Marshall Schinner v. Michael Gundrum , 349 Wis. 2d 529 ( 2013 )

2013 WI 71
SUPREME COURT OF WISCONSIN
CASE NO.: 2011AP564
COMPLETE TITLE:
Marshall Schinner,
Plaintiff-Appellant,
v.
Michael Gundrum,
Defendant,
West Bend Insurance Company,
Defendant-Respondent-Petitioner.
REVIEW OF A DECISION OF THE COURT OF APPEALS
Reported at 340 Wis. 2d 195, 811 N.W.2d 431
(Ct. App. 2012 – Published)
PDC No: 2012 WI App 31
OPINION FILED: July 12, 2013
SUBMITTED ON BRIEFS:
ORAL ARGUMENT: October 23, 2012
SOURCE OF APPEAL:
COURT: Circuit
COUNTY: Washington
JUDGE: James G. Pouros
JUSTICES:
CONCURRED: CROOKS, J., concurs. (Opinion filed.)
DISSENTED: BRADLEY, J., ABRAHAMSON, C.J., dissents.
(Opinion filed.) CROOKS, J. joins Part II of the
dissent.
NOT PARTICIPATING:
ATTORNEYS:
For the defendant-respondent-petitioner, there were briefs
filed by Jeffrey Leavell and Christopher John Koppes, and
Jeffrey Leavell, S.C., Racine, and oral argument by Jeffrey
Leavell.
For the plaintiff-appellant, there were briefs by Keith R.
Stachowiak and Murphy & Prachthauser, S.C., Milwaukee, and
Daniel P. Patrykus and Keberle & Patrykus, LLP, West Bend, and
oral argument by Keith R. Stachowiak.
An amicus curiae brief was filed by James A. Friedman and
Linda S. Schmidt, and Godfrey & Kahn, S.C., Madison, on behalf
of the Wisconsin Insurance Alliance, and oral argument by Linda
S. Schmidt.
An amicus curiae brief was filed by Mark L. Thomsen and
Cannon & Dunphy, S.C., Brookfield, on behalf of the Wisconsin
Association for Justice.
2
2013 WI 71
NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2011AP564
(L.C. No. 2009CV870)
STATE OF WISCONSIN : IN SUPREME COURT
Marshall Schinner,
Plaintiff-Appellant,
v.
FILED
Michael Gundrum,
JUL 12, 2013
Defendant,
Diane M. Fremgen
West Bend Insurance Company, Clerk of Supreme Court
Defendant-Respondent-Petitioner.
REVIEW of a decision of the Court of Appeals. Reversed.
¶1 DAVID T. PROSSER, J. This is a review of a published
decision of the court of appeals1 reversing a grant of summary
judgment by the Washington County Circuit Court2 to West Bend
1
Schinner v. Gundrum, 2012 WI App 31, 340 Wis. 2d 195, 811
N.W.2d 431.
2
Circuit Judge James G. Pouros, presiding.
No. 2011AP564
Mutual Insurance Company (West Bend)3 against one of its
insureds.
¶2 The insured, Michael Gundrum (Gundrum), hosted an
underage drinking party. One of Gundrum's many guests, Matthew
Cecil (Cecil), assaulted and seriously injured another guest.
Gundrum knew that Cecil had a tendency to become belligerent
when he was intoxicated but he permitted Cecil to drink anyway.
The victim, Marshall Schinner (Schinner), ultimately sued
Gundrum and West Bend to secure damages for Schinner's injuries.
¶3 West Bend disputed coverage. The insurer argued that
it had no duty to defend and indemnify Gundrum because his
actions as a party host were intentional; thus, there was no
"accident" and no "occurrence" under the Gundrum family's
homeowner's insurance policy. West Bend also contended that
even if there were an occurrence under the policy, there was no
coverage because of an exclusion in the policy for bodily injury
arising out of a non-insured location. The party had been held
at a shed at Gundrum Trucking, a family-owned business that was
not an insured location under the homeowner's policy.
¶4 The circuit court granted summary judgment to West
Bend because it determined that there is no accident when
someone intentionally procures alcohol for an underage drinking
party, and even if Gundrum's actions were an accident, the
victim suffered bodily injury at an uninsured location.
3
The parties, the circuit court, and the court of appeals
have referred to the insurance company as "West Bend Insurance
Company" and "West Bend Mutual Insurance Company."
2
No. 2011AP564
¶5 The court of appeals reversed on both issues. The
court of appeals concluded that there was an occurrence because
Schinner's assault was an accident when viewed from the
standpoint of either the injured person (Schinner) or the
insured (Gundrum). The court of appeals also concluded that the
non-insured location exclusion did not apply because Schinner's
injury did not arise from some "condition" of that premises.
¶6 The primary question before us is whether Schinner's
injury resulted from an occurrence as defined by the West Bend
homeowner's insurance policy, thus triggering coverage for
Gundrum. If the answer is yes, we are required to determine
whether that coverage was excluded because the injury "arose out
of" an uninsured location that was not "used in connection with"
an insured premises under the homeowner's policy.
¶7 After carefully considering the facts in the record,
the allegations in Schinner's complaint, the pertinent language
in the homeowner's insurance policy, and our previous
interpretations of "occurrence" in insurance policies, we
reverse the court of appeals and reach the following
conclusions.
¶8 First, Gundrum's actions in setting up an isolated
shed for a drinking party, procuring alcohol and expecting
others to bring alcohol, inviting many underage guests to the
party, and encouraging the underage guests to drink——especially
an underage guest known to become belligerent when intoxicated——
were intentional actions that violated the law. Gundrum's many
intentional wrongful acts were a substantial factor in causing
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No. 2011AP564
Schinner's bodily injury. Viewed from the standpoint of a
reasonable insured, Gundrum's intentional actions created a
direct risk of harm resulting in bodily injury, notwithstanding
his lack of intent that a specific injury occur. Thus,
Schinner's bodily injury was not caused by an "occurrence"
within the meaning of the policy, and West Bend is not obligated
to provide insurance coverage for Gundrum.
¶9 Second, even assuming there was an occurrence under
the West Bend homeowner's policy, coverage is excluded because
the injury arose out of the use of an isolated shed for an
underage drinking party on uninsured premises. The fact that
the Gundrums kept some personal property insured under the
policy at the shed did not make the shed a premises used in
connection with the insured's residence, as those terms are
defined in the policy. Thus, the business shed was not an
insured location triggering coverage under the homeowner's
policy.
I. FACTUAL BACKGROUND
¶10 The facts of this case are derived from Schinner's
Second Amended Complaint against Gundrum and West Bend, witness
statements, police reports, Gundrum's deposition, and the West
Bend insurance policies of record.
¶11 In December 2008 Gundrum, then 21, resided with his
parents, Scott and Teri Gundrum, at their residence on State
Highway 144, near Slinger, Wisconsin. The Gundrums had
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No. 2011AP564
purchased a Home and Highway4 policy (homeowner's policy or the
policy) from West Bend covering their residential premises. The
homeowner's policy contained personal liability coverage for
persons insured under the policy, including Gundrum.
¶12 The personal liability coverage applied to an
"occurrence":
A. Coverage E – Personal Liability
If a claim is made or a suit is brought against
an "insured" for damages because of "bodily injury" or
"property damage" caused by an "occurrence" to which
this coverage applies, we will:
1. Pay up to our limit of liability for the
damages for which an "insured" is legally
liable. . . .
2. Provide a defense at our expense by counsel
of our choice . . . .
¶13 The homeowner's policy defined "occurrence" as "an
accident, including continuous or repeated exposure to
substantially the same general harmful conditions."
¶14 The policy contained an exclusion for bodily injury or
property damage liability arising out of a premises that is not
an "insured location."5
4
The highway, or automobile, portion of the policy is not
relevant to this case.
5
The homeowner's policy stated, "Coverages E and F do not
apply to the following: . . . 'Bodily injury' or 'property
damage' arising out of a premises: a. Owned by an 'insured'; b.
Rented to an 'insured'; or c. Rented to others by an 'insured';
that is not an 'insured location'."
5
No. 2011AP564
¶15 The homeowner's policy also defined an insured
location in part as, "[t]he residence premises," the "part of
other premises, other structures and grounds used by you as a
residence," and any premises used by the insured "in connection
with" the premises described above.
¶16 West Bend had also issued a commercial general
liability (CGL) policy to Howard, Jan, Scott, and Guy Gundrum,
doing business as HJSG Enterprises, located on Arthur Road near
Slinger. The facilities at this address were commonly referred
to as Gundrum Trucking,6 where the events in question took place.
Because of its liquor exclusion clause, HJSG's CGL policy is not
at issue in this case.
¶17 On December 14, 2008, Gundrum hosted a party in a shed
at Gundrum Trucking. The party lasted into the early morning
The homeowner's policy also contained an exclusion for
intentional injury, stating that coverage did not apply to
"'[b]odily injury' or 'property damage' which is expected or
intended by an 'insured'."
6
West Bend issued the CGL policy to HJSG Enterprises, but
the CGL policy does not refer to Gundrum Trucking.
The record includes a printed copy of the Wisconsin
Department of Financial Institutions (DFI) corporate record for
Gundrum Trucking, Inc., with its principal office on Arthur
Road, Slinger, presumably as proof of how HJSG Enterprises
publicly conducted its business, or that HJSG is a parent entity
of Gundrum Trucking, Inc. However, the DFI record for Gundrum
Trucking, Inc. does not refer to HJSG Enterprises. Moreover, a
search of DFI corporate records reveals a Scott Gundrum
Trucking, LLC, also listing its principal office on Arthur Road
in Slinger. For the sake of simplicity, we will refer to the
entity conducting business on Arthur Road near Slinger as
Gundrum Trucking.
6
No. 2011AP564
hours of December 15. It was not the first party hosted by
Gundrum at the shed. Gundrum testified in a deposition that
there was at least one prior party, but other witnesses recalled
multiple prior parties.7
¶18 As with previous parties, Gundrum texted friends about
the party and expected his friends to text or tell others,
ensuring a well-attended party. Gundrum later estimated that
more than 40 partygoers came to the shed on the night of
December 14. He also estimated that 40 to 50 percent of the
people were under the age of 21.
¶19 The site of the party was a pole barn approximately
40-by-60 feet in size. It had no windows. This shed was used
by the trucking company, but it also stored some personal
property belonging to Gundrum's extended family. The property
included boats, a camper, and two snowmobile trailers.
Gundrum's immediate family stored snowmobiles in the shed.
These snowmobiles were insured under the Gundrums' homeowner's
policy. Gundrum referred to the shed as the "toy shed" because
of "all the junk that's piled in there."
¶20 A portion of the shed was set up for parties. It was
furnished with couches, chairs, a table, a Ping-Pong table, a CD
player, and a refrigerator. The law enforcement personnel who
7
At his deposition, Gundrum testified that his father was
aware of small gatherings of friends at the shed, but that he
told Gundrum to "[u]se [his] judgment" and "to not have big
parties."
7
No. 2011AP564
responded to Schinner's injury described the atmosphere in the
shed as consistent with an "underage alcohol party."
¶21 Alcohol was prevalent at the party, despite the fact
that up to half of the guests were underage. Some guests
brought their own alcohol; underage guests expected to obtain
alcohol from people who were of legal drinking age. Gundrum
purchased two cases of Busch Light beer for a friend and
himself. He kept the beer in the refrigerator but admitted that
it was available for people who did not bring their own alcohol
to the party. Law enforcement officers reported a "large amount
of alcoholic beverages" in the shed, and Gundrum was aware that
guests were becoming intoxicated from the alcohol at the party.
In fact, Gundrum himself stopped drinking when he realized that
so many guests showed up and became intoxicated. He claimed
that he wanted to monitor the situation. Nevertheless, alcohol
consumption at the party continued. One of the party games,
"beer pong," utilized the Ping-Pong table in the shed and
encouraged more alcohol consumption.8
8
According to Schinner's testimony at the preliminary
hearing in Cecil's criminal assault case, beer pong is a game in
which cups are set up on opposite ends of a Ping-Pong table.
Teams of participants attempt to toss or bounce Ping-Pong balls
into one of the other team's cups. If successful, the other
team must drink the beer in that cup.
While there are many variations of the rules of beer pong,
"the common object is the copious consumption of alcoholic
beverages." Venito v. Salverson, No. 104110/08, 2011 WL
2464760, at *2 (N.Y. Sup. June 21, 2011). See also Kirchoff v.
Abbey, No. WMN-10-1532, 2011 WL 4711898 at *1 n.2 (D. Md. Oct.
5, 2011) ("Beer pong is a game that encourages players to drink
heavily.").
8
No. 2011AP564
¶22 Cecil was one of the intoxicated underage guests who
participated in beer pong during the party. He was known by
Gundrum and others to become belligerent when intoxicated.
Gundrum testified that he knew from previous occasions that
Cecil would become confrontational, had a history of picking on
weaker kids, and used inflammatory language when intoxicated.
¶23 Eventually, an intoxicated Cecil started to make fun
of Schinner at the party.9 At least twice Schinner asked Gundrum
to intervene. But Gundrum's lone entreaty to Cecil to cease his
abusive behavior was only temporarily successful. Cecil
returned to making fun of Schinner.
¶24 At approximately 2:30 a.m., Schinner and some of his
friends left the shed and got into a car to leave the party.
Cecil also left the shed to taunt Schinner. When Schinner got
out of the car, Cecil punched him twice in the face and then
kicked him in the head after Schinner had fallen to the ground.
Schinner was seriously injured in the assault.
¶25 About a half hour later, Washington County Sheriff
deputies and medical personnel were dispatched to Gundrum
Trucking in response to an anonymous phone call about a physical
altercation and an injured male. Deputies had trouble locating
Schinner because other guests had carried him inside the shed,
which had no windows "to peer into," and no one in the shed
would answer the door. Eventually, law enforcement and medical
9
According to various accounts by Schinner and witnesses,
Cecil referred to Schinner as a "pussy," "homo," and "fag."
9
No. 2011AP564
personnel gained entry and treated Schinner for his injuries.10
The sheriff's report noted that once law enforcement gained
access to the shed, party guests scattered and hid on top of and
behind a motorhome parked in the shed.
II. PROCEDURAL HISTORY
¶26 Schinner sued Gundrum and his insurer, West Bend, for
his injuries. The Second Amended Complaint alleged, in part:
6. Defendant Gundrum knew and expected, based
on a similar party held there months earlier, that
individuals he invited would invite other youths, who
in turn would invite others.
7. Defendant Gundrum knew and expected that a
substantial number of individuals, 40%–50% of those in
attendance, would be under the legal drinking age.
The underage attendees at the party also knew that
alcoholic beverages would be available for their
consumption.
10
Schinner testified at the preliminary hearing in Cecil's
criminal case that he suffered spinal cord damage as a result of
the assault, and while Schinner has regained some movement in
his arms and legs, he is "considered quadriplegic."
The record does not indicate what criminal charges Cecil
faced as a result of the Schinner assault. The investigating
sheriff's deputy indicated in his supplemental report on the
assault that he would be requesting charges against Cecil for
battery, with intent to cause either substantial or great bodily
harm, contrary to Wis. Stat. § 940.19(2) (2007–08). The deputy
also recommended a hate crime penalty enhancer under Wis. Stat.
§ 939.645(1)(b) (2007–08).
According to Consolidated Court Automation Programs (CCAP)
records, Cecil pled no contest to a charge of substantial
battery with intent to cause bodily harm, contrary to Wis. Stat.
§ 940.19 (2007–08). Another charge, second-degree recklessly
endangering safety, contrary to Wis. Stat. § 941.30(2) (2007–
08), was dismissed but read in.
10
No. 2011AP564
. . . .
12. Defendant Michael Gundrum realized that the
number of attendees, their age, and their intoxication
level could lead to fights or arguments, and undertook
the responsibility to monitor and supervise the party.
¶27 Schinner's first claim in the Second Amended Complaint
alleged a statutory violation in serving alcohol to minors. It
stated in part:
21. On December 14th and 15th, 2008, Gundrum
"procured" alcohol beverages for Cecil as that term is
used in Chapter 125 of the Wisconsin Statutes or sold,
dispensed[,] or gave away alcohol beverages to Cecil
a[s] those terms are used in Chapter 125 of the
Wisconsin Statutes.11
22. Further, on December 14th and 15th, 2008,
Gundrum committed affirmative acts which encouraged,
advised and assisted Cecil in his consumption of
alcohol.
23. On December 14, 2008, Gundrum knew that
Cecil had not attained the legal drinking age.
24. On December 14th and 15th, 2008, the
consumption of beer by Cecil was a substantial factor
in causing injury to plaintiff Marshall Schinner.
¶28 Schinner's second claim in the Second Amended
Complaint alleged a breach of duty as a party host that
ultimately led to Schinner's injuries.
¶29 West Bend moved the circuit court for "separate trials
on the issues of insurance coverage and liability and a stay of
proceedings on liability pending resolution of insurance
11
Gundrum pled no contest to a charge of selling or
dispensing alcohol to underage persons, contrary to Wis. Stat.
§ 125.07(1)(a) (2007–08).
11
No. 2011AP564
coverage issues."12 After conducting discovery, West Bend moved
for summary judgment.
¶30 The circuit court granted West Bend's motion,
concluding that there was no occurrence because "[t]here is no
allegation of any accidental conduct. . . . [A]ny acts on the
part of . . . Gundrum were intentional, namely his providing of
alcoholic beverages to underaged persons." In addition, the
circuit court ruled that the location exclusion in the
homeowner's policy was applicable "because the injury did not
occur at an insured location."
¶31 The court of appeals reversed. Schinner v. Gundrum,
2012 WI App 31, 340 Wis. 2d 195, 811 N.W.2d 431. The court of
appeals focused upon the assault on Schinner rather than on
Gundrum's actions in determining whether there was an
occurrence. Id., ¶10. Furthermore, the court of appeals
focused upon whether the assault was an accident from the
standpoint of the injured party——Schinner——although the court
said it would have determined that there was an occurrence even
if the assault were viewed from the standpoint of Gundrum, the
insured. Id., ¶¶10, 15.
¶32 The court of appeals cited three decisions by this
court to support its analysis that, "for purposes of determining
12
"Both the insurer and the insured have the right to have
the court resolve the issue of coverage separate from any trial
on liability." Estate of Sustache v. Am. Family Mut. Ins. Co.,
2008 WI 87, ¶26, 311 Wis. 2d 548, 751 N.W.2d 845; see also 2
Arnold P. Anderson, Wisconsin Insurance Law § 7.39, at 39 (6th
ed. 2012).
12
No. 2011AP564
whether an assault is an 'accident' or 'accidental' under an
insurance policy, the assault and resulting injuries must be
viewed from the standpoint of the person injured." Id., ¶11
(citing Tomlin v. State Farm Mut. Auto. Liab. Ins. Co., 95
Wis. 2d 215, 219, 222, 290 N.W.2d 285 (1980); Fox Wis. Corp. v.
Century Indem. Co., 219 Wis. 549, 551, 263 N.W. 567 (1935);
Button v. Am. Mut. Accident Ass'n, 92 Wis. 83, 85, 65 N.W. 861
(1896)). The court concluded that the assault was an accident
from Schinner's standpoint and that this triggered coverage for
Gundrum under the homeowner's policy. Id., ¶15. The court
acknowledged that its conclusion appeared to conflict with
Estate of Sustache v. American Family Mutual Insurance Co., 2008
WI 87, 311 Wis. 2d 548, 751 N.W.2d 845, which viewed the
question of whether an assault was an accident from the
standpoint of the insured, but the court stated that "the
outcome of the analysis is the same when viewed from either
vantage point." Schinner, 340 Wis. 2d 195, ¶16.
¶33 The court of appeals also concluded that the exclusion
for non-insured locations in the homeowner's policy did not
apply. Citing Newhouse v. Laidig, Inc., 145 Wis. 2d 236, 426
N.W.2d 88 (Ct. App. 1988), the court of appeals determined that
Schinner's injury did not "'aris[e] out of' the shed under the
terms of the policy because, while [the shed] was the undisputed
physical situs of injury, no particular condition of the
premises correlates to the basis of liability for the injury."
Id., ¶28 (emphasis added).
13
No. 2011AP564
¶34 West Bend petitioned this court for review, which we
granted on June 13, 2012.
III. STANDARD OF REVIEW
¶35 The interpretation of an insurance contract is a
question of law which this court reviews de novo. Everson v.
Lorenz, 2005 WI 51, ¶10, 280 Wis. 2d 1, 695 N.W.2d 298.
¶36 "We review a grant of summary judgment de novo,
relying on the same methodology as the circuit court." Estate
of Sustache, 311 Wis. 2d 548, ¶17 (citing Doyle v. Engelke, 219
Wis. 2d 277, 283, 580 N.W.2d 245 (1998)). Summary judgment is
proper where the record demonstrates that there is no genuine
issue as to any material fact and that the moving party is
entitled to judgment as a matter of law. Wis. Stat. § 802.08(2)
(2009–10); Estate of Sustache, 311 Wis. 2d 548, ¶17.
IV. DISCUSSION
¶37 When determining whether an insurance policy provides
coverage, a court first looks to the initial grant of coverage.
Estate of Sustache, 311 Wis. 2d 548, ¶22; Wadzinski v. Auto-
Owners Ins. Co., 2012 WI 75, ¶14, 342 Wis. 2d 311, 818
N.W.2d 819. Normally, if the court determines that the policy
was not intended to cover the asserted claims, it is not
necessary to examine the policy's exclusions. Estate of
Sustache, 311 Wis. 2d 548, ¶22. "If the court determines that
the initial grant of coverage does cover the type of claim
presented, the second step requires the court to examine the
policy's exclusions to determine whether coverage has been
withdrawn by an exclusion." Wadzinski, 342 Wis. 2d 311, ¶14
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No. 2011AP564
(citing Am. Family Mut. Ins. Co. v. Am. Girl, Inc., 2004 WI 2,
¶24, 268 Wis. 2d 16, 673 N.W.2d 65). "[I]f coverage for the
claim has been withdrawn by an exclusion, the court examines any
exceptions to that exclusion that might reinstate coverage for
the claim." Id.
¶38 We interpret an insurance contract as it would be
understood by a reasonable person in the position of the
insured. Am. Girl, 268 Wis. 2d 16, ¶23. In interpreting
insurance policy language, we seek to "give effect to the intent
of the contracting parties." Id. (citing Wis. Label Corp. v.
Northbrook Prop. & Cas. Ins. Co., 2000 WI 26, ¶23, 233
Wis. 2d 314, 607 N.W.2d 276).
A. Was There an "Occurrence"?
¶39 The Gundrums' homeowner's policy states:
A. Coverage E – Personal Liability
If a claim is made or a suit is brought against
an "insured" for damages because of "bodily injury" or
"property damage" caused by an "occurrence" to which
this coverage applies, we will:
1. Pay up to our limit of liability for the
damage to which an "insured" is legally liable. . . .
2. Provide a defense at our expense by counsel
of our choice . . . .
(Emphasis added.) As noted previously, the homeowner's policy
defines an occurrence as "an accident, including continuous or
repeated exposure to substantially the same general harmful
conditions . . . ." (Emphasis added.) The homeowner's policy
does not define the term "accident."
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No. 2011AP564
¶40 Our first task in this analysis is to determine from
whose standpoint an alleged accident should be viewed: the
injured party or the insured? We then must determine whether
the facts alleged in the Second Amended Complaint constitute an
occurrence or accident covered under the policy.
1. From Whose Standpoint Should an Accident be Viewed?
¶41 Liability insurance policies, like the homeowner's
policy in this case, typically contain a provision in which the
insurer agrees to indemnify the insured against liability
resulting from claims for bodily injury or property damage
caused by an occurrence or accident. However, insurance
treatises indicate that the definition of "occurrence" in
standard liability policies has changed over time.
¶42 Before 1966 standard insurance liability policies did
not contain an occurrence requirement. Instead, policies
"required proof that the bodily injury or property damage was
the result of an 'accident' which was interpreted to mean a
sudden, identifiable event." 3 Martha A. Kersey, New Appleman
on Insurance Law Library Edition § 18.02[6][a] (Jeffrey E.
Thomas & Francis J. Mootz, III, eds., 2012). Standard liability
policies were changed in 1966 to include the word "occurrence,"
which was defined as "an accident, including continuous or
repeated exposure to conditions, which results in bodily injury
or property damage neither expected nor intended from the
standpoint of the insured." Id.
¶43 In 1986 the definition was changed again, this time
removing the phrase "not expected or intended from the
16
No. 2011AP564
standpoint of the insured" and moving that phrase to the
intentional acts exclusion in the liability policy. See id.
¶44 Assaults, given their intentional nature, would seem
never to constitute an occurrence under a general liability
policy. However, "courts have taken or adopted two divergent
positions as to from whose perspective the assault is to be
viewed in determining whether it constitutes an 'accident'."
Annotation, Liability Insurance: Assault as an "Accident," or
Injuries Therefrom as "Accidentally" Sustained, Within Coverage
Clause, 72 A.L.R. 3d 1090, 1095 (1976); see also 9 Steven Plitt,
Daniel Maldonado & Joshua D. Rogers, Couch on Insurance § 127:21
(3d ed. 2008). Some courts have held that this determination
should be made from the standpoint of the injured party, while
other courts have held that the determination must be made from
the standpoint of the assailant who is often——but not always——
the insured.
¶45 Schinner urges us to decide the question of whether an
"accident" took place from the standpoint of the injured party.
At oral argument, counsel for Schinner asserted that if the
language "expected or intended from the standpoint of the
insured" is not present in the definition of occurrence, then,
as a default rule, the occurrence must be viewed from the
standpoint of the injured party. Schinner and the court of
appeals both look to Button, Fox, and Tomlin as Wisconsin
precedent on point. We examine each case in turn.
¶46 In Button, the insured plaintiff was injured by the
"intentional discharge of a firearm" directed at him by an
17
No. 2011AP564
unknown person. Button, 92 Wis. at 84. The policy at issue, an
accident policy, insured the plaintiff against "death or
injuries through 'external, violent, and accidental means,'" but
contained an exclusion for, among other things, intentional
injuries. Id. at 84–85. The Button court concluded that "an
injury intentionally inflicted on the insured person by another
is an 'accidental injury,' when such injury is unintentional on
the part of the insured." Id. at 85 (citation omitted). It is
important to reiterate that, in Button, the injured party was
also the insured party. Id. at 84-85.
¶47 In Fox, an insurer refused to indemnify an insured
theater when one of the theater's employees assaulted a patron
and the patron sued the theater for damages. Fox, 219 Wis. at
550 (summary of the case). Citing Button, the Fox court held
that "[w]hether or not an injury is accidental under the terms
used in the policy here involved is to be determined from the
standpoint of the person injured." Id. at 551. Thus, Fox's
holding misconstrued Button by substituting the term "injured"
for "insured." While the Button plaintiff was both the injured
and insured, Fox's holding focused exclusively on the injured
party's perspective.13
13
The court later explained the theater's position:
The appellant is subject to the liability for
damages flowing from the tortious conduct of its
employee. This liability is imposed upon [the]
assured by law under the rule of respondeat superior.
Although the appellant may be held liable for such
tort, it cannot be said that it committed the assault,
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No. 2011AP564
¶48 Finally, in Tomlin this court concluded that injuries
sustained by a state patrol officer who was stabbed by an
insured motorist during a traffic stop were "caused by
accident," within the meaning of the insured assailant's
automobile liability policy. Tomlin, 95 Wis. 2d at 222. The
Tomlin court stated:
In determining whether an injury is "caused by
accident" or "accidentally sustained" within the
coverage afforded by a liability insurance policy, the
courts have been primarily concerned with the question
of whether the occurrence is to be viewed from the
standpoint of the injured person or the insured. The
majority of courts, including this court, when
considering the question, have held or recognized that
the determination of whether injuries resulting from
an assault were caused by "accident" or "accidentally
sustained" must be made from the standpoint of the
injured party, rather than from that of the person
committing the assault.
Id. at 219 (citing Annotation, Liability Insurance: Assault as
an "Accident," or Injuries Therefrom as "Accidentally"
Sustained, Within Coverage Clause 72 A.L.R. 3d 1090 (1976); 12
George J. Couch, Ronald A. Anderson, & Mark S. Rhodes, Couch on
Insurance § 45:38, at 133-34 (2d ed. 1959)) (emphasis added).
¶49 On the surface, Tomlin stands for the proposition that
an accident should be viewed from the standpoint of the injured
party, not the insured. But there is a factual caveat. In
Tomlin, the injured officer was stabbed by a minor. The officer
nor that it authorized it. Thus the appellant has not
placed itself outside the terms of the policy . . . .
Fox Wis. Corp. v. Century Indem. Co., 219 Wis. 549, 551-52, 263
N.W. 567 (1935).
19
No. 2011AP564
sued the minor and the minor's parents. Under Wisconsin law,
Wis. Stat. § 343.15(2) (1977–78), "Any . . . wilful misconduct
of a person under the age of 18 years when operating a motor
vehicle upon the highways is imputed to the parents . . . . The
parents . . . [are] jointly and severally liable with such
operator for any damages caused by such . . . wilful
misconduct." See also Wis. Stat. § 895.035 (1977–78).
Consequently, the court may have perceived the parents as being
in the same position as the theater in Fox.
¶50 While the decisions in Button and Fox make good sense,
the rule stated in Tomlin comes out of an extraordinary
situation and is distinguishable on that basis.
¶51 Analyzing an accident from the standpoint of the
injured party goes against recent insurance decisions in
Wisconsin, which considered whether the insured acted with lack
of intent in a particular incident. See, e.g., Estate of
Sustache, 311 Wis. 2d 548, ¶52; Am. Girl, 268 Wis. 2d 16, ¶¶37–
49; Smith v. Katz, 226 Wis. 2d 798, 819–21, 595 N.W.2d 345
(1999); Bruner v. Heritage Cos., 225 Wis. 2d 728, 737–38, 593
N.W.2d 814 (Ct. App. 1999); Kalchthaler v. Keller Constr. Co.,
224 Wis. 2d 387, 397, 591 N.W.2d 169 (Ct. App. 1999); cf. 43 Am.
Jur. 2d Insurance § 674 (2003) ("The determination of whether an
injury resulted from an accident within an occurrence clause of
a liability policy is made from the standpoint of the
insured."). This approach is consistent with the idea that a
court should interpret an insurance policy from the standpoint
of a reasonable person in the position of the insured.
20
No. 2011AP564
Wadzinski, 342 Wis. 2d 311, ¶11. Moreover, when interpreting an
insurance contract a court should give effect to the intentions
of the parties, Folkman v. Quamme, 2003 WI 116, ¶12, 264
Wis. 2d 617, 665 N.W.2d 857, not the intent of a third party.
¶52 Therefore, we hold that when an insured is seeking
coverage, the determination of whether an injury is accidental
under a liability insurance policy should be viewed from the
standpoint of the insured.
2. Determining Whether an Accident Took Place
¶53 Numerous courts and commentators, both inside and
outside of Wisconsin, have attempted to define and interpret the
term "accident" when determining whether insurance coverage
applies. Compare 9 Steven Plitt, Daniel Maldonado, & Joshua D.
Rogers, Couch on Insurance § 126:26 ("an accident is a
distinctive event that is unforeseen and unintended") with 1
Arnold P. Anderson, Wisconsin Insurance Law § 5.18, at 26 (6th
ed. 2012) ("The difficulty comes in determining . . . what
triggers the coverage.").
¶54 This court has interpreted the term "accident" in an
insurance policy in previous decisions, and we look to our
earlier decisions for guidance.
¶55 In Doyle we reviewed an employer's alleged negligent
supervision of its employees. Doyle, 219 Wis. 2d at 281. The
court was called upon to interpret the term "event" in a CGL
policy, which defined "event" as "an accident, including
continuous or repeated exposure to substantially the same
general harmful conditions." Id. at 289.
21
 No. 2011AP564
¶56 Because the word "accident" was undefined in the CGL
policy, the Doyle court looked to dictionary definitions and
found that "accident" was commonly defined as "'[a]n unexpected,
undesirable event' or 'an unforeseen incident' which is
characterized by a 'lack of intention.'" Id. (quoting The
American Heritage Dictionary of the English Language 11 (3d ed.
1992)). The Doyle court also examined the dictionary definition
of negligence, which was defined as "'failure to exercise the
degree of care considered reasonable under the circumstances,
resulting in an unintended injury to another party.'" Id. at
289–90 (quoting The American Heritage Dictionary, supra, at
1209). The court noted that both definitions "center on an
unintentional occurrence leading to undesirable results," and
the court concluded that "a reasonable insured would
expect . . . [a policy] provision defining 'event' to include
negligent acts." Id. at 290 (emphasis added).14
14
Relying on dram shop law in Chapter 125 of the Wisconsin
Statutes, Schinner argues that furnishing alcohol to a minor in
Wisconsin is negligent, not intentional, conduct. He asserts
that because negligence can constitute an occurrence under an
insurance policy, Doyle v. Engelke, 219 Wis. 2d 277, 290, 580
N.W.2d 245 (1998), Gundrum's furnishing of alcohol to minors was
negligent and should trigger coverage.
We reject this argument. The facts alleged in a complaint
or as supplemented by affidavits determine a duty to defend and
trigger coverage under an insurance policy, not a plaintiff's
theories of liability. See, e.g., Doyle, 219 Wis. 2d at 284–85
(stating that the insurer has a duty to defend where the
plaintiff's complaint alleges facts that would give rise to
liability under a policy); Berg v. Schultz, 190 Wis. 2d 170,
177, 526 N.W.2d 781 (Ct. App. 1994) (courts "must focus on the
incident or injury that gives rise to the claim, not the
plaintiff's theory of liability").
22
No. 2011AP564
¶57 In American Girl we interpreted a CGL policy to
determine whether the policy provided coverage for property
damages resulting from an alleged occurrence. Am. Girl, 268
Wis. 2d 16, ¶¶1–3. In American Girl a subcontractor "gave
faulty site-preparation advice to a general contractor in
connection with the construction of a warehouse. As a result,
there was excessive settlement of the soil after the building
was completed," and the warehouse was so damaged that it had to
be torn down. Id., ¶3. Once again, the CGL policy defined
occurrence as an accident, but the policy did not define
accident. Id., ¶37.
¶58 As in Doyle, the American Girl court turned to
dictionaries for help in interpreting the term accident:
The dictionary definition of "accident" is: "an event
or condition occurring by chance or arising from
unknown or remote causes." Webster's Third New
International Dictionary of the English Language 11
(2002). Black's Law Dictionary defines "accident" as
follows: "The word 'accident,' in accident policies,
means an event which takes place without one's
foresight or expectation. A result, though
unexpected, is not an accident; the means or cause
must be accidental." Black's Law Dictionary 15 (7th
ed. 1999).
Id. (emphasis added). In light of these definitions, the
American Girl court concluded that the circumstances in the case
Furthermore, an allegation of negligence is not the
equivalent of an occurrence. Am. Family Mut. Ins. Co. v. Am.
Girl, Inc., 2004 WI 2, ¶45, 268 Wis. 2d 16, 673 N.W.2d 65
("Doyle did not . . . equate the term 'accident,' as used in the
CGL policy, with negligence as a form of legal liability; we
simply held that negligent acts were 'accidental' within the
meaning of the CGL's definition of 'event.'").
23
No. 2011AP564
constituted an occurrence under the policy: the property damage
was "clearly not intentional," nor was it "anticipated by the
parties." Id., ¶38. More specifically:
The damage to the [warehouse] occurred as a result of
the continuous, substantial, and harmful settlement of
the soil underneath the building. [The] inadequate
site-preparation advice was a cause of this exposure
to harm. Neither the cause nor the harm was intended,
anticipated, or expected. We conclude that the
circumstances of this claim fall within the policy's
definition of "occurrence."
Id. (emphasis added) (footnote omitted).15
¶59 In Everson we reviewed whether misrepresentation in a
real estate transaction constituted an occurrence under a CGL
policy. Everson, 280 Wis. 2d 1, ¶2. After the transaction, the
buyers determined that a portion of their lot was in a 100-year
floodplain, contrary to the representations made by the seller
in a real estate condition report given to the buyers.16 Id.,
¶5. As a result, the buyer was unable to build on that
location. Id. The buyer sued the seller, but the seller's
insurer argued that it had no duty to defend and indemnify under
its CGL policy to the seller. Id., ¶7. The CGL policy covered
15
See also Stuart v. Weisflog's Showroom Gallery, Inc.,
2008 WI 86, 311 Wis. 2d 492, 753 N.W.2d 448. The Stuart court
adopted American Girl's requirement that the underlying causal
event must be accidental for the event to be an occurrence, not
the unexpected result. Id., ¶40. "It does not matter whether
[the defendants] intended a specific result; what matters is
whether the cause of the damage was accidental." Id.
16
The real estate condition report appeared to have
contained a typographical error that the buyer relied upon when
purchasing a particular lot. Everson v. Lorenz, 2005 WI 51,
¶16, 280 Wis. 2d 1, 695 N.W.2d 298.
24
No. 2011AP564
property damage caused by an occurrence. The policy defined the
term "occurrence" as an accident, but "accident" was not
defined. Id., ¶¶12, 15. Thus, the Everson court had to
determine whether the seller's alleged misrepresentation
constituted an accident and triggered coverage under the CGL
policy.
¶60 Noting that "this court has often relied on dictionary
definitions for assistance," the Everson court looked to Black's
Law Dictionary, which defined an "accident" as "'[a]n unintended
and unforeseen injurious occurrence; something that does not
occur in the usual course of events or that could not be
reasonably anticipated.'" Id., ¶15 (quoting Black's Law
Dictionary 15 (7th ed. 1999)). The court also cited the Doyle
court's definition of "accident": "'[a]n unexpected, undesirable
event' or 'an unforeseen incident' which is characterized by a
'lack of intention.'" Id. (quoting Doyle, 219 Wis. 2d at 289).
¶61 Ultimately, the Everson court concluded that the
seller's misrepresentations did not constitute an accident.
Id., ¶18. The seller's misrepresentation required a "degree of
volition inconsistent with the term accident." Id., ¶19 (citing
Sheets v. Brethren Mut. Ins. Co., 679 A.2d 540, 552–53 (Md.
1999) (Karwacki, J., dissenting)) (emphasis added). The seller
may have made a mistake in a real estate condition report when
he initially placed the lot outside of the 100-year floodplain.
Id., ¶¶5 n.3, 22. However, the seller later acted with volition
when he intentionally gave this information to the buyer. Id.,
¶22 (emphasis added). "[S]tripped to its essentials," an
25
No. 2011AP564
action, not an accident, caused the seller to give misleading
information to the buyer. Id.
¶62 Finally, in Estate of Sustache, we reviewed an
occurrence case somewhat similar to this matter. Estate of
Sustache involved a fight at an underage drinking party in which
the insured punched a victim, causing the victim to fall to a
curb and sustain severe injuries that ultimately led to death.
Estate of Sustache, 311 Wis. 2d 548, ¶5. There was no dispute
that the insured assaulter intended to strike the victim, but
there was also no dispute that the insured assaulter did not
intend the blow to be fatal. Id. The estate and parents of the
victim sued the assaulter and his insurer, American Family,
which moved for summary judgment on the grounds that, inter
alia, the damages were not caused by an occurrence under the
policy. Id., ¶¶6, 12. Once again, the policy defined an
"occurrence" as an accident, but the policy did not define the
term "accident." Id., ¶9.
¶63 After reviewing our previous analysis of the term
"occurrence" in Doyle, American Girl, Everson, and Stuart v.
Weisflog's Showroom Gallery, Inc., 2008 WI 86, 311 Wis. 2d 492,
753 N.W.2d 448, we held in Estate of Sustache that the
allegations in the complaint, supplemented by the deposition of
the insured assaulter, could not "reasonably be construed to
constitute a covered claim" under the American Family policy.
Id., ¶51.
¶64 Considering one of the Doyle definitions of
"accident"——"an unintentional occurrence leading to undesirable
26
No. 2011AP564
results"——we concluded that the insured's actions did not
constitute an accident. The insured may not have intended the
unexpected result, but he did intend to throw the punch that
ultimately led to the death of the victim. Id., ¶¶52–53
(quoting Doyle, 219 Wis. 2d at 290). American Girl's definition
of "accident" also reinforced our conclusion. The means or
cause of the victim's bodily harm was an intentional punch; the
punch could not be said to occur by chance or arise from an
unknown or remote cause. Id., ¶53 (citing Am. Girl, 268
Wis. 2d 16, ¶37). We also noted that, like the
misrepresentation in Everson, the insured assaulter's action
required a degree of volition inconsistent with the term
"accident." Id., ¶54 (citing Everson, 280 Wis. 2d 1, ¶19).
¶65 With the above cases and their interpretations of an
insurance policy's requirement of an "occurrence" or "accident"
in mind, we turn to the facts of this case.
¶66 At the outset, we must determine where to focus our
analysis. More specifically, what is the injury-causing event
in this case? Is it Cecil's assault on Schinner, or is it the
actions of Gundrum in hosting the party? In this case, as
opposed to a case against Cecil, Schinner's Second Amended
Complaint alleges that wrongful conduct by Gundrum caused his
bodily injury. Normally, the allegations in a complaint are the
allegations an insurer must defend or indemnify, and it is these
alleged facts that determine whether there is coverage under the
homeowner's policy. See Doyle, 219 Wis. 2d at 284-85. Here,
the circuit court considered additional evidence, but the
27
No. 2011AP564
additional evidence did not undermine or change the thrust of
the allegations in the complaint.
¶67 There is no question that Cecil intended to assault
Schinner. Schinner does not contend that Gundrum intended or
approved of Cecil's assault or that he ever wanted to see
Schinner injured.
¶68 However, the allegations in Schinner's Second Amended
Complaint and other evidence make clear that Gundrum took a
number of intentional actions that ultimately caused Schinner's
bodily injury. Gundrum intended to host the party and, based on
the experience from an earlier party he hosted, he intended that
the "individuals he invited would invite other youths, who would
in turn invite others." Gundrum intended that minors attend his
party. He "knew and expected that a substantial number of
individuals" were under the legal drinking age and that these
underage attendees would consume alcohol made available to them
at the party. By making the arrangements for beer pong
throughout the evening, Gundrum actively promoted heavy drinking
at the party. In violation of Chapter 125 of the Wisconsin
Statutes, Gundrum procured alcohol for Cecil and other minors.
Gundrum knew that Cecil was an underage individual who became
belligerent when intoxicated. Nonetheless, Gundrum "encouraged,
advised and assisted Cecil in his consumption of alcohol."
Gundrum's actions in hosting an underage drinking party and in
procuring alcohol for Cecil and others were intentional. See
Doyle, 219 Wis. 2d at 290 (concluding that an "accident" is an
"unintentional occurrence leading to undesirable results")
28
No. 2011AP564
(emphasis added). Gundrum's actions were entirely volitional.
He did not host the underage drinking party by mistake, against
his will, or by chance. See Everson, 280 Wis. 2d 1, ¶19.
¶69 As we stated in American Girl, "A result, though
unexpected, is not an accident; the means or cause must be
accidental." Am. Girl, 268 Wis. 2d 16, ¶37 (citation omitted).
Here, "the means or cause" of Schinner's bodily injury was not
accidental. The intentional, illegal procuring and serving of
alcohol to Cecil exposed Schinner to harm. Gundrum's many
intentional acts were a substantial factor in causing Schinner's
bodily injury. The events leading up to the bodily injury were
not remote and were not accidental.
¶70 As a general rule, where an insured acts intentionally
to cause bodily injury to another, insurance coverage for the
injury will not be available. This case is more difficult
because bodily injury was not intended and there was no
certainty that it would occur. On the other hand, bodily injury
was hardly unforeseeable. All the conditions for a tragic
injury had been put in place, and they were put in place
intentionally. As the Michigan Supreme Court concluded in an
insurance coverage case dealing with an occurrence, "when an
insured's intentional actions create a direct risk of harm,
there can be no liability coverage for any resulting damage or
injury, despite the lack of an actual intent to damage or
injure." Frankenmuth Mut. Ins. Co. v. Masters, 595 N.W.2d 832,
839 (Mich. 1999) (quoting Auto Club Grp. Ins. Co. v. Marzonie,
527 N.W.2d 760, 771 (Mich. 1994) (Griffin, J., concurring)).
29
No. 2011AP564
¶71 Given the facts of this case, it is not reasonable to
argue that a fight between intoxicated teenagers was
"unexpected" or "unforeseen," Doyle, 219 Wis. 2d at 289,
especially when one of the underage drinkers was known to become
belligerent when he was drunk. Gundrum anticipated that
something undesirable, like a fight, might happen at his party:
he stopped drinking when he realized the increasing number of
guests attending the party along with the amount of alcohol
being consumed created a volatile situation. It is no leap of
logic to conclude that Gundrum knew that a combination of
underage partygoers, alcohol, and games like beer pong would
create a powder keg. To aggravate this already volatile
situation, Gundrum heard Schinner's pleas to intervene and stop
the relentless taunting he was receiving from Cecil who had a
reputation for belligerence when he was intoxicated.
¶72 Schinner urges us to adopt an approach in determining
an occurrence like the approach taken by the Minnesota Supreme
Court in American Family Insurance Co. v. Walser, 628 N.W.2d 605
(Minn. 2001). In that case, three youths were playing in a high
school gym, when one of them, Jewison, jumped up and hung from
the rim of the basketball hoop. Id. at 607. The other two
pulled on Jewison's ankles several times until finally he fell
and suffered bodily injury. Id. Jewison sued the other two
youths, Walser and Shoemaker, but Walser's insurer, American
Family, argued it had no duty to defend or indemnify Walser
because there was no occurrence under Walser's homeowner's
policy. Id. at 608. The definition of occurrence in the
30
No. 2011AP564
American Family policy was identical to the homeowner's policy
in this case——"an accident," which the policy did not define.
Id. at 609.
¶73 The Minnesota Supreme Court held that "in analyzing
whether there was an accident for purposes of coverage, lack of
specific intent to injure will be determinative, just as it is
in an intentional act exclusion analysis." Id. at 612. Thus,
the court concluded that while Walser acted intentionally——
pulling at Jewison's ankles while he hung from the basketball
hoop——Walser did not act with specific intent to injure Jewison,
thereby constituting an occurrence and triggering coverage under
the American Family policy. Id. at 613. The court also
concluded that, since the three youths were merely "goofing
around," that both Jewison and Walser had hung on the basketball
rim before and fallen to the ground without injury, and that
Walser's actions were merely impulsive actions resulting in
unintentional injury, the intentional acts exclusion did not
apply. Id. at 614–15.
¶74 We have two reservations about applying Walser to the
present situation. First, our insurance case law does not
require that an insured intend to harm, or know with substantial
certainty that harm will occur, in order to determine that the
harm was not an accident. An accident is "an unintentional
occurrence leading to undesirable results." Doyle, 219
Wis. 2d at 290. To assess the existence of an accident, a court
will focus on the "means or cause" of harm to determine whether
it was truly accidental, even if the result was unexpected. Am.
31
No. 2011AP564
Girl, 268 Wis. 2d 16, ¶37. Here, there was intentional conduct
in throwing the illegal underage drinking party and encouraging
Cecil to drink when Gundrum had knowledge of Cecil's aggressive
behavior when intoxicated. Intent, volition, knowledge, and
foreseeability are all present, consistent with our case law.
Gundrum's conduct was not accidental, so no occurrence triggered
coverage under the homeowner's policy.
¶75 Second, Gundrum's conduct and Schinner's injury differ
greatly from the conduct and injury in Walser. While the
actions of the three youths in Walser were described as "goofing
around" and "impulsive," Gundrum was doing more than "goofing
around." Gundrum planned a large drinking party, procured
alcohol for minors, knew of Cecil's belligerence, and encouraged
Cecil's consumption of alcohol. We believe that the facts of
this case——intentionally providing alcohol to minors, resulting
in bodily injury——are closer to the facts in a Minnesota Court
of Appeals case, Illinois Farmers Insurance Co. v. Duffy, 618
N.W.2d 613 (Minn. Ct. App. 2000).17
17
The Minnesota Supreme Court's decision in American Family
Insurance Co. v. Walser, 628 N.W.2d 605 (Minn. 2001), did not
specifically overrule the Minnesota court of appeals decision
cited by West Bend in this case, Illinois Farmers Insurance Co.
v. Duffy, 618 N.W.2d 613 (Minn. Ct. App. 2000), review denied
(Jan. 26, 2001). In fact, the Walser decision did not even
mention Duffy. In Duffy, the Minnesota Court of Appeals held
that the intentional act of providing alcohol to minors was
wrongful conduct and did not constitute an occurrence under a
homeowner's insurance policy. Duffy, 618 N.W.2d at 615.
32
No. 2011AP564
¶76 Schinner also contends that the lack of a liquor
exclusion in the homeowner's policy is important in this case.
He argues that since other homeowner policies contain liquor
exclusions,18 and West Bend could have put one in its policy,
this court should not rewrite the contract to help West Bend
avoid coverage. Schinner also points to the presence of a
liquor exclusion in the CGL policy for Gundrum Trucking.19 If
West Bend anticipated liquor liability coverage under the CGL
policy and specifically excluded it, he argues, then surely the
homeowner's policy was expected to cover liquor liability in the
absence of such an exclusion. We are not persuaded.
¶77 CGL policies typically contain an exclusion for liquor
liability. See, e.g., 1 Anderson, supra, at § 5.187; 9A Lee R.
It is not surprising that Duffy is still good law. The
Duffy court and courts in other states have found no accident,
or no occurrence, under a homeowner's policy when an insured
intentionally or knowingly provides alcohol to a minor and
injury results. See, e.g., Am. Modern Home Ins. Co. v. Corra,
671 S.E.2d 802, 806–07 (W. Va. 2008) (holding that there is no
occurrence and a homeowner's policy does not provide coverage
when injury is caused by an insured's conduct in "knowingly
permitting" a minor to consume alcohol on the insured's
property); Allstate Ins. Co. v. J.J.M., 657 N.W.2d 181, 184
(Mich. Ct. App. 2002) (concluding that the insured "reasonably
should have expected that giving minors enough alcohol to allow
them to pass out would result in harm" and thus no accident
giving rise to coverage existed).
18
As an example of a homeowner's policy containing a liquor
exclusion, Schinner cites Anderson v. American Family Mutual
Insurance Co., 2002 WI App 315, 259 Wis. 2d 413, 655 N.W.2d 531.
19
The written summary judgment decision in this case
mistakenly placed the liquor exclusion in the homeowner's
policy, not the CGL policy.
33
No. 2011AP564
Russ, Thomas F. Segalla, Steven Plitt, Daniel Maldonado, &
Joshua D. Rogers, Couch on Insurance § 129:32 (3d ed. 2005).
However, these same treatises say nothing about the frequency of
liquor liability exclusions in homeowner's policies. Although
Schinner cites one Wisconsin case20 to support his assertion that
these exclusions are common to homeowner's policies, the absence
of an exclusion does not necessarily mean the presence of
coverage.
¶78 As noted above, the first step in a court's analysis
of an insurance contract is to examine whether the policy
provides an initial grant of coverage. See, supra, ¶37. Hence,
if a given set of facts do not trigger coverage, it is not
necessary to look at a policy's exclusions. West Bend could
have inserted a liquor liability exclusion into the policy, but
we would not have reached it under the facts of this case
because Gundrum's intentional and illegal conduct did not lead
to coverage.
¶79 Finally, we note the strong public policy weighing
against finding an occurrence in this situation. As this court
stated in Hedtcke v. Sentry Insurance Co., 109 Wis. 2d 461, 326
N.W.2d 727 (1982):
Even where the insurance policy contains no language
expressly stating the principle of fortuitousness,
courts read this principle into the insurance policy
to further specific public policy objectives including
(1) avoiding profit from wrongdoing; (2) deterring
crime; (3) avoiding fraud against insurers; and (4)
20
See supra, n.18.
34
No. 2011AP564
maintaining coverage of a scope consistent with the
reasonable expectations of the contracting parties on
matters as to which no intention or expectation was
expressed.
Hedtcke, 109 Wis. 2d at 484 (citing Keeton, Insurance Law
§ 5.3(a) at 279 (1971)). See also 7 Steven Plitt, Daniel
Maldonado, Joshua D. Rogers, & Jordan R. Plitt, Couch on
Insurance § 101:22 (3d ed. 2006) ("In general, it is against
public policy for an insurance contract to provide coverage for
the intentional or willful misconduct of an insured."); 43 Am.
Jur. 2d Insurance § 478 (2003) ("Public policy does on occasion
demand that a wrongdoer be forbidden to shift the cost of
liability to another through insurance . . . .").
¶80 Finding an occurrence and coverage under these
circumstances would allow the host to escape responsibility for
his intentional and illegal actions. We would be sending the
wrong message about underage drinking parties, implying that
whatever tragic consequences might occur, insurance companies
will be there to foot the bill. Moreover, insurance contracts
are construed from the standpoint of what a reasonable person in
the position of the insured would believe the contract to mean.
Acuity v. Bagadia, 2008 WI 62, ¶13, 310 Wis. 2d 197, 750
N.W.2d 817; Liebovich v. Minn. Ins. Co., 2008 WI 75, ¶17, 310
Wis. 2d 751, 751 N.W.2d 764. We do not believe that a
reasonable insured would expect coverage for bodily injury
resulting from the hosting of a large, illegal underage drinking
party.
35
No. 2011AP564
¶81 We conclude that Gundrum's intentional actions in
hosting a large underage drinking party——actions that were
illegal——and providing alcohol to an individual known to become
belligerent when intoxicated, were a substantial factor in
causing Schinner's bodily injury. These causes were not
accidental. Since there was no occurrence under the homeowner's
policy, there was no initial grant of coverage to Gundrum under
the policy.
B. The Exclusion for "Arising Out Of" a Non-Insured Location
¶82 Ordinarily, if we find no initial grant of coverage
under an insurance policy, we end our inquiry. See supra, ¶37.
In this case, however, the court of appeals' interpretation of
the non-insured location exclusion has been published and should
be addressed.
¶83 The homeowner's policy contained an exclusion for
bodily injury or property damage liability arising out of a
premises that is not an "insured location" (or a premises used
by the insured "in connection with" an "insured location.")
"Coverages E and F do not apply to the following: . . . 'Bodily
injury' or 'property damage' arising out of a premises: a. Owned
by an 'insured'; b. Rented to an 'insured'; or c. Rented to
others by an 'insured'; that is not an 'insured location'."
(Emphasis added.)
¶84 The parties dispute the meaning of the phrase "arising
out of." West Bend argues that this phrase means, in the
context of a general liability insurance policy, "originating
from, growing out of, or flowing from." Garriguenc v. Love, 67
36
No. 2011AP564
Wis. 2d 130, 137, 226 N.W.2d 414 (1975). West Bend argues that
the plain language of the exclusion precludes coverage because
Schinner's injuries arose out of the shed and the Gundrums did
not use the shed "in connection with" their insured residence.
Schinner and the court of appeals disagree with this
interpretation, relying on Newhouse v. Laidig, Inc., 145
Wis. 2d 236, 426 N.W.2d 88 (Ct. App. 1988).
¶85 In Newhouse, an unsupervised child was injured when he
became entangled in a silo unloader. Id. at 238. The
defendant's homeowner's policy excluded coverage for bodily
injury "arising out of any premises owned or rented to any
insured which is not an insured location." Id. at 239. The
farm silo was not an insured location. Id.
¶86 The Newhouse court found the non-insured location
exclusion did not apply, and the homeowner's policy provided
coverage to the farm owner. Id. at 239–40. Newhouse relied on
a Missouri decision, Lititz Mutual Insurance Co. v. Branch.
Lititz involved a similar "arising out of" exclusion, but the
court held that the bodily injury in that case did not occur as
a result of "a condition" of the non-insured location. Lititz
Mut. Ins. Co. v. Branch, 561 S.W.2d 371, 374 (Mo. Ct. App.
1977). Newhouse adopted this approach: "The dispositive issue
therefore is whether there is some correlation between the
negligence giving rise to liability and a condition of the
premises." Newhouse, 145 Wis. 2d at 240 (emphasis added).
¶87 Newhouse did not cite the Garriguenc case, which
discussed the same "arising out of" language. The Garriguenc
37
No. 2011AP564
court said: "The words 'arising out of' in liability insurance
policies are very broad, general, and comprehensive; and are
ordinarily understood to mean originating from, growing out of,
or flowing from. All that is necessary is some causal
relationship between the injury and the event [here, "property"]
not covered." Garriguenc, 67 Wis. 2d at 137 (footnote omitted).
¶88 The Newhouse court provided a much narrower reading of
the "arising out of" exclusion than the Garriguenc court. In
effect, it attempted to overrule the Garriguenc decision. We
think a better reading of the exclusion is not to exclude all
liability coverage for events not on an insured premises but
rather to exclude liability coverage when there is a "causal
relationship" between the premises that are not insured and the
insured's action or non-action giving rise to liability. Cf.
St. Paul Fire & Marine Ins. Co. v. INA, 501 F. Supp. 136, 138
(W.D. Va. 1980) (stating that "arising out of" are words of much
broader significance than "caused by" and are usually understood
to mean "incident to or having connection with").
¶89 In this case, the homeowner's policy language is clear
on its face. The policy excludes coverage for injuries arising
out of a non-insured premises, not from a condition of a non-
insured premises. Schinner's bodily injury clearly arose out
of, or originated, or flowed from, the shed where the illegal
party took place on the premises of Gundrum Trucking, a non-
insured location.
¶90 In this case, a causal relationship between the shed
and Schinner's injury is present. A portion of the shed was set
38
No. 2011AP564
up for a social gathering, especially an underage drinking
party: chairs, tables, couch, a refrigerator, a CD player, and a
Ping-Pong table for beer pong. The shed had no windows, thereby
concealing the illegal activities inside. As counsel for West
Bend aptly observed at oral argument for summary judgment, "It
was an illegal party. . . . [T]hat's not the kind of thing one
could have rented out the Knights of Columbus Hall to do. Or to
have done out in your front yard at your residence. This had a
causal nexus to the premises."
C. Whether the Shed was a Premises Used in Connection With
an Insured Location
¶91 Finally, Schinner advances the argument that the shed
was in fact an insured location because it was used "in
connection with" the Gundrum's insured residence. Schinner
points to the storage of the Gundrums' insured personal
property, like snowmobiles, to turn the shed into an insured
location.21 Such an assertion defies common sense. If business
owners were allowed to store insured personal property on their
business premises and obtain insurance coverage for the premises
through a homeowner's policy, there would be much less reason to
obtain business insurance. Such a result would be absurd.
Olguin v. Allstate Ins. Co., 71 Wis. 2d 160, 165, 237 N.W.2d 694
(1976) ("[I]nsurance policies should be given a reasonable
21
The shed was used to store personal property for
Gundrum's extended family. If Schinner's argument were valid,
the shed would be used "in connection with" more than one
residence. Tortfeasors from several residences would be able to
claim coverage.
39
No. 2011AP564
interpretation and not one which leads to an absurd result.");
Wilson Mut. Ins. Co. v. Risler, 2011 WI App 70, ¶12, 333
Wis. 2d 175, 798 N.W.2d 898 ("We reject interpretations of
insurance policies that lead to absurd results.").
V. CONCLUSION
¶92 Gundrum's actions in setting up an isolated shed for a
drinking party, procuring alcohol and expecting others to bring
alcohol, inviting many underage guests to the party, and
encouraging the underage guests to drink——especially an underage
guest known to become belligerent when intoxicated——were
intentional actions that violated the law. Gundrum's many
intentional wrongful acts were a substantial factor in causing
Schinner's bodily injury. Viewed from the standpoint of a
reasonable insured, Gundrum's intentional actions created a
direct risk of harm resulting in bodily injury, notwithstanding
his lack of intent that a specific injury occur. Thus,
Schinner's bodily injury was not caused by an "occurrence"
within the meaning of the policy, and West Bend is not obligated
to provide insurance coverage for Gundrum.
¶93 Even assuming there was an occurrence under the West
Bend homeowner's policy, coverage is excluded because the injury
arose out of the use of an isolated shed for an underage
drinking party on uninsured premises. The fact that the
Gundrums kept some personal property insured under the policy at
the shed did not make the shed a premises used in connection
with the insured's residence, as those terms are defined in the
40
No. 2011AP564
policy. Thus, the business shed was not an insured location
triggering coverage under the homeowner's policy.
By the Court.—The decision of the court of appeals is
reversed.
41
No. 2011AP564.npc
¶94 N. PATRICK CROOKS, J. (concurring). I agree with
the result reached by the majority that the homeowner's policy
does not provide coverage for Schinner's injuries under these
facts. I write separately because my approach differs from both
the majority opinion and that of the dissent.
¶95 I agree with the dissent that under the insurance
policy at issue and our case law, including Doyle v. Engelke,
219 Wis. 2d 277, 580 N.W.2d 245 (1998), and Estate of Sustache
v. American Family Mutual Insurance Co., 2008 WI 87, 311 Wis. 2d
548, 751 N.W.2d 845, Cecil's assault on Schinner constitutes an
occurrence, and I join the analysis of the dissent on that
issue.
¶96 However, I agree with the majority that the non-
insured location exclusion applies because Schinner's injuries
arose out of, originated, or flowed from a non-insured location,
consistent with this court's interpretation of "arising out of"
in Garriguenc v. Love, 67 Wis. 2d 130, 226 N.W.2d 414 (1975),
and I join the analysis of the majority on that issue.
¶97 Accordingly, I respectfully concur.
1
No. 2011AP564.awb
¶98 ANN WALSH BRADLEY, J. (dissenting). I agree with
the majority when it holds that the determination of what
constitutes an "occurrence" under the insurance policy is to be
analyzed from the standpoint of the insured, not the injured
party. Majority op., ¶52. I part ways with the majority,
however, when it fails to apply that holding.
¶99 Like the unanimous court of appeals, I conclude that
the "occurrence" here is the event of an assault. The insurance
policy defines an "occurrence" as an "accident."
¶100 Applying the proper analysis, the question then
becomes whether the assault of Schinner by the assailant was an
"accident" from the standpoint of Gundrum, the insured? As even
the majority acknowledges, there is nothing in the record that
suggests that Gundrum intended the assault or any subsequent
injury to Schinner. See id., ¶67. Accordingly, when viewed
from the standpoint of the insured, the assault was unintended
and was an "accident," constituting an "occurrence" under the
policy.
¶101 Instead of identifying the assault as an "occurrence,"
the majority's analysis simply ignores it. Rather than
analyzing an "occurrence" from the standpoint of the insured, it
develops a different test, conflating a discussion of negligence
principles with the analysis required to interpret an undefined
word in an insurance policy. Ultimately, its analysis
undermines the well-established understanding that an
intentional act by an insured is within the definition of an
"occurrence" if the injury is unexpected and unintended.
1
No. 2011AP564.awb
¶102 In contrast to the majority, I conclude that the
assault is an "occurrence" for the purposes of coverage and I
further conclude that the non-insured location exclusion does
not apply under these circumstances. As a result, the relevant
insurance policy provides coverage for damages arising from
Schinner's injuries. Accordingly, I respectfully dissent.
I
¶103 The Second Amended Complaint filed in this case
identifies the assault as the occurrence. It alleges that
Schinner was "kicked . . . in the head [by the assailant],
causing permanent paralysis." The claims alleged against
Gundrum sound in negligent supervision, negligence in failing to
protect Schinner, and negligence as a matter of law.1
1
Specifically, Schinner alleged a violation of Wis. Stat.
§ 125.035, which is commonly known as the "dram shop" law. It
provides, in relevant part:
(2) A person is immune from civil liability arising
out of the act of procuring alcohol beverages for or
selling, dispensing or giving away alcohol beverages
to another person.
. . . .
(4)(a) In this subsection, "provider" means a person,
including a licensee or permittee, who procures
alcohol beverages for or sells, dispenses or gives
away alcohol beverages to an underage person in
violation of s. 125.07(1)(a).
(b) Subsection (2) does not apply if the provider knew
or should have known that the underage person was
under the legal drinking age and if the alcohol
beverages provided to the underage person were a
substantial factor in causing injury to a 3rd party.
In determining whether a provider knew or should have
known that the underage person was under the legal
drinking age, all relevant circumstances surrounding
2
No. 2011AP564.awb
¶104 Recognizing that identifying the event that should be
considered the "occurrence" is critical to the coverage
analysis, the majority jettisons the allegation of an
"occurrence" stated in the Second Amended Complaint and asks
what is "the injury-causing event in this case?" Majority op.,
¶66. It answers the question by pointing to a course of conduct
by Gundrum that allegedly was a cause of Schinner's bodily
injury and accordingly shifts its focus to Gundrum's acts as the
apparent "occurrence" without further discussion of the assault.
Id.
¶105 The remainder of the majority's analysis is fixed upon
developing a new objective test that examines remote theories of
legal causation and events that occurred up the chain of
causation. It states that "Gundrum took a number of intentional
actions that ultimately caused Schinner's bodily injury." Id.,
¶68. Ultimately, it concludes that "Gundrum's many intentional
acts were a substantial factor in causing Schinner's bodily
injury." Id., ¶69.
the procuring, selling, dispensing or giving away of
the alcohol beverages may be considered . . . .
3
No. 2011AP564.awb
¶106 Gundrum's alleged negligent acts are repeatedly
characterized as "intentional" and "illegal."2 See id., ¶¶69,
70, 81. The majority takes Gundrum to task for failing to
foresee Schinner being injured in an assault, stating that
Schinner's "bodily injury was hardly unforeseeable." Id., ¶70.
Because his acts were both "intentional" and "illegal" and
because he should have foreseen a risk of harm, the majority
concludes that there was no "accident," and thus no
"occurrence." Id., ¶81.
II
¶107 At the outset, I observe that if the majority actually
applied a "from the standpoint of the insured" test, it would be
compelled to conclude that there is an initial grant of
coverage. Guided by public policy, however, it instead
concludes that there should be no insurance coverage for hosting
an illegal underage drinking party.
2
In order to determine whether the relevant homeowner's
policy sets forth an initial grant of coverage for the claims
presented, the coverage must be compared to the allegations
advanced in the Second Amended Complaint. This is the first
step of a coverage determination——the court must examine the
facts of the insured's claim to determine whether the policy's
insuring agreement makes an initial grant of coverage. Estate
of Sustache v. Am. Family Mut. Ins. Co., 2008 WI 87, ¶22, 311
Wis. 2d 548, 751 N.W.2d 845. If the facts do not fall within
the initial grant of coverage, the analysis ends there. Id.
The Second Amended Complaint does not once use the word
"intentional," whether in reference to Gundrum or in reference
to the third-party assailant. It likewise makes no allegation
that Gundrum in fact foresaw that a fight would occur, or that a
fight was substantially certain to occur as a result of his
acts.
4
No. 2011AP564.awb
¶108 In its quest to avoid "sending the wrong message"
about underage drinking parties, the majority looks at the wrong
policy. Majority op., ¶80. Instead of looking at public
policy, it should be looking at the policy of insurance.
¶109 This homeowner's policy has a broad grant of coverage.
To narrow that coverage, the insurer in this case had available
to it several standard exclusions that are relevant here:
• An underage drinking exclusion;3
• An illegal acts exclusion;4
• An intentional acts exclusion.5
¶110 Despite the availability of those exclusions, the
insurer chose not to include them in the Gundrums' homeowner's
insurance policy or assert them as a defense to coverage. As a
result of those deficits, the majority is forced to look
elsewhere for support of its public policy determination. It is
not the court's role in this case to send a policy message,
3
A standard underage drinking exclusion would provide that
"[w]e will not cover bodily injury . . . arising out of the
insured's knowingly permitting or failing to take action to
prevent the illegal consumption of alcoholic beverages by an
underage person." 1 Susan J. Miller, Miller's Standard
Insurance Policies Annotated 238.3 (Form HOEX) (6th ed. 2012).
4
A standard illegal acts exclusion would negate coverage
for "bodily injury . . . caused by violation of a penal law or
ordinance committed by or with knowledge or consent of the
insured." 1 Susan J. Miller, Miller's Standard Insurance
Policies Annotated 238.3 (Form HOEX) (6th ed. 2012).
5
The intentional acts exclusion in the Gundrums'
homeowner's policy, which was not asserted as a coverage defense
here, precludes coverage for bodily injury "which is expected or
intended" by an insured even if the resulting bodily injury is
"of a different kind, quality or degree than initially expected
or intended . . . ."
5
No. 2011AP564.awb
right or wrong, about underage drinking parties or to determine
whether Gundrum should "escape responsibility" under these
facts. Majority op., ¶80. It is this court's role to interpret
the insurance policy——the written contract entered into by the
parties.
¶111 I turn next to discuss the primary flaws in the
majority's opinion. Its analysis: (a) ignores the need to
analyze the assault as an "occurrence," (b) develops a new
objective test that conflates principles of negligence with the
analysis required to interpret an undefined word in an insurance
policy, and (c) undermines the well-established premise that
intentional acts constitute an "occurrence" if the injury is
unexpected or unintended.
A
¶112 The majority's public policy focus leads it to ignore
the assault as an "occurrence." Contrary to what the majority
implies when it sets up a question setting forth two potential
occurrences, whether an "occurrence" exists under a set of
alleged facts is not an either-or proposition requiring the
6
No. 2011AP564.awb
court to choose between Gundrum's acts and the assault.6 An
"occurrence" in this case is easily identified. As the court of
appeals unanimously recognized, the assault itself is the
correct focus of the "occurrence" when viewed from the
standpoint of Gundrum. Schinner v. Gundrum, 2012 WI App 31,
¶22, 340 Wis. 2d 195, 811 N.W.2d 431.
¶113 Our prior precedent recognizes that an intentional
assault by a third party can constitute an "occurrence." In
Estate of Sustache v. Am. Family Mut. Ins. Co., 2008 WI 87, 311
Wis. 2d 548, 751 N.W.2d 845, this court was called upon to
determine whether an intentional assault by an insured was an
"occurrence," defined as an "accident." Although the court
determined that the assault was not an "occurrence," Estate of
6
Courts are to examine the factual circumstances alleged in
the complaint to determine whether an "occurrence" exists. See,
e.g., Doyle v. Engelke, 219 Wis. 2d 277, 284-285, 580 N.W.2d 245
(1998)("An insurer has a duty to defend a suit where the
complaint alleges facts which, if proven at trial, would give
rise to the insurer's liability under the terms of the
policy."); Smith v. Katz, 226 Wis. 2d 798, 807, 595 N.W.2d 345
(1999) ("The insurer's duty arises when the allegations in the
complaint coincide with the coverage provided by the policy.");
United Co-op v. Frontier FS Co-op., 2007 WI App 197, ¶15, 304
Wis. 2d 750, 738 N.W.2d 578 (courts are to look to whether "some
alleged event" was an "occurrence"); Glendenning's Limestone &
Ready-Mix Co., Inc. v. Reimer (Glendenning's), 2006 WI App 161,
¶37, 295 Wis. 2d 556, 721 N.W.2d 704 ("we are to look at the
factual circumstances of the claim to decide whether there is an
'occurrence' under the policy . . . ."); 1325 North Van Buren,
LLC v. T-3 Group, Ltd., 2006 WI 94, ¶58, 293 Wis. 2d 410, 716
N.W.2d 822 ("We have repeatedly rejected the argument that
insurance coverage is dependent upon the theory of liability.").
The allegations are to be liberally construed in favor of
coverage. Glendenning's, 295 Wis. 2d 556, ¶41.
7
No. 2011AP564.awb
Sustache is distinguishable because the insured in that case was
the assailant and intentionally caused the damage. Id., ¶31.
¶114 Further context is found in the analysis of this court
in Stuart v. Weisflog's Showroom Gallery, Inc., 2008 WI 86, 311
Wis. 2d 492, 753 N.W.2d 448. The Stuart court observed that
courts must "focus on the incident or injury that gives rise to
the claim, not the plaintiff's theory of liability." Id., ¶36
(quoting Berg v. Schultz, 190 Wis. 2d 170, 177, 526 N.W.2d 781
(Ct. App. 1994)).7 In this case, the assault is an incident that
gave rise to the claims at issue.
¶115 The above cases counsel that when viewed from
Gundrum's standpoint, the "occurrence" is the assault on
Schinner. Couch on Insurance further supports that the assault
in this case is an "occurrence" under the policy. It explains
that when the insured is not an assailant in a claim involving
an assault, the assault can constitute an "occurrence" when
viewed from the standpoint of the insured:
If the insured is also the assailant, the result is
that there is no coverage for the assault. . . .
However, where the insured is not the assailant but is
instead liable based upon vicarious liability,
negligent supervision, or some other negligence
7
Most recently, the court of appeals in Henshue Const.,
Inc. v. Terra Engineering & Const. Corp., slip op., no.
2012AP1038 (Ct. App. May 9, 2013) analyzed whether flood damage
caused by the insured "deliberately" cutting into a storm sewer
pipe without providing means for storm water diversion was an
"occurrence." The Henshue Const., Inc. court cautioned that
"the correct 'occurrence' question is whether the event that
caused the damage, that is, the flooding event resulting from
[the insured's] failure to divert storm water, was an accident."
Id., ¶¶60-61. Thus, the flooding event was an "occurrence."
Id., ¶62.
8
No. 2011AP564.awb
theory, the assault may constitute an accident or
occurrence, at least from the standpoint of the
insured.
Lee R. Russ & Thomas F. Segalla, Couch on Insurance § 127:21 (3d
ed. 2012).
¶116 The majority fails to explain why the assault is not
an "occurrence" when viewed from the standpoint of the insured.
Instead of analyzing the assault as the "occurrence," it is
simply ignored.
B
¶117 Furthermore, the majority develops a test that
conflates a discussion of negligence principles with the
analysis required to interpret the undefined word, "accident,"
in an insurance policy. In developing that test, it introduces
concepts that are superficially compelling, but which really do
not, or should not, drive its analysis.
¶118 The majority appears to analyze this case with an
objective test in mind, looking at whether the resulting injury
or damage was reasonably foreseeable to a reasonable person.
That analysis is irrelevant. As the majority recognized at the
outset, the question to ask is: "Did this insured expect or
intend the injury or property damage?"
¶119 When applying the wrong test, the majority takes
Gundrum to task for failing to foresee a fight. It appears to
conclude that a failure to anticipate or foresee a foreseeable
risk of harm is not an "accident." Majority op., ¶71. Yet,
injury or damage that should have been anticipated or foreseen
9
No. 2011AP564.awb
but was not is the very essence of negligence.8 Such a test
conflates negligence principles with the concept of what
constitutes an "accident" when interpreting this insurance
policy.
¶120 Negligence is defined as when "the person, without
intending to do harm, does something . . . that a reasonable
person would recognize as creating an unreasonable risk of
injury or damage to a person or property." Wis. JI-Civil 1005
(2013). In concluding that failure to anticipate or foresee
harm here is not an "accident," the majority is really declaring
that because negligent behavior is non-accidental, it is not
covered by insurance liability policies. That makes no sense
because the very reason people buy liability insurance is to
cover them for their negligent acts.
¶121 In contrast, when interpreting the undefined word
"accident" in a liability insurance policy, we often look to
precedent for guidance. This court has set forth a definition
of the term "accident": "'[a]n unexpected, undesirable event' or
'an unforeseen incident' which is characterized by a 'lack of
intention.'" Doyle v. Engelke, 219 Wis. 2d 277, 289, 580 N.W.2d
245 (1998). The definition of an "accident" by its nature
8
Cirillo v. City of Milwaukee, 34 Wis. 2d 705, 711, 150
N.W.2d 460 (1967) (there is no necessity in establishing
negligence that the actual harm was foreseen); see also Behrendt
v. Gulf Underwriters Ins. Co., 2009 WI 71, ¶¶29-31, 318 Wis. 2d
622, 768 N.W.2d 568 (discussing foreseeability); Rockweit v.
Senecal, 197 Wis. 2d 409, 423, 541 N.W.2d 742 (1995)
("Negligence is to be determined by ascertaining whether the
defendant's exercise of care foreseeably created an unreasonable
risk of harm to others.").
10
No. 2011AP564.awb
encompasses foreseeable events that were not in fact foreseen by
the insured.
¶122 The Doyle court recognized that most negligence is
accidental for the purposes of interpreting an insurance policy,
stating that liability policies are "designed to protect an
insured against liability for negligent acts resulting in damage
to third-parties." Id. at 290 (citations omitted). In short,
our prior precedent recognizes that we buy insurance to cover us
when we are negligent.
¶123 The majority's focus on the fact that Gundrum should
have anticipated or foreseen that "something undesirable" might
occur is inconsistent with the definition of an "accident" set
forth in Doyle.9 Majority op., ¶71 (emphasis in original). An
"accident" is an unforeseen event that causes injury or damage——
not an unforeseeable risk of harm that causes injury or damage.
¶124 To the extent the majority opinion can be read to
state that a risk of harm that should have been anticipated or
foreseen is not an "accident" even when the risk in fact is
unanticipated and unforeseen, it has rendered liability coverage
illusory in many circumstances. Defining the word "accident" so
narrowly "so greatly restricts the insurer's liability as to
render the policy valueless or even meaningless, and denies
9
The definition of an "accident" set forth in Doyle
likewise focuses on a failure to foresee a specific harmful
event rather than a failure to foresee general risk of harm. It
requires an "unexpected . . . event" or "unforeseen incident,"
not an unexpected or unforeseen risk of an injurious event or
incident. Doyle v. Engelke, 219 Wis. 2d 277, 289, 580 N.W.2d
245 (1998).
11
No. 2011AP564.awb
coverage for what is the predicate of any likely liability
against the insured." J. P. Ludington, Liability Insurance:
"Accident" or "Accidental" as Including Loss Resulting From
Ordinary Negligence of Insured or his Agent, 7 A.L.R. 3d 1262,
§ 2 (1966).
C
¶125 Ultimately, the majority's analysis undermines the
well-established understanding that an intentional act by an
insured is within the definition of an "occurrence" if the
injury or damage is unexpected and unintended. Multiple
treatises discussing general principles of insurance law explain
that an "occurrence" exists if the injury or damage is
unexpected and unintended.
¶126 One treatise provides that the "vast majority of
decisions" have held that "intentional conduct can constitute an
accident if the insured did not intend or expect to cause
injury." Allan D. Windt, Insurance Claims & Disputes:
Representation of Insurance Companies & Insureds, § 11:3 (2013).
It sets forth the straightforward rule embraced by the "vast
majority of decisions" as follows:
The correct analysis is as follows. An "occurrence"
is defined in a typical general liability policy as an
"accident." The word "accident" must be given its
ordinary, dictionary definition, and the ordinary,
dictionary definition of "accident" is a happening
that occurs unintentionally. Accordingly, damage that
the insured intended——including . . . damage that is
inherent or substantially certain to result——is not
covered. Damage that the insured did not intend is
covered . . . . In fact . . . damage that the insured
did not intend is covered regardless of whether the
insured's act was volitional. A standard insuring
12
No. 2011AP564.awb
agreement requires only that the property
damage/bodily injury have been caused by an
occurrence/accident. It is enough if the
damage/injury "occurs unintentionally" by reason of
something that the insured has done.
Id. In an admonition that should give the majority pause, it
further states that courts should "[k]eep in mind" that "under
standard policy language, the "occurrence" is not limited to
actions taken by the insured, but includes any event that causes
injury/damage during the policy period." Id.
¶127 Another treatise observes that courts ordinarily
examine "whether the insured intends or expects the results of
its conduct, not necessarily whether the insured intends or
expects the conduct itself, to determine whether there is an
'occurrence' . . . ." 1 New Appleman Law of Liability
Insurance, § 1.09[1] (2d ed. 2012). Yet another states that "in
order for a claim to be actionable under a liability policy, the
insured's negligence must result in an 'accident' . . . [t]he
word 'accident' implies a misfortune with concomitant damage to
a victim, and not the negligence which eventually results in
that misfortune." Lee R. Russ & Thomas F. Segalla, Couch on
Insurance § 126:26 (3d ed. 2012). Many jurisdictions have
accordingly focused on whether the injury or damages were
unexpected and unintended. See J.P. Luddington, Liability
Insurance: "Accident" or "Accidental" as Including Loss
Resulting From Ordinary Negligence of Insured or his Agent, 7
A.L.R. 3d 1262 (1966).
¶128 This court has long adhered to the principle that
insurance policies are to be interpreted as understood by a
13
No. 2011AP564.awb
reasonable person in the position of the insured. Frost v.
Whitbeck, 2002 WI 129, ¶20, 257 Wis. 2d 80, 654 N.W.2d 225. A
reasonable person in the position of the insured understands the
word "accident" to encompass unexpected and unintended injuries
or damages. See Doyle, 219 Wis. 2d 277, 289 (ascribing the
"common, everyday meaning" to the word "accident").
¶129 The majority's analysis not only appears to
require unexpected and unintended injury or damage, but also
that the acts of the insured non-assailant must be
unintentional. Majority op., ¶68. Such a requirement appears
to eliminate coverage anytime an insured acts with intention,
regardless of whether the injury or damage is unexpected and
unintended.10
10
The majority's citation to Frankenmuth Mut. Ins. Co. v.
Masters (Masters), 595 N.W.2d 832 (Mich. 1999) affords it no
assistance for two reasons. First, the facts of that arson case
are different from those in this case. In Masters, the insured
and his son intentionally set fire to their own clothing store
so as to destroy inventory and collect the insurance proceeds.
Id. at 835. Here, Gundrum is not a participant in anything
similar to an insurance scam. The majority errs in making such
a comparison.
14
No. 2011AP564.awb
¶130 In determining that there is no coverage under the
insurance policy, the majority fails to apply its holding that
the determination of what constitutes an "occurrence" is to be
analyzed from the standpoint of the insured. Instead it simply
ignores the assault as an "occurrence," develops an objective
test that conflates a discussion of negligence principles with
the analysis required to interpret an undefined word in an
insurance policy, and undermines the well-established
understanding that an intentional act by an insured is within
the definition of an "occurrence" if the injury or damage is
unexpected and unintended. By failing to apply its holding, the
majority is led astray.
III
Second, the majority does not capture the Masters court's
complete analysis. It reasoned that "[o]f course, 'an insured
need not act unintentionally' in order for the act to constitute
an 'accident' and therefore an 'occurrence.'" Id. at 838-39.
To illustrate its analytical framework, it gave an example of a
fire that was started by a faulty electric cord on a coffeemaker
owned by the insured. Id. at 839 (quotation omitted). It
stated that "there is no doubt that [the insured] purposely
plugged in the coffeemaker and turned on the switch," and acted
"intentionally." Id. (quotation omitted.) Nevertheless, "[t]he
fire remains an accident and the act constitutes an
occurrence . . . because at the time of the insured's purposeful
act he had no intent to cause harm. The act of plugging in the
coffeepot is not a sufficiently direct cause of the harm, and
the fire in this example is an accident." Id. (quotation
omitted.)
Thus, Masters not only does not help the majority, it
undermines the analysis. Masters counsels in favor of finding
an "occurrence" in this case. Gundrum is not like the insured
that intentionally set a fire hoping to cause damage and thereby
collect insurance proceeds. Instead he is like the insured who
plugged in a faulty coffeepot——he had no intent to cause harm,
and the assault is an accident from his standpoint. Id.
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No. 2011AP564.awb
¶131 Even though the majority's coverage analysis should
end with its determination that there is no coverage, it
nevertheless proceeds to analyze whether coverage should be
denied because of an exclusion for bodily injury or property
damage liability "arising out of a premises" that is not an
insured location. Majority op., ¶¶82, 83. The majority
concludes for the second time that there is no coverage.
¶132 In contrast to the majority, I apply the tried and
true principles of coverage examination and conclude that
coverage is not excluded by the non-insured location exclusion.
I look first to determine whether there is a grant of coverage.
Estate of Sustache, 311 Wis. 2d 548, ¶22. If there is a grant
of coverage under the facts alleged, I must determine whether an
exclusion applies. Id., ¶23. If an exclusion applies, I then
must determine whether an exception to the exclusion reinstates
coverage. See id.
¶133 The Gundrums' homeowner's policy provides coverage for
"bodily injury" or "property damage" that is "caused by an
'occurrence.'" It provides a basic grant of coverage in which
the insurer agreed to pay all sums that Gundrum is legally
obligated to pay as damages because of bodily injury or property
damage caused by an "occurrence":
If a claim is made or a suit is brought against an
"insured" for damages because of "bodily injury" or
"property damage" caused by an "occurrence" to which
this coverage applies . . . .
¶134 An "occurrence" is defined as "an accident, including
continuous or repeated exposure to substantially the same
general harmful conditions," but the word "accident" is not
16
No. 2011AP564.awb
defined in the policy. This basic grant of coverage is
substantially similar to countless standardized "occurrence"-
based liability insurance policies that are purchased by
individuals and businesses throughout the state. See 1 New
Appleman Law of Liability Insurance, § 1.07[2] (2d ed. 2012).
¶135 In order to fall within the grant of coverage, the
Second Amended Complaint must allege facts showing that
Schinner's bodily injury was caused by an "occurrence," which is
defined as an "accident." For the reasons discussed above, I
conclude that the assault was an "occurrence" when viewed from
Gundrum's standpoint. Because the assault was an "occurrence,"
the allegations in the Second Amended Complaint fall within the
policy's grant of coverage.
¶136 Having determined that the assault is an "occurrence,"
the next step is to determine whether an exclusion applies.
Estate of Sustache, 311 Wis. 2d 548, ¶23. The only exclusion
argued to apply in this case is a non-insured location
exclusion, which excludes bodily injury "arising out of a
premises" that is not an "insured location."11 An "insured
location" is defined in part as "[t]he residence premises," the
"part of other premises, other structures and grounds used by
you as a residence," and any premises used by the insured "in
connection" with the premises described in the policy.
¶137 The court of appeals in Newhouse v. Ladig, Inc., 145
Wis. 2d 236, 426 N.W.2d 88 (Ct. App. 1988) addressed the same
11
There is no liquor liability exclusion in the Gundrums'
policy. Likewise, no one argues that an exclusion precluding
coverage for intentional acts applies.
17
No. 2011AP564.awb
issue before this court today——what is the meaning of the phrase
"arising out of a . . . premises." Its analysis is instructive
in evaluating whether the non-insured location exclusion applies
in this case.
¶138 Under the interpretation adopted in Newhouse, the non-
insured location exclusion applies to bodily injuries "related
to conditions of the premises on which an accident or occurrence
takes place." Id. at 239. It does not, however, apply to
"insureds' tortious acts occurring on uninsured lands." Id.
The ultimate test for whether there was bodily injury or
property damage "arising out of a . . . premises" is "whether
there is some correlation between the negligence giving rise to
liability and a condition of the premises."12 Id. at 240.
¶139 Thus, under Newhouse, the facts alleged must indicate
that there was some correlation between Gundrum's negligence
giving rise to liability and a condition of the premises on
which the assault occurred. Here, however, no condition of the
shed itself or the surrounding premises is alleged to correlate
with Gundrum's alleged negligence. The only arguable
correlation between Gundrum's alleged negligence and the shed is
that Gundrum's alleged negligence occurred at an underage
12
In interpreting a non-insured location exclusion, the
Newhouse court relied upon Wisconsin's "policy of strictly
interpreting exclusionary clauses." 145 Wis. 2d at 242. It
observed that "if the [insurance] company had intended to
geographically limit coverage for tortious personal conduct, 'it
could simply have provided that the exclusion ran to an accident
'occurring on' other owned premises.'" Id. (quotation omitted).
18
 No. 2011AP564.awb
drinking party hosted by Gundrum on the premises where the shed
was located.
¶140 Such a tenuous connection to the premises is not
enough to fall within the non-insured location exclusion. The
Newhouse court soundly rejected the argument that tortious acts
occurring on a non-insured premises are excluded from coverage:
It makes no difference whether the insured owns the
premises on which his tortious act takes place. Under
the policy's terms, there is floating coverage for the
insured's tortious personal acts wherever he might be.
The dispositive issue is therefore whether there is
some correlation between the negligence giving rise to
liability and a condition of the premises.
Id. at 240. Like Newhouse, it makes no difference here that the
alleged tortious acts merely occurred on a non-insured premises.
The exclusion is therefore inapplicable and no analysis of any
exceptions to the exclusion is required. Estate of Sustache,
311 Wis. 2d 548, ¶23.
¶141 Because facts alleged in the Second Amended Complaint
fall within the policy's grant of coverage and because coverage
is not excluded by the non-insured location exclusion, I
conclude that the homeowner's policy provides coverage in this
case. Accordingly, I respectfully dissent.
¶142 I am authorized to state that CHIEF JUSTICE SHIRLEY S.
ABRAHAMSON joins this dissent. I am also authorized to state
that JUSTICE N. PATRICK CROOKS joins Part II of this dissent.
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No. 2011AP564.awb
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