from an order of the circuit court for Outagamie County, No.
2011CV434 MICHAEL W. GAGE, Judge. Affirmed.
Stark, P. J., Hruz and Seidl, JJ.
We review a decision of the circuit court declaring that
insurance policies AMCO Insurance Company issued to GLB
Acquisition, LLC (GLBA) excluded coverage to GLBA for
third-party claims brought by Keith Wochinski and several
related parties (collectively, Wochinski). The circuit court
concluded the policies' "breach of contract"
exclusions barred coverage for Wochinski's claims. We
agree that the breach of contract exclusions apply, and we
therefore affirm the order dismissing AMCO from this action.
Wochinski worked in the beverage industry, doing business as
New London Bottling Company, New London Kist Bottling
Company, and Kist Bottling Company. He manufactured and sold
specialty sodas and juices, and sold national brand beverage
products as well.
In June 2009, K-Way Systems contracted with Wochinski to
purchase his beverage distribution business. The purchase
agreement consisted of three parts: an asset purchase
agreement, a covenant not to compete, and a supply agreement.
Under the asset purchase agreement, K-Way purchased
Wochinski's customer lists, formulas, trade names,
goodwill, and other business assets. Under the covenant not
to compete, Wochinski agreed not to compete with K-Way in the
beverage distribution business for a specified period of
time. Under the supply agreement, K-Way agreed to purchase
beverage products from Wochinski to sell to its customers.
The business relationship between Wochinski and K-Way quickly
soured. According to Wochinski, K-Way ordered only a small
amount of product from him, failed to pay him for that
product, and thereafter stopped buying product from him
altogether. Wochinski asserts he sent multiple letters to
K-Way demanding payment and compliance with the supply
agreement, but K-Way did not respond. Wochinski therefore
wrote to K-Way stating he considered K-Way to be in breach of
the supply agreement, and all parts of the purchase agreement
were therefore void.
K-Way later sold its business to GLBA. Thereafter, Wochinski
began working with his son in the beverage distribution
industry. According to Wochinski, GLBA did not honor his
rescission of the purchase agreement and, instead,
"threatened and harassed [him] in an attempt to enforce
the non-compete." GLBA subsequently filed the underlying
lawsuit against Wochinski, seeking to enforce the non-compete
agreement and also alleging that Wochinski had mislabeled
products and misused trade names, resulting in unfair
competition. GLBA ultimately sold its assets to Great Lakes
Beverages, LLC, and assigned its rights in this lawsuit to
Great Lakes Beverages.
Wochinski subsequently filed a counterclaim against Great
Lakes Beverages and a third-party complaint against GLBA and
several other parties. He also moved for summary judgment on
Great Lakes Beverages' claims. The circuit court granted
Wochinski's summary judgment motion in part in January
2014. The court concluded the non-compete agreement was
unenforceable because Wochinski validly rescinded the
purchase agreement in October 2010 as a result of K-Way's
breach. However, the court determined material issues of fact
remained regarding Great Lakes Beverages' unfair
competition claim against Wochinski.
In February 2014, Wochinski filed an amended third-party
complaint, which asserted multiple claims against GLBA,
including a claim for tortious interference with contracts or
prospective contracts. The tortious interference claim
alleged that GLBA and other third-party defendants
"intentionally interfered with Wochinski's actual
and prospective contractual relationships" by
"harassing and threatening Wochinski and other actions
to enforce a non-compete they knew or should have known was
rescinded and by telling actual and prospective customers
that the non-compete was in effect when it was not."
AMCO had issued to GLBA a "Premier Businessowners
Policy" and a commercial umbrella liability policy that
were in effect from September 17, 2010, to September 17,
2011. In March 2014, GLBA's insurance agent
faxed a copy of Wochinski's amended third-party complaint
to AMCO, along with a letter stating, "I am not sure
that the contractual arrangements that the client may or may
not have taken part in are a covered peril in the policy. I
am sending this information to you so that you may review and
respond to the client." AMCO responded on April 18,
2014, stating, "[I]t is AMCO's position that it does
not owe [GLBA] a defense against, or indemnification for, the
claims asserted in the" amended third-party complaint.
In the meantime, Pekin Insurance Company and Erie Insurance
Exchange, both of which insured Great Lakes Beverages during
the relevant time period, intervened in this lawsuit and
moved for declaratory/summary judgment that their policies
did not provide coverage for Wochinski's claims against
Great Lakes Beverages. On January 13, 2015, the circuit court
held that the Pekin and Erie policies provided potential
coverage for Wochinski's tortious interference claim
against Great Lakes Beverages, but not for his other claims.
The court further held that, because Wochinski had alleged
one potentially covered claim, Pekin and Erie were
"obligated to defend the entire action."
GLBA provided AMCO with a copy of the circuit court's
January 13, 2015 decision. On January 29, 2015, AMCO wrote
GLBA's attorney indicating AMCO would provide a defense
for GLBA, subject to a reservation of rights, and would pay
GLBA's defense costs dating back to March 25, 2014. On
the same date, AMCO moved to intervene in this lawsuit,
seeking an adjudication of its coverage obligations. The
circuit court granted AMCO's motion, and AMCO then moved
for declaratory/summary judgment on the coverage issue,
arguing: (1) its policies did not provide an initial grant of
coverage for Wochinski's claims against GLBA; and (2)
even if the ...