Everson v. Lorenz
| Decision Date | 22 April 2005 |
| Docket Number | No. 2003AP1331.,2003AP1331. |
| Citation | 2005 WI 51,695 NW 2d 298,280 Wis.2d 1 |
| Parties | Paul J. Everson and Michelle J. Everson, Plaintiffs, Pekin Insurance Company, Intervening Plaintiff-Respondent, v. Richard J. Lorenz and Lorenz Land Development, Inc., Defendants-Third-Party Plaintiffs-Appellants, Sharon Jeanquart, individually, and d/b/a Jeanquart Realty and ACE American Insurance Company, Third-Party Defendants. |
| Court | Wisconsin Supreme Court |
For the defendants-third-party plaintiffs-appellants there was a brief by Mark S. Des Rochers and Lawrence & Des Rochers, S.C., St. Nazianz, and oral argument by Mark S. Des Rochers.
For the intervening plaintiff-respondent there was a brief by Monte E. Weiss and Weiss Law Office, S.C., Milwaukee, and oral argument by Monte E. Weiss.
An amicus curiae brief was filed by Troy D. Thompson, Jonathan M. Ward and Axley Brynelson, LLP, Madison, on behalf of Civil Trial Counsel of Wisconsin and Wisconsin Insurance Alliance.
This case comes before us on certification from the court of appeals pursuant to Wis. Stat. § (Rule) 809.61 (2001-02).1 Richard Lorenz and Lorenz Land Development, Inc. (Lorenz) seek review of an order of the Circuit Court for Calumet County, Donald A. Poppy, Judge, granting Intervenor Pekin Insurance Company's (Pekin) motion for summary judgment. This case presents the issue of whether Pekin's insurance policy provides coverage to its insured, Lorenz, for strict responsibility misrepresentation and/or negligent misrepresentation claims filed against it by Paul and Michelle Everson (Everson).
¶ 2 The court of appeals certified three questions to this court: (1) Does an alleged strict responsibility misrepresentation and/or negligent misrepresentation in a real estate transaction constitute an "occurrence" for the purpose of a commercial general liability insurance policy such that the insurer's duty to defend the insured is triggered?; (2) What allegations must a complaint contain to plead sufficiently "loss of use" within the meaning of a commercial general liability insurance policy?; and (3) Under what circumstances does a misrepresentation, negligent or strict responsibility, cause the "loss of use" of property such that a "causation nexus" is established?
¶ 3 We conclude that since there is no coverage based on Everson's complaint and the language of the Pekin insurance policy, Pekin has no duty to defend and no duty to indemnify Lorenz against Everson's claims for strict responsibility and/or negligent misrepresentation. The alleged misrepresentation was not an "occurrence" within the meaning of the policy. We hold that Everson must plead more than "damages" in relation to the misrepresentation claims to plead sufficiently a "loss of use" under the policy. We further conclude that since the complaint fails to allege "property damage," in that there is no allegation of an "occurrence," and no allegation of "loss of use," there clearly is not a sufficient allegation of "causation nexus." The "property damage" was caused by defects in the property, not by any misrepresentations of Lorenz.
¶ 4 For the purposes of this review, the facts of this case are undisputed. Lorenz, a real estate developer, purchased vacant land in Brillion, Wisconsin in 1997. This property eventually became the subdivision known as Deer Run Estates. Everson bought a parcel in the subdivision from Lorenz, Lot 31, for the purpose of constructing a single family home. Everson accepted the offer on June 29, 2000.
¶ 5 After the transaction was completed, Everson determined that a portion of Lot 31 was located within a 100year flood plain. As a result, Everson filed a complaint against Lorenz on March 18, 2002.2 The claims alleged in the complaint were as follows: (1) negligent misrepresentation; (2) strict responsibility misrepresentation; (3) intentional misrepresentation; and (4) breach of contract. Specifically, Everson alleged that Lorenz represented that no portion of the property (Lot 31) lay within a 100-year flood plain.3 As a result, the construction of the home would not be possible in the location that Everson wished to build. Everson's complaint alleged that the property was "unbuildable," and asked for damages in the amount of $37,000.4
¶ 6 At the time of the purchase, Pekin insured Lorenz under a commercial general liability policy. Following the initiation of suit by Everson, Lorenz tendered its defense to Pekin. Pekin has since moved to intervene, bifurcate the insurance coverage issues from the liability and damage issues, and stay all liability and damage issues until the insurance coverage issues have been decided. The circuit court granted this motion, and Pekin subsequently hired counsel to represent Lorenz on the merits of the pending action against Everson.
¶ 7 On February 11, 2003, Pekin filed a motion for summary judgment on the issues of insurance coverage, including the duty to defend and indemnify. The circuit court, the Honorable Donald A. Poppy presiding, granted Pekin's summary judgment motion in a written order as follows: (1) No coverage exists under Pekin's policy of insurance, for the complaint and causes of action of Everson in the present matter; (2) no duty exists on behalf of Pekin to defend Lorenz for the complaint filed by Everson in the present matter; (3) no duty exists on behalf of Pekin to indemnify Lorenz for the complaint filed by Everson in this matter; and (4) the stay of discovery memorialized in the court's order dated August 8, 2002 is hereby dissolved.
¶ 8 Lorenz appealed the circuit court's grant of summary judgment. The court of appeals certified the case to this court. We accepted certification and now affirm the order of the circuit court.
¶ 9 We review a circuit court's grant of summary judgment de novo, applying the same methodology as the circuit court, and benefiting from its analysis. Atkins v. Swimwest Family Fitness Center, 2005 WI 4, ¶11, ___ Wis. 2d ___, 691 N.W.2d 334. According to Wis. Stat. § 802.08(2), summary judgment will be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."
¶ 10 We also address issues regarding the interpretation of an insurance contract. Such interpretation, we have held, presents a question of law which we review de novo. Lambert v. Wrensch, 135 Wis. 2d 105, 115, 399 N.W.2d 369 (1987).
¶ 11 The determinative issue presented in this case is whether Pekin's insurance policy provides coverage to Lorenz for the strict responsibility and/or negligent misrepresentation claims filed by Everson. We have held that an insurer's duty to defend its insured is triggered by comparing the allegations of the complaint to the terms of the insurance policy. See Smith v. Katz, 226 Wis. 2d 798, 806, 595 N.W.2d 345 (1999). "'These allegations must state or claim a cause of action for the liability insured against or for which indemnity is paid in order for the suit to come within any defense coverage of the policy. . . .'" Qualman v. Bruckmoser, 163 Wis. 2d 361, 364, 471 N.W.2d 282 (Ct. App. 1991) (quoting Grieb v. Citizens Casualty Co., 33 Wis. 2d 552, 557, 148 N.W.2d 103 (1967).
¶ 12 Since Pekin's duty to defend is determined by the language in both the policy provisions and the complaint, we set forth the relevant portions of each. The insurance policy states in part:
1. Insuring Agreement.
(Emphasis added.)
¶ 13 As previously stated, the four claims that Everson alleges against Lorenz are strict responsibility misrepresentation, negligent misrepresentation, intentional misrepresentation, and breach of contract.5 The relevant allegation of the complaint is as follows:
7. Subsequently, the Plaintiffs discovered that a substantial portion of Lot 31 lay within the 100 year flood plain making the construction of the home which they wished to construct on the property impossible in the location in which the Plaintiffs wished to build based upon the pre-sale representations of LORENZ, rendering the property unbuildable for the Plaintiffs and causing the Plaintiffs to incur damages as a result in excess of $37,000.00.
¶ 14 In looking at the four corners of the complaint and the insurance policy, we recognize that "[o]ur objective is to further the insured's reasonable expectations of coverage while meeting the intent of both parties to the contract." Benjamin v. Dohm, 189 Wis. 2d 352, 359, 525 N.W.2d 371 (Ct. App. 1994) (citation omitted). Accordingly, we must not rewrite the insurance policy to bind an insurer to a risk which the insurer did not contemplate...
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