Teske v. Wilson Mutual Insurance Co. (Claim Preclusion)

In Teske v. Wilson Mutual Insurance Co. (2019 WI 62), the Wisconsin Supreme Court held that previous litigation related to underinsured motorist (UIM) coverage precludes a second tort claim alleging negligence in the same accident.

The litigation arose from a car accident that injured four members of the Teske family: Julie, Katherine, Elle, and Emily. Emily Teske was driving the vehicle. John Teske was not in the car.

Julie, Katherine, and Elle Teske filed the first action against the other driver and her insurer State Farm. The parties agreed on a settlement wherein State Farm tendered its $300,000 policy limit to the plaintiffs. The Teskes’ insurer Wilson Mutual paid the Teskes their UIM policy limit minus the amount provided by State Farm in accordance with the Wilson policy’s reducing clause. An appeals court determined the validity of the Wilson payment.

After the conclusion of the first action, John, Julie, Katherine, and Elle Teske filed a claim alleging Emily Teske, who was driving the vehicle, was negligent. The Teskes sued Wilson directly as Emily’s insurer. Wilson argued claim preclusion barred this second action.

The Supreme Court held 6-0 that claim preclusion did apply to Julie, Katherine, and Elle’s negligence claim, barring the second action against Wilson. The second action satisfied all three required elements of claim preclusion:

  1. Identity of parties. Julie, Katherine, and Elle Teske and Wilson were named parties in both the first and second lawsuit.
  2. Identity of causes of action. The lawsuits both arose from a single accident. The decision noted claim preclusion analyses should focus on the identity of the facts, not the identity of the legal arguments. The court held that UIM actions involve both contracts and tort law, so the Teskes’ negligence claim against Emily could have been litigated in the first lawsuit.
  3. Final judgment reached. The appeals court did reach a final judgment in the Teskes’ first action.

However, the court was evenly divided as to whether John Teske was a party in the first lawsuit. While he was not named in the first lawsuit, he participated in the settlement process and received proceeds. With an evenly divided court (3-3 with Justice Shirley Abrahamson not participating), the Supreme Court affirmed the appeals court’s decision allowing John Teske’s claims to proceed because the identity of parties element of claim preclusion was not met.