Wiegert v. TM Carpentry, LLC

• Citation: 403 Wis.2d 519,978 N.W.2d 207,2022 WI App 28
• Decision Date: 04 May 2022
• Docket Number: Appeal No. 2020AP1833
• Parties: Terry WIEGERT and Deborah Wiegert, Plaintiffs, v. TM CARPENTRY, LLC, State Farm Fire & Casualty Company and Auto-Owners Insurance, Defendants, Stone Creek Builders, LLC, Defendant-Third-Party Plaintiff-Appellant, v. Timothy Balthazor d/b/a Tim Balthazor Masonry and Secura Insurance, a Mutual Company, Third-Party Defendants, Acuity, a Mutual Insurance Company, Intervenor-Respondent.
• Court: Wisconsin Court of Appeals

403 Wis.2d 519
978 N.W.2d 207
2022 WI App 28

Terry WIEGERT and Deborah Wiegert, Plaintiffs,
v.
TM CARPENTRY, LLC, State Farm Fire & Casualty Company and Auto-Owners Insurance, Defendants,

Stone Creek Builders, LLC, Defendant-Third-Party Plaintiff-Appellant,
v.
Timothy Balthazor d/b/a Tim Balthazor Masonry and Secura Insurance, a Mutual Company, Third-Party Defendants,

Acuity, a Mutual Insurance Company, Intervenor-Respondent.

Appeal No. 2020AP1833

Court of Appeals of Wisconsin.

Submitted on Briefs: October 26, 2021
Opinion Filed: May 4, 2022

On behalf of the defendant-appellant, the cause was submitted on the briefs of Erik Fuehrer of Gabert, Williams, Konz & Lawrynk, LLP, Appleton.

On behalf of the plaintiff-respondent, the cause was submitted on the brief of Christine Marie Rice of Simpson & Deardorff, S.C., Milwaukee.

Before Gundrum, P.J., Neubauer and Grogan, JJ.

NEUBAUER, J.

403 Wis.2d 522

¶1 Stone Creek Builders, LLC, (Stone Creek) appeals from an order of the circuit court granting a motion for summary judgment in favor of Acuity, A Mutual Insurance Company (Acuity). The court ruled that Acuity had no duty to indemnify its insured, Stone Creek, against claims asserted by Terry and Deborah Wiegert which arise out of renovation work Stone Creek performed on the Wiegerts’ home. The court determined that any damage alleged to have occurred during the Acuity policy period could only have arisen out of Stone Creek's work in raising the house off its foundation to increase the height of the basement, and that the contractual scope of Stone Creek's work explicitly included lifting the house. The court concluded that any damages arising from liability caused by lifting the home would fall within a "business risk" exclusion (the "k.(5) exclusion") in the Acuity policy that bars coverage for "[p]roperty damage" to "[t]hat particular part" of real property upon which an insured "is performing operations, if the property damage arises out of those operations." We agree. Though we are obliged to construe the phrase "[t]hat particular part" narrowly, here the entire house constituted "[t]hat particular part" of the real property on which Stone Creek was working because Stone Creek's contract

978 N.W.2d 209

required it to lift the entire house off the foundation. We affirm.¹

403 Wis.2d 523

BACKGROUND

¶2 The following undisputed facts were submitted to the circuit court on motions for summary and/or declaratory judgment filed by the insurers.

I. The Renovation Project

¶3 The Wiegerts decided to undertake certain renovations to their two-story home in the City of Sheboygan, including increasing the floor-to-ceiling height of the basement. In July 2014, the Wiegerts entered into a contract with TM Carpentry, LLC (TM) for the renovation. The contract called for TM to increase the height of the basement by removing the existing floor, excavating several inches of dirt below it, and pouring a new concrete floor. TM performed some of the excavation and other work but abandoned the project before its work was complete.

¶4 After TM left the job, the Wiegerts hired an engineering firm to inspect the basement and make recommendations to address the issues allegedly resulting from TM's work. After receiving the engineer's recommendations, the Wiegerts hired Stone Creek to do further renovation work.

¶5 On October 21, 2014, the Wiegerts entered into a contract with Stone Creek to finish the renovation project. Stone Creek's scope of work was set forth in a "Budgetary Proposal" and included the following:

403 Wis.2d 524

(1) Removing basement ceiling, fixtures, and the basement stairway;

(2) Disconnecting electrical circuits and other utilities;

(3) Lifting the house and porch approximately three feet above the existing foundation;

(4) Installing two courses of concrete block on top of the existing foundation;

(5) Lowering the house onto the newly raised foundation;

(6) Installing new window openings including headers;

(7) Reinstalling mechanical services to the house; and

(8) Rebuilding the basement staircase.

Stone Creek subcontracted with Timothy Balthazor, d/b/a Tim Balthazor Masonry (Balthazor), to install the additional concrete block.

¶6 Stone Creek began its work in October 2014. Between October 27 and October 29, 2014, Stone Creek removed the basement staircase and ceiling, disconnected the utilities, and cut access holes in the existing foundation. On October 29, Stone Creek raised the house several feet above the existing foundation. The new courses of concrete block were installed between November 5 and November 19, 2014. Stone Creek lowered the house onto the new foundation on November 18 or 19 and performed additional work on the house from that date through mid-February 2015.

¶7 The Wiegerts noticed damage to the house during the three-week period in which it was elevated. Mrs. Wiegert noticed cracks developing in the walls of the house almost immediately after Stone

978 N.W.2d 210

Creek lifted

403 Wis.2d 525

it on October 29. The Wiegerts also noticed gaps between the baseboard and shoe molding in one room, as well as separation and unevenness in the wood floors on the main and second floors. The Wiegerts observed additional cracking in the walls and other structural issues after the house was lowered onto the foundation on November 19, 2014.

II. The Acuity Policy

¶8 TM, Stone Creek and Balthazor were insured under separate policies of insurance during the periods of time that they worked on the project.² Stone Creek was insured under two policies, each of which covered a portion of the period in which Stone Creek's work was performed. Acuity issued a "Bis-Pak" policy of business liability insurance to Stone Creek with a policy period of November 7, 2013 to November 7, 2014. Stone Creek's other insurer, Auto-Owners Insurance, issued a policy of commercial general liability insurance to Stone Creek that was in effect from November 7, 2014, to November 7, 2015.

¶9 The Acuity policy contains several provisions relevant to this appeal. The policy contains an insuring agreement under which Acuity agreed to pay amounts that Stone Creek "becomes legally obligated to pay as damages because of ... property damage ... to which this insurance applies." The Acuity policy applies to "property damage" that (1) occurs during the policy period and (2) is caused by an "occurrence."³

403 Wis.2d 526

¶10 The "property damage" exclusion at issue reads as follows:

This insurance does not apply to:

....

k. Damage to Property

Property damage to:

....

(5) That particular part of real property on which you or any contractor or subcontractor working directly or indirectly on your behalf is performing operations, if the property damage arises out of those operations.

PROCEDURAL HISTORY

¶11 In June 2015, the Wiegerts sued TM, Stone Creek, and their insurers, seeking to recover for the physical damage to, and loss of use of, their house. As summarized by the circuit court, the Wiegerts claimed that Stone Creek "caused significant physical damage to the [house] including cracking of the interior walls and unevenness in the wood flooring" throughout the house.

¶12 Acuity was not originally a party to the action but filed a motion to intervene, which the circuit court granted. Acuity also moved the court for an order "bifurcating litigation of the underlying merits from insurance...