Patrick v. Head of the Lakes Co-op. Elec. Ass'n

• Decision Date: 24 June 1980
• Docket Number: No. 79-1452,79-1452
• Citation: 98 Wis.2d 66,295 N.W.2d 205
• Parties: Charles R. PATRICK, Plaintiff, v. HEAD OF THE LAKES COOPERATIVE ELECTRIC ASSOCIATION, Defendant-Appellant and Cross-Respondent, Federated Rural Electric Insurance Company, Defendant-Respondent and Cross- Appellant.
• Court: Wisconsin Court of Appeals

Page 205

295 N.W.2d 205

98 Wis.2d 66

Charles R. PATRICK, Plaintiff, v. HEAD OF THE LAKES COOPERATIVE ELECTRIC ASSOCIATION Defendant-Appellant and Cross-Respondent Federated Rural Electric Insurance Company Defendant-Respondent and Cross- Appellant.

No. 79-1452.

Court of Appeals of Wisconsin.

Submitted on Briefs April 8, 1980.

Opinion Released June 24, 1980.

Opinion Filed June 24, 1980.

Jeffrey A. Lee, David M. Weiby and Davis, Witkin, Weiby & Maki, S.C., Superior, submitted brief for defendant-appellant and cross-respondent.

James L. Cirilli and Borg, McGill, Peterson, McDonald & Cirilli, Superior, submitted brief for defendant-respondent and cross-appellant.

Before DONLIN, P. J., and FOLEY and DEAN, JJ.

FOLEY, Judge.

Federated Rural Electric Insurance Company refused to defend Head of the Lakes Cooperative Electric Association, its insured, in an action brought by Charles Patrick for damages resulting from the Cooperative's intentional cutting of Patrick's trees. Some or all of the trees were within an unrecorded easement held by the Cooperative over Patrick's property. The trial court ruled that Federated had a duty to defend and award the Cooperative defense fees and costs of $2,545.67. Both parties have appealed the judgment, Federated claiming that it had no duty to defend and the Cooperative that it is actually entitled to attorney's fees and costs of $6,219.95. We agree with the trial court that Federated had a duty to defend. As to the amount of the judgment, however, we have the obligation to make an independent review of the attorney's fees and costs. Based on that review, we modify the judgment to award the Cooperative $5,122.95, their fees and costs for defending the Patrick action, plus their taxable costs on their cross-complaint against Federated.

Federated claims that it did not have a duty to defend because: (1) The act of cutting trees was an intentional act not covered by the policy; and (2) since the trees that were cut were on a Cooperative easement, they were in the physical control of the Cooperative and excluded from coverage. The insurance policy provided that the claimed damage, to be covered, must result from an "occurrence." An "occurrence" is defined as:

An accident occurring within the policy period, including continuous or reported exposure to conditions, which results in Personal Injury or Property Damage neither expected or intended from the standpoint of an Insured.

The policy excluded:

(D)amage to property owned, used or otherwise in the physical control of an insured . . . .

The construction of an insurance policy is a question of law. RTE Corporation v. Maryland Casualty Company, 74 Wis.2d 614, 247 N.W.2d 171 (1976). We independently determine questions of law without deference to the conclusions reached by the trial court. American Mutual Liability Insurance Company v. Fisher, 58 Wis.2d 299, 206 N.W.2d 152 (1973). Our objective in construing an insurance policy is to ascertain and carry out the intention of the parties. Home Mutual Insurance Company v. Insurance Company of North America, 20 Wis.2d 48, 121 N.W.2d 275 (1963).

When ambiguous, an exclusionary clause in an insurance contract should be strictly construed against the insurer. Meiser v. Aetna Casualty and Surety Co., 8 Wis.2d 233, 98 N.W.2d 919 (1959). The test of coverage is not what the insurer intended to cover, but what a reasonable person in the position of the insured would have understood to be covered. Ehlers v. Colonial Penn Insurance Company, 81 Wis.2d 64, 259 N.W.2d 718 (1977). The words used in an insurance contract should be given their common everyday meaning, Schmidt v. Luchterhand, 62 Wis.2d 125, 214 N.W.2d 393 (1974), and should be interpreted reasonably so as to avoid absurd results. Olguin v. Allstate Insurance Company, 71 Wis.2d 160, 237 N.W.2d 694 (1976). Finally, there is a public policy in Wisconsin against the avoidance of coverage by an insurer, and the reasonable expectations of coverage by an insured should be honored. Handal v. American Farmers Mutual Casualty Company, 79 Wis.2d 67, 255 N.W.2d 903 (1977).

Federated contends that "occurrence" and "accident" are synonymous terms. This construction defeats the purpose of using the term "occurrence." It also does not take into consideration the portion of the policy definition of occurrence that requires consideration of whether the result of the accident was "expected or intended from the standpoint of the insured."

The term "occurrence" originally came into use in insurance policies because a restrictive construction of the term "accident" proved unsatisfactory to the insured, the public, and the courts. The purpose of using "occurrence" rather than "accident" was to expand coverage. 7A Appleman, Insurance Law and Practice § 4492 (1979). Its use permits consideration of the state of mind of the actor as it relates to the resultant damage, rather than only as it relates to causation. 7A Appleman, supra § 4492.02. Its use affords coverage for an intended act and an intended result if they cause damage unintended from the standpoint of the insured.

In this case, the cutting of trees and resulting damage to the trees was intended by the Cooperative. Any unauthorized cutting, which is the basis for Patrick's action, was unintended. The employees of the Cooperative intended to trim trees that were interfering with transmission lines. The lines ran over Patrick's property, but were on an unrecorded easement held by the Cooperative. The easement authorized the Cooperative to trim trees that interfered with its lines. The employees of the Cooperative did not intend to trim more than was necessary to reasonably maintain service, and did not intend to cut or trim trees located outside of the Cooperative's easement. As a cause of action existing only for damages due to unauthorized trimming and cutting, any damage was in fact unintended. Under these circumstances, Patrick's action claims an occurrence covered by the policy.

Federated's second argument is that since the Cooperative cut trees on its own easement, the property was under the Cooperative's "physical control" and is excluded from coverage. The Wisconsin Supreme Court has held that "control" is an ambiguous term and must be strictly construed against the insurer. Meiser, supra. In strictly construing the term here, in light of its purpose in the policy and honoring the reasonable expectations of coverage of the Cooperative, we conclude that the Cooperative did not have physical control over the trees.

The purpose of the exclusion of property over which the insured has physical control is to avoid coverage of property that should be covered separately under a different type of insurance that contemplates a different type of risk. 7A Appleman, supra § 4493.03. In this case, if coverage were excluded, we know of no other type of insurance the Cooperative should have been...