Thompson v. Threshermen's Mut. Ins. Co., 92-0928

• Decision Date: 03 November 1992
• Docket Number: No. 92-0928,92-0928
• Parties: Thomas THOMPSON and Marie Thompson, d/b/a TMJ'S Supermarket, Plaintiffs-Appellants, d v. THRESHERMEN'S MUTUAL INSURANCE COMPANY, Defendant-Respondent.
• Court: Wisconsin Court of Appeals

Page 734

493 N.W.2d 734

172 Wis.2d 275

Thomas THOMPSON and Marie Thompson, d/b/a TMJ'S Supermarket, Plaintiffs-Appellants, ^d v. THRESHERMEN'S MUTUAL INSURANCE COMPANY, Defendant-Respondent.

No. 92-0928.

Court of Appeals of Wisconsin.

Submitted on Briefs Oct. 5, 1992.

Opinion Released Nov. 3, 1992.

Opinion Filed Nov. 3, 1992.

On behalf of the plaintiffs-appellants, the cause was submitted on the briefs of Beverly Wickstrom of Misfeldt, Stark, Richie & Wickstrom of Eau Claire

On behalf of the defendant-respondent, the cause was submitted on the brief of William M. Gabler of Garvey, Anderson, Johnson, Gabler & Geraci, S.C. of Eau Claire.

Before CANE, P.J., and LaROCQUE and MYSE, JJ.

CANE, Presiding Judge.

Thomas and Marie Thompson appeal a summary judgment denying their claims for reimbursement under the "Extra Expense" and "Money and Securities" sections of a Threshermen's Mutual Insurance Company Businessowners Policy held by the Thompsons. Because the policy did not cover these claims, we affirm the summary judgment.

Thomas and Marie Thompson owned and operated a supermarket in Gillett, Wisconsin. The Thompsons rented the building that housed the supermarket and held a Businessowners Policy that contemplated their status as renters. A fire destroyed the supermarket building, along with most of the Thompsons' equipment, fixtures and wares. Although the Thompsons hoped to resume operation of the supermarket, their landlord opted not to rebuild and the Thompsons were unable to locate other suitable rental space. Therefore, the Thompsons built their own structure for the supermarket. The crux of this dispute is whether costs associated with the building of a new structure by an insured tenant are covered by the policy.

After the fire, the Thompsons submitted a sworn statement in proof of loss and Threshermen's paid them the following amounts:

                Demolition Costs                    10,475.00
                Unspecified Payment                120,000.00
                Contents & Debris Removal           34,525.00
                Loss of Earnings                    30,000.00
                Money & Securities                   4,138.47
                Balance of Business Interruption     7,529.00
                Extra Expense                        2,147.96
                                                  -----------
                                                  $208,815.43
                

Threshermen's rationale for this payout was that the business personal property coverage ¹ limited to $160,000 and an additional debris removal coverage ² of $5,000 were paid out by the first three payments shown above. The remaining "Loss of Earnings" (or "Business Interruption"), ³ "Money and Securities" ⁴ and "Extra Expense" ⁵ coverage was paid by the other payouts. The Thompsons, however, felt they were due more under both the Extra Expense and Money and Securities provisions of the policy.

The Thompsons commenced an action seeking additional coverage under these sections. Both parties moved for summary judgment. With a limited exception not related to this appeal, ⁶ the trial court ruled that no additional coverage was provided and granted summary judgment to Threshermen's. The Thompsons appealed.

In reviewing a grant of summary judgment, this court applies the same standards as the trial court. A motion for summary judgment should be granted if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Griebler v. Doughboy Recreational, Inc., 160 Wis.2d 547, 559, 466 N.W.2d 897, 902 (1991). Both sides agree that there are no disputed facts and the only issue presented, construction of the insurance contract, is an issue of law that we review without deference to the trial court. Lambert v. Wrensch, 135 Wis.2d 105, 115, 399 N.W.2d 369, 374 (1987).

When the terms of an insurance policy are plain on their face, the court need not resort to construction or caselaw to augment the meaning of the policy's plain language. Paape v. Northern Assur. Co., 142 Wis.2d 45, 51, 416 N.W.2d 665, 668 (Ct.App.1987). The Thompsons argue that the policy is plain on its face and calls for the coverage requested. We disagree. We conclude that the Extra Expense and Money and Securities sections do not provide coverage.

EXTRA EXPENSE SECTION

The applicable Extra Expense portion of the insurance policy reads:

We will pay necessary Extra Expense you incur during the "period of restoration" that you would not have incurred if there had been no direct physical loss or damage to property ... caused by or resulting from a Covered Cause of Loss.

Extra Expense means expenses incurred:

(1) To avoid or minimize the suspension of business and to continue "operations":

(a) At the described premises; or

(b) At replacement premises or at temporary locations, including:

(i) Relocation expenses; and

(ii) Costs to equip and operate the replacement or temporary locations.

....

We will only pay for Extra Expense that occurs within 12 consecutive months after the date of direct physical loss or damage. This Additional Coverage is not subject to the Limits of Insurance.

Under the Extra Expense section of the policy, the Thompsons claim approximately $130,000 worth of expenses involved in the building of the new structure. ⁷ They correctly contend that all of the costs were incurred within the "period of restoration." Further, they state that consistent with coverage under the policy, the expenses were incurred to minimize the suspension of business and to continue "operation" at replacement premises or temporary locations. According to the policy, these expenses may be either "relocation expenses" or "costs to equip and operate the replacement ... locations." They contend that the terms "relocation expenses" and "costs to equip and operate the replacement ... locations" are unambiguous. Because these terms are reasonably susceptible to more than one meaning, we conclude they are ambiguous, and their meaning must be construed. Kremers-Urban Co. v. American Employers Ins. Co., 119 Wis.2d 722, 735-36, 351 N.W.2d 156, 163 (1984).

Insurance policies should be construed in accordance with what a reasonable person in the position of the insured would have understood them to mean. Kenosha Beef Int'l v. North River Ins. Co., 151 Wis.2d 655, 659, 445 N.W.2d 703, 705 Insurance policies should be given a reasonable interpretation and not one that leads to absurd results, Olguin v. Allstate Ins. Co., 71 Wis.2d 160, 165, 237 N.W.2d 694, 697 (1976), and construction should not bind an insurer to a risk it did not contemplate. Gonzalez v. City of Franklin, 137 Wis.2d 109, 122, 403 N.W.2d 747, 762 (1987).

(Ct.App.1989). Although courts frequently state that ambiguous language in a policy is construed against the drafting insurer, this rule should not be applied until other rules of interpretation have been exhausted. Lechner v. Scharrer, 145 Wis.2d 667, 673, 429 N.W.2d 491, 494 (Ct.App.1988); Hemerley v. American Fam. Mut. Ins. Co., 127 Wis.2d 304, 309, 379 N.W.2d 860, 863 (Ct.App.1985).

The items the Thompsons seek additional coverage for under the Extra Expense section were either items (or costs associated with acquiring such) that they had owned previous to the fire or items (or costs associated with acquiring such) that...