Archie A. Talley, Plaintiff-Appellant,
Mustafa Mustafa, d/b/a Burleigh Liquor, a/k/a Burleigh Food Market and Adams Foods, LLC, Defendants, Auto-Owners Insurance Company, Defendant-Respondent-Petitioner.
amicus curiae brief was filed on behalf of The Wisconsin
Insurance Alliance by James A. Friedman, Mark W. Hancock, and
Godfrey & Kahn, S.C., Madison.
of a decision of the Court of Appeals. Reversed.
the defendant-respondent-petitioner, there were briefs filed
by Justin F. Wallace, William R. Wick, and Nash, Spindler,
Grimstad, & McCracken, LLP, Manitowoc. There was an oral
argument by Justin F. Wallace.
the plaintiff-appellant, there was a brief filed by George E.
Chaparas and Carlson, Blau & Clemens, S.C., Milwaukee.
There was an oral argument by George E. Chaparas.
REBECCA GRASSL BRADLEY, J.
In this insurance coverage dispute, we consider whether a
business-owners liability policy covers a negligent
supervision claim arising out of an alleged
employee's intentional act of physically punching a
customer in the face. We hold that this insurance policy does
not provide coverage under these circumstances. When the
negligent supervision claim pled rests solely on an
employee's intentional and unlawful act without any
separate basis for a negligence claim against the employer,
no coverage exists. Accordingly, we reverse the decision of
the court of appeals,  which reversed the circuit
court's grant of summary judgment in favor of
Auto-Owners Insurance Company (Auto-Owners) on the coverage
issue. The circuit court correctly concluded that there is no
coverage under this business liability insurance policy for
either the employee's intentional act or the negligent
supervision claim against the employer arising solely out of
the employee's intentional act.
The insurance coverage issue in this case arises from an
incident that occurred in July 2009 at a neighborhood
convenience store, Burleigh Food Market. Mustafa Mustafa
owned and operated the store, and at the time carried a
"Businessowners' Liability Policy" with
The provisions in the business liability insurance policy
provide, as material:
1. Business Liability We will pay those sums that
the insured becomes legally obligated to pay as damages
because of "bodily injury" ... to which this
insurance applies. No other obligation or liability to pay
sums or perform acts or services is covered unless explicitly
provided for under COVERAGE EXTENSION SUPPLEMENTARY PAYMENTS.
a. This insurance applies only:
(1) To "bodily injury" or "property
(a) That occurs during the policy period; and
(b) That is caused by an "occurrence". The
"occurrence" must take place in the "coverage
1. Applicable to Business Liability Coverage -
This insurance does not apply to:
a. "Bodily injury" or "property damage"
expected or intended from the standpoint of the insured. This
exclusion does not apply to "bodily injury"
resulting from the use of reasonable force to protect persons
C. WHO IS AN INSURED
1. If you are designated in the Declarations as:
a. An individual, you and your spouse are insureds, but only
with respect to the conduct of a business of which you are
the sole owner.
b. A partnership or joint venture, you are an insured. Your
members, your partners and their spouses are also insureds,
but only with respect to the conduct of your business.
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 your
officers or directors. Your stockholders are also insureds,
but only with respect to their liability as stockholders.
2. Each of the following is also an insured:
a. Your employees, other than your executive officers, but
only for acts within the scope of their employment by you.
F. LIABILITY AND MEDICAL EXPENSES DEFINITIONS
3. "Bodily injury" means bodily injury,
sickness or disease sustained by a person, including death
resulting from any of these at any time.
9. "Occurrence" means an accident,
including continuous or repeated exposure to substantially
the same general harmful conditions.
(Some formatting altered).
On July 24, 2009, Archie A. Talley walked into Mustafa's
store to buy beer. Talley claims that while he was inside the
store, Mustafa's security guard, Keith Scott, punched him
in the face twice. Talley left the store and called police to
report the assault. Talley was taken to the hospital where he
was treated for a broken jaw.
On July 17, 2012, Talley filed suit against Mustafa, Keith
Scott,  and Mustafa's insurer, Auto-Owners.
The complaint alleged, as material:
• "[Keith Scott] was a[n] employee, security guard
and/or customer of the defendant, Mustafa Mustafa."
• "Auto-Owners . . . issued a policy of liability
insurance wherein it agreed, among other things, to pay up to
the limits of its policy any and all damages sustained as a
result of negligence in the ownership and/or maintenance of .
. . Burleigh Food Market."
• As Talley entered the store, "the alleged
security guard on the premises, began a verbal altercation
with" Talley. Talley, "while walking in the
premises was then struck by the security guard twice,
fracturing his jaw."
• "The defendants had a duty to properly train and
supervise their employees and have a duty to exercise the
highest degree of care for the safety of their customers from
any harm that might befall them by reason of the actions
and/or conduct of their employees."
• "The defendants failed to provide adequate or
proper security for their customers, and further said
defendants, their agents, employees, or representatives, were
the parties who attacked the plaintiff. A videotape viewed by
officers of the Milwaukee Police Department from the
defendants' own security system, showed the
Auto-Owners hired counsel to represent Mustafa. Auto-Owners
filed an Answer and conducted discovery, which revealed
issues related to coverage. In January 2014, Auto-Owners
notified the insured that it was defending the case under a
reservation of rights letter. In October 2014, Auto-Owners
filed a motion to bifurcate the issues of coverage and
liability and stay the proceedings on the latter so that the
coverage issue could be decided before the liability issues
The circuit court granted the motion to bifurcate and stayed
the trial on the merits to "allow the defendant to seek
a declaratory judgment with regard to insurance coverage
issues." Mustafa hired his own lawyer to represent him
on the coverage issue. In February 2015, Auto-Owners filed
its motion for declaratory and summary judgment, asking the
circuit court to declare that the insurance policy does not
provide coverage, and to grant summary judgment dismissing
Auto-Owners from the lawsuit. Auto-Owners asserted that no
coverage existed under the policy because: (1) Scott was not
Mustafa's employee, and therefore not an insured; (2)
even if a factual dispute about Scott's status exists,
Mustafa did not believe Scott was an employee; (3) an
intentional assault-punching someone in the face-is not an
"occurrence" under the insurance policy and
excluded by the intentional acts exclusion; (4) there can be
no coverage for a negligent supervision claim based on an
assault, and no negligent supervision claim exists because
Scott was not an employee.
The circuit court held two hearings on the motion and both
times concluded the Auto-Owners insurance policy did not
provide coverage for Scott or for Mustafa. The circuit court
addressed the intentional act at the May 2015 hearing and
• "So if it's an intentional act, those things
are clearly not covered under Wisconsin law. It wasn't an
• Attorneys trying to get coverage for an intentional
act will "try to shoehorn in [a] negligence claim"
to make the intentional act an occurrence. "[T]his is
not anything other than an intentional tort. It doesn't
fall within the definition of an accident that's covered
by the policy."
• Auto-Owners "has aptly pointed out in [its] brief
of what an occurrence is under Wisconsin law. And intentional
acts are simply not covered because they are not
• "And that's the ruling of the Court, and
there's no coverage."
The circuit court held a second hearing in September 2015 to
address whether coverage existed for the negligent
supervision claim, which was not discussed ...