In Hull v. Glewwe (2017AP2485), the Court of Appeals District III held that claim preclusion does not bar a plaintiff from pursuing a new negligence lawsuit when the plaintiff’s insurer has already defended the plaintiff in a previous lawsuit arising out of the same accident, wherein the plaintiff was not a named defendant.
Plaintiff Hull and defendant Glewwe were both injured in the same accident. Glewwe sued Hull’s insurer Unitrin Auto & Home Insurance Co., and that lawsuit ended in a settlement. Hull was not a named defendant in the lawsuit and did not participate in the settlement agreement. Hull subsequently filed the instant action seeking damages from Glewwe and his insurer State Farm. Glewwe argued that claim preclusion barred Hull’s action, and Hull instead should have raised his arguments as a counterclaim in the first lawsuit.
The appeals court held that claim preclusion does not bar Hull’s negligence claims because he was not a named party in the first lawsuit; therefore, Glewwe failed to satisfy the identity of parties element of claim preclusion. While Glewwe argued Hull was in privity with his defendant insurer in the first lawsuit, the court determined that Hull’s and his insurer’s interests were materially different. In the first lawsuit, the insurer had only a duty to defend Hull, not to pursue Hull’s cause of action for his own injuries. Finally, the appeals court determined that allowing Hull’s claim to proceed after the first lawsuit was settled does not contradict the direct action statute (Wis. Stat. § 632.24), which establishes that insurers are directly liable to persons entitled to recover.
The Wisconsin Insurance Alliance wrote an amicus brief in the case, arguing that allowing Glewwe’s claim preclusion defense to proceed would pose significant issues for both insurers and insureds.