Go Wireless, LLC v. Md. Cas. Co.

• Decision Date: 19 February 2013
• Docket Number: No. 2012AP321.,2012AP321.
• Court: Wisconsin Court of Appeals
• Parties: GO WIRELESS, LLC, Plaintiff–Appellant, v. MARYLAND CASUALTY COMPANY, Defendant–Respondent, Northern Insurance Associates–Bartels & Brown, LLC and Utica Mutual Insurance Company, Defendants–Co–Appellants.

346 Wis.2d 731

828 N.W.2d 592

2013 WI App 41

GO WIRELESS, LLC, Plaintiff–Appellant,

v.MARYLAND CASUALTY COMPANY, Defendant–Respondent,Northern Insurance Associates–Bartels & Brown, LLC and Utica Mutual Insurance Company, Defendants–Co–Appellants.

No. 2012AP321.

Court of Appeals of Wisconsin.

Feb. 19, 2013.

OPINION TEXT STARTS HEREAppeal from a judgment of the circuit court for Outagamie County: Mitchell J. Metropulos, Judge. Affirmed.

Before HOOVER, P.J., MANGERSON, J., and THOMAS CANE, Reserve Judge.¶ 1CANE, J.

After a fire destroyed its warehouse, Go Wireless, LLC, sued its insurer, Maryland Casualty Company, for breach of contract and reformation. Go Wireless argued that Maryland had agreed to provide $2.5 million in business personal property coverage, but it subsequently asserted coverage was limited to $546,400. The circuit court granted summary judgment in favor of Maryland, concluding that Go Wireless's acceptance of $546,400 from Maryland constituted an accord and satisfaction. We agree, and we therefore affirm the dismissal of Go Wireless's claims against Maryland.

¶ 2 Go Wireless also sued its insurance agent, Northern Insurance Associates–Bartels & Brown, LLC, asserting that Northern failed to advise Go Wireless regarding the adequacy of its business personal property coverage. Northern filed a cross-claim against Maryland for contribution or indemnification, contending that Maryland breached a duty to advise Go Wireless about its insurance needs. The circuit court dismissed Northern's cross-claim, concluding the undisputed facts showed that Go Wireless relied exclusively on Northern for insurance advice and never sought advice from Maryland. We agree and, consequently, affirm the dismissal of Northern's cross-claim.

BACKGROUND

¶ 3 Go Wireless was co-owned by David Graves and Ned Bartels. From 2003 until November 2008, Go Wireless was an exclusive sales agent for U.S. Cellular. At its peak, Go Wireless had fifty-five stores in seven states.

¶ 4 Go Wireless purchased its business insurance through Northern, which served as its insurance agent for nine years. In addition, Northern routinely advised Go Wireless on insurance matters. Graves testified he and Bartels met with a representative from Northern on a quarterly basis “to discuss where we were at, what we needed, and what he had coming on the horizon and ... come up with a game plan[.]” Bartels testified he met with an agent from Northern periodically to “talk about where we're going, where we're at right now, and then discuss our insurance needs.” He further stated Northern would “give us recommendations, whether it was changing our health insurance, changing companies ... the recommendations were given on all our insurance needs.”

¶ 5 Through Northern, Go Wireless purchased an insurance policy from Maryland that provided business personal property coverage. As of July 2008, Go Wireless had fifty store locations, and the Maryland policy provided about $50,000 in business personal property coverage for each location. The policy also provided “blanket” business personal property coverage in the amount of $2,577,601. That figure represented the total amount of business personal property coverage for all of Go Wireless's locations. The blanket coverage allowed Go Wireless to aggregate the policy limits for each of the insured locations in order to cover a single loss at any one location.

¶ 6 In fall of 2008, U.S. Cellular decided not to renew its contract with Go Wireless. As a result, Go Wireless sold the leases on all of its retail locations to U.S. Cellular and began winding up its business. On November 17, 2008, Kristen Vosters, Go Wireless's office manager, contacted Maryland through the “Zurich Small Business Customer Service Center.” ¹ Vosters informed Maryland that Go Wireless had sold its operations to U.S. Cellular, and, therefore, needed to remove all but two locations from its policy. The two remaining locations covered by the policy were: (1) Go Wireless's corporate headquarters, located at 740 Ford Street in Kimberly; and (2) a warehouse, located at 575 Timmers Lane in Appleton.

¶ 7 On March 16, 2009, Graves informed Northern that Go Wireless's operations at the Ford Street location had ceased, and he directed Northern to delete coverage for the Ford Street location. This left the Timmers Lane warehouse as the only location insured under the Maryland policy. Graves instructed Northern to increase the business personal property limit for the Timmers Lane warehouse from $50,000 to $546,400, which had been the business personal property limit for Go Wireless's previous primary location. Graves did not give Northern any instructions about Go Wireless's blanket coverage, and Northern did not inform him that removing the Ford Street location would affect the blanket coverage. About one week later, the Timmers Lane warehouse was destroyed in a fire.

¶ 8 Go Wireless subsequently submitted a claim to Maryland, alleging the fire had destroyed $1.2 million of business personal property. At the time, Bartels and Graves believed the Maryland policy provided $2.5 million of blanket business personal property coverage. Maryland, however, asserted that the policy no longer provided any blanket coverage. In a letter dated August 20, 2009, Maryland explained:

Upon review of your policy, it was determined that this policy ... did not have a floater on the Business Personal Property but rather the policy contained blanket coverage. This means the policy had specific coverage at each location, but that the sum of the coverage's [sic] could be used at any location as needed when products were moved around with in [sic] the company properties. When the other locations were removed from the policy, this effectively reduced the coverage to the amount specifically applied to that single location. In this case that coverage is $546,400.00. In reviewing the blanket coverage with underwriting they have stated it is not possible to place blanket coverage on a policy with only one single location.

The letter further advised Go Wireless that “your policy limit will remain at $546,000 [sic]. That is the most coverage that can be provided by this policy for your Business Personal Property coverage.” Finally, the letter informed Go Wireless that Maryland “[did] not waive any of the terms, conditions or provisions of this insurance policy” and “retain[ed] all available defenses[.]”

¶ 9 Maryland subsequently tendered two checks to Go Wireless. The second check was sent on November 2, 2009, and the accompanying letter stated:

Please find the enclosed payment in the amount of $196,400.00. This combined with the previous payment of $350,000 previously paid, brings the claims settlement amount to the [business personal property] policy limit of $546,400.00 thus exhausting the [business personal property] coverage for this loss. Please note that thrse [sic] is still an outstanding Replacement Cost coverage for the Building unit if the building is replaced with like kind and quality construction. Please advise me to the status of this portion of the claim so I may update my claims file.

Go Wireless deposited both of the checks it received from Maryland.

¶ 10 Go Wireless then filed the instant lawsuit, asserting breach of contract and negligence claims against Northern and breach of contract and reformation claims against Maryland. Northern filed a cross-claim against Maryland, seeking contribution or indemnification. Specifically, Northern argued that Maryland breached a duty to advise Go Wireless that removing locations from its policy would eliminate the blanket coverage and therefore result in inadequate business personal property coverage.

¶ 11 In support of its cross-claim, Northern noted that, beginning in 2007, Go Wireless was instructed to contact the “Zurich Small Business Customer Service Center” directly when it needed to make changes to its policy. Northern also noted that, pursuant to a “producer agreement” between Maryland and Northern, the customer service center was supposed to provide insureds with “policyholder services.” The term “policyholder services” included “[c]ommunicating with policyholders regarding insurance needs[.]” Thus, Northern contended the producer agreement obligated Maryland to advise Go Wireless about the adequacy of its coverage.

¶ 12 However, Ned Bartels testified that, despite the producer agreement, Go Wireless continued to rely exclusively on Northern for insurance advice. He stated:

Bartels: We got all our insurance advice from [Northern]. We didn't get it from anybody at Zurich as far as policy changes or the major policy changes.

Counsel: Or the sufficiency of coverages?

Bartels: Right.

Counsel: Or the amount of coverage provided?

Bartels: Correct.

Counsel: Or the types of coverage that potentially either should be provided or were needed by the company?

Bartels: Correct.

Similarly, Vosters testified that, when she contacted the customer service center to make changes to the policy, she never had any substantive discussions about coverage and never asked for any advice or opinions.

¶ 13 Maryland moved for summary judgment on Go Wireless's claims and Northern's cross-claim. Following a hearing, the circuit court granted Maryland's motion. The court concluded Go Wireless's claims against Maryland were barred because Go Wireless's acceptance of Maryland's payments constituted an accord and satisfaction. Regarding Northern's cross-claim, the court stated, “[I]t's clear from the facts that have been brought out through the legal pleadings and from the depositions that have been taken to date that all the coverage issues were dealt with from Northern Insurance agents and, in this court's opinion, not directly with Maryland Casualty[.]” Consequently, the court concluded Northern was not entitled to contribution or indemnification from Maryland, and it dismissed the cross-claim. The court subsequently denied Northern's motion for...