from a judgment of the circuit court for Fond du lac County
Nos. 2011CV879, 2011CV897, 2012CV1, DALE L. ENGLISH, Judge.
Reilly, P.J., Gundrum and Hagedorn, JJ.
This case is an insurance dispute between Addison Insurance
Company and West Bend Mutual Insurance Company. The dispute
arose when an employee of Badger State Auto Auction, Inc.
(BSAA) injured the plaintiffs while driving a vehicle it was
preparing to auction off for Fairview Auto, Inc. Addison
insures Fairview and West Bend insures BSAA.
The primary issue is whether Fairview's policy with
Addison covered the accident. The circuit court concluded it
did, resting in part on the conclusion that the BSAA driver
was acting as Fairview's agent at the time of the
accident. We reverse and conclude that the BSAA driver was
not acting as Fairview's agent. Accordingly,
Addison's policy did not cover the accident.
This case comes before us on summary judgment; the material
facts are not in dispute.
BSAA, and the Accident
Fairview is a corporation owned and operated by Jeffrey Boe.
Fairview's entire business consists of buying vehicles at
auctions and selling them at other auctions for a profit.
Fairview has long used BSAA to sell its cars. At the time of
the accident, Fairview had a policy with Addison, and BSAA
had a policy with West Bend.
On August 22, 2011, Fairview purchased a 2002 Ford Explorer
from an auction in Schofield, Wisconsin. Fairview then
arranged for the Explorer to be sold at BSAA's August 25,
2011 auction. Fairview had control over certain parts of the
auction process, but most policies and procedures were
dictated by BSAA. Regarding the sale itself, Fairview could
instruct BSAA whether the vehicle was being sold "as
is" or as "auction guaranteed." Instead of
giving BSAA a minimum price, Boe would usually stand at the
auction block and inform the auctioneer whether to sell the
vehicle or not.
BSAA, as part of its normal services, drove the Ford Explorer
from Fairview's place of business to BSAA's auction.
At the auction house, BSAA would assign each vehicle a
parking spot and a lane to travel in. BSAA also offered
services such as detailing and repairing vehicles. Once a
vehicle was on BSAA's auction site, potential buyers
could request a test drive. When the auction began, a BSAA
driver would retrieve the vehicle from its designated spot
and follow a route designated by BSAA into the auction house
where the auction would be conducted. Fairview had no input,
supervision, or control over the hiring or training of
drivers, the particular routes used inside the auction house,
the safety procedures employed by BSAA drivers, or the
management of foot traffic in the auction house.
On August 25, 2011, BSAA employee Francis Yeager was driving
vehicles for that day's auction. He was the person tasked
with driving Fairview's Ford Explorer into the auction
house. While doing so, he struck plaintiff Benjamin Romero.
Romero suffered severe injuries that resulted in the
amputation of his right leg and part of his left hand.
According to the complaints, plaintiffs George Kucharas and
Kyle Witz also suffered injuries. At the time of the
accident, Boe was inside the auction house waiting for his
vehicles to enter so that he could take his place next to the
Addison's policy provided primary liability insurance for
any covered auto Fairview owned. It contained both a Garage
Coverage Form and a Wisconsin-specific endorsement, the
Wisconsin Changes Endorsement.
The Garage Coverage Form provides the default coverage under
Addison's policy and applies unless modified by the
Endorsement. It defines "Who Is An Insured" to
include the policyholder and, with several exceptions,
"[a]nyone else while using with your permission a
covered 'auto' you own, hire or borrow." One of
the exceptions to coverage is "[s]omeone using a covered
'auto' while he or she is working in a business of
selling, servicing, repairing, parking or storing
'autos' unless that business is your 'garage
The Endorsement reads: "THIS ENDORSEMENT CHANGES THE
POLICY. PLEASE READ IT CAREFULLY." The Endorsement
states that "[f]or a covered 'auto' licensed or
principally garaged in, or 'garage operations'
conducted in, Wisconsin, the coverage form is changed as
follows." The original policy language remained
operative "unless modified by the endorsement."
The Endorsement provided in pertinent part:
A. Changes In Liability Coverage
2. If your business is selling, servicing, repairing or
parking "autos", Who Is An Insured is changed to
include anyone other than an officer, agent or
"employee" of such business while using a covered
"auto." However, that person is an
"insured" only if he or she has no other valid and
collectible insurance with at least the applicable minimum
limit specified by Wis.Stat. [§]344.01(2)(am)….
3. The following is added to Who Is An Insured:
Anyone else is an "insured" while using a covered
"auto" you own with your or any adult "family
Following the accident, Romero, Kucharas, and Witz each filed
separate personal injury lawsuits stemming from their
injuries. The three cases were consolidated into a single
case for discovery and trial. Romero's claim was mediated
and the parties eventually settled his claim for $5 million.
Addison was kept informed of the settlement negotiations and
refused to contribute to the settlement. West Bend paid the
settlement and acquired Yeager and BSAA's rights under
Fairview's policy with Addison.
West Bend then filed a cross-claim against Addison asserting
that Yeager was an insured under Addison's policy. West
Bend also maintained that Addison's policy was primary
and that Addison breached its duty to indemnify by refusing
to contribute to the settlement. Because of this alleged
breach, West Bend claimed that it was entitled to
reimbursement of $1 million-the limits of Addison's
policy-plus the costs and attorneys' fees incurred in
pursuing the claim against ...