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COURT OF APPEALS DECISION DATED AND RELEASED OCTOBER 8, 1996 |
NOTICE |
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A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62(1), Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 96-0188
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT III
DAVID J. HOFFMAN AND
MAYME HOFFMAN,
Plaintiffs-Appellants,
WEA INSURANCE
CORPORATION,
Nominal-Plaintiff,
v.
J. DANIEL BENSON,
Defendant-Co-Appellant,
FIDELITY &
GUARANTY INSURANCE CO.,
Defendant,
TWIN CITY FIRE
INSURANCE COMPANY,
Defendant-Respondent.
APPEAL from a judgment
of the circuit court for Vilas County:
JAMES B. MOHR, Judge. Affirmed.
Before Cane, P.J.,
LaRocque and Myse, JJ.
PER CURIAM. David Hoffman and Mayme Hoffman, his wife,
appeal a summary judgment dismissing Twin City Fire Insurance Company from this
personal injury action arising out of a skiing accident in Utah. David was injured after colliding with J.
Daniel Benson, who also appeals. The
trial court ruled that Twin City's commercial general liability policy issued
to Daniel Benson Builders, Inc., provided no coverage for David's damages
caused by the skiing accident. The
Hoffmans argue that coverage is available under three theories: (1) the plain
language of the policy; (2) an act that is part personal and part business is
covered; and (3) acts done by the insured acting within the scope of his
employment at the time of the accident.
They argue that the scope of employment is a jury question and, because
competing inferences may be drawn, summary judgment is inappropriate.
Daniel, a co-appellant,
files a separate brief and also makes three arguments: (1) the exclusionary
language of the Twin City policy is ambiguous; (2) the policy is illusory;
and (3) coverage under the Twin City policy, a commercial policy, does not
exclude coverage under Daniel's homeowner's policy. We conclude that the Twin City policy is unambiguous and that
coverage is not available for the damages alleged in this case. We therefore affirm the judgment.
The material facts are
undisputed for purposes of this appeal.
Daniel Benson is president of Daniel Benson Builders, Inc., a
residential construction company. He is
engaged in all facets of the business, except book work, and his duties are to
"[e]ffectively run my business."
Daniel and David, an employee of Custom Components, a residential
building business, attended the National Association of Home Builders
Convention in Las Vegas, Nevada. After
attending the convention, Daniel and David went to Park City, Utah, to
ski. They visited David's brother, Mark
Hoffman, who worked for Daniel Benson Builders, Inc., in the summer and worked
in Utah in the winter. Daniel
characterized the trip to Utah as follows:
"The object was for us to ski. ... I was not in Park City on my
construction business. However, we did
discuss some jobs that we had coming up this summer."
The
accident occurred on an icy hill when Daniel hit a patch of icy snow and his
ski slid out. He slid toward David,
they became entangled and David landed on Daniel. There was a steep drop off; Daniel picked up momentum and went
down, sliding a long distance and slamming into some trees.
David initiated this
personal injury action against Daniel and two insurance carriers. Twin City provided a commercial policy to
Benson Builders, and Fidelity & Guaranty Insurance Company provided a
homeowner's policy to Daniel. Fidelity
admitted coverage to Daniel for the skiing accident, but Twin City denied
coverage.
The issue is whether on
summary judgment the trial court correctly interpreted the Twin City policy to
deny coverage. This issue turns on
whether Daniel was insured under the terms of the policy. Under the terms of the policy, Daniel is
insured only with respect to his duties as an officer and director of Daniel
Benson Builders.
The policy provides:
1. If you are designated in
the Declarations as:
....
c. An
organization other than a partnership or joint venture, you are an
insured. Your executive officers and
directors are insureds, but only with respect to their duties as officers and
directors.
When facts are
undisputed and the issue involves only the interpretation of an insurance
policy, a question of law is presented appropriate for resolution on summary
judgment. See Smith v. State Farm
Fire & Cas. 127 Wis.2d 298, 301, 380 N.W.2d 372, 373 (Ct. App.
1985). We review summary judgment de novo, applying the standards in §
802.08(2), Stats. Kreinz v. NDII Secs. Corp.,
138 Wis.2d 204, 209, 406 N.W.2d 164, 166 (Ct. App. 1987). Summary judgment may be granted when
material facts are undisputed and reasonable inferences drawn from the facts
lead only to one conclusion. Green
Spring Farms v. Kersten, 136 Wis.2d 304, 314-15, 401 N.W.2d 816, 821,
(1987). Insurance contracts are
interpreted by the same principles as other contracts; in absence of an ambiguity,
their plain meaning governs. Garriguenc
v. Love, 67 Wis.2d 130, 134-35, 226 N.W.2d 414, 417 (1975). The policy is to be interpreted according to
what a reasonable person in the position of the insured would have understood
the words to mean. Id.
David argues that the
Twin City policy should be broadly interpreted to provide coverage for damages
incurred in the skiing accident for the following reasons.[1] Daniel testified that his duties were to run
his business effectively and, therefore, a reasonable person in the position of
the insured would have understood the Twin City policy to cover all those
things he did to effectively run his business.
Because the trip to Las Vegas was part business and part pleasure, and
because he talked business and discussed building and design ideas while on the
ski trip in Utah, he contends that Daniel's "acts on the trip are the acts
of an officer and director of a small corporation performing his duties toward
that corporation." David argues
that because Twin City did not expressly deny coverage for activities with
mixed business and pleasure purposes, the policy contemplated the risk. We disagree.
Here, the undisputed
facts fail to raise an inference that the ski trip was part of Daniel's
corporate duties. The corporation is a
construction business. There is no
suggestion that the skiing vacation was necessary or integral to running the
construction business. David's attempt
to hinge the ski trip to the builders' convention fails to recognize the
distinction between the two. Assuming
the trip to the Las Vegas builder's convention was business, the ski accident
did not occur until after the parties left the Las Vegas convention to go to
Utah to ski. The ski vacation's
temporal and geographical proximity to the Las Vegas convention does not transform
its nature.
Also, Daniel stated that
the object of the trip to Utah was to ski and that he was not there on
business, although he did discuss "some jobs ... coming up" while he
was there. We conclude as a matter of
law that the discussion of some jobs while on a ski vacation fails to bring the
skiing activities into the realm of "duties as an officer and
director" as those terms are ordinarily understood by a reasonable
insured. We conclude that the plain
language of the policy does not provide coverage under the facts of
record.
Next, Daniel argues that
coverage is available under a theory enunciated in Grotelueschen v.
American Family Mut. Ins. Co., 171 Wis.2d 437, 492 N.W.2d 131
(1992). We disagree. Grotelueschen held that a
comprehensive general liability policy issued to a partnership and its partners
covered a partner's liability arising out of a lawn mowing accident. The partnership owned and operated an
apartment building. The partners stored
some of the apartment building materials at a storage shed on a lot that was
owned by the partner but not operated as part of the partnership. While mowing the lawn at the shed, the
partner injured his granddaughter.
Our Wisconsin Supreme
Court relied on an "aggregate theory of partnership" to conclude that
if the policy designates the named insured as a partnership and also lists the
individual partners in describing the named insured, the policy covers the
partners as individuals. Id.
at 450, 492 N.W.2d at 136. Second, and
"[m]ore importantly, because the declarations page lists [the partner]
individually and his home address under 'Named Insured-Address' before
designating the named insured as a partnership, the policy language alone
supports finding coverage." Id. at 451, 492 N.W.2d at
136. Also, in acknowledged dicta, the
court held that because the partner kept items at the shed used to maintain
partnership property, maintaining the shed's premises benefitted the apartment
building partnership, and therefore the partner "was acting in the
ordinary course of the partnership at the time of the accident." Id. at 455, 492 N.W.2d at 137.
None of those factors is
present in the case before us. Benson
Builders is not a partnership but a corporation. Because it is a corporate entity, the aggregate partnership theory
does not apply. Also, there is no
showing that Daniel was listed as individually insured.
Next, we reject David's
argument that the record raises a material issue of fact whether Daniel was
acting in the ordinary course of business at the time of the accident. David contends that because an activity can
further both business and personal purposes, and still occur in the ordinary
course of business, a fact issue is presented whether Daniel was acting in
regard to his corporate duties when skiing.
We decline to so hold. Both
legally and factually, this argument is unpersuasive. For legal authority, David relies on dicta. Cf. id. at 452, 492
N.W.2d at 136 ("Having concluded the policy covers Dimmer, we need go no
further."). The facts on which
David relies are essentially that the ski vacation followed a business trip and
that business was discussed. We
conclude that these facts fail to raise a fact issue whether the ski accident
occurred in the ordinary course of the corporate business.
Next,
David argues that the "scope of employment" law supports a finding of
coverage. An employer is liable for the
torts of its employees that are committed while the employees are acting within
the scope of their employment. Cameron
v. City of Milwaukee, 102 Wis.2d 448, 456, 307 N.W.2d 164, 168
(1981). The act must be a
"natural, not disconnected and not extraordinary, part or incident of the
service contemplated." Id.
at 457-58, 307 N.W.2d at 168. An
employee is not acting within the scope of employment if he steps aside from
the prosecution of the employer's business to accomplish an independent purpose
of his own. Finsland v. Phillips
Petroleum Co., 57 Wis.2d 267, 276, 204 N.W.2d 1, 6, (1973). Generally, the question of scope of
employment is a factual question appropriate for jury determination. See Grotelueschen, 171
Wis.2d at 458-63, 492 N.W.2d at 139-41 (Abrahamson, J., dissenting).
Determining the
existence of a genuine issue of material fact is a question of law for the
court. Id. at 462, 492 N.W.2d at 141 (Abrahamson, J.,
dissenting). The facts on which Daniel
relies consist essentially of the ski trip's proximity to the Las Vegas trip
and conversations about business. We
conclude that the skiing vacation is too little actuated by a purpose to serve
the employer to permit the inference that the events giving rise to the injury
fell within the scope of employment. See
Finsland, 57 Wis.2d at 276, 204 N.W.2d at 6.
Next, we address
Daniel's arguments. Daniel contends
that the exclusionary language, "only with respect to their duties as
officers and directors" is ambiguous, because the term "duties"
is subject to more than one reasonable interpretation. We disagree. Because the policy does not define the term, resort may be had to
ordinary and common usage. Duty is
"obligatory tasks ... conduct, service or functions ...." Webster's
Third New Int'l Dictionary 705 (Unabr. 3d ed. 1976). That the scope of one's duty may be fact
sensitive depending on the circumstances of one's employment does not render
the term ambiguous.
Next, Daniel argues that
Grotelueschen gave approval to the dual purpose doctrine, that
"[a]n act can further part personal and part business purposes and still
occur in the ordinary course of the partnership." Id. at 454, 171 Wis.2d 437,
492 N.W.2d at 137. He argues that if
the work of the employee creates the necessity for travel, he is in the course
of his employment, even though he at the same time is serving some purpose of
his own, citing Wolfe v. Harms, 413 S.W.2d 204, 216 (Mo.
1967). Here, the facts fail to raise
the issue whether the ski trip to Utah was occasioned by his employment. By Daniel's own admission "[t]he object
was for us to ski." Consequently,
this argument fails.
Daniel also argues that
as a owner of a small company, although he is an officer, he acts like a
partner or sole proprietor and therefore, under Grotelueschen,
the dual purpose doctrine should apply.
We conclude that the facts of this case do not support the disregard of
the corporate status of Benson Builders, and consequently reject this argument.
Next, Daniel argues that
attending a builder's convention and discussions with an architect and other
business associates are duties and functions of a corporate officer, and
building good will is a valid business pursuit, and it is irrelevant where the
discussions take place. The facts of
record, however, demonstrate that the accident did not occur at the builder's
convention or even in Las Vegas, but rather during a subsequent vacation trip
to Utah. There is no suggestion that
the accident was related to a business discussion, but occurred while skiing in
icy conditions near a steep slope.
Because this conduct is too attenuated from the duty of an officer or
director, this argument also fails.
Next, Daniel argues that
the policy's failure to define its exclusionary language creates an illusory
contract. We disagree. "[A]ny interpretation, which allows one
party to a contract to determine without limitation and in a subjective manner the meaning of an ambiguous term,
comes dangerously close to an illusory or aleatory contract if it does not in
fact reach it." Gerruth
Realty Co. v. Pire, 17 Wis.2d 89, 92, 115 N.W.2d 557, 559 (1962)
(citation omitted). Because we conclude
that the definition of who is an insured is not ambiguous, we conclude that the
contract is not illusory.[2]
By the Court.—Judgment
affirmed.
This opinion will not be
published. Rule 809.23(1)(b)5, Stats.
[1] David observes that neither the policy nor Wisconsin case law defines what conduct constitutes the duties of corporate officers or directors. Also, he observes that Wisconsin statutes provide minimal guidance. Cf. § 180.0841, Stats. ("Each officer ... shall perform the duties set forth in the bylaws"); see also § 180.0801(2), Stats. However, the bylaws and articles of incorporation are not part of this record.