Sharp v. Vick

• Decision Date: 10 July 2003
• Docket Number: Appeal No. 02-1575.
• Citation: 670 N.W.2d 557,267 Wis. 2d 277
• Parties: DANIEL RAY SHARP, DIONNE SHARP, DEANNA KING, JOE MAYEUR AND ERIC KING, PLAINTIFFS, v. ROBERT G. VICK AND KAREN L. VICK, DEFENDANTS-APPELLANTS, RURAL MUTUAL INSURANCE COMPANY, INTERVENOR-RESPONDENT.
• Court: Wisconsin Court of Appeals

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DANIEL RAY SHARP, DIONNE SHARP, DEANNA KING, JOE MAYEUR AND ERIC KING, PLAINTIFFS, v. ROBERT G. VICK AND KAREN L. VICK, DEFENDANTS-APPELLANTS RURAL MUTUAL INSURANCE COMPANY, INTERVENOR-RESPONDENT.

Appeal No. 02-1575.

Court of Appeals of Wisconsin, District IV.

July 10, 2003.

APPEAL from a judgment of the circuit court for Dane County: JOHN C. ALBERT, Judge. Reversed and cause remanded.

Before Vergeront, P.J., Dykman and Roggensack, JJ.

¶1 ROGGENSACK, J

Robert and Karen Vick appeal summary judgment granted to Rural Mutual Insurance Company on its coverage defense. The Vicks were sued by Daniel Ray Sharp, Dionne Sharp, Deanna King and Joe Mayeur (hereinafter collectively, plaintiffs) based on injuries allegedly caused by the Vicks' improper maintenance of a water well shared by the plaintiffs. The circuit court concluded that an intentional acts exclusion in the Vicks' homeowners policy precluded coverage. On a motion to reconsider, the court additionally concluded that the homeowners and personal umbrella policies did not afford coverage because the Vicks' alleged negligent misrepresentation was not an "occurrence" as that term is defined by the policies.

¶2 We conclude that: (1) the complaint alleges a common law negligence claim in regard to cleaning the well; (2) the allegedly negligent cleaning of the water well is an "occurrence" as occurrence is defined in both policies; and (3) none of the policy exclusions cited by Rural Mutual bars coverage for at least one of plaintiffs' claims. Therefore, we conclude that there is potential coverage and a duty to defend under both policies. Accordingly, we reverse the circuit court's judgment and remand for further proceedings.

BACKGROUND

¶3 In 1991, Robert and Karen Vick purchased two rental properties. The rental properties are served by a common water well. The Vicks had a homeowners and a personal umbrella policy issued by Rural Mutual. The policies were in effect from January 1999 until April 2000, during the time of the events at issue. In May 1999, the Vicks rented the Sunnyside Street residence to Deanna King, Joe Mayeur and Eric King, and in November 1998, they rented the Fairview Street residence to Daniel and Dionne Sharp.

¶4 In March 2001, plaintiffs sued the Vicks based on injuries allegedly caused by the Vicks' maintenance of the well and misrepresentations regarding the condition of the water from the well. The complaint alleges that shortly after the Vicks purchased the residences, they had the well inspected and were advised that the water was not safe for human consumption, and that run-off water, including debris and wild animal feces washed into the well water on rainy days or during times of snow melt. The Vicks, despite allegedly knowing the unsafe condition of the water, did not remedy the situation and rented the properties.

¶5 The complaint also alleges that the Vicks were again advised in June 1999 that the water was unsafe for drinking. The Vicks then performed a cleaning procedure on the well and told the plaintiffs that the water should not be used, but that as soon as the cleaning procedure was finished, the water would again be safe for all uses. In August, the plaintiffs became suspicious and obtained their own tests of the water. Those tests showed the water was contaminated with bacteria and not safe for human use or consumption. The well water, therefore, remained "unsafe after the `cleaning procedure.'" As a result of the contaminates in the water, the plaintiffs allege they suffered adverse health problems, serious mental anguish, fear regarding short and long term health problems and loss of the full normal use of their rental property. The complaint does not allege that the Vicks knew that the cleaning procedure had not remedied the contaminated condition of the well.

¶6 The Vicks notified Rural Mutual of the claims filed against it and requested coverage and a defense under their insurance policies. After intervening in the lawsuit, Rural Mutual raised a coverage defense. The circuit court granted summary judgment to Rural Mutual, reasoning that the complaint alleged claims only for intentional acts, which claims were not covered due to the "intentional acts" exclusions contained in both policies. The Vicks moved for reconsideration. The circuit court denied the motion, explaining that even if the complaint alleged negligent acts, the negligence pled is not an "occurrence" as defined by the policies and therefore there was no coverage. Accordingly, Rural Mutual's duty to defend "would not have been triggered." The Vicks appeal.

DISCUSSION

Standard of Review.

¶7 We review summary judgment decisions de novo, applying the same standards employed by the circuit court.

Guenther v. City of Onalaska,

223 Wis. 2d 206, 210, 588 N.W.2d 375, 376 (Ct. App. 1998). We first examine the complaint to determine whether it states a claim, and then we review the answer to determine whether it joins a material issue of fact or law.

Smith v. Dodgeville Mut. Ins. Co.,

212 Wis. 2d 226, 232, 568 N.W.2d 31, 34 (Ct. App. 1997). If we conclude that the complaint and answer are sufficient to join issue, we examine the moving party's affidavits to determine whether they establish a prima facie case for summary judgment.

Id.

at 232-33, 568 N.W.2d at 34. If they do, we look to the opposing party's affidavits to determine whether there are any material facts in dispute that entitle the opposing party to a trial.

Id.

¶8 The resolution of this case requires us to interpret an insurance policy to determine if potential coverage exists and whether the insurer is subject to a duty to defend. Interpretation of a written insurance policy is a question of law, which we review without deference to the decision of the circuit court.

Guenther,

223 Wis. 2d at 210, 588 N.W.2d at 377.

Types of Claims Made.

¶9 An insurer's duty to defend its insured is predicated on allegations in the complaint that, if proven at trial, would require the insured to pay the resulting judgment.

School Dist. of Shorewood v. Wausau Ins. Cos.,

170 Wis. 2d 347, 364, 488 N.W.2d 82, 87 (1992). To determine whether a duty to defend exists, we apply the factual allegations contained within the four corners of the complaint to the disputed terms and conditions of the insurance policy.

Id.

at 364-65, 488 N.W.2d at 87-88. We liberally construe the allegations in the complaint and assume all reasonable inferences in favor of the insured.

Doyle v. Engelke,

219 Wis. 2d 277, 284, 580 NW.2d 245, 248 (1998). Additionally, although the complaint may contain some theories of liability not covered by the insurance policy, the insurer is obligated to defend the entire action if "just one theory of liability appears to fall within the coverage of the policies."

School Dist. of Shorewood,

170 Wis. 2d at 366, 488 N.W.2d at 88.

¶10 As a threshold matter, we note that the parties dispute what types of claims are alleged in the complaint. The Vicks argue that the complaint contains negligence claims that are covered by the terms of the policy. In contrast, Rural Mutual asserts that the complaint contains allegations only of intentional acts and those are not covered due to the policies' intentional acts exclusions. Because the nature of the claims alleged against the insured affects our analysis, we must first determine whether the underlying complaint states a claim for negligence. See

Smith v. Katz,

226 Wis. 2d 798, 806, 595 N.W.2d 345, 350 (1999).

¶11 To maintain a cause of action for negligence, four elements must exist: (1) a duty of care on the part of the defendant; (2) a breach of that duty; (3) a causal connection between the conduct and the injury; and (4) an actual loss or damage.

Rockweit v. Senecal,

197 Wis. 2d 409, 418, 541 N.W.2d 742, 747 (1995). The plaintiffs' complaint alleges the following: the plaintiffs were tenants of residential property owned and rented by the Vicks. The Vicks were advised in June of 1999 that the water was unsafe for drinking, and they failed to inform the plaintiffs about the hazard posed by the well water. The Vicks performed a cleaning procedure on the well that did not correct the harmful bacteria present in the water. As a result, the plaintiffs suffered adverse health problems and loss of the full normal use of their rental property.

¶12 In sum, the complaint alleges that the Vicks undertook a duty to maintain the residential premises, including the well that serves the properties. See

Pagelsdorf v. Safeco Ins. Co. of Am.,

91 Wis. 2d 734, 745, 284 N.W.2d 55, 61 (1979) ("[A] landlord owes his tenant or anyone on the premises with the tenant's consent a duty to exercise ordinary care."); WIS. STAT. § 704.07 (2001-02). The Vicks breached this duty by failing to correct the contamination in the water, and as a result, the plaintiffs suffered personal injuries and loss of the full normal use of the properties. In regard to cleaning the well, the complaint pleads all of the essential elements of a common law negligence claim. Because, for the purpose of determining coverage, we assume that all facts alleged in the complaint and the reasonable inferences therefrom are true, we conclude that the complaint states a claim for ordinary negligence in the attempted decontamination of the well.

¶13 Rural Mutual argues that the complaint alleges the Vicks "became aware that ... the water from [the well] was not safe for human consumption," prior to renting the residences and that their alleged knowledge controverts any argument that they pled a negligence claim. While it may be true that the complaint states a claim for intentional tortuous conduct too, it is well settled that only a single covered claim need be alleged to trigger the duty to defend.

School Dist. of Shorewood,

170 Wis. 2d at 366, 488 N.W.2d at 88. "Even though the amended complaint in the underlying litigation may contain other theories of liability not covered by the insurance...