Ehlers v. Johnson

• Decision Date: 10 September 1991
• Docket Number: D,No. 1,No. 91-0166,1,91-0166
• Parties: Thomas L. EHLERS and Linda M. Ehlers, Plaintiffs, v. H.A. JOHNSON, individually, d/b/a Owner Realty Company, Ray Dehmer, individually, and d/b/a Owner Realty Company and Alias Insurance Companyefendants. Gary R. FRISCH and Nancy Frisch, Defendants-Third-Party Plaintiffs-Appellants, v. STATE FARM FIRE AND CASUALTY COMPANY, Third-Party Defendant-Respondent.
• Court: Wisconsin Court of Appeals

Page 291

476 N.W.2d 291

164 Wis.2d 560

Thomas L. EHLERS and Linda M. Ehlers, Plaintiffs, v. H.A. JOHNSON, individually, d/b/a Owner Realty Company, Ray

Dehmer, individually, and d/b/a Owner Realty

Company and Alias Insurance Company No.

1, Defendants.

Gary R. FRISCH and Nancy Frisch, Defendants-Third-Party Plaintiffs-Appellants, v. STATE FARM FIRE AND CASUALTY COMPANY, Third-Party

Defendant-Respondent.

No. 91-0166.

Court of Appeals of Wisconsin.

Submitted on Briefs July 15, 1991.

Sept. 10, 1991.

Opinion Filed Sept. 10, 1991.

Tori A. Vesely of Ament, Wulf & Frokjer, Merrill, for defendants-third-party plaintiffs-appellants.

David A. Piehler of Terwilliger, Wakeen, Piehler & Conway, S.C., Wausau, for third-party defendant-respondent.

Before CANE, P.J., and LaROCQUE and MYSE, JJ.

LaROCQUE, Judge.

Gary R. Frisch and Nancy Frisch, defendants accused of misrepresenting the lot lines in the sale of their lake property, appeal a summary judgment dismissing their third-party claim against their homeowner's insurer, State Farm Fire and Casualty Company. The Frisches sought recovery under their State Farm policy for the costs of defending the underlying misrepresentation action as well as indemnity for any damages ultimately awarded the plaintiff-buyers, Thomas and Linda Ehlers. The policy provided the Frisches liability coverage for property damage for which they were liable. The policy defined "property damage" to mean "physical injury to or destruction of tangible property, including loss of use of this property. " The circuit court concluded that State Farm had no obligation under the policy because the claim here did not involve the physical injury or destruction of tangible property. It also rejected the claim for costs of defending the misrepresentation action because the third-party complaint failed to allege facts that, if proven, would give rise to State Farm's liability. We agree and affirm.

The facts of the case are undisputed. The Frisches sold their Lynx Lake residence to the Ehlers. After the purchase, the Ehlers filed a complaint against the Frisches and their real estate agents, alleging that during the course of the negotiations, the lot lines of the property were misrepresented. The Frisches then filed a third-party complaint against State Farm, claiming that it was obligated to defend them and to pay any damage award. State Farm sought and received summary judgment.

When there are no factual disputes, questions of insurance coverage may be decided on motions for summary judgment. Smith v. State Farm Fire & Cas. Co., 127 Wis.2d 298, 301, 380 N.W.2d 372, 374 (Ct.App.1985). When reviewing a grant of summary judgment, we must follow the same methodology as the trial court. Because that methodology is well known, it need not be repeated here. Paape v. Northern Assur. Co., 142 Wis.2d 45, 50, 416 N.W.2d 665, 667 (Ct.App.1987); see also Preloznik v. City of Madison, 113 Wis.2d 112, 116, 334 N.W.2d 580, 582-83 (Ct.App.1983).

Absent any stated legislative policy to the contrary, an insurance company's liability is based upon the contract between the parties and must be governed by its terms and conditions. Paape, 142 Wis.2d at 51, 416 N.W.2d at 668. When there is no ambiguity in the terms of the policy, we will merely apply the terms and not engage in construction. Western Cas. & Surety Co. v. Budrus, 112 Wis.2d 348, 351, 332 N.W.2d 837, 839 (Ct.App.1983). Words or phrases are ambiguous when they are susceptible to more than one reasonable meaning. Smith v. Atlantic Mut. Ins. Co., 155 Wis.2d 808, 811, 456 N.W.2d 597, 598-99 (1990).

The Frisches argue that the alleged diminution in market value as well as use value to the Ehlers constitutes "property damage" as defined in their homeowner's policy. "Property damage" is defined as "physical injury to or destruction of tangible property, including loss of use of this property." The Frisches would interpret the clause "including loss of use of this property" to mean all tangible property, not just physically injured or destroyed property. We disagree. We conclude that the clause "including loss of use of this property" is unambiguous. The only reasonable meaning of the clause is that it defines property damage to include loss of use damage that accompanies physical injury or destruction. The Minnesota Court of Appeals reached the same conclusion from identical policy language in Dixon v. National Amer. Ins. Co., 411 N.W.2d 32 (Minn.Ct.App.1987).

The loss of use clause is introduced by the verb "including." The dictionary defines "including" as "to take in or comprise as part of a whole...." The Mirriam-Webster Dictionary 358 (1974). The loss of use clause is thus introduced as a subset of "physical injury to or physical destruction of tangible property." If the loss of use clause were interpreted as the Frisches would have it, i.e., as any nonphysical injury to tangible property, the definition of property damage would effectively read: "physical injury to ... tangible property, including non-physical injury." We reject such a contradictory reading.

The Frisches rely on Sola Basic Indus. v. USF & G, 90 Wis.2d 641, 280 N.W.2d 211 (1979), to support their proposition that "tangible property may be damaged in that it is...