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Water Well Solutions Service Group Inc. v. Consolidated Ins. Co.

Court of Appeals of Wisconsin

September 9, 2015

WATER WELL SOLUTIONS SERVICE GROUP INC., PLAINTIFF-APPELLANT,
v.
CONSOLIDATED INSURANCE COMPANY, DEFENDANT-RESPONDENT

Submitted on Briefs May 20, 2015.

Page 277

APPEAL from an order of the circuit court for Waukesha County: JAMES R. KIEFFER, Judge. Cir. Ct. No. 2014CV254.

On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Lee M. Seese of Michael Best & Friedrich LLP, Waukesha.

On behalf of the defendant-respondent, the cause was submitted on the brief of William J. Katt and Christina A. Katt of Wilson Elser Moskowitz Edelman & Dicker LLP, Milwaukee.

Before Neubauer, C.J., Reilly, P.J., and Gundrum, J. REILLY, P.J. (dissenting).

OPINION

Page 278

[365 Wis.2d 226] NEUBAUER, C.J.

[¶1] This is an insurance coverage dispute arising out of the allegedly negligent installation of a water pump in a municipal well. In the underlying complaint, the subrogated insurer of the municipal utility sued the water well contractor, alleging negligent work. The water well contractor tendered its defense and indemnity to its commercial general liability insurer, which denied any duty to defend or [365 Wis.2d 227] indemnify. That case settled. The water well contractor then brought this action against its insurer, alleging breach of the duty to defend and bad faith. The circuit court granted summary judgment to the insurer, finding that the underlying complaint did not allege a covered claim because certain business risk exclusions applied. The water well contractor urges us to look outside the four corners of the complaint to find coverage. We decline this invitation to depart from the well-established Wisconsin rule that the allegations in the complaint are what we look at to determine whether there is a duty to defend. The water well contractor also argues that we should ignore the exclusions in the policy when determining the duty to defend. This would also be a departure from established Wisconsin law. We affirm the circuit court's grant of summary judgment to the insurer.

BACKGROUND

[¶2] In May 2009, the city of Waukesha hired Water Well Solutions Service Group Inc., (Water Well) to remove the old pump and install a new pump at its Well #10. Water Well installed the pump, including providing and installing new pipe and rethreading pipe as needed. In February 2011, the pump unthreaded and separated from the pipe column and fell to the bottom of the 1910-foot-deep well. Argonaut Insurance Company, Waukesha Water Utility's insurer, filed suit in United States District Court for the Eastern District of Wisconsin against Water Well, alleging negligence and breach of contract and seeking $300,465.48 in damages. Water Well tendered its defense to its insurer, Consolidated Insurance Company, which denied coverage and did not provide a defense. Consolidated indicated that the grounds for denial [365 Wis.2d 228] were, among other exclusions, the " your product" and " your work" exclusions. Water Well ended up settling the case for $87,500.

[¶3] On February 5, 2014, Water Well filed this lawsuit against Consolidated, claiming that at least some of the damages alleged in the underlying complaint were covered, and therefore Consolidated had breached its duty to defend Water Well. Water Well and Consolidated both moved for summary judgment, and the circuit court granted summary judgment to Consolidated and denied Water Well's motion. The circuit court concluded that, under well-settled Wisconsin law, the insurer's duty to defend is determined by reviewing the four corners of the underlying complaint, without resort to extrinsic evidence. Furthermore, ruled the circuit court, when making this coverage determination, the court must consider all the terms of the insurance policy, including the exclusions.

Page 279

The circuit court concluded that there was no covered claim alleged in the underlying complaint because of the " your product" and " your work" exclusions. Thus, Consolidated did not have a duty to defend. Water Well appeals.

DISCUSSION

Standard of Review

[¶4] On review of a grant of summary judgment, we apply the same methodology as the circuit court. Green Spring Farms v. Kersten, 136 Wis.2d 304, 315, 401 N.W.2d 816 (1987). Summary judgment " shall be rendered if the pleadings, depositions, answers to interrogatories, and admissions on file, together with [365 Wis.2d 229] the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving ...


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