Olson v. Farrar
| Decision Date | 31 January 2012 |
| Docket Number | No. 2009AP2385.,2009AP2385. |
| Citation | 809 N.W.2d 1,338 Wis.2d 215,2012 WI 3 |
| Parties | Todd OLSON, Plaintiff, v. Robert FARRAR, Defendant–Appellant,Mt. Morris Mutual Insurance Company, Intervenor–Defendant–Respondent–Petitioner. |
| Court | Wisconsin Supreme Court |
OPINION TEXT STARTS HERE
For the intervenor-defendant-respondent-petitioner there were briefs by Stacy Kay Luell, Jeffrey T. Nichols, Daniel K. Mullin and Crivello Carlson, S.C., Milwaukee and oral argument by Stacy Kay Luell.
For the defendant-appellant there was a brief by Joseph G. Veenstra, Cheryl M. Gill and Johns, Flaherty & Collins S.C., La Crosse and oral argument by Joseph G. Veenstra.
[338 Wis.2d 221] ¶ 1 Mt. Morris Mutual Insurance Company seeks review of a published decision of the court of appeals reversing the circuit court's grant of a declaratory and summary judgment in its favor.1 Todd Olson filed suit against Robert Farrar, alleging he was liable for property damage to Olson's trailer home and vehicle. Farrar's insurer, Mt. Morris, sought a declaration that it had neither a duty to defend nor a duty to indemnify Farrar under the terms of its insurance policy.
¶ 2 Mt. Morris contends that under the four-corners rule, the court should resolve this dispute with reference to the language contained solely within the four corners of the insurance policy and the factual allegations of the complaint. In addition, it asserts that the language of the policy does not give rise to a duty to defend because of certain coverage exclusions: (1) the property damage did not “result from” a “mobile home trailer”; (2) the “mobile home trailer” was attached to a “motor vehicle”; and (3) the “mobile home trailer” was “used by, or in the care” of Farrar, the insured, at the time of the accident. Because the duty to defend is broader than the duty to indemnify, Mt. Morris asserts that there is no duty to indemnify here.
[338 Wis.2d 222] ¶ 3 Given that Mt. Morris made an initial determination to appoint counsel for Farrar's defense until the question of coverage could be finally resolved by the court, we determine that the purpose of the four-corners rule has been served. It is not further implicated in this case.
¶ 4 Turning to the policy language of the exclusions, we apply a well-settled canon of insurance policy interpretation. We determine that the phrase “results from” is susceptible to more than one reasonable interpretation. We likewise determine that the definition of “motor vehicle” is susceptible to more than one reasonable interpretation. Accordingly, both of these policy provisions are ambiguous, and we construe them in favor of coverage.
¶ 5 Finally, although the factual record has not been well developed, it appears that there may be genuine issues of material fact regarding whether Olson's trailer home was “used by, or in the care of an insured” when it sustained property damage. Because the circuit court did not address this exclusion when it granted judgment, we remand to the circuit court for a determination on this issue. Accordingly, we affirm the court of appeals and remand to the circuit court for further proceedings.
¶ 6 Although there are disputes of fact, the following facts are undisputed. The plaintiff, Todd Olson, purchased a trailer home with the intention of moving it to a new location. Olson was acquainted with Robert Farrar, who owned a farm tractor. It is undisputed Olson asked Farrar to provide some assistance with the move.2
¶ 7 Farrar hitched Olson's trailer home to his tractor and proceeded to drive to the new location, towing Olson's trailer home behind him. At one point during the eight-mile journey, Farrar's tractor stalled on a hill, and the trailer home rolled backwards. As it rolled backwards, Olson's trailer home crashed into Olson's vehicle.3
¶ 8 Olson filed suit against Farrar, alleging that Farrar did not have permission to move the trailer home more than a couple of feet. Olson alleged that Farrar was negligent because he “knew, or should have known, that his tractor was incapable of pulling [Olson's] trailer home for the approximately 8 miles up and down hills and around sharp corners.” According to the complaint, Farrar was liable for the “extensive damage” to Olson's trailer home and vehicle.
¶ 9 Farrar tendered the defense of the suit to Mt. Morris Mutual Insurance Company, which had issued Farrar a farmowners policy. In addition to first-party coverage for direct physical loss to Farrar's property, the policy provides third-party coverage for liability incurred by Farrar, subject to the relevant exclusions.
¶ 10 Mt. Morris elected to provide an initial defense for Farrar pursuant to a reservation of rights. It then moved to intervene, bifurcate the coverage issues from the issues related to liability and damages, and stay all proceedings on liability and damages. The circuit court granted this motion.
¶ 11 Mt. Morris moved next for “declaratory and summary judgment.” It sought a declaration that “Mt. Morris owes no coverage” and an order “dismissing it from this action.” It relied on two separate exclusions: an exclusion for liability resulting from the use of a motorized vehicle, and an exclusion for damage to property that is used by or in the care of an insured.
¶ 12 The first exclusion relied upon by Mt. Morris specifically excludes “ ‘property damage’ which results from the ownership, operation, maintenance, use ... of motorized vehicles ... owned and operated by ... an insured.” An exception to that exclusion reasserts coverage if “coverage is provided by an Incidental Motorized Vehicle ... Coverage.”
¶ 13 The Incidental Coverage for Motorized Vehicles provides coverage for “property damage” that “results from” a “mobile home trailer,” unless the mobile home trailer is attached to a “motor vehicle”.4 The policy defines “motor vehicle” as “a ‘motorized vehicle,’ ... and all attached machinery or equipment if: a. it is subject to ‘motor vehicle’ registration; or b. it is designed for use on public roads.”
¶ 14 The second exclusion relied upon by Mt. Morris is found in paragraph 2.d. of the exclusion section of the policy. It provides: “Coverage L does not apply to: ... damage to property that is rented to, occupied by, used by, or in the care of an ‘insured’....”
[338 Wis.2d 225] ¶ 15 Mt. Morris contended that in the court's summary judgment determination, extrinsic evidence was not admissible under the “four-corners” rule, and the court should decide the coverage question based only on the factual allegations in the complaint and the language of the policy. It asserted that under a four-corners analysis, it had no duty to defend Farrar. It further contended that because there was no duty to defend and because the duty to defend is broader than the duty to indemnify, there likewise could be no duty to indemnify Farrar.
¶ 16 Farrar contended that the policy provided coverage for the property damage. He argued that the Incidental Coverage for Motorized Vehicles was an applicable exception to the motorized vehicle exclusion, and it reasserted coverage for Olson's claims. Farrar further argued that the exclusion for property that is used by or in the care of an insured did not apply to the facts of the case.
¶ 17 In support of his arguments, Farrar submitted an affidavit setting forth his version of the accident as well as information about the tractor. He stated that the tractor was a Massey Ferguson Model Number 1130, that it was equipped with field tires, and that it was not equipped with brake lights, tail lights, turn signals, or other safety devices for highway use.
¶ 18 Mt. Morris reasserted its argument that the four-corners rule precluded consideration of Farrar's affidavit. In the alternative, it submitted portions of the manufacturer's manual by affidavit. In relevant part, the section on safety precautions stated:
[338 Wis.2d 226] ¶ 19 During the hearing in the circuit court, Olson's attorney offered to amend the complaint to conform to the terms of the insurance policy. It appears that the circuit court concluded that an amendment was unnecessary. Although the court made reference to the extrinsic evidence, it did not specifically determine whether the four-corners rule applied.
¶ 20 The dispositive question during the hearing was whether Farrar's tractor was a “motor vehicle” within the terms of the policy. The circuit court acknowledged that “this is a very close issue.” It nevertheless concluded that the tractor was a “motor vehicle” and therefore, there was no coverage under the policy. The circuit court did not address the exclusion for damage to property “used by, or in the care of an insured.”
¶ 21 The court of appeals reversed. Olson v. Farrar, 2010 WI App 165, 330 Wis.2d 611, 794 N.W.2d 245. It concluded, “we are beyond the initial duty to defend stage of the proceedings and are not constrained by the four-corners rule.” Id., ¶ 11. It further determined that the property damage “resulted from” a mobile home trailer and the property that was damaged was not “used by, or in the care of” Farrar. Id., ¶ 29. Finally, it concluded that “Mt. Morris has not pointed to any undisputed facts showing that Farrar's tractor was ‘designed for use on public roads.’ ” Id. The court of appeals remanded to the circuit court for further proceedings.
¶ 22 In this case, we are asked to determine whether the four-corners rule applies. The proper application of the four-corners rule presents a question of law, which we decide independently of the determinations rendered by the circuit court and the court of appeals. See Estate of Sustache v. American Family Mut. Ins. Co., 2008 WI 87, ¶¶ 27–29, 311 Wis.2d 548, 751 N.W.2d 845.
¶ 23 We are also asked to determine whether the circuit court properly granted Mt....
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