T.H.E. Insurance Company v. Trey Olson

In the

United States Court of Appeals

For the Seventh Circuit

____________________

Nos. 22-1143, 22-1170 & 22-1172

T.H.E. INSURANCE COMPANY,

Plaintiff-Appellee,

v.

TREY D. OLSON, as Special Administrator of the Estate of Tim-

othy L. Olson, et al.,

Defendants-Appellants.

____________________

Appeals from the United States District Court for the

Eastern District of Wisconsin.

No. 1:20-cv-01010 — William C. Griesbach, Judge.

____________________

ARGUED SEPTEMBER 21, 2022 — DECIDED OCTOBER 17, 2022

____________________

Before FLAUM, SCUDDER, and KIRSCH, Circuit Judges.

SCUDDER, Circuit Judge. Before us is a question of insurance

coverage under Wisconsin law arising out of injuries to two

volunteers at Fourth of July fireworks displays in Land

O’ Lakes and Rib Lake, Wisconsin. The district court found

that the plaintiff, T.H.E. Insurance, had no duty to defend or

indemnify its insured, the fireworks distributor, for both

events. We affirm.

2 Nos. 22-1143, 22-1170 & 22-1172

I

A

We resolve these coverage issues under Wisconsin law.

Like many states, Wisconsin distinguishes between a duty to

defend and a duty to indemnify. The state’s Supreme Court

has explained that an insurer’s duty to defend “is broader

than its duty to indemnify.” Olson v. Farrar, 809 N.W.2d 1, 7

(Wis. 2012); see also Choinsky v. Emps. Ins. Co. of Wausau, 938

N.W.2d 548, 555 (Wis. 2020). “The insurer is under an obliga-

tion to defend only if it could be held bound to indemnify the

insured, assuming that the injured person proved the allega-

tions of the complaint, regardless of the actual outcome of the

case.” Olson, 809 N.W.2d at 7 (quoting Grieb v. Citizens Cas. Co.

of New York, 148 N.W.2d 103, 106 (Wis. 1967)). Absent a duty

to defend, the insurer shoulders no duty to indemnify on the

alleged facts giving rise to the underlying injury or harm. See

Choinsky, 938 N.W.2d at 555 (“In contrast, if the complaint

does not allege a covered claim, the insurer has no obligations

under the policy.”).

Wisconsin law also provides substantial guidance on in-

terpreting insurance policies. “An insurance policy is con-

strued to give effect to the intent of the parties as expressed in

the language of the policy.” Folkman v. Quamme, 665 N.W.2d

857, 864 (Wis. 2003). Words are given the plain and ordinary

meaning as a reasonable insured would understand them. See

id. at 864–65. Ambiguous language is interpreted in the in-

sured’s favor. See id. at 865. Policy language is ambiguous

only if it is “susceptible [by a reasonable insured] to more than

one reasonable interpretation.” Id. at 864–65 (quoting Danbeck

v. Am. Fam. Mut. Ins. Co., 629 N.W.2d 150, 193 (Wis. 2001)).

Nos. 22-1143, 22-1170 & 22-1172 3

B

Timothy Olson and Todd Zdroik sustained injuries while

volunteering at Fourth of July fireworks displays in the towns

of Rib Lake and Land O’ Lakes in 2018. Fireworks distributed

by Spielbauer Fireworks Company exploded prematurely at

both events, severely burning Zdroik and Olson. Olson later

passed away from unrelated causes. Both towns used teams

of volunteers to put on their Fourth of July displays. Olson

opened and closed a bin from which other volunteers re-

trieved fireworks during the show in Rib Lake. Zdroik

worked at the Land O’Lakes event as a so-called “shooter,”

manually lighting the fuses on mortar shells.

Olson’s estate and Zdroik sued Spielbauer in Wisconsin

state courts. From the outset, it was clear the parties disagreed

with Spielbauer’s insurer, T.H.E. Insurance, about whether

the claims for Olson and Zdroik’s injuries would be covered

under Spielbauer’s general and excess liability policies.

C

As the state court litigation progressed, T.H.E. sought to

resolve the coverage issue in federal court under the Declara-

tory Judgment Act. See 28 U.S.C. § 2201(a). The district court

granted T.H.E.’s motions for judgment on the pleadings after

examining the insurance policy and the personal injury alle-

gations in Olson and Zdroik’s state court complaints. The dis-

trict court determined T.H.E. had no duty to defend—and by

extension, no duty to indemnify—Spielbauer because the pol-

icy in question excluded coverage for injuries sustained by

volunteers at fireworks displays. In their respective state

court complaints, Zdroik and Olson admitted to volunteering

at the displays. Although Olson’s role as a container operator

4 Nos. 22-1143, 22-1170 & 22-1172

was minimal, the district court concluded that the exclusion

in T.H.E.’s policy applied to any kind of volunteer work.

Zdroik, Olson’s estate, and Spielbauer all appealed.

II

Our analysis of Spielbauer’s general and excess liability in-

surance policies turns on the “Shooters Endorsement,” a one-

sentence exclusion that reads:

This policy shall NOT provide coverage of any

kind (including but not limited to judgment

costs, defense, costs of defense, etc.) for any

claims arising out of injuries or death to shoot-

ers or their assistants hired to perform fireworks

displays or any other persons assisting or aiding

in the display of fireworks whether or not any

of the foregoing are employed by the Named In-

sured, any shooter or any assistant.

The key issue is whether the exclusion extends to any and

all volunteers or only to those assisting hired shooters or hired

assistants.

Both parties focus on the middle of the block quote, offer-

ing competing interpretations of the words “any other per-

sons assisting or aiding in the display of fireworks.” They dis-

pute how this group relates back to the phrase about “shoot-

ers and their assistants hired to perform….” Zdroik, the estate,

and Spielbauer urge us to conclude that while “any other per-

sons” may include volunteers, the exclusion applies to volun-

teers only if they were assisting hired shooters or hired assis-

tants at the time they sustained their alleged injuries. At a

more practical and concrete level, that would mean the exclu-

sion does not apply to the estate and Zdroik’s claims because

Nos. 22-1143, 22-1170 & 22-1172 5

there were no hired persons at either Fourth of July fireworks

event. For its part, T.H.E. insists that the “other persons” cat-

egory is broader and includes any volunteer assistant regard-

less of whether anyone else at the display worked as a hired

employee or contractor.

A

T.H.E. has the better reading. The Shooters Endorsement

plainly and unambiguously creates two distinct groups ex-

cluded from coverage. Go back to the block quote and focus

on who the language excludes. On one side are hired shooters

and their hired assistants. On the other is a large residual cat-

egory of “any other persons” who assist the fireworks dis-

play, regardless of whether they assist hired persons. This

reading is compelled partly by the last-antecedent rule, which

takes the qualifying phrase “hired to perform fireworks dis-

plays” and attaches it to the last antecedent only—shooters

and assistants. See In re Airadigm Commc’ns, Inc., 616 F.3d 642,

655 (7th Cir. 2010). The word “or,” following the phrase

“hired to perform other fireworks displays,” introduces a sep-

arate, discrete group of other persons who assist the display.

That group, consisting of “any other persons assisting or aid-

ing in the display,” stands alone.

A reasonable insured would interpret the policy the same

way. The expansive wording in and around the final category

(“any other persons,” “assisting or aiding,” “whether or not

any of the foregoing are employed by the Named Insured, any

shooter, or any assistant”) puts a reasonable insured on notice

that all volunteers are excluded from coverage.

Olson’s estate, Zdroik, and Spielbauer beg to differ, urging

us to interpret the policy against the backdrop of the

6 Nos. 22-1143, 22-1170 & 22-1172

Wisconsin workers’ compensation scheme. They view the

Shooters Endorsement exclusion as limiting coverage for

hired personnel who are already entitled to workers’ compen-

sation, contending that a reasonable insured would believe

the exclusion only applies if there are hired workers at the dis-

play. We are not persuaded.

Whether we accept T.H.E.’s reading or the defendants’, the

provision plainly excludes coverage for at least some volun-

teers who presumably are ineligible for workers’ compensa-

tion. More fundamentally, a reasonable insured would under-

stand that the provision’s purpose is to exclude coverage for

high-risk work, not to account for alternative remedies for

persons who may have been injured at a fireworks display.

This purpose explains why the provision sweeps up “any

other persons” involved in the risky work of putting on a fire-

works display, and why hired shooters and assistants—in-

cluding all volunteers—are excluded irrespective of who em-

ploys them or asked them to help.

No doubt the exclusion includes some surplus language.

See Goebel v. First Fed. Sav. & Loan Ass’n of Racine, 266 N.W.2d

352, 358 (Wis. 1978) (“[C]ourts must avoid a construction

which renders portions of a contract meaningless, inexplica-

ble or mere surplusage.”). Doubtless, too, T.H.E. could have

achieved the exact same result by scratching the words

“shooters or their assistants hired to perform,” since these in-

dividuals are already captured by the “other persons” cate-

gory. The placement of the phrase “whether or not any of the

foregoing are employed by the Named Insured, any shooter

or any assistant” at the end of the sentence is odd as well. The

words “any of the foregoing” suggest this phrase should mod-

ify shooters, assistants, and other persons, even though only

Nos. 22-1143, 22-1170 & 22-1172 7

the shooters and assistants are required to have any employ-

ment relationship at all.

But T.H.E.’s point does not become twisted or uncertain

just because the company used extra words in the exclusion

to make it. The surplusage canon informs how to choose be-

tween multiple reasonable interpretations. It does not require

injecting ambiguity into a wordy provision that is otherwise

clear. See id. at 679 (“[The canons of construction] necessarily

yield to any contrary intention of the parties, if such an inten-

tion could be ascertained from the contract as a whole.”); An-

tonin Scalia & Bryan A. Garner, Reading Law: The Interpretation

of Legal Texts 176 (2012) (explaining that the surplusage canon

only applies if the provision is susceptible of more than one

meaning). The exclusion here is at once bulky and plain: the

provision excludes anyone who assists a fireworks display. If

anything, the extra words underscore the breadth of the ex-

clusion by punctuating just how many people the policy in-

tended to exclude—any hired shooter or any hired assistant

no matter who hired them, and any leftover assistant who was

not hired but pitched in anyway.

Zdroik, Olson’s estate, and Spielbauer also see our reading

as in tension with the provision’s use of punctuation and

prepositions. To their eyes, the absence of commas—running

from the description of hired shooters through other persons

assisting in the display—means that the whole sentence forms

one continuous phrase. The clause describing “other persons”

therefore modifies the phrase “hired to perform the fireworks

display.” The result, they say, is that other persons assisting

the display are excluded only if they are assisting the same

display where hired shooters and hired assistants are work-

ing.

8 Nos. 22-1143, 22-1170 & 22-1172

But this is backwards. The defendants are essentially re-

versing the last-antecedent rule by turning “other persons”

into a qualifying phrase and “hired to perform” into its ante-

cedent. Indeed, the clause about other persons is not a quali-

fying phrase at all: it stands separately from the hired assis-

tants and shooters, commas or no.

Finally, the defendants return us to the middle portion of

the block quote that explains that the shooters and assistants

must be “hired to perform fireworks displays” while the

“other persons” must be “assisting or aiding in the display of

fireworks.” The defendants invite us to read a great deal of

meaning into the word “the.” They take this word to mean

that other persons assisting the display must be assisting the

same display that hired shooters and assistants worked at. We

see things differently. At best, the phrase “the fireworks dis-

play” indicates that anyone assisting (hired shooters, hired as-

sistants, or otherwise) must be assisting in the same fireworks

display that gave rise to the insurance claim.

B

Under this plain reading of the provision, T.H.E. had no

obligations to Spielbauer for Zdroik’s or Olson’s estate’s

claims. The district court stood on firm ground in reviewing

documents incorporated by reference in T.H.E.’s motions, in-

cluding both the estate’s and Zdroik’s state court complaints,

when it reached this conclusion. See United States v. Wood, 925

F.2d 1580, 1582 (7th Cir. 1991) (per curiam). The (undisputed)

admissions in those complaints allowed the district court to

determine there was no duty to defend, and therefore no duty

to indemnify. See Liebovich v. Minnesota Ins. Co., 751 N.W.2d

764, 765–66 (Wis. 2008) (observing that the duty to defend is

determined by the allegations in the underlying complaint).

Nos. 22-1143, 22-1170 & 22-1172 9

Start with Zdroik. He admitted in his state court complaint

that he was a volunteer shooter, a major role in a fireworks

display in Land O’Lakes. Zdroik’s contribution is clearly em-

braced by the final category of other persons assisting the dis-

play, even if he could not be excluded under the first category

of hired shooters.

Likewise, the estate admitted in its complaint that Timo-

thy Olson operated a bin of fireworks to assist other volun-

teers at the Rib Lake event. Olson played a minimal role, but

no one disputes what he was doing. And the Shooters En-

dorsement excludes coverage for all volunteers, even if they

made only small contributions.

III

Spielbauer urges us to resist reaching the indemnity ques-

tion. It argues that the indemnity issue was not ripe for deci-

sion without a judgment on liability. But neither the law nor

the facts are on Spielbauer’s side.

First, Wisconsin law allows us to reach T.H.E.’s indemni-

fication obligations because the duty to defend is broader

than the duty to indemnify. See Olson, 809 N.W.2d at 7. Spiel-

bauer does not argue that the district court’s decision on the

duty to defend was unripe. And where the district court has

found there is no duty to defend, the immediate legal conse-

quence is that there is also no duty to indemnify. See Choinsky,

938 N.W.2d at 555. This consequence is a product of Wiscon-

sin’s substantive law, which we are bound to apply in a diver-

sity case like this one. See Mayer v. Gary Partners & Co., 29 F.3d

330, 333 (7th Cir. 1994).

Second, the facts before the district court do not support

Spielbauer’s position either. Ripeness doctrine is meant to

10 Nos. 22-1143, 22-1170 & 22-1172

“prevent the courts, through avoidance of premature adjudi-

cation, from entangling themselves in abstract disagree-

ments.” Abbott Lab’ys v. Gardner, 387 U.S. 136, 148 (1967).

Whether an issue is ripe depends on the “fitness of the issues

for judicial decision and the hardship to the parties of with-

holding court consideration.” Id. at 149. An issue is more

likely to be fit for judicial review if it is purely legal rather

than factual. See id.

In the insurance context, we have generally observed that

“decisions about indemnity should be postponed until the

underlying liability has been established.” Lear Corp. v. John-

son Elec. Holdings Ltd., 353 F.3d 580, 583 (7th Cir. 2003). That

preference reflects our concerns about wading into an abstract

dispute. See id. But the rule is not absolute. We have gone the

other way where indemnification issues did not hinge on re-

mote contingencies and facts. See Amling v. Harrow Indus.

LLC, 943 F.3d 373, 378–79 (7th Cir. 2019) (concluding that

“[t]here is nothing remote about a plaintiff’s asking which of

two defendants she is currently suing is the right one to sue”

under the terms of an executed asset-purchase agreement);

Bankers Tr. Co. v. Old Republic Ins. Co., 959 F.2d 677, 680–81

(7th Cir. 1992) (finding an indemnification suit ripe where the

plaintiff raised a legal issue by challenging the validity of a

settlement agreement between the insured and insurer that

limited the insurer’s indemnification obligations).

But the dispute here was neither abstract nor remote.

Zdroik and Olson’s estate both sued Spielbauer and admitted

immediately to volunteer roles. If either party recovered any-

thing from Spielbauer, the state court would need to turn to

T.H.E.’s duty to indemnify generally and the application of

the Shooters Endorsement specifically. The federal district

Nos. 22-1143, 22-1170 & 22-1172 11

court could settle that issue based on the parties’ admissions

and the text of the Shooters Endorsement. Because there was

no dispute that Zdroik and Olson were volunteers, the district

court’s conclusions hinged on policy interpretation—a legal

rather than factual issue. And at oral argument, the defend-

ants could not identify which evolving or unknown facts

would change the district court’s decision. There was no sug-

gestion, for instance, that the underlying liability trials might

reveal that Olson and Zdroik were bystanders or spectators,

not volunteers. Spielbauer’s coverage was therefore ripe for

review.

For these reasons, we AFFIRM.