Sawyer v. W. Bend Mut. Ins. Co.

• Decision Date: 10 July 2012
• Docket Number: No. 2011AP902.,2011AP902.
• Citation: 821 N.W.2d 250,2012 WI App 92,343 Wis.2d 714
• Parties: Isaac SAWYER, d/b/a A–1 Security Locksmiths, Plaintiff–Respondent, v. WEST BEND MUTUAL INSURANCE COMPANY, Defendant–Appellant, Atlas Heating and Sheet Metal Works, Inc., Defendant–Respondent.
• Court: Wisconsin Court of Appeals

343 Wis.2d 714

821 N.W.2d 250

2012 WI App 92

Isaac SAWYER, d/b/a A–1 Security Locksmiths, Plaintiff–Respondent,

v. WEST BEND MUTUAL INSURANCE COMPANY, Defendant–Appellant,^†Atlas Heating and Sheet Metal Works, Inc., Defendant–Respondent.

No. 2011AP902.

Court of Appeals of Wisconsin.

Oral Argument May 8, 2012.

Opinion Filed July 10, 2012.

On behalf of the defendant-appellant, the cause was submitted on the briefs of Jeffrey L. Leavell and Timothy L. Pagel of Jeffrey Leavell, S.C., of Racine, with oral argument by Jeffrey L. Leavell.

On behalf of the plaintiff-respondent, the cause was submitted on the brief of Charles H. Barr of Croen & Barr LLP, of Milwaukee, with oral argument by David M. Oppenheim, pro hac vice, of Anderson & Wanca, Rolling Meadows, IL.

Before CURLEY, P.J., FINE and BRENNAN, JJ.

CURLEY, P.J.

[343 Wis.2d 718]¶ 1 West Bend Mutual Insurance Company (West Bend) appeals the grant of summary judgment to Isaac Sawyer, doing business as A–1 Security Locksmiths (A–1 Security), on the issue of whether the insurance policy West Bend issued to defendant Atlas Heating and Sheet Metal Works, Inc. (Atlas) provides coverage under its “personal and advertising injury” provision for privacy violations stemming from an unsolicited “junk” fax, as alleged in Sawyer's complaint against Atlas.¹ West Bend argues the policy should not be construed to cover damages from Atlas's unsolicited fax because: (1) the policy solely covers individual privacy rights, and plaintiff A–1 Security is a business; (2) the complaint does not allege facts describing a privacy violation covered by the policy's “personal and advertising injury” provision; and (3) there has been no “publication” of the fax as required by the policy. In the alternative, West Bend argues that even if there is coverage, it is excluded under the policy's “Knowing Violation of Rights of Another” exclusion. For reasons we discuss below, we affirm.

BACKGROUND

¶ 2 On or around December 9, 2005, Atlas sent an unsolicited “junk” fax advertisement to Sawyer's business, A–1 Security. The advertisement was printed by A–1 Security's fax machine, using its paper and its toner. Sawyer had not given Atlas express invitation or permission to fax advertisements, nor did Sawyer have a business relationship with Atlas.

¶ 3 Consequently, Sawyer initiated a class action against Atlas, alleging that Atlas violated the federal Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227,² by sending the “junk” fax to his place of business as well as to thousands of others. Specifically, Sawyer claimed that Atlas was responsible for damages to his physical property because the junk fax consumed paper, toner, and caused general wear and tear to the fax machine. Sawyer also alleged that Atlas was responsible for damages for personal and advertising injury because the receipt of the unsolicited junk fax violated his right to privacy. The class action, originally filed in Milwaukee County Circuit Court, was removed to the Eastern District of Wisconsin based on federal question jurisdiction, and has been stayed pending resolution of the insurance coverage issue addressed in this court.

¶ 4 Sawyer also sued West Bend, Atlas's insurer. The West Bend policy, which was in effect when Atlas faxed the unsolicited advertisement, included general liability coverage for damages incurred by Atlas due to: (1) “property damage” caused by an “occurrence” and (2) “personal and advertising injury.” The “personal and advertising injury” coverage contained a provision excluding coverage if the personal and advertising injury was “caused by or at the direction of the insured with the knowledge that the act would violate the rights of another and would inflict ‘personal and advertising injury.’ ”

¶ 5 As pertinent to this appeal, Sawyer brought an action for declaratory judgment against Atlas and West Bend in the Milwaukee County Circuit Court to determine whether West Bend had a duty to defend and/or indemnify Atlas. The trial court determined that West Bend did not have a duty to defend or indemnify Atlas under the “property damage” provision of the policy, but it did have a duty to defend Atlas under the “personal and advertising injury” provision of the policy.

¶ 6 The “Personal and Advertising Injury Liability” provision of the policy provided, in pertinent part: “We will pay those sums that the insured becomes legally obligated to pay as damages because of ‘personal and advertising injury’ to which this insurance applies.” The policy defined “personal and advertising injury” in pertinent part as: “injury, including consequential ‘bodily injury,’ arising out of one or more of the following offenses: ... [o]ral or written publication, in any manner, of material that violates a person's right of privacy.”

¶ 7 The “knowing violation of rights of another” exclusion provided, in pertinent part, that the insurance did not apply to: “ ‘[p]ersonal and advertising injury’ caused by or at the direction of the insured with the knowledge that the act would violate the rights of another and would inflict ‘personal and advertising injury.’ ”

¶ 8 The trial court concluded that the plaintiff in the case was Sawyer as an individual and that his individual right to privacy was violated. The trial court also concluded that the language of the policy was ambiguous and consequently needed to be construed in favor of the insured. Specifically, the trial court deduced that the word “privacy” should include the right to seclusion. Additionally, the trial court concluded that the faxed advertisement was a “publication.” Finally, the court held that the “knowing violation of rights of another” exclusion did not apply here because the allegations in the complaint provided for the possibility that Atlas may not have had the requisite knowledge that it was violating Sawyer's right of privacy; in other words, Atlas may have negligently, and not intentionally, violated Sawyer's right of privacy. West Bend now appeals.

ANALYSIS

Standard of Review

¶ 9 Summary judgment is appropriate when determining insurance policy coverage. Home Ins. Co. v. Phillips, 175 Wis.2d 104, 109, 499 N.W.2d 193 (Ct.App.1993). We review a grant of summary judgment independently, applying the standards set forth in Wis. Stat. § 802.08(2) (2009–10),³ in the same manner as the trial court. See Danbeck v. American Family Mut. Ins. Co., 2001 WI 91, ¶ 9, 245 Wis.2d 186, 629 N.W.2d 150. Summary judgment is appropriate if the material facts are undisputed and “the moving party is entitled to judgment as a matter of law.” § 802.08(2). Additionally, “[t]he interpretation of an insurance contract is a question of law subject to de novo review.” Danbeck, 245 Wis.2d 186, ¶ 10, 629 N.W.2d 150 (emphasis added). Here, the only issue is whether West Bend has a duty to defend Atlas against Sawyer's federal suit. Because there are no material facts in dispute, we are presented with a question of law, which we review de novo. See Radke v. Fireman's Fund Ins. Co., 217 Wis.2d 39, 42–43, 577 N.W.2d 366 (Ct.App.1998).

¶ 10 Key to our determination is the rule that an insurer has a duty to defend as long as coverage is arguable or fairly debatable. Southeast Wis. Prof'l Baseball Park Dist. v. Mitsubishi Heavy Indus. Am., Inc., 2007 WI App 185, ¶ 41, 304 Wis.2d 637, 738 N.W.2d 87. Whether an insurer has a duty to defend the insured is determined by the complaint without looking to extrinsic evidence. Grube v. Daun, 173 Wis.2d 30, 72, 496 N.W.2d 106 (Ct.App.1992). Wisconsin applies the four-corners rule, which provides that the insurer must defend its insured when the facts alleged in the four corners of the complaint, if proven, would constitute a covered claim. See Estate of Sustache v. American Family Mut. Ins. Co., 2008 WI 87, ¶ 27, 311 Wis.2d 548, 751 N.W.2d 845. The duty to defend depends solely on the nature of the claim, regardless of the claim's merits, and any doubts are resolved in favor of the insured. Elliott v. Donahue, 169 Wis.2d 310, 321, 485 N.W.2d 403 (1992).

¶ 11 General principles of contract construction control insurance contract interpretation. Maas by Grant v. Ziegler, 172 Wis.2d 70, 79, 492 N.W.2d 621 (1992). Because the primary goal is to determine and carry out the intent of the parties, the language of the policy is interpreted how “a reasonable person in the position of the insured would have understood the words to mean.” See Sprangers v. Greatway Ins. Co., 182 Wis.2d 521, 536, 514 N.W.2d 1 (1994). Words are given their common and ordinary meaning. Folkman v. Quamme, 2003 WI 116, ¶ 17, 264 Wis.2d 617, 665 N.W.2d 857. If the policy language is plain and unambiguous, it is enforced as written. Danbeck, 245 Wis.2d 186, ¶ 10, 629 N.W.2d 150. However, if the policy language is susceptible to more than one reasonable meaning, it is considered ambiguous and construed in favor of coverage. Id.

(1) West Bend's policy covers damages from Atlas's unsolicited fax.

¶ 12 On appeal, West Bend provides three reasons why the policy should not be construed to cover damages from Atlas's unsolicited fax: (1) the policy covers only individual privacy rights, and the plaintiff in this case, A–1 Security, is a business; (2) the complaint does not allege facts describing a privacy violation covered by the policy's “personal and advertising injury” provision; and (3) there has been no “publication” of the fax as required by the policy. We discuss each argument in turn.

(a) The policy covers Sawyer individually and doing business as A–1 Security.

¶ 13 West Bend first argues that, because the policy language at issue refers to a publication that violates a person's right to privacy, it does not cover damages suffered by Sawyer, who is listed on the complaint as doing business as “A–1 Security Locksmiths.” West Bend argues that because a separate clause in the policy—the clause that provides coverage for personal and advertising injury involving slander and...