Bangstad’s insurance companies move to drop him as client

The two insurance companies representing Minocqua Brewing Company owner Kirk Bangstad during his recent defamation trial have filed a complaint to intervene in the case, saying he violated the terms of his policy and thus they have no obligation to defend him or pay the costs of the verdict or the judgment against him.

On October 27, a jury of nine women and four men found Bangstad and Minocqua Brewing Company (MBC) guilty of multiple counts of defamation of Lakeland Times and River News publisher Gregg Walker, awarding Walker what is thought to be the largest defamation award in state history — $750,000, including $430,000 in punitive damages.

The attorneys say Bangstad violated the terms of his policy by refusing to cooperate in his own defense and that in any event the policies did not cover the malicious defamation of which the jury found him guilty. As such, the companies contend, they would not be liable for any eventual judgment entered as a result of knowing defamation.

Jeffrey Leavell, an attorney for West Bend Mutual Insurance Company and Society Insurance Company, a Mutual Insurance Company, filed the motion in Oneida County circuit court on November 10.

Specifically, the insurance companies maintain that, during the trial, Bangstad refused to cooperate in the defense of the lawsuit, conduct which they described as prejudicial to the companies. They maintain Bangstad continued to refuse to cooperate even after being told that his conduct would jeopardize his liability coverage.

In addition, the filing states, Bangstad’s defamatory statements and posts, if they stand, were outside the scope of his employment for Minocqua Brewing Company (MBC) and outside the scope of his position or function with the company. Because the policies covered only officers or employees with respect to their duties as officers or while performing duties related to the conduct of the business, the filing contends, he was not an insured within the definition of the liability policies.

Alternatively, the filing states, the two insurers’ policies expressly exclude coverage for knowing defamation, and consequently coverage in this case would be excluded.

As the filing states, the jury found Bangstad guilty of committing defamation with express malice warranting punitive damages in a post on August 8, 2022, in which Bangstad falsely alleged that Walker contributed to his brother’s death in a hunting accident 36 years ago.

Also part of that post was Bangstad’s false accusation that Walker abused his elderly father for his own financial benefit and kept his father’s second wife away from him. Again, the jury found the statement false and defamatory, awarding Walker $200,000 in compensation for the false post and $430,000 in punitive damages because they considered them to have been made with express malice.

The two insurance companies have been paying for Bangstad’s defense — Society Insurance under a liability policy in effect from May 1, 2020, to May 1, 2021, and from May 1, 2021, to May 1, 2022; and West Bend under a liability policy in effect from September 21, 2021 to September 21, 2022. 

Drop kicked

In the filing, the companies argued that they had completely reserved their rights to dispute coverage.

First, the companies allege, Bangstad did not cooperate in his defense as his policies required.

“During the trial Minocqua Brewing Company and Mr. Bangstad refused to cooperate in the defense of the lawsuit and to the prejudice of Society and West Bend,” the filing states. “Specifically, and for example, Mr. Bangstad who attended the trial purportedly in aid of his own defense as well as the defense of Minocqua Brewing Company committed acts of misconduct some of which were found to be contemptuous by the court and resulted in a finding of contempt, and this misconduct and contemptuous conduct occurred in the presence of the jury and within juror’s eye shot and earshot.”

What’s more, the filing contends, Society and West Bend told Minocqua Brewing Company and Bangstad that their conduct was noncooperative and prejudicial to the insurers and put their liability coverage in jeopardy. In fact, they sent Bangstad letters to that effect during the trial.

“Neither Society nor West Bend have a duty to indemnify Mr. Bangstad or Minocqua Brewery for the verdict findings and the eventual judgment that will be entered as a result of the prejudicial noncooperation, and therefore no direct action liability to the plaintiffs,” the filing states.

That’s wasn’t all.

“Additionally, Mr. Bangstad’s defamatory statements and posts were outside the scope of his employment for Minocqua Brewing Company and outside the scope of his officer or executive position or function with Minocqua Brewing Company such that he was not an insured within the definition of the liability policies issued by Society and West Bend,” the filing states. “Consequently, and alternatively, Society and West Bend have no duty to indemnify Mr. Bangstad for the verdict findings and the eventual judgment that will be entered against him.”

And, finally, the filing stated, the two insurers’ policies expressly exclude coverage for knowing defamation.

Specifically, according to the policies, the insurance does not apply to the knowing violation of the rights of another, that is, “personal and advertising injury” caused by or at the direction of the insured with the knowledge that the act would violate the rights of another and would inflict “personal and advertising injury.”

Likewise, the filing continues, the coverage does not apply when material is published with knowledge of falsity, or “personal and advertising injury” arising out of oral or written publication, in any manner, of material, if done by or at the direction of the insured with knowledge of its falsity.

All in all, the companies stated, there were abundant reasons to sever their relationship with Bangstad: “In light of the insurers not being obligated to indemnify Mr. Bangstad or Minocqua Brewing Company for the verdict and the ultimate judgment, they no longer have an obligation to defend Mr. Bangstad or Minocqua Brewing Company in this action.”

The letters

In an October 25 letter to Bangstad, Mark Suhr, a staff counsel for Society Insurance, warned Bangstad that his coverage was subject to certain exclusions.

“The allegations made in the Lakeland Printing complaints appear to meet the definition of a specifically described ‘personal and advertising injury’ in your Society Policy but also may be subject to certain exclusions in that policy, ... “ the letter states. “Specifically, ‘personal and advertising injury’ … pertains to ‘[O]ral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person’s or organizations goods, products, or services.’”

But the coverage is applicable only if the bodily injury or property damage is caused by an “occurrence” as defined in the policy, meaning it was an accidental occurrence, Suhr wrote.

“The policy defines an occurrence to mean an accident,” Suhr wrote. “The complaints refer to an issue involving use of the word ‘retarded’ and alleges that you acknowledged attributing the plaintiffs’ reported use of that term to your lapse in memory but otherwise alleges intentional conduct rather than accidental conduct.”

And so, Suhr continued, based on the allegations in the lawsuit, there was a question regarding whether the occurrence-based coverage under the Businessowners Liability Coverage Form of the Society policy applied because the lawsuit did not allege damages stemming from a covered “bodily injury” or “property damage” caused by an “occurrence” or covered “personal and advertising injury” caused by an offense arising out of Minocqua Brewing’s business. 

“Furthermore, … exclusions could apply even if the Lakeland Printing lawsuit otherwise came within the terms and conditions of the Society Policy,” he wrote. 

More specifically, Suhr wrote, the liability policy excludes coverage under an exclusion for “bodily injury” or “property damage” that is expected or intended from the standpoint of the insured. 

“Similarly, [an exclusion] excludes coverage for ‘personal and advertising injury’ caused by or at the direction of the insured with the knowledge that the act would violate the rights of another and inflict ‘personal and advertising injury,’” he wrote. “The acts alleged here were intentional and knowing in nature, and in fact the Lakeland Printing lawsuit alleges they were done ‘intentionally.’”

As a result, Suhr wrote, there would not be any coverage to the extent the acts were done intentionally or knowing that the acts violate the rights of another. In addition, Suhr continued, the defense team had discussed with Bangstad his noncooperation in his own defense.

“[A]s noted in the policy language below, and as discussed with you on October 25, 2023, the Society policy requires you to cooperate with Society regarding the above claim, including your cooperation in the defense of this matter,” Suhr wrote. “Your failure to cooperate, including but not limited to a failure to comply with the recommendations of defense counsel designated by Society or otherwise cooperate in the defense of this matter, violates the terms and conditions of the Society policy and could impact the coverage provided under the policy.”

What’s more, Suhr wrote, there is no coverage to the extent that the alleged acts were performed outside of the conduct of Bangstad’s business. 

Suhr outlined what would be covered.

“To the extent that any coverage is available for the Lakeland Printing lawsuit, it would be limited to those sums that the insured becomes obligated to pay as damages because of covered ‘bodily injury,’ ‘property damage,’ or ‘personal and advertising injury,’” he wrote. “The Lakeland Printing Lawsuit seeks relief including attorney’s fees and statutory costs, which are not ‘damages’ under the Businessowners Liability Coverage Form.”

There were other problems, Suhr said, as potential challenges to coverage mounted.

“Minocqua Brewing also may have failed to comply with the notice provisions of the Society Policy,” he wrote. “The Society Policy requires Minocqua Brewing to notify Society ‘as soon as practicable’ of any occurrence which may give rise to a claim. Additionally, if a claim is made against it, or a suit is brought, Minocqua Brewing is required to notify Society ‘as soon as practicable’ and to ‘immediately send [to Society] copies of any demands, notices, summonses, or legal papers received in connection with the claim or ‘suit.’”

That did not happen, Suhr wrote.

“Although the Second Amended Complaint alleges that cease-and-desist letters were sent on June 12, 2020, and June 22, 2020, and Society understands that the initial complaint was filed on May 12, 2021, Society was not notified of the claim until April 5, 2022,” he wrote. “The delay in providing Society notice of the claim, and the failure to ‘immediately’ send to Society copies of the summons and legal papers, violates the terms and conditions of the Society policies, which is an additional reason coverage may not be applicable.”

The bottom line was, Suhr wrote, based on the information currently available to the company, including the complaints, Society had provided a defense to Bangstad for the Lakeland Printing Lawsuit but would not have a duty to defend or indemnify Bangstad or MBC for the Lakeland Printing lawsuit if it was determined that the outlined exclusions were applicable or coverage was otherwise precluded. 

“Under those circumstances, Society would not provide a defense or indemnity and would not pay any amounts toward any judgment or settlement under the Society Policy,” he wrote. 

On November 10, the insurance filing to the court attested that the companies had indeed concluded that exclusions applied and coverage was precluded.

Richard Moore is the author of “Dark State” and may be reached at richardd3d.substack.com.