. Hammer

| Arbitration | Damages | Family Law |
| Insurance | Worker's Compensation |

Comprehensive Liability Policies - Duty to Defend/Indemnify Successor Entity

Red Arrow Products Company Inc. v. Employers Insurance of Wausau, 2000 WI App 36 (filed 19 Jan. 2000) (ordered published 23 Feb. 2000)

In May 1984 Red Arrow Products Company ("Old Red Arrow") transferred and assigned certain of its assets and liabilities to a new corporation referred to hereafter as New Red Arrow. In this case New Red Arrow appealed from an order dismissing its action requesting a declaration of the duty of Employers Insurance of Wausau to defend and/or indemnify New Red Arrow under liability policies issued by Wausau to Old Red Arrow. (Old Red Arrow existed in a variety of corporate and partnership forms prior to the 1984 transfer and assignment of assets and liabilities to New Red Arrow). New Red Arrow argued that, by operation of law, the benefits of Wausau's policies which were in effect prior to New Red Arrow's existence were transferred to it.

In a decision authored by Judge Snyder, the court of appeals concluded that New Red Arrow was not a named insured and was never assigned the policies. The 1984 sale agreement gave New Red Arrow various specified assets, but these did not include the Wausau policies. The court further rejected New Red Arrow's contention that the benefits of the Wausau policies were transferred to it by operation of law.

UIM Coverage - Stacking

Meyer v. Michigan Mutual Ins. Co., 2000 WI App 37 (filed 26 Jan. 2000) (ordered published 23 Feb. 2000)

Meyer was seriously injured at work when a semi-trailer backed into him. The truck was insured by Michigan Mutual, its policy carrying limits of $1 million. Meyer also sought underinsured motorist (UIM) coverage from Millers Classified Ins. Co. (Millers), which insured two vehicles owned by his parents, each carrying limits of $250,000. Meyer's parents also had an umbrella (excess) policy for $1 million issued by Millers. The trial judge ruled that Meyer was entitled to the UIM coverage and awarded him $1.5 million from Millers.

The court of appeals, in an opinion written by Judge Anderson, affirmed. The umbrella policy contained no definition of UIM coverage, thus forcing the court to consider the parties' intentions. The umbrella policy required the Meyerses to maintain the UIM coverage; thus, the Meyerses intended to add the $1 million coverage to the underlying UIM coverage. The court also held that the case law and the policy language dictated "that the primary and umbrella policies should be considered together for determining coverage." Adding the $1 million in excess coverage to the underlying $250,000 in UIM coverage gave the Meyerses at least a $1.25 million liability limit. Since this exceeded the $1 million that covered the semi-trailer truck, the Meyerses qualified for the "underinsured" coverage. Finally, Meyer was permitted to "stack" the twin $250,000 UIM coverage because separate premiums were paid on each vehicle.

Exclusions - Permission to Drive - Implied Permission

Heaton v. Mountin, 2000 WI App 45 (filed 19 Jan. 2000) (ordered published 23 Feb. 2000)

Robert and his wife Diane owned a car insured by American Family. Robert permitted his son, Travis, age 17, to drive the car. Travis later permitted Mountin to drive the car. Mountin struck Heaton's automobile raising the issue of whether Mountin was covered under the American Family policy, which denied coverage. The trial judge refused to grant summary judgment dismissing American Family.

The court of appeals, in an opinion written by Judge Hoover, reversed. The policy contained two applicable exclusions: (# 1) "Any person other than a relative, using your insured car without your permission, or that of an adult member of your household;" (# 3) "Any person using a vehicle without the permission of the person having lawful possession." The court held that the exclusions must be applied separately. Nothing in the policy prevented exclusion # 3 from applying to a person using the insured car. Since Travis was in lawful possession of the car and permitted Mountin to use it, Mountin was not excluded under this provision. But exclusion # 1 did bar coverage. Neither Robert nor Diane permitted Mountin to drive the car. Mountin also raised the issue of their "implied permission" to drive the car, but the summary judgment record raised disputed issues of fact and the court remanded the case for further proceedings.

Independent Contractors - Statutory Standards for Determining Independent Contractor Status

Jarrett v. Labor and Industry Review Commission, 2000 WI App 46 (filed 25 Jan. 2000) (ordered published 23 Feb. 2000)

This case concerns the test for determining whether a person is an independent contractor within the meaning of the Worker's Compensation Act. Wis. Stat. section 102.07(8)(b) articulates nine conditions that must be met before a worker is considered an independent contractor. The Labor and Industry Review Commission (LIRC) contended that this statute is the exclusive test for determining independent contractor status for worker's compensation purposes. The plaintiff argued that the LIRC must first consider common law criteria for determining whether a worker is an independent contractor or an employee and, only if it first concludes under the common law that the worker is an independent contractor, should it apply the statutory criteria.

The court of appeals, in a decision authored by Judge Hoover, agreed with the LIRC. It held that the nine criteria specified in the statute cited above supplant the common law and provide the sole test to determine independent contractor status under the Worker's Compensation Act.

Prof. Daniel D. Blinka and Prof. Thomas J. Hammer invite comments and questions about the digests. They can be reached at the Marquette University Law School, 1103 W. Wisconsin Ave., Milwaukee, WI 53233, (414) 288-7090.