from a judgment and an order of the trial court for Milwaukee
County Cir. Ct. No. 2013CV1685 MARY M. KUHNMUENCH and GLEN H.
YAMAHIRO, Judges. Affirmed.
Brennan, P.J., Kessler and Dugan, JJ.
This case involves issues of insurance coverage and the duty
to defend involving Milwaukee Metropolitan Sewerage District
(MMSD) and insurance companies, Greenwich Insurance Company
and Steadfast Insurance Company, relating to the defense of
lawsuits against MMSD in the wake of a June 7 and 8, 2008
rain event (the "rain event
lawsuits"). After the rain event lawsuits were filed,
MMSD tendered its defense to Steadfast and Greenwich.
Steadfast accepted the tender and defended MMSD. Greenwich
declined the tender and did not defend MMSD. Eventually, the
rain event lawsuits settled and, as a part of the settlement,
Steadfast reimbursed MMSD $1.55 million for MMSD's
defense costs. Steadfast then brought the lawsuit (the
"insurance lawsuit") that is the subject of this
appeal against Greenwich.
Ultimately, the trial court determined that Greenwich
breached its duty to defend and, therefore, had waived its
rights to raise coverage defenses, and was responsible for
paying the $1.55 million for MMSD's defense and
Steadfast's $325, 500 attorney fees incurred in bringing
the insurance lawsuit.
On appeal, Greenwich argues that it did not breach its duty
to defend the rain event lawsuits and did not waive its right
to litigate the coverage issues. Greenwich further argues
that it was entitled to summary judgment for the following
reasons: (1) its policy with MMSD was excess coverage, with
Steadfast's coverage being primary; (2) its policy with
MMSD had a $250, 000 self-insured risk retention amount and
MMSD did not establish that it had expended that amount in
defending the rain event lawsuits; and (3) Steadfast's
claim is barred by the one-year statute of limitations in
Wis.Stat. § 893.92 (2015-16),  applicable to actions for
contribution. Alternatively, Greenwich argues that it was
entitled to an allocation of the costs as between Steadfast,
Travelers and itself. In addition, Greenwich argues that
Steadfast is not entitled to recover attorney fees in
connection with the insurance lawsuit.
We conclude as follows: (1) Greenwich's policy provided
primary, not excess, coverage for claims against MMSD; (2)
MMSD has established that it met the $250, 000 risk retention
amount by incurring $594, 302.23 in defense costs; (3)
Steadfast's equitable subrogation claim is timely because
the six-year statute of limitations in Wis.Stat. §
893.43 applicable to contract claims applies to
Steadfast's claim, which is premised on Greenwich's
breach of the duty to defend MMSD; (4) under the facts of
this case, because Greenwich breached its duty to defend
MMSD, Greenwich is not equitably entitled to an allocation of
MMSD's defense costs; and (5) under the facts of this
case, Steadfast is equitably entitled to recover attorney
fees in this lawsuit. Based on our conclusions, we affirm the
trial court's orders and judgments.
MMSD is a regional government agency that provides water
reclamation and flood management services to the Greater
Milwaukee area. Since 1998, MMSD has contracted with private
parties to operate and maintain its sewerage system. From
March 1, 1998, through February 29, 2008, MMSD contracted
with United Water Services Milwaukee LLC to operate the
system. From March 1, 2008, through all times relevant to
this action, MMSD contracted with Veolia Water North
America-Central, LLC to operate the system.
MMSD's agreements with United Water and Veolia,
respectively, obligated each company to fully indemnify MMSD
for claims arising out of the operation and maintenance of
the system and to obtain insurance to cover its indemnity
obligations. The agreements required that the insurance
policies obtained by each company list MMSD as an additional
insured. Both companies complied with those requirements.
The June 2008 rain event overwhelmed MMSD's sewer system
and more than 8, 000 homeowners reported basement sewage
backups. Between February 2009 and May 2009, four rain event
lawsuits were filed against MMSD. The rain event lawsuits
included allegations that MMSD and Veolia were negligent in
the inspection, maintenance, repair, and operation of the
sewer system and diversion gates prior to and during the rain
Subsequently, the rain event lawsuits were consolidated into
two separate actions. Later, United Water was named as a
defendant in one of the rain event lawsuits and negligence
claims, like those against MMSD and Veolia, were alleged
On June 9, 2009, after MMSD had been sued in the rain event
lawsuits, it sent a letter to both Steadfast and Greenwich
tendering the defense. As noted, Steadfast, the insurer for
Veolia, which had named MMSD as an additional insured,
accepted the tender and defended MMSD.
As will be further detailed below, Greenwich, United
Water's insurer, did not accept the tender, did not
defend MMSD, and did not pay any amounts for defense costs,
despite the fact that MMSD was named as an additional insured
on the policy. In a September 23, 2009 letter, Greenwich
denied coverage, stating in part, as follows:
Initially, we fail to see how [United Water] could be liable
for causing a sewage backup in June 2008 when its services
for MMSD terminated in February 2008. From a professional and
contracting services standpoint, there is ample evidence that
when [United Water] turned over operational responsibilities
to Veolia and MMSD in February 2008, all systems, equipment,
and machinery at the subject sewage overflow diversion
chamber were functioning according to operational protocols.
Thus, we can only conclude that [United Water]'s work met
all professional and contracting standards of care.
letter also raises MMSD's satisfaction of the risk
retention amounts and "other insurance" provisions
as reasons for denying coverage.
On October 14, 2010, MMSD renewed its tender of defense. In
its letter to Greenwich, MMSD noted as a basis for coverage
that the plaintiffs in the rain event lawsuits had made
specific allegations concerning United Water's
negligence. On March 9, 2011, Greenwich responded to
MMSD's renewed tender of defense, stating that there was
a potential for coverage, but it reserved its rights, noting
that under its "other insurance" clause, Greenwich
was excess to the $250, 000 risk retention amount and any
other valid insurance available to MMSD, including that
through Veolia's policy.
On May 31, 2011, Greenwich's attorney sent another
letter, acknowledging that there might be potential coverage
and asking for information to determine if MMSD had satisfied
the $250, 000 risk retention amount. On June 16, 2011,
MMSD's attorney responded, stating that MMSD had paid its
legal counsel a total of $823, 602.75 and that, clearly, MMSD
had "surpassed the risk retention amount and [was] well
into the liability portion of the policy." Greenwich
then responded stating, "the coverage potentially
provided to MMSD under the Greenwich Policy is excess of the
$250, 000 deductible and the $30, 000, 000 limits provided
under the Steadfast Pollution Policy." Greenwich did not
provide MMSD with any defense during the rain event lawsuits.
The rain event lawsuits settled without MMSD or Steadfast
making any payments towards the parties' claimed damages.
However, Steadfast reimbursed MMSD $1.55 million towards the
defense costs that MMSD paid for those lawsuits. After the
rain event lawsuits settled, Steadfast filed this action
against Greenwich and Travelers, seeking to recoup the monies
that it had paid to MMSD for the defense costs. MMSD
intervened to recoup unpaid defense costs from all the other
As this action proceeded, the parties filed and briefed
motions and cross-motions for summary judgment. Before the
trial court issued any decision on those motions, Steadfast
and all parties, except Greenwich, settled the case. Thus, as
mentioned, the sole remaining parties to this action are
Steadfast and Greenwich.
On May 15, 2015, the trial court issued a written decision
denying Greenwich's summary judgment motion based on its
determination that Greenwich had breached its duty to defend
MMSD and, thereby, waived its rights to raise any coverage
On November 13, 2015, Steadfast and Greenwich filed a
stipulation stating that Steadfast had reasonably and
necessarily incurred $1.55 million for MMSD's defense in
the rain event lawsuits. However, they reserved their
respective rights to argue what portion of the $1.55 million,
if any, Steadfast should recover from Greenwich. The trial
court entered an order approving the stipulation.
Thereafter, the parties filed additional summary judgment
motions. On June 29, 2016, the trial court granted
Steadfast's summary judgment motion, awarding judgment
against Greenwich in the amounts of $1.55 million dollars as
damages, and $325, 500 as attorney fees for the insurance
lawsuit. This appeal followed.
We review a grant of summary judgment using the same
standards the trial court applied in making its
determination, and "accordingly, we benefit from, but
need not give deference to, the analys[is] of the [trial]
court." See State Farm Mut. Auto. Ins. Co. v.
Langridge, 2004 WI 113, ¶12, 275 Wis.2d 35, 683
N.W.2d 75. When we review a grant of summary judgment, our
review is de novo. See id.
The issues presented involve multiple questions of law, which
are subject to de novo review. The interpretation of
an insurance policy and the existence of coverage under the
policy are questions of law that are decided de
novo. See id., ¶13. The interpretation of
an insurance policy to determine the scope of an
insurer's duty to defend also involves a question of law
that is subject to our de novo review. See
Estate of Sustache v. American Family Mut. Ins. Co.,
2008 WI 87, ¶18, 311 Wis.2d 548, 751 N.W.2d 845. An
insurer's duty to defend its insured "is triggered
by the allegations contained within the four corners of the
complaint" against the insured." See Marks v.
Houston Cas. Co., 2016 WI 53, ¶¶ 37, 39, 369
Wis.2d 547, 881 N.W.2d 309');">881 N.W.2d 309 (citation omitted). In analyzing
whether an insurer has a duty to defend (1) "allegations
in the complaint are construed liberally and all reasonable
inferences are assumed, " (2) "ambiguity in the
insurance policy is construed against the insurer, " and
(3) "when an insurance policy provides coverage for even
one claim made in a lawsuit, the insurer is obligated to
defend the entire suit." Id., ¶42
Furthermore, "[t]he question of which statute of
limitations governs a particular claim is one of law which we
decide de novo." Hicks v. Nunnery,
2002 WI App. 87, ¶17, 253 Wis.2d 721, 643 N.W.2d 809
(italics added). In addition, the proper measure of damages
for an insurer's breach of its duty to defend "is a
question of law which this court decides independently and
without deference to the lower courts." See Newhouse
v. Citizens Sec. Mut. Ins., 176 Wis.2d 824, 837, 501
N.W.2d 1 (1993).
We address the multiple issues presented in sequence and
begin by addressing whether Greenwich waived its right to
litigate coverage by asserting that it did not have a duty to
defend because there was no coverage under its policy with
United Water. As a preliminary matter, Greenwich argues that
the trial court erred in holding that, because Greenwich
breached its duty to defend, Greenwich forfeited its right to
litigate coverage with respect to its duty to defend.
Steadfast argued, and the trial court agreed, that Greenwich
waived its right to litigate coverage because Greenwich had
breached its duty to defend MMSD. However, on appeal,
Steadfast does not make that argument. Rather, Steadfast
notes that the trial court's decision was issued prior to
the Wisconsin Supreme Court's issuance of Marks,
369 Wis.2d 547. Thus, Steadfast implicitly concedes that,
given the Marks holding, Greenwich did not waive its
right to contest coverage in this case with respect to the
duty to defend and the trial court's ruling to the
contrary is erroneous. Therefore, we address whether
Greenwich's coverage defenses apply such that Greenwich
had no duty to defend MMSD in the rain event lawsuits.
Policy did not Provide Excess Coverage over the Coverage
Provided by Steadfast's Policy Because under the Facts of
this Case neither the Greenwich nor the Steadfast "Other
Insurance" Provisions were Triggered
Greenwich argues that it did not breach its duty to defend
MMSD in the rain event lawsuits because its coverage was
excess over the Steadfast policy coverage. Greenwich analyzes
the "other insurance" language in its policy and
Steadfast's policy and concludes that the Steadfast
policy provides primary coverage while the Greenwich policy
provides excess coverage. Greenwich asserts that under
Wisconsin law, "'other insurance' provisions are
applied as written, and given full effect, in situations
involving concurrent coverage." (Emphasis added.)
By contrast, Steadfast argues that we need to determine
whether any "other insurance" provision is
triggered by the facts in this case before we examine the
language in the policies regarding "other
insurance." We agree.
"Other insurance" provisions are triggered when (1)
two or more insurance policies, (2) insure the same risk and
the same interest, (3) for the benefit of the same person or
entity, and (4) during the same time period. Plastics
Eng'g Co. v. Liberty Mut. Ins. Co., 2009 WI 13,
¶¶48-49, 315 Wis.2d 556, 759 N.W.2d 613. Further,
the provisions do not apply to successive insurance policies.
In Plastics, the Wisconsin Supreme Court held that
"'[o]ther insurance' refers only to two or more
policies insuring the same risk, and the same interest, for
the benefit of the same person, during the same period."
See id. (citation and one set of quotation marks).
Plastics further explains that, "[t]he purpose
of an 'other insurance' clause is to define which
coverage is primary and which coverage is excess between
policies…. 'Other insurance' clauses govern
the relationship between insurers, and they do not affect the
right of the insured to recover under each concurrent
policy." Id. (citations and one set of
quotation marks omitted). Moreover, it states that
"'[w]henever there are two policies that apply to
the same insured at the same time, the issue of which policy
must pay first-or which is primary and which is excess-is
dealt with by other insurance clauses.'"
Id. (citation omitted). Additionally, "[t]he
accepted meaning of 'other insurance' provisions does
not include application to successive insurance
policies." Id. (emphasis added).
In Plastics, the court concluded that the requisite
conditions, before an "other insurance" provision
would apply, were not satisfied. It stated that "[t]he
issue is not which of two or more policies pays first because
the Liberty Mutual policies are not concurrent policies
between competing insurers that apply to the same time
period." Id., ¶49.
The Plastics holding controls in this case. First,
the policies do not insure the same party. Greenwich's
policy insured United Water with respect to United
Water's conduct in operating and maintaining MMSD's
system. It did not insure against any conduct by Veolia in
operating the system. Likewise, Steadfast's policy
insured Veolia with respect to Veolia's conduct in
operating and maintaining MMSD system. It did not insure
against any conduct by United Water in operating the system.
Additionally, the policies do not provide coverage for the
same time period. Greenwich provided coverage for United
Water's operation and maintenance of MMSD's system
from March 1, 1998, until February 29, 2008. As of March 1,
2008, Veolia took over the operation and management of the
system. The policies are successive, not concurrent. They do
not cover the same time period.
By contrast, Greenwich argues that the "other
insurance" provisions were triggered in this case,
citing Schoenecker v. Haines, 88 Wis.2d 665, 674,
277 N.W.2d 782 (1979), and Oelhafen v. Tower Insurance
Co., 171 Wis.2d 532, 536-37, 492 N.W.2d 321 (Ct. App.
1992). We do not find Greenwich's argument persuasive. In
Schoenecker, the court expressly stated that
"[b]ecause both policies provided concurrent coverage
absent contract provisions relating to 'other insurance,
' it is necessary to analyze the 'other
insurance' provision of each policy." Id.,
88 Wis.2d at 669. However, unlike Schoenecker, this
action involves successive coverage, not concurrent coverage.
Oelhafen involved review of the trial court's
apportionment of four insurers' respective obligations to
pay portions of a personal injury action settlement in excess
$900, 000 against the insured boat owners and operators.
Id., 171 Wis.2d at 534-35. On appeal, the four
insurers challenged the trial court's apportionment of
the insurers' liability for the settlement, which had
directed each of the three primary insurers to pay the policy
limit and the fourth insurer, the issuer of "a true
umbrella policy, " to pay "only any excess
liability not paid by the other insurers." Id.
at 535-36. We noted that all four policies had an "other
insurance" provision and the parties had agreed that the
provisions applied, but they were repugnant to each other.
See id. at 536. Thus, we held that under Wisconsin
law, none of the 'other insurance" provisions would
be enforced. See id. Moreover, Oelhafen
does not address when an "other insurance"
provision is triggered. See id. The action also
involved concurrent, not successive, coverage among the
insurance policies. See id. at 535. Again, this
action involves successive policies, not concurrent policies.
In its initial brief, Greenwich also relies upon
Riccobono v. Seven Star, Inc., as supporting its
argument. See id., 2000 WI.App. 74, ¶13, 234
Wis.2d 374, 610 N.W.2d 501. In Riccobono, this court
held that both insurance policies covered the same parties
for the same risks stating as follows: "[c]onsequently,
we agree with the trial court that both insurance policies
provide coverage for the same parties and the same risk, and
an interpretation of the 'other insurance' clauses
found in the policies was necessary to resolve the
dispute." Id., ¶10. Rather than supporting
Greenwich's argument, Riccobono supports
Steadfast's argument that an "other insurance"
provision only applies when both policies provide coverage
for the same parties and the same risk.
See id., ¶13.
Interestingly, Greenwich's reply brief also relies upon
Riccobono as supporting its argument that the
"other insurance" provision can be applied even
when insurance policies provide coverage for
different risks. However, Greenwich's initial
brief correctly stated that the Riccobono court had
"rejected arguments advanced by [the insurer that it had
determined to be primary] that the policies were issued to
different named insureds, and covered different risks."
See id. Indeed, Riccobono's holding was
based on its determination that the concurrent policies
covered the same parties and the same risks. See
id., ¶10. Therefore, the "other
insurance" provisions were triggered. See id.,
¶¶10-12. Those are not the facts of this case.
Riccobono does not support Greenwich's argument;
it supports Steadfast's.
In its reply brief, Greenwich also cites Acuity v.
Chartis Specialty Insurance Co., 2015 WI 28, 361 Wis.2d
396, 861 N.W.2d 533');">861 N.W.2d 533, as supportive of its argument that the
"other insurance" provision can be applied even
when insurance policies provide coverage for different risks.
However, Acuity addressed only whether the Chartis
policy covered the claims in the underlying case, not whether
the Acuity policy also covered the claims. See id.,
¶4. Both Acuity and Chartis issued liability policies to
the Dorner, Inc. construction company. See id.,
¶2. The Acuity policy was a Comprehensive General
Liability (CGL) policy. Id. The Chartis policy was a
Contractors' Pollution Liability (CPL) policy.
Id. Acuity defended and indemnified Dorner in four
lawsuits, seeking redress for bodily injury and property
damage. Id., ¶3. The lawsuits arose from a
natural gas-fueled explosion and fire that occurred after
Dorner's employees damaged an underground natural gas
pipeline during an excavation project. Id. Acuity
sought recovery from Chartis, asserting that the Chartis
policy provided coverage for Dorner in the lawsuits.
Our supreme court stated that it would address the following
three arguments regarding Chartis's obligations under its
policy to defend and indemnify Dorner: (1) whether the
escaped gas was a pollution condition, see id.,
¶39; (2) if the escaped gas was a pollution condition,
whether the bodily injury and property damage were caused by
the pollution condition, see id., ¶40; and (3)
whether concurrent coverage was possible under both Acuity
and Chartis's policies, see id., ¶41. We
interpret Greenwich's appellate argument as relying on
the third Acuity argument. See id.,
¶41. However, the Acuity facts and the
court's ruling distinguish Acuity from this
First, the facts involved the same insured (Dorner) engaging
in the same conduct (excavating an underground gas line) that
caused the injuries. See id., ¶¶2-3.
Unlike Acuity, the rain event lawsuits assert
separate claims against United Water and Veolia, where each
operated the sewage system at different times. Additionally,
the two insurers had different primary insureds, Greenwich
insured United Water and Steadfast insured Veolia. Further,
each policy named MMSD as an additional insured, but only for
the conduct of United Water in the Greenwich policy and only
for the conduct of Veolia in the Steadfast policy. Each
policy excluded coverage for MMSD for its own conduct.
Acuity did not address any issues regarding
"other insurance" or excess coverage and did not
make any rulings about Acuity's CGL policy. See
id., ¶101. Rather, the court noted at the outset
that "[t]he dispute in the instant case revolves around
the insurance companies' different interpretations of
Chartis's duties and obligation to the insured under
Chartis's CPL policy." Id., ¶4. The
court only concluded that the ...