In Scott Dhein v. Frankenmuth Mutual Insurance Company (2019AP531) District II of the Wisconsin Court of Appeals reversed a summary judgement finding on multiple grounds, including finding that there is a genuine issue of material fact. Additionally, the court denied City Centre the use of the direct action statute.  

Facts  

City Centre, LLC and Frankenmuth Mutual Insurance Company appealed the summary judgment dismissal of City Centre’s claim for coverage against ACE American Insurance Company. City Centre is the owner of large parcel of land that it portions and leases out to multiple tenants. ACE is the CGL carrier for Broadwind, one of City Centre’s commercial tenants. “City Centre is an additional insured on the ACE policy pursuant to its lease with Broadwind. The lease provided contractual indemnification, requiring Broadwind to hold City Centre harmless for any injury caused in whole or in part by Broadwind’s negligence. City Centre was sued by Scott Dhein, an employee of Broadwind, following an accident on September 9, 2013. The accident occurred on property owned by City Centre but used by Broadwind on a daily basis in the course of its business. City Centre tendered coverage to ACE. ACE refused to provide a defense or coverage to City Centre.”  

Decision  

The court concluded that the additional insured endorsement provides coverage to City Centre for liability incurred for bodily injury caused by Broadwind’s “acts or omissions,” regardless of whether Broadwind is legally negligent. Additionally, “a genuine issue of material fact exists as to Broadwind’s causal negligence so as to trigger coverage for any resulting liability under the additional insured endorsement to the extent, upon further appeal, negligence is deemed a required element for coverage under the endorsement. Moreover, Broadwind has coverage under the same policy for certain contractual indemnification obligations it may owe to City Centre as a result of Broadwind’s negligence.” Finally, City Centre cannot invoke the direct action statute to enforce Broadwind’s rights to that coverage as the direct action statute only permits an action against a liability insurer to recover insurance proceeds attributable to a negligence action, where here Broadwind’s liability could only come from contractual indemnity.