In Zarnstorff v. Neenah Creek Custom Trucking, 2010 WL 4008535, the insureds were both employees of Neenah Trucking. The first insured was driving a semi and the second was following the semi by car. When the semi stopped in front of an underpass, the first insured exited his car and crossed the highway to assess the height of the underpass. He then darted back across traffic causing a number of cars to swerve, resulting in a serious car accident. Id.  6. At trial the jury returned a verdict in favor of the plaintiffs and Acuity paid out the limits of its auto policy. The plaintiffs then learned that Acuity also issued a CGL Policy to the insured. The plaintiffs argued that Acuity should be estoped from denying coverage under the CGL Policy because Neenah Trucking failed to disclose the CGL Policy to plaintiffs. Id. 10. The plaintiffs also argued that the CGL Policy’s Auto Exclusion did not apply because the insured’s conduct in crossing the highway was not a “use” of the semi. Id. 9. The trial court declined to preclude Acuity from contesting coverage as a sanction and found that the insured’s conduct arose out of the use of the semi.

The court of appeals affirmed the trial court on both counts. With respect to the plaintiffs’ request for sanctions, the court found that no sanctions were warranted because Acuity’s conduct was not egregious. The court made this determination because the plaintiffs’ discovery requests seeking policies were ambiguous, the complaint’s allegations related solely to the auto policy, and Acuity willingly disclosed policy information when asked post-verdict. Id.  50-51. Additionally, the court declined to sanction Acuity because it found that the plaintiffs did not sufficiently explain why Acuity should be sanctioned for what amounted to its insured’s failure to respond to discovery. Id.  49. Finally, the court noted that the plaintiffs were not prejudiced by Acuity’s conduct. Id. 52.

With respect to whether the CGL Policy’s Auto Exclusion applied, the court found that the Auto Exclusion was not ambiguous therefore the court would not give the exclusion a strict construction. Id. 27. The court held that the term “arises out of” had a broad meaning that encompassed the insured’s conduct in crossing the highway. Id.  36. Because the bodily injury arose of the use of the semi, the court found that the plaintiffs’ reliance on the “independent concurrent cause doctrine”, as explained by the Wisconsin Supreme Court in Lawver v. Boling, 71 Wis. 2d 408, 238 N.W.2d 514 (1976), was misplaced. The court held that the “independent concurrent cause doctrine” comes into play only after it has been determined that there was injury-causing conduct that did not come within an exclusion. Id. 27. Because the court found that the injury-causing conduct in this case arose solely out of the use of the semi, the court held that there was no need to consider the “independent concurrent cause doctrine.” Id. 27 & 36.

Zarnstorff v. Neenah Creek Custom Trucking, 2010 WL 4008535
(Wis. Ct. App. October 14, 2010) (Recommended for publication.)