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Hull v. Glewwe

Court of Appeals of Wisconsin, District III

May 14, 2019

Frank Hull, Plaintiff-Appellant,
v.
John Glewwe and State Farm Fire and Casualty Company, Defendants-Respondents.

          APPEAL from a judgment of the circuit court for Burnett County: No. 2017CV86 MELISSIA R. MOGEN, Judge.

          Before Stark, P.J., Hruz and Seidl, JJ.

          HRUZ, J.

         ¶1 Frank Hull appeals a judgment dismissing his negligence claim against John Glewwe and Glewwe's insurer, State Farm Fire and Casualty Company. Hull and Glewwe were both injured in an accident that occurred during a roofing project at Hull's home. In a prior lawsuit, Glewwe had pursued claims for damages arising out of the accident directly against Hull's liability insurer, Unitrin Auto and Home Insurance Company, without Hull being made a party to that action. That case terminated in a settlement agreement under which Glewwe released his claims against Hull and Unitrin in exchange for the payment of a designated sum.

         ¶2 Hull subsequently filed this negligence action against Glewwe and State Farm. The case was dismissed based upon the circuit court's conclusion that Hull was required to assert his affirmative claim for damages in the earlier lawsuit, even though he was not a party to that action. The issue presented in this appeal is whether claim preclusion and the common law compulsory counterclaim rule operate so as to bar an injured person's negligence claim against an alleged tortfeasor, when prior litigation arising out of the same accident has been settled by that injured person's insurer without that injured person having been a party to the prior litigation.

         ¶3 We conclude that, under the circumstances present in this case, Hull is not precluded from pursuing a negligence claim against Glewwe and State Farm. Because Hull was not a party to the prior action, he could only be bound to the outcome in the earlier case if he was in privity with his insurer, Unitrin. Privity, in turn, requires a sufficient alignment of interests that is lacking in this case. Specifically, although Hull's and Unitrin's interests aligned for purposes of defending against the claims in the prior lawsuit, their interests did not align for purposes of advancing Hull's affirmative claim for relief. Accordingly, we reverse the grant of summary judgment and remand for further proceedings.

         BACKGROUND

         ¶4 This appeal arises from an accident that occurred on June 30, 2015. According to the complaint, Glewwe, a contractor, was installing metal roofing panels on Hull's home. On the date of the accident, Glewwe asked for Hull's help getting some roof measurements. Glewwe had screwed a board into the home's fascia to support a "treadway," which is a wooden ladder-like structure laid across the roof to allow a person to walk on the roof without damaging the panels. Hull alleged that Glewwe failed to adequately secure the support board to the home, causing both him and Glewwe to fall from the roof. Both individuals sustained injuries in the fall.

         ¶5 In May 2016, Glewwe and his wife filed a direct action lawsuit (hereinafter, Glewwe I) in which they alleged negligence and Safe Place Act claims against Hull's homeowners' insurer, Unitrin Auto and Home Insurance Company.[1] Unitrin responded by raising several affirmative defenses, including that the claims asserted were barred "in whole or in part by Wisconsin's comparative fault statute."

         ¶6 Hull was not named as a party in Glewwe I. He did not participate in that litigation, except that he testified as a witness in a deposition. As a result, Hull did not file a counterclaim for his own damages against Glewwe or State Farm in Glewwe I, and his affirmative claims were not directly at issue in that litigation.[2] Unitrin expressly advised Hull that its duties were limited to the defense of the claim against him and it would not be representing his interests with respect to any potential claims he might have against Glewwe.

         ¶7 The parties in Glewwe I ultimately entered into a settlement agreement that resolved the litigation. In exchange for the payment of a specified sum, Glewwe released Hull and Unitrin from any liability for all injuries he sustained in the accident. The release further stated that the payment "is not to be construed as an admission of liability and is a compromise of a doubtful and disputed claim." Although the release resolved Glewwe's claims against Unitrin, the parties explicitly stated that their intentions were to "resolve a questionable claim by plaintiffs," and the release provided that "the payment to plaintiff is a significant compromise due to various factors, including issues of liability, damages, extent of care and treatment, which does not provide full compensation." Based upon the parties' stipulation, the circuit court signed an order for judgment dismissing Glewwe's claims against Unitrin "with prejudice" and "on the merits."

         ¶8 It is undisputed that Hull had no input in the drafting or execution of the Glewwe I settlement agreement, he was not consulted with respect to any matters regarding the settlement, and he did not know the case had been settled until after the fact. Unitrin has maintained, without challenge from Hull, that it had the authority to settle Glewwe's claims against it on its own, without consulting Hull or receiving his approval.

         ¶9 Hull filed the present negligence action just weeks after Glewwe I's dismissal. Glewwe and State Farm filed a joint answer and a motion for summary judgment.[3] Glewwe contended that Hull's action raised the same comparative negligence issues that had previously been decided by stipulation in Glewwe I and that permitting Hull to recover on his negligence claim would undermine the final judgment in that case. Glewwe also argued that Hull was bound by the prior lawsuit's outcome because he was in privity with his insurer, Unitrin. Accordingly, Glewwe asserted that as a function of the doctrine of claim preclusion and the common law compulsory counterclaim rule, Hull was required, but failed, to file his negligence claim as a counterclaim in Glewwe I, and his claims were therefore barred. Glewwe also asserted that permitting Hull to maintain his separate action would be contrary to the purposes of Wisconsin's direct action statute, Wis.Stat. § 632.24 (2017-18).[4]

         ¶10 The circuit court agreed with Glewwe and granted his summary judgment motion. It first concluded that the elements of claim preclusion had been satisfied. The court ruled that, under Parsons ex rel. Cabaniss v. American Family Insurance Co., 2007 WI.App. 211, 305 Wis.2d 630, 740 N.W.2d 399, an insured stands in privity with the insurer because there is but "one wrong and one cause of action." The court also determined that the causes of action were identical in that both lawsuits arose out of a common nucleus of operative facts. Finally, the court concluded that a stipulated settlement that dismisses a claim on its merits operates as a final judgment for purposes of claim preclusion.

         ¶11 The circuit court also determined that permitting Hull's action to go forward would violate Wisconsin's common law compulsory counterclaim rule. It concluded that any recovery for Hull in this action would leave Glewwe at a "substantial risk of incurring double, multiple, or otherwise inconsistent obligations and would impair the rights he established in the first action as he … may not be able to assert Mr. Hull's negligence as a defense and would not be free to argue [the amount of his damages]," potentially forcing him to return a substantial portion of his recovery from the previous lawsuit. (Internal quotation marks omitted.) The court concluded that Hull was barred from raising his present claim regardless of whether Unitrin refused to represent him in making a counterclaim, and it remarked that Hull should have retained private counsel to intervene and join in Glewwe I. Hull now appeals.[5]

         DISCUSSION

         ¶12 We review a grant of summary judgment de novo. Tews v. NHI, LLC, 2010 WI 137, ¶40, 330 Wis.2d 389, 793 N.W.2d 860. Summary judgment must be granted when there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Wis.Stat. § 802.08(2). In this case, no party argues there is a genuine dispute as to any material fact. Rather, the sole question presented is one of law: whether, under the undisputed facts present here, Hull's negligence claim is barred by the doctrine of claim preclusion and the common law compulsory counterclaim rule.

         ¶13 Glewwe argues that if Hull wished to pursue his affirmative negligence claim, he was required to file it as a counterclaim in the earlier lawsuit, in which the issue of comparative negligence was raised. As an introductory matter, we note that Hull was not named as a party in the earlier lawsuit. Glewwe sued Unitrin, Hull's insurer, pursuant to Wisconsin's direct action statute, Wis.Stat. § 632.24, which makes a liability insurer directly liable to an injured party in an amount not to exceed its policy limits.[6] It has long been established that, pursuant to this statutory language, an insured is not a necessary party to an action between the injured party and the alleged tortfeasor's insurer. Loy v. Bunderson, 107 Wis.2d ...


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