Grieb v. Citizens Cas. Co. of New York

Decision Date31 January 1967
Citation148 N.W.2d 103,33 Wis.2d 552
PartiesDonald L. GRIEB, Plaintiff-Appellant, v. CITIZENS CASUALTY COMPANY OF NEW YORK, a foreign corporation, Defendant-Respondent.
CourtWisconsin Supreme Court

Arnold, Murray & O'Neill, Milwaukee, for appellant.

Stanley F. Schellinger, Milwaukee, James G. Doyle, Milwaukee, of counsel, for respondent.

HALLOWS, Justice.

In October of 1957, Donald L. Grieb entered into a contract with the Milwaukee Park Commission under which he was to prepare plans and specifications for and supervise the construction of a botanical conservatory in Mitchell Park, Milwaukee. A unique conservatory ultimately was constructed which consisted of three 80-foot-high metal and glass geodesic domes connected by a one-story structure. The contract required Grieb to maintain in force an architect's professional liability errors-and-omissions policy during the planning and construction of the conservatory. The policy issued by Citizens provided it would pay all sums Grieb might become legally obligated to pay as damages because of liability arising out of any act of negligence, error, mistake or omission in rendering professional architectural services. 1 Citizens also undertook to defend any suit against Grieb which alleged any act of negligence, error, mistake or omission and sought damages on account thereof. The policy excluded from coverage dishonest, fraudulent, criminal or malicious acts or omissions and those of a knowingly wrongful nature intentionally committed.

During the policy period a taxpayers' suit was commenced against Grieb, Super Sky Products, Inc., ad Milwaukee County. The complaint detailed many acts which were allegedly performed in furtherance of a conspiracy between Grieb and Super Sky and intended to give Super Sky an unfair advantage over other bidders for the job of constructing the domes. The complaint sought to void the contract between Super Sky and Milwaukee County, plus damages and other relief.

On this appeal Grieb contends that although the taxpayers' suit was one for conspiracy Citizens had a duty to defend under its indemnity clause, which he claims indemnifies against any act of negligence, error, mistake or omission and is not confined to allegations of such acts in a third-party pleading as is the defense-coverage clause. Because of this he argues Citizens has an implied corollary duty to defend any type of action so long as any act of negligence, error, mistake or omission is committed by him.

We think Citizens' duty to defend under its policy is not so broad as contended for by Grieb. While errors-and-omissions policies for professional men are of relatively recent origin in the insurance industry, the principles governing their construction are the same as those applied to No claim is made by Grieb on this appeal that Citizens has a duty to defend the conspiracy suit under the express defense-coverage clause in the policy. The duty under this clause, as correctly held by the trial court, is restricted to suits for damages grounded upon, arising out of, or because of acts of alleged negligence, omission, mistake or error. The duty under this clause does not extend to intentional torts such as conspiracy and furthermore acts constituting a conspiracy are excluded by the exclusion clause even though we construe that clause against the insurer, as we are bound to do.

indemnity and liability policies. 2 An errors-and-omissions policy is professional-liability insurance providing a specialized and limited type of coverage compared to general comprehensive insurance. It is designed [33 Wis.2d 557] to insure members of a particular professional group from liability arising out of the special risk such as negligence, omissions, mistakes and errors inherent in the practice of the profession. The coverage generally excludes, as the instant policy does, intentional torts and dishonest, wrongful and malicious acts of commission and omission. These professional-liability policies differ in detail depending upon the company which issues them and are generally called malpractice insurance when issued to members of the healing profession where the exposure is largely bodily injury and errors-and-omissions insurance where the risk is primarily that of damage to intangible property such as coverage for attorneys, insurance agents, and architects. 2a

Whether a third-party suit comes within the coverage of this clause or an implied duty to defend under an indemnity clause depends upon its allegations which are referred to as a general rule as the measure in the first instance. 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 unless the express defense coverage is broader. Aitchison v. Founders Ins. Co. (1959), 166 Cal.App.2d 432, 333 P.2d 178. It is the nature of the claim alleged against the insured which is controlling even though the suit may be groundless, false or fraudulent. Wilson v. Maryland Casualty Co. (1954), 377 Pa. 588, 105 A.2d 304, 50 A.L.R.2d 449; Wis. Transp. Co. v. Great Lakes Cas. Co. (1942), 241 Wis. 523, 6 N.W.2d 708; 7A Appleman, Insurance Law & Practice p. 441, sec. 4683. National Surety Corp. v. Musgrove (5th Cir. 1962), 310 F.2d 256 (an errors-and-omissions policy). Conversely stated, 'the insurer is under an obligation to defend only if it could be held bound to indemnify the insured, assuming that the injured person proved the allegations of the complaint, regardless of the actual outcome of the case,' 29A Am.Jur., Insurance, p. 565, sec. 1452.

There are at least four exceptions to the general rule determining the extent of the insurer's...

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1 books & journal articles
  • Wisconsin Court of Appeals stands by four-corners rule.
    • United States
    • Wisconsin Law Journal No. 2007, October 2007
    • June 4, 2007 by a 4-3 vote). The court of appeals began by reviewing the conflicting authority on the issue. In Grieb v. Citizens Casualty Co., 33 Wis. 2d 552, 148 N.W.2d 103 (1967), the court held that, when deciding whether an insurer has a duty to defend, coverage is determined by looking solely......

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