Kremers-Urban Co. v. American Employers Ins. Co., KREMERS-URBAN

CourtUnited States State Supreme Court of Wisconsin
Writing for the CourtHEFFERNAN; Michael D. Guolee
Citation119 Wis.2d 722,351 N.W.2d 156
Docket NumberNo. 82-991,KREMERS-URBAN
Decision Date29 June 1984
PartiesCOMPANY, a Wisconsin corporation, Plaintiff-Respondent and Cross-Appellant, v. AMERICAN EMPLOYERS INSURANCE CO., one of the Commercial Union Assurance Companies, a foreign insurance corporation, Defendant-Appellant and Cross-Respondent.

Page 156

351 N.W.2d 156
119 Wis.2d 722
KREMERS-URBAN COMPANY, a Wisconsin corporation,
Plaintiff-Respondent and Cross-Appellant,
v.
AMERICAN EMPLOYERS INSURANCE CO., one of the Commercial
Union Assurance Companies, a foreign insurance
corporation, Defendant-Appellant and
Cross-Respondent.
No. 82-991.
Supreme Court of Wisconsin.
Argued March 27, 1984.
Decided June 29, 1984.

Page 158

[119 Wis.2d 724] Barry L. Kroll, Chicago, Ill. (argued), for defendant-appellant and cross-respondent; John R. Hoaglund, Jr., Robert E. Wrenn, Susan J. Martin, and Gibbs, Roper, Loots & Williams, Milwaukee, and Jacobs, Williams and Montgomery, Ltd., Chicago, Ill., on brief.

James E. Schacht, Milwaukee (argued), for plaintiff-respondent and cross-appellant; Lee J. Geronime and Michael, Best & Friedrich, Milwaukee, on brief.

HEFFERNAN, Chief Justice.

The defendant-appellant, American Employers Insurance Co., one of the Commercial Union Assurance Companies (hereinafter Commercial Union), appeals from a judgment of the circuit court for [119 Wis.2d 725] Milwaukee county, Michael D. Goulee, Circuit Judge, entered on April 8, 1982, which granted summary judgment in favor of the plaintiff-respondent, Kremers-Urban Company (hereinafter Kremers-Urban) and denied Commercial Union's cross-motion for summary judgment. Kremers-Urban cross-appeals the portion of the circuit court's judgment which struck the award to Kremers-Urban of reasonable attorney's fees. We accepted certification of the appeal from the court of appeals. We affirm the judgment of the circuit court for Milwaukee county because it appropriately held, as a matter of law, that liability insurance policy coverage issued by Commercial Union to Kremers-Urban prior to March 16, 1968, is triggered when a pregnant woman ingested DES or when Kremers-Urban engaged in marketing activities, as both constitute an "occurrence" as that term is used in those policies. We also affirm that Kremers-Urban is not entitled to attorney's fees for this action commenced under the declaratory judgments act, sec. 806.04(10), Stats.

Commercial Union issued a series of comprehensive product liability insurance policies to Kremers-Urban from March 16, 1954, 1 through March 16, 1976. Kremers-Urban is a manufacturer of pharmaceuticals, which manufactured and distributed, from 1947 to 1962, a product labeled "stilbestrol," generic name diethylstilbestrol, commonly known as DES. Diethylstilbestrol was prescribed to pregnant women to prevent possible spontaneous abortions and for treatment of estrogenic deficiencies.

[119 Wis.2d 726] Beginning in 1974, product liability claims were brought against Kremers-Urban by plaintiffs alleging they developed, or are subject to the high risk of developing, clear cell adenocarcinoma of the vagina

Page 159

and other cancerous or precancerous lesions of the cervix and vagina as a result of their being exposed as unborn children to DES, ingested by their mothers, manufactured by Kremers-Urban, or that Kremers-Urban was liable under an enterprise liability theory.

Under the enterprise theory of liability, a plaintiff alleges that all of the DES manufacturers are jointly liable for claimed damages, because the sale and distribution of DES was a direct result of the collective effort of all manufacturers in promoting, advertising, and marketing DES. As of the date of commencing this action, Kremers-Urban had been named as a defendant in at least 49 DES cases in some 16 states. Kremers-Urban tendered these cases to Commercial Union for defense. Commercial Union provided defense in those cases where it was alleged that the plaintiff's disease manifested itself during one of Commercial Union's policy periods. Starting in December of 1980 Commercial Union rejected the defense of four cases and attempted to withdraw from the previously accepted defense of another case where the alleged injury had not manifested itself during a Commercial Union policy period.

This action, instituted by Kremers-Union on February 25, 1981, seeks a declaratory judgment, pursuant to sec. 806.04, Stats., to construe the liability insurance policies issued by Commercial Union to Kremers-Urban from March 16, 1954, to March 16, 1976, declaring that Commercial Union has the contractual obligation to defend and indemnify Kremers-Urban for the product liability claims allegedly resulting from ingestion of DES by the plaintiff's mother or marketing activities engaged in by Kremers-Urban while the insurance policies were in [119 Wis.2d 727] force and effect regardless of when the injury became manifest. Kremers-Urban also seeks reimbursement for attorney's fees in connection with this declaratory judgment action.

Pursuant to a motion for temporary injunction by Kremers-Urban, filed February 22, 1981, Judge Leander J. Foley, then presiding trial judge, ordered on April 4, 1981, that Commercial Union not withdraw from cases in which they are already representing Kremers-Urban and ordered a bond be posted. The injunction was to continue until the issue of coverage was decided.

On May 4, 1981, Kremers-Urban, in the declaratory judgment action, moved for summary judgment. Some five months later, on October 16, 1981, Commercial Union made a cross-motion for summary judgment for a declaration that its policies provide coverage only if the alleged date of manifestation of bodily injury (adenosis or adenocarcinoma) is within the policy period. The policies interpreted by the circuit court were in effect from March 16, 1954, 2 to March 16, 1976. During this time there were five variations of the language used in the policies. The pertinent parts of the policies in question are as follows:

Policies in effect between March 16, 1954, through March 16, 1960, contained the following:

"I.

"Coverage B--Bodily Injury Liability--Except Automobile.

"To pay on behalf of the Insured all sums which the Insured shall become obligated to pay by reason of the liability imposed upon him by law, or assumed by him under contract as defined herein, for damages, including damages for care and loss of services, because of bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person or persons.

[119 Wis.2d 728] "II. Defense, Settlement, Supplementary Payments.

"As respects such insurance as is afforded by the other terms of this policy the Company shall

"(a) defend in his name and behalf any suit against the Insured alleging such

Page 160

injury, sickness, disease or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent; but the Company shall have the right to make such investigation, negotiation and settlement of any claim or suit as may be deemed expedient by the Company;

" * * *

"IV. Policy Period, Territory.

"This policy applies only to accidents which occur during the policy period within the United States of America, its territories or possessions, Canada or Newfoundland, or on a vessel between ports within said territory.

" * * *

"VI. Accident--Occurrence.

"Wherever the word 'accident' is used with respect to the insurance afforded under Coverages A, B and C, the word 'occurrence' shall be substituted therefor."

Policies in effect between March 16, 1960, and March 16, 1966, contained the following revision in the policy language:

"I.

"Coverage B--Bodily Injury Liability--Except Automobile.

"To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury as defined herein sustained by any person.

"II. Defense, Settlement, Supplementary Payments.

"With respect to such insurance as is afforded by this policy, the company shall:

"(a)(1) defend any suit, except by arbitration, against the insured alleging such bodily or other injury or destruction and seeking damages which are payable under the terms of this policy, even if such suit is groundless, false or fraudulent; but the company may make such investigation, negotiation and settlement of any claim or suit as it deems expedient:

[119 Wis.2d 729] "CONDITIONS

"3. Definitions.

"(g) the term 'bodily injury' means bodily injury, sickness or disease, including death at any time resulting therefrom."

Sections IV, Policy Period, and V, Accident-Occurrence, were not changed.

In the 1966-67 policy, the policy format was revised. Coverage B--Bodily Injury Liability--Except Automobile was shortened to read:

"1. To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of:

Coverage B

Bodily Injury bodily injury, caused by an occurrence,

Liability - sustained by any person;

Except Automobile

and with respect to such insurance as is afforded by the policy, the company shall (a) defend any suit, except by arbitration, against the insured alleging such bodily injury or property damage and seeking damages on account thereof, even if such suit is groundless, false or fraudulent, but the company may make such investigation, negotiation and settlement of any claim or suit as it deems expedient, and (b) defend any arbitration proceeding wherein an indemnitee under a contract as defined herein or under a warranty of goods or products seeks damages on account thereof and which are payable under the terms of this policy, and wherein the company is entitled to exercise the insured's right in the choice of arbitrators and in the conduct of such arbitration proceedings; provided, however, the provisions of subdivision (b) of this paragraph shall not apply unless the agreement to arbitrate was executed prior to the occurrence."

In addition, the following definition of the word, "occurrence," was added:

"III. Definitions

"(b) 'occurrence' means (1) an event, or continuous or repeated exposure to conditions, or (2) an accident, [119 Wis.2d 730] which

Page 161

causes bodily injury or property damage during the policy period, which is neither expected nor intended...

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    ...as "a reasonable person in the position of the insured would have understood the words." Kremers-Urban Co. v. Am. Employers Ins. Co., 119 Wis.2d 722, 735, 351 N.W.2d 156 (1984). In regard to property damage, the policy COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY 1. Insuring Agre......
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    ...from coverage by the principle of fortuity. Continental and Hallmark go on to cite Kremers-Urban Co. v. American Employers Ins. Co., 119 Wis.2d 722, 351 N.W.2d 156 (1984), and Fidelity & Deposit Co. v. Verzal, 121 Wis.2d 517, 361 N.W.2d 290 (Ct.App.1984), in support of the argument 809 F. S......
  • Estate of Miller v. Storey, No. 2014AP2420
    • United States
    • United States State Supreme Court of Wisconsin
    • 30 Noviembre 2017
    ...its own costs of litigation. The American rule has been recognized and followed in Wisconsin. Kremers-Urban Co. v. Am. Emp'rs Ins. Co., 119 Wis. 2d 722, 744-45, 351 N.W.2d 156 (1984) (internal citations omitted). That's our common law. So if Wis. Stat. § 895.446(3)(b) is to alter that rule,......
  • Request a trial to view additional results
275 cases
  • Stuart v. Weisflog's Showroom Gallery, No. 2005AP1287.
    • United States
    • United States State Supreme Court of Wisconsin
    • 10 Julio 2008
    ...as "a reasonable person in the position of the insured would have understood the words." Kremers-Urban Co. v. Am. Employers Ins. Co., 119 Wis.2d 722, 735, 351 N.W.2d 156 (1984). In regard to property damage, the policy COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY 1. Insuring Agre......
  • Cousins Submarines, Inc. v. Fed. Ins. Co., Case No. 12-CV-387-JPS
    • United States
    • United States District Courts. 7th Circuit. United States District Court of Eastern District of Wisconsin
    • 8 Febrero 2013
    ...General Cas. Co. of Wis. v. Hills, 209 Wis. 2d 167, 175, 561 N.W.2d 718 (1997); Kremers-Urban Co. v. American Employers Ins. Co., 119 Wis. 2d 722, 735, 351 N.W.2d 156, 163 (1984). The Court need not apply rules of construction to the policy unless it determines that the plain language of th......
  • Maryland Cas. Co. v. Wausau Chemical Corp., No. 91-C-479-C.
    • United States
    • U.S. District Court — Western District of Wisconsin
    • 16 Diciembre 1992
    ...from coverage by the principle of fortuity. Continental and Hallmark go on to cite Kremers-Urban Co. v. American Employers Ins. Co., 119 Wis.2d 722, 351 N.W.2d 156 (1984), and Fidelity & Deposit Co. v. Verzal, 121 Wis.2d 517, 361 N.W.2d 290 (Ct.App.1984), in support of the argument 809 F. S......
  • Estate of Miller v. Storey, No. 2014AP2420
    • United States
    • United States State Supreme Court of Wisconsin
    • 30 Noviembre 2017
    ...its own costs of litigation. The American rule has been recognized and followed in Wisconsin. Kremers-Urban Co. v. Am. Emp'rs Ins. Co., 119 Wis. 2d 722, 744-45, 351 N.W.2d 156 (1984) (internal citations omitted). That's our common law. So if Wis. Stat. § 895.446(3)(b) is to alter that rule,......
  • Request a trial to view additional results

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