Najjar Abdullah v. Inspire Brands, Inc. ( 2024 )

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
April 9, 2024
A party may file with the Supreme Court a
Samuel A. Christensen petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10 and
RULE 809.62.
Appeal No. 2022AP1306 Cir. Ct. No. 2020CV1986
STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT I
NAJJAR ABDULLAH,
PLAINTIFF,
THE CITY OF MILWAUKEE MEDICAL PLAN,
INVOLUNTARY-PLAINTIFF,
WEST BEND MUTUAL INSURANCE COMPANY,
INTERVENOR-RESPONDENT,
V.
INSPIRE BRANDS, INC.,
DEFENDANT,
MERESS & ASSOCIATES LLC,
DEFENDANT-APPELLANT.
No. 2022AP1306
APPEAL from orders of the circuit court for Milwaukee County:
PAUL R. VAN GRUNSVEN, Judge. Affirmed.
Before White, C.J., Geenen and Gill, JJ.
Per curiam opinions may not be cited in any court of this state as precedent
or authority, except for the limited purposes specified in WIS. STAT. RULE 809.23(3).
¶1 PER CURIAM. Meress & Associates LLC (“Meress”) appeals
orders of the circuit court denying its motion for summary judgment, granting the
cross-motion for summary judgment of West Bend Mutual Insurance Company
(“West Bend”), and entering judgment in West Bend’s favor. Meress argues that
the circuit court erred when it concluded that West Bend had no duty to defend
Meress under the insurance policy issued by West Bend to Meress (the “Policy”).
We reject Meress’s arguments and affirm.
BACKGROUND
¶2 On September 7, 2018, Najjar Abdullah and his fifteen-year-old
daughter went to Buffalo Wild Wings in Glendale, Wisconsin, after a high school
football game. When he and his daughter entered, Grant Nelson, a security guard
employed by Meress and acting within the scope of his employment at the
restaurant, angrily stated that patrons needed to be twenty-one years of age to enter.
Abdullah’s daughter left, and Abdullah told Nelson that he wanted to place a to-go
order. Abdullah began talking with a manager, Justin Weber, at the front desk, when
Nelson intervened by pushing Abdullah in the chest and telling him to step out of
the restaurant. When Abdullah tried to tell Nelson that he was only speaking with
Weber, Nelson again pushed Abdullah before pepper spraying Abdullah in the face.
Nelson called the police to the restaurant and falsely told them that Abdullah had
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No. 2022AP1306
been disorderly. As a result, Abdullah was arrested, handcuffed, driven to the police
station in a squad car, booked, and cited for disorderly conduct. The City of
Glendale Municipal Court dismissed the citation on January 20, 2020. At all times
relevant to this lawsuit, Nelson did not have a license or permit to act as a security
guard, as required by Wisconsin law.
¶3 On March 11, 2020, Abdullah filed the instant case alleging, among
other claims, that Meress negligently hired and supervised Nelson because Nelson
lacked a license or permit to act as a security guard when he assaulted Abdullah.
On March 21, 2020, West Bend sent a letter to Meress denying it had a duty to
defend or indemnify Meress in Abdullah’s lawsuit.
¶4 Abdullah’s case was removed to the United States District Court for
the Eastern District of Wisconsin, and West Bend intervened seeking a declaratory
judgment that it had no duty to defend or indemnify Meress under the Policy in
effect at the time of the events giving rise to the lawsuit. Abdullah settled his claims
against Inspire Brands, Inc., the owner/franchisor of Buffalo Wild Wings, and
Meress, and the federal court remanded the case back to Milwaukee County Circuit
Court.
¶5 Meress and West Bend filed cross-motions for summary judgment
asking to the circuit court to decide whether West Bend owed duties of defense and
indemnification to Meress. The circuit court granted West Bend’s motion and
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denied Meress’s motion, concluding that West Bend did not owe duties of defense
or indemnification to Meress.1
¶6 Meress appeals.
DISCUSSION
¶7 Meress argues that several provisions of the Policy provide an initial
grant of coverage for the claims alleged in Abdullah’s complaint, and no exclusions
apply that would preclude coverage. Pointing specifically to the allegation that it
was negligent in unlawfully hiring Nelson as an unlicensed security guard, Meress
says that West Bend’s duty to defend has been triggered.
¶8 The duty to defend is related to but distinct from the duty to
indemnify. Unlike the duty to indemnify, the duty to defend “is based upon the
nature of the claim and not on the merits of the claim.” Fireman’s Fund Ins. Co.
of Wis. v. Bradley Corp., 2003 WI 33, ¶21, 261 Wis. 2d 4, 660 N.W.2d 666. It
arises when the complaint alleges facts that, if proven, would constitute a covered
claim under the policy. Choinsky v. Employers Ins. Co. of Wausau, 2020 WI 13,
¶16, 390 Wis. 2d 209, 938 N.W.2d 548. Thus, “[t]he duty to defend is necessarily
broader than the duty to indemnify because the duty to defend is triggered by
arguable, as opposed to actual, coverage.” Fireman’s Fund, 261 Wis. 2d 4, ¶20.
¶9 To determine whether allegations in a complaint trigger an insurer’s
duty to defend the insured, we compare the allegations within the “four corners” of
1
Although the circuit court appeared to use the term “coverage” interchangeably while
analyzing the duties to defend and indemnify while ruling on the cross-motions for summary
judgment, this is largely because that is how the issues were presented in the briefs. In any event,
it is clear from the circuit court’s written decision that it applied the correct standard of law and
only applied the Policy and Wisconsin law to the allegations in the Abdullah complaint when
concluding that West Bend owed no duties to Meress.
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No. 2022AP1306
the complaint to the plain and ordinary meaning of the language of the entire
insurance policy, including exclusions if an initial grant of coverage is shown.
Water Well Sols. Servs. Grp., Inc. v. Consolidated Ins. Co., 2016 WI 54, ¶¶19, 31,
369 Wis. 2d 607, 881 N.W.2d 285; Bank One v. Breakers Dev., Inc., 208 Wis. 2d
230, 233, 559 N.W.2d 911 (Ct. App. 1997). We accept the allegations as true, draw
all reasonable inferences from them, and resolve any doubt as to coverage in favor
of the insured. Fireman’s Fund, 261 Wis. 2d 4, ¶¶19-20.
¶10 We review orders granting summary judgment, interpret insurance
policies, and determine whether the duty to defend was triggered independently and
without deference to the circuit court. Green Spring Farms v. Kersten, 136 Wis. 2d
304, 315, 401 N.W.2d 816 (1987) (explaining that orders granting summary
judgment are reviewed de novo); Employers Mut. Cas. Co. v. Horace Mann Ins.
Co., 2005 WI App 237, ¶5, 287 Wis. 2d 418, 707 N.W.2d 280 (indicating that the
interpretation of insurance policies is subject to de novo review); Choinsky, 390
Wis. 2d 209, ¶13 (explaining that the existence of duty to defend is a question of
law reviewed de novo).
I. West Bend has no duty to defend Meress under Coverage A.
¶11 Meress argues that Coverage A of the Policy provides coverage in the
instant case triggering West Bend’s duty to defend. Coverage A provides coverage
for “those sums that the insured becomes legally obligated to pay as damages
because of ‘bodily injury[,]’” but only if the bodily injury is caused by an
“occurrence.” As it did in the circuit court, Meress relies primarily on non-binding,
non-Wisconsin cases to support its argument that the allegations involving its
unlawful hiring of Nelson as an unlicensed security guard constitutes an
“occurrence.” The circuit court, following Talley v. Mustafa, 2018 WI 47, 381
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No. 2022AP1306
Wis. 2d 393, 911 N.W.2d 55, disagreed, and concluded that there was no
“occurrence” as defined by the Policy and Wisconsin law. We agree with the circuit
court that Talley controls this issue and that coverage was not triggered because
there was no “occurrence.”
¶12 The Policy defines the term “occurrence” as “an accident[.]”
“Accident” is not defined in the Policy, but Wisconsin courts have defined
“accident” to mean an “unexpected, undesirable event’ or ‘an unforeseen incident’
which is characterized by a ‘lack of intention.’” Doyle v. Engelke, 219 Wis. 2d 277,
289, 580 N.W.2d 245 (1998), overruled on other grounds by Talley, 381 Wis. 2d
393; Doe 1 v. Archdiocese of Milwaukee, 2010 WI App 164, ¶7, 330 Wis. 2d 666,
794 N.W.2d 468. Here, both parties agree that Nelson’s alleged actions (i.e.,
pushing and pepper spraying Abdullah, calling the police, and falsely claiming that
Abdullah was being disorderly) were intentional and not accidental.
¶13 Instead, the issue is whether the complaint contains allegations that
Meress acted negligently in a specific way that led Nelson to commit his intentional
injury-causing acts. This issue was squarely addressed in Talley. In Talley, a
security guard at a convenience store punched a customer in the face twice. The
customer sued the security guard, the security guard’s employer, and the employer’s
liability insurer. Id., 381 Wis. 2d 393, ¶¶4-5. Among other claims, the customer
alleged that the employer was negligent in failing “to properly train and supervise
their employees[.]” Id., ¶5. The insurer defended the employer under a reservation
of rights but moved to bifurcate the issues of coverage and liability. Id., ¶6.
¶14 Like the Policy in this case, coverage in the Talley policy was only
triggered by an “‘occurrence,’ which is defined as an accident.” Id., ¶16.
Ultimately, the Talley court agreed with the insurer that there was no “occurrence”
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No. 2022AP1306
triggering coverage. It explained that the focus of the inquiry was on the “injury-
causing event,” i.e., the punching, and in order to constitute an “occurrence,” there
must be a separate, independent act by the employer that accidentally caused the
injury-causing event. Id., ¶29. It reasoned:
[Customer’s] allegations asserting negligent
supervision are entirely dependent upon the intentional act
giving rise to the injury—the punching. The factual
allegations say the punching caused [Customer’s] injury. It
is the only injury-causing event. There are no factual
allegations that [Employer] knew or should have known that
[Security Guard/Employee] was likely to punch customers
in the face. There are no facts alleging that [Employer] acted
in a specific way that led [Security Guard/Employee] to
commit the act causing the injury. Because [Customer] does
not present any separate basis for [Employer’s]
negligence—any independent act by [Employer] that
accidentally caused [Customer’s] injury—no coverage
exists.
Id., ¶29.
¶15 The Talley court cited QBE Ins. Corp. v. M & S Landis Corp., 915
A. 2d 1222 (Pa. Super. 2007) as an example of a negligent supervision claim that
constituted an “occurrence” that triggered insurance coverage. Talley, 381 Wis. 2d
393, ¶30. In QBE, the court held the insurer had a duty to defend its insured—a
nightclub—on the plaintiff’s claim that the employer was negligent in failing to
properly train its bouncer employees on how to safely evict unruly patrons from the
club and how to render first aid. Id., 915 A. 2d 1222, ¶¶11-15. After removing a
patron from the nightclub, the bouncers threw the man on the ground, pinned him
face down, and laid on top of him for so long that the man suffocated. Id., ¶11. The
QBE court identified factual allegations in the complaint of negligence against the
nightclub, separate from the bouncers’ intentional acts, sufficient to conclude that
the negligence claims “[could] be considered an ‘accident’ triggering an occurrence
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No. 2022AP1306
under [the] policy.” Id., ¶12. Specifically, the QBE court highlighted the
allegations that the nightclub failed to properly teach the bouncers how to eject
patrons, use the correct amount of restraint, and render first aid. Id., ¶¶11-12. “That
is, had the employer in QBE taught its bouncers how to safely restrain and remove
a patron and how to render first aid, the man in QBE may not have been injured.”
Talley, 381 Wis. 2d 393, ¶30.
¶16 Meress argues that the Abdullah complaint contains specific
allegations of separate acts from Meress that trigger an “occurrence” under the
Policy; namely, that Meress failed to properly credential Nelson, who did not have
a license to operate as an armed security guard, before hiring him. However, as
West Bend correctly points out, the alleged separate acts need to bear some relation
to the injury-causing event. The allegation that Meress failed to properly credential
Nelson falls short of the specific separate acts contemplated by Talley and present
in QBE. Here, there was no indication that Meress knew or should have known that
Nelson was likely to pepper spray a patron or that it acted in a particular way that
caused Nelson to pepper spray Abdullah. See Talley, 381 Wis. 2d 393, ¶29
(suggesting that the employer would need to have known or should have known that
the employee was likely to punch a customer, or that the employer acted in a
particular way that would have caused the employee to punch a customer).
¶17 Accordingly, we conclude that West Bend has no duty to defend
Meress under Coverage A.
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No. 2022AP1306
II. West Bend has no duty to defend Meress under Coverage B.
¶18 Meress next argues that West Bend’s duty to defend is triggered under
Coverage B, which provides that West Bend “will pay those sums that the insured
becomes legally obligated to pay as damages because of ‘personal and advertising
injury’ to which this insurance applies.” “‘Personal and advertising injury’ means
injury, including consequential ‘bodily injury’, arising out of one or more of the
following offenses” including “[f]alse arrest, detention or imprisonment” and
“[m]alicious prosecution[.]” Meress highlights Paragraph 12 of the Abdullah
complaint to support an initial grant of coverage, which states:
Nelson called the police and falsely told them that
Abdullah had been disorderly. Weber ratified Nelson’s false
statements. As a result of their false statements, Abdullah
was arrested, handcuffed, put in the back of a squad car,
driven to the police station, photographed, fingerprinted, and
issued a citation for disorderly conduct. The City of
Glendale Municipal Court dismissed the citation on
January 20, 2020.
¶19 These allegations are insufficiently detailed to trigger coverage; even
construed liberally, these allegations do not amount to an allegation that Meress had
a legal obligation to pay for injury caused by false arrest, detention, imprisonment,
or malicious prosecution. Several necessary elements of these claims are absent
from the complaint as are many critical details about the circumstances under which
the citation was dismissed (e.g., whether it was dismissed with or without
prejudice).2 Moreover, any damages for injury that Meress could conceivably be
2
For comprehensive discussions of claims for false arrest or imprisonment and malicious
prosecution, see the following: Monroe v. Chase, 2021 WI 66, 397 Wis. 2d 805, 961 N.W.2d 50(discussing malicious prosecution); Herbst v. Wuennenberg, 83 Wis. 2d 768, 266 N.W.2d 391(1978) (regarding false imprisonment); Maniaci v. Marquette Univ., 50 Wis. 2d 287, 184 N.W.2d
168 (1971) (discussing false arrest or imprisonment, malicious prosecution, abuse of process).
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No. 2022AP1306
“legally obligated to pay” would arise out of the negligent hiring of Nelson, not
Nelson’s false statements to the police.
¶20 Accordingly, we conclude West Bend has no duty to defend Meress
under Coverage B.
III. West Bend has no duty to defend Meress under the “Limitation of
Coverage Designated Premises or Project” endorsement.
¶21 Meress argues that the Limitation of Coverage Designated Premises
or Project endorsement (“Designated Project Limitation”) substituted for the
coverage provided in Coverages A and B, such that the Designated Project
Limitation creates new coverage that should not be predicated on an “occurrence.”
Endorsements substitute to and prevail over the main body of a policy so long as the
endorsement “expressly states” the intent to do so. Romero v. West Bend Mut. Ins.
Co., 2016 WI App 59, ¶19, 371 Wis. 2d 478, 885 N.W.2d 591.
¶22 The Designated Project Limitation states, in relevant part, that it
“modifies” insurance provided in the Policy. It designates “Detective Agency
Operations” as the “Project” for purposes of the endorsement and states: “This
insurance applies only to ‘bodily injury’, ‘property damage’, ‘personal and
advertising injury’ and medical expenses arising out of ... [t]he project[.]”
¶23 Meress says that the Designated Project Limitation’s intention to
substitute for (rather than modify) Coverages A and B is clear, because West Bend
did not include a provision that states the insurer has “[n]o other obligation or
liability to pay sums or perform acts or services … unless explicitly provided for
under Supplementary Payments—Coverages A and B,” which was included in the
“Detective/Security Guard Professional Liability Coverage” (“Professional
Liability”) endorsement.
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No. 2022AP1306
¶24 We disagree with Meress. By its plain language, the Designated
Project Limitation is a limitation on Coverages A and B, not a substitute for them.
In particular, it adds the additional requirement to Coverages A and B that the injury
“arise out of” the designated project, i.e., Detective Agency Operations. The
language in the Professional Liability Coverage endorsement highlighted by Meress
acts as a way of limiting additional obligations to pay if coverage under that
endorsement is triggered. That is, if coverage under the Professional Liability
Coverage endorsement is triggered, West Bend will have no other obligation to pay
sums to Meress except as explicitly provided in the Supplementary Payments—
Coverages A and B section of the Policy. The absence of this language does not
transform the Designated Project Limitation into an endorsement that creates or
substitutes rather than limits coverage.
¶25 Accordingly, West Bend has no duty to defend Meress under the
Designated Project Limitation.
IV. West Bend has no duty to defend Meress under the Professional
Liability Coverage endorsement.
¶26 Finally, Meress argues that it is owed a duty of defense under the
Professional Liability Coverage endorsement. The endorsement says that it is being
“added” to the Policy, and it reads, in relevant part:
We will pay those sums that the insured becomes
legally obligated to pay as damages because of any act, error,
or omission of the insured arising out of the insured’s
professional detective or security guard operations. We will
have the right and duty to defend the insured against any
“suit” seeking those damages. However, we will have no
duty to defend the insured against any “suit” seeking
damages for “bodily injury” or “property damage” to which
this insurance does not apply.
…
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No. 2022AP1306
No other obligation or liability to pay sums or
perform acts or services is covered unless explicitly provided
for under Supplementary Payments—Coverages A and B.
Meress argues that the Abdullah complaint triggers an initial grant of coverage
under this Professional Liability Coverage endorsement, and West Bend does not
appear to disagree.
¶27 However, West Bend argues, and the circuit court concluded, that an
exclusion applied, namely, an exclusion for “[l]iability arising from any fraudulent,
dishonest or criminal act of any insured.” The Abdullah complaint alleges that
Nelson is an employee of Meress, and that Nelson did not have a license to operate
as a security guard when Meress hired him for that position. These allegations, if
proven, amount to a violation of WIS. STAT. § 440.26(8) (2021-22).3 This section
makes it a crime punishable by fine and/or imprisonment to employ anyone as a
“private security person” without having procured the license or permit under that
section. Meress argues that violation of § 440.26(8) cannot be a crime because it is
not located in the criminal code, but WIS. STAT. § 939.12 defines a “crime” as
“conduct which is prohibited by state law and punishable by fine or imprisonment
or both.” Violation of § 440.26(8), therefore, is a crime.
¶28 Taking the allegations in the Abdullah complaint as true, Meress hired
Nelson to perform services as a security person without obtaining a license or permit
under WIS. STAT. § 440.26 in violation of § 440.26(8). This constitutes “[l]iability
arising from any ... criminal act of any insured[,]” and accordingly, West Bend has
no duty to defend Meress under the Professional Liability Coverage endorsement.
3
All references to the Wisconsin Statutes are to the 2021-22 version unless otherwise
noted.
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No. 2022AP1306
By the Court.—Orders affirmed.
This opinion will not be published. See WIS. STAT.
RULE 809.23(1)(b)5.
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