Kemper Independence Ins. Co. v. Islami

• Citation: 397 Wis.2d 394,2021 WI 53,959 N.W.2d 912
• Decision Date: 08 June 2021
• Docket Number: No. 2019AP488,2019AP488
• Parties: KEMPER INDEPENDENCE INSURANCE COMPANY, Plaintiff-Respondent, v. Ismet ISLAMI, Defendant-Appellant-Petitioner.
• Court: Wisconsin Supreme Court

397 Wis.2d 394

959 N.W.2d 912

2021 WI 53

KEMPER INDEPENDENCE INSURANCE COMPANY, Plaintiff-Respondent,

v.Ismet ISLAMI, Defendant-Appellant-Petitioner.

No. 2019AP488

Supreme Court of Wisconsin.

Oral Argument: February 22, 2021

Opinion Filed: June 8, 2021

Motion for Reconsideration Filed June 28, 2021

For the defendant-appellant-petitioner, there were briefs filed by Joseph F. Owens and Law Offices of Joseph F. Owens, LLC, New Berlin. There was an oral argument by Joseph F. Owens.

For the plaintiff-respondent, there was a brief filed by James M. Fredricks, Alison E. Kliner, and Borgelt, Powell, Peterson & Frauen, S.C., Milwaukee. There was an oral argument by James M. Fredricks.

An amicus curiae brief was filed on behalf of Wisconsin Insurance Alliance by James A. Friedman, Daniel C.W. Narvey, and Godfrey & Kahn, S.C., Madison.

An amicus curiae brief was filed on behalf of Wisconsin Association for Justice by Michael J. Cerjak and Cannon & Dunphy, S.C., Brookfield.

REBECCA GRASSL BRADLEY, J., delivered the majority opinion of the Court, in which ZIEGLER, C.J., ROGGENSACK, and HAGEDORN, JJ., joined. KAROFSKY, J., filed a dissenting opinion in which ANN WALSH BRADLEY and DALLET, JJ., joined.

REBECCA GRASSL BRADLEY, J.

¶1 Ismet Islami seeks review of the court of appeals decision¹ affirming the Waukesha County Circuit Court's grant of summary judgment in favor of Kemper Independence Insurance Company (Kemper) denying coverage to Ismet for the loss of her home.² Ydbi Islami, from whom Ismet is legally separated, intentionally set fire to the home. All parties stipulated that Ydbi concealed facts from Kemper about his involvement in the fire with the intent to deceive, and Kemper relied upon Ydbi's concealment and fraud to its detriment. The circuit court ruled the "concealment or fraud" condition in Kemper's insurance policy covering the home ("the Policy") barred coverage for Ismet's claims. The court of appeals agreed that the Policy did not provide coverage as a result of Ydbi's conduct and affirmed the circuit court's decision.

¶2 Ismet raises three arguments. First, Ismet contends that, given her legal separation from Ydbi, Ydbi is not her spouse and therefore not an "insured" for purposes of the Policy. Second, Ismet argues the Policy's "concealment or fraud" condition is ambiguous, conflicts with the Policy's "intentional loss" exclusion, and therefore does not bar coverage. Third, Ismet asserts she is an innocent insured and the victim of domestic abuse, thereby requiring Kemper to provide coverage under Wis. Stat. § 631.95(2)(f) ’s domestic abuse exception to a property insurer's intentional act exclusion.

¶3 We hold: (1) Ydbi is an insured under the terms of the Policy, both under the plain language of the insurance contract and because Wisconsin's marriage laws recognize Ydbi as Ismet's spouse; (2) the Policy's "concealment or fraud" condition precludes coverage for Ismet—a conclusion unaffected by the Policy's "intentional loss" exclusion; and (3) Wis. Stat. § 631.95(2)(f) does not apply because the record lacks any evidence showing Ydbi's arson constituted "domestic abuse" against Ismet, as statutorily defined. Accordingly, we affirm the decision of the court of appeals.

I. BACKGROUND

¶4 Ismet and Ydbi married in 1978. In 1988, Ydbi was convicted of a number of crimes, including stalking and sexual assault of a minor, involving victims other than Ismet. Following these incidents, Ismet initially sought a divorce from Ydbi but, for religious reasons, obtained a legal separation instead. As part of the separation, which occurred in 1998, both parties entered into a Marital Settlement Agreement, under which Ismet received sole ownership of their home in Oconomowoc, although Ismet and Ydbi continued to live in the home together. Neither party proceeded with a divorce.

¶5 In 2012, Kemper issued a "Package Plus" home and automobile insurance policy covering Ismet's Oconomowoc home and listed automobiles. Under the Policy, Ismet is listed as the "Named Insured." However, the introduction to the Policy reads: "Throughout the policy, ‘you’ and ‘your’ mean the person shown as the ‘Named Insured’ in the Declarations. It also means the spouse if a resident of the same household." The Policy further states that "insured" means "you and residents of your household who are ... [y]our relatives." Additionally, both Ismet and Ydbi are listed in the vehicle coverage section as "Operator 1" and "Operator 2," respectively. Both parties also marked their marital status as "Married."

¶6 The Policy also contains a "concealment or fraud" condition. As relevant to this dispute, the provision bars coverage for "all insureds" if "an insured" concealed or misrepresented a material fact, with intent to deceive and on which Kemper relied. In full, the provision reads:

Under Section 1 – Property Coverages, with respect to all "insureds" covered under this policy, we provide coverage to no "insureds" for loss under Section 1 – Property Coverages if, whether before or after a loss, an "insured" has:

1) Concealed or misrepresented any fact upon which we rely, and that concealment or misrepresentation is material and made with intent to deceive; or

2) Concealed or misrepresented any fact and the fact misrepresented contributes to the loss.

¶7 Importantly for purposes of Ismet's argument, the Policy also contains an "intentional loss" exclusion. That provision bars recovery for "an insured" who "commits or conspires to commit an act with the intent to cause a loss." As material to Ismet's argument, the provision provides as follows:

1. We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss.

....

1h. Intentional Loss.

Intentional Loss means any loss arising out of any act an "insured" commits or conspires to commit with the intent to cause a loss.

This exclusion only applies to an "insured" who commits or conspires to commit an act with the intent to cause a loss.

¶8 In June 2013, a fire occurred at the Oconomowoc home, damaging the property and its contents and rendering the home a total loss. Per the Policy, Kemper sent Ismet and Ydbi a "Sworn Statement in Proof of Loss." In the signed statement, both Ismet and Ydbi attested that the "the cause and origin" of the fire was "unknown."³ They also represented to Kemper in the statement that they were each "insureds" under the Policy. Kemper later conducted a formal examination of Ismet and Ydbi with both answering questions under oath (hereinafter "Examination Under Oath"). In response to questions during that examination, both Ismet and Ydbi swore they were not aware the house burned down until after receiving notice of the incident.⁴

¶9 Despite these attestations, further investigation revealed that Ydbi had started the fire. The fire occurred while Ismet was vacationing overseas in North Macedonia—a fact indisputably known by Ydbi. In a separate criminal proceeding, the State eventually charged Ydbi with arson, for which he was convicted.

¶10 Relying on the Policy's "concealment or fraud" condition (among other provisions), Kemper denied coverage for the loss of the home. After its denial of the claim, Kemper commenced a declaratory judgment action seeking a judicial determination of its rights and obligations under the Policy. In particular, Kemper sought, inter alia, a declaration that the "concealment or fraud" condition barred coverage for both Ismet and Ydbi.

¶11 Both parties eventually filed motions for summary judgment on stipulated facts. Specifically, all parties stipulated to the following: (1) Ydbi committed arson to destroy the Oconomowoc home; (2) if Ydbi is found to be an "insured" under the Policy, "Ydbi ... was a resident of Ismet[’s] ... household"; (3) "Ydbi ... engaged in concealment and fraud in his statement[s] to Kemper" about his involvement in the fire "with the intent to deceive Kemper, and Kemper relied upon Ydbi's concealment and fraud to its detriment"; (4) "the fire was not a result of Ismet committing or conspiring to commit any act with the intention of damaging the property ..."; and (5) Ismet is an "innocent insured" under the Policy.

¶12 Ultimately, the circuit court granted Kemper's motion for summary judgment, finding that Ydbi was an "insured" under the Policy, and Ismet's and Ydbi's legal separation in 1998 did not alter Ydbi's status. The circuit court further found that, because Ydbi was an "insured," the "concealment or fraud" condition barred recovery for Ismet. Lastly, the circuit court determined that, because the record was devoid of any evidence of domestic abuse, Wis. Stat. § 631.95(2)(f) did not preclude Kemper from denying coverage. Ismet appealed the decision to the court of appeals, which affirmed the circuit court's ruling. We granted Ismet's petition for review.

II. STANDARD OF REVIEW

¶13 This case comes before us as a review of a grant of summary judgment. "Summary judgment is appropriate when there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law." Talley v. Mustafa Mustafa, 2018 WI 47, ¶12, 381 Wis. 2d 393, 911 N.W.2d 55 (citing Wis. Stat. § 802.08(2) ). "We independently review a grant of summary judgment using the same methodology of the circuit court and the court of appeals." Id. (citation omitted); see also Romero v. West Bend Mut. Ins. Co., 2016 WI App 59, ¶17, 371 Wis. 2d 478, 885 N.W.2d 591.

III. DISCUSSION

A. Ydbi is an "insured" under the Policy.

¶14 Ismet contends Ydbi is not her spouse because they are legally separated; therefore, according to Ismet, Ydbi is not an "insured" under the Policy. We disagree.

¶15 Whether Ydbi is Ismet's "spouse" for purposes of insurance coverage is governed by the terms of the insurance contract. The Policy definitions answer this question: "Throughout the policy, ‘you’ and ‘your’ mean the person shown as the ‘Named...