New Decision on Corporate Officer Liability and Direct Action Against Insurer
A recent Wisconsin Supreme Court decision has significant implications regarding liability of corporate officers for negligence, and direct actions against insurance company.
Casper v. American International South Ins. Co, 2011 WI 81 involves an automobile accident caused by an employee of trucking companies who was under the influence of prescription drugs at the time of the accident. The CEO of one of the companies was named as a defendant He was not involved in the hiring or supervision of the driver, but had approved the trucking route used by the driver, which allegedly violated federal trucking safety regulations. The argument was made he could not be held personally liable for negligence committed with the scope of his employment.
The unanimous court refused to accept this argument, in effect acknowledging that there could be circumstances when a corporate officer can be held personally liable for such negligence. The court noted that the even the business judgment rule, which provides protection for corporate officers acting in the course of their duties, protects officers and directors only for negligent acts harming shareholders, not third parties.
The majority decided that the negligence was too remote from the injuries to impose personal liability in this case. However, this case stands for the proposition that corporate officers may be personally liable in certain circumstances, thus increasing the possibility corporate officers and directors will be named as individual defendants and subject to liability in tort actions.
The court also held that the Wisconsin Statute allowing actions to be brought against insurance companies directly did not limit actions to those involving policies which were delivered or issued for delivery in Wisconsin. Direct action was found to be appropriate so long as the accident or injury occurs in Wisconsin, regardless of whether the policy was delivered or issued for delivery in this state. Thus foreign insurers issuing policies for delivery outside the state or delivering them outside the state may be sued directly for accident or injury in Wisconsin.
