Marks v. Bedford Underwriters, Ltd.
Decision Date | 07 May 2015 |
Docket Number | Appeal No. 2013AP2756 |
Parties | DAVID M. MARKS, PLAINTIFF-APPELLANT-CROSS-RESPONDENT, v. BEDFORD UNDERWRITERS, LTD., DEFENDANT-RESPONDENT, HOUSTON CASUALTY COMPANY, DEFENDANT-RESPONDENT-CROSS-APPELLANT. |
Court | Wisconsin Court of Appeals |
NOTICE
This opinion is subject to further editing. If published, the official version will appear in the bound volume of the Official Reports.
A party may file with the Supreme Court a petition to review an adverse decision by the Court of Appeals. See WIS. STAT. § 808.10 and RULE 809.62.
APPEAL and CROSS-APPEAL from a judgment of the circuit court for Milwaukee County: RICHARD J. SANKOVITZ, Judge. Affirmed.
Before Lundsten, Sherman and Kloppenburg, JJ.
¶1 SHERMAN, J. David Marks appeals a judgment in favor of Houston Casualty Company and Bedford Underwriters, Ltd., Houston Casualty's declaring that Houston Casualty did not, in other actions, breach its duty to defend by failing to provide Marks a defense. The circuit court concluded that Houston Casualty had no duty to defend Marks in the other actions because a comparison of the facts alleged in the complaints in those cases and a policy exclusion in an insurance policy issued by Houston Casualty to Marks revealed the lack of coverage. Houston Casualty cross-appeals, challenging the circuit court's determination that the policy provided an initial grant of coverage. For the reasons explained below, we affirm the circuit court's determination that Houston Casualty did not have a duty to defend Marks. Thus, we need not and do not reach the issue raised in Houston Casualty's cross-appeal.
¶2 Marks is the trustee of two trusts, known as the Irrevocable Children's Trust (ICT) and the Irrevocable Children's Trust No. 2 (ICT2). As trustee, Marks is responsible for investing, managing and growing the corpus of the trusts. In the course of such duties, Marks allegedly invested and took a majority stock position in a company called Titan Global Holdings, Inc. and its subsidiaries. Marks sat on the board of Titan, acted as the board's chair, and served, as necessary, as an officer and/or director of Titan's subsidiaries, all of which Marks alleged was in furtherance of his duties as trustee.
¶3 Houston Casualty issued a "Professional Liability Errors & Omissions Insurance Policy" to Marks for the policy period October 28, 2008 to October 28, 2009. The policy provides coverage up to $1,000,000 for any loss and/or expenses relating to any claims, demands, or suits based upon or arising out of Marks's profession. In an endorsement, the policy states that the "Named Insured's Profession" is "[s]olely in the performance of services as the Trustee ofthe Irrevocable Children's Trust (ICT), and/or Irrevocable Children's Trust No. 2 (ICT2), for a fee." The policy contains the following exclusion:
¶4 Marks was sued six times in five states for his actions related to Titan, and Marks submitted claims to Houston Casualty for each lawsuit. Houston Casualty either refused or failed to provide a defense for Marks for any of the lawsuits. On November 17, 2009, Marks brought suit against Houston Casualty and Bedford, seeking various forms of relief based upon Houston Casualty's failure or refusal to provide him a defense in those other lawsuits. Houston Casualty cross-claimed against Bedford, alleging that Houston Casualty was entitled to be indemnified by Bedford to the extent that Houston Casualty was found liable to Marks.
¶5 All parties moved for summary judgment. The circuit court granted summary judgment in favor of Houston Casualty and Bedford on Marks's claims, and dismissed Houston Casualty's cross-claim against Bedford. Marks appeals, and Houston Casualty cross-appeals from the summary judgment on Marks'sclaims. The summary judgment order dismissing Houston Casualty's cross-claim against Bedford is not appealed from and is not before us.1
¶6 We review summary judgments de novo, and will uphold a grant of summary judgment if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. WIS. STAT. § 802.08(2) (2013-14); Hardy v. Hoefferle, 2007 WI App 264, ¶6, 306 Wis. 2d 513, 743 N.W.2d 843. For purposes of summary judgment here, there are no material disputed facts because the duty-to-defend law that we apply requires that we look to the allegations in the complaints against Marks and there is no dispute regarding what those allegations are. What remains is the correct interpretation of duty to defend law and the application of that law to the "facts," that is, the allegations in the complaints. These are questions of law we review de novo. See Zurich Am. Ins. Co. v. Wisconsin Physicians Servs. Ins. Corp., 2007 WI App 259, ¶11, 306 Wis. 2d 617, 743 N.W.2d 710.
¶7 Marks argues that the circuit court erroneously concluded that Houston Casualty did not breach its duty to defend Marks in the other lawsuits. Specifically, Marks argues that: (1) because Houston Casualty made a unilateraldecision to deny a defense to Marks in the other lawsuits, policy exclusions may not be considered when determining whether Houston Casualty breached its duty to defend; and (2) if exclusions are considered in deciding whether Houston Casualty breached its duty to defend, the exclusions here do not bar coverage for two alternative reasons, first because their plain language does not bar coverage and, second, because the exclusions are void because they create illusory coverage. We conclude that: (1) policy exclusions are properly considered in determining whether Houston Casualty breached its duty to defend Marks; and (2) Houston Casualty did not breach its duty to defend because policy exclusion IV(b)(1) precludes coverage when assessed in light of the allegations in complaints against Marks, and because the policy exclusions do not create illusory coverage. Therefore, the circuit court correctly concluded that Houston Casualty did not breach its duty to defend in the other lawsuits.
¶8 The overarching issue in this case is whether Houston Casualty breached its duty to defend Marks in the other lawsuits. To resolve this issue, we look only to the allegations contained within the four corners of the complaints in those suits and the terms of the policy. See Grieb v. Citizens Cas. Co. of N.Y., 33 Wis. 2d 552, 558, 148 N.W.2d 103 (1967) ()
¶9 Normally, when determining whether an insurer has a duty to defend, courts look to allegations in a complaint and first compare them with a policy's initial grant of coverage and, if we find coverage, turn next to see if anyexclusions preclude coverage. If we find any such exclusions, we look to see if any exceptions to the exclusions reinstate coverage. See Preisler v. General Cas. Ins. Co., 2014 WI 135, ¶22, 360 Wis. 2d 129, 857 N.W.2d 136. In this case, we assume without deciding that the policy makes an initial grant of coverage and no exception to an exclusion has been raised. Therefore, our inquiry into whether Houston Casualty breached its duty to defend would presumably focus on whether there is an exclusion that applies to preclude coverage. However, Marks argues that where there is a unilateral failure or refusal by the insurer to defend the insured so that the question is whether the insurer has breached its duty to defend, the insurer is not permitted to argue that an exclusion justified its refusal to defend. In effect, Marks argues that a different duty to defend analysis applies when, as here, an insurer decides on its own not to provide a defense, and the issue later arises in a breach of duty to defend context. As we explain below, we disagree.
¶10 Marks's support for his argument can be summarized by a single paragraph from his appellant's brief:
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