West Bend Mutual Insurance Company, Plaintiff-Respondent-Petitioner,
Ixthus Medical Supply, Inc. and Karl Kunstman, Defendants-Appellants, Abbott Laboratories, Abbott Diabetes Care Inc. and Abbott Diabetes Care Sales Corp., Defendants-Co-Appellants.
Submitted on Briefs: December 11, 2018
OF DECISION OF THE COURT OF APPEALS Reported at 381 Wis.2d
472, 915 N.W.2d 456
Circuit Court: Racine County, L.C. No. 2016CV1414 David W.
the plaintiff-respondent-petitioner, the initial supreme
court brief was filed by Kris Bartos and the reply brief was
filed by Danielle N. Rousset, with whom on the briefs was
Jeffrey Leavell and Jeffrey Leavell, S.C., Racine. There was
an oral argument by Jeffrey L. Leavell.
the defendants-appellants, there was a brief filed by Jason
Pilmaier, Albert Solochek, and Howard, Solochek & Weber,
S.C., Milwaukee. There was an oral argument by Jason
the defendants-co-appellants, there was a brief filed by
Michael P. Mayer, Linda T. Coberly, and Winstron & Strawn
LLP, Chicago, IL. There was an oral argument by Linda T.
amicus curiae brief was filed on behalf of Wisconsin
Insurance Alliance by James A. Friedman, Amber Coisman, and
Godfrey & Kahn, S.C., Madison.
REBECCA GRASSL BRADLEY, J.
In this duty to defend case, West Bend Mutual Insurance
Company asks us to reverse the court of appeals' decision
holding that the allegations in Abbott Laboratories'
complaint against Ixthus Medical Supply, Inc. alleged a
potentially covered advertising injury, and as a result,
triggered West Bend's duty to defend under the commercial
general liability policy West Bend issued to
Ixthus.West Bend argues the court of appeals erred
when it determined: (1) Abbott's complaint alleged a causal
connection between the advertising activity and injury; and
(2) the knowing violation exclusion did not apply. West Bend
further contends that the criminal acts exclusion applies,
thereby removing any duty to defend, or alternatively that
application of the fortuity doctrine, public policy, and the
reasonable expectation of an insured each independently
eliminates its duty to defend.
We hold the allegations in Abbott's complaint fall within
the initial grant of coverage under the "personal and
advertising injury liability" provision of the
commercial general liability insurance policy West Bend
issued to Ixthus. We further hold that neither the knowing
violation nor the criminal acts exclusions apply to remove
West Bend's duty to defend. Finally, we do not address
West Bend's argument that the fortuity doctrine, public
policy, and the reasonable expectation of an insured
eliminate its duty to defend because West Bend failed to
adequately raise or develop these contentions. We affirm the
decision of the court of appeals.
Ixthus is a medical supply company operating in Wisconsin. At
all times relevant to this action, Ixthus was insured under a
commercial general liability insurance ("CGL")
policy with West Bend, which provided coverage for
"personal and advertising injury." Specifically,
the CGL policy provided:
COVERAGE B PERSONAL AND ADVERTISING INJURY LIABILITY
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally
obligated to pay as damages because of "personal and
advertising injury" to which this insurance applies. We
will have the right and duty to defend the insured against
any "suit" seeking those damages. However, we will
have no duty to defend the insured against any
"suit" seeking damages for "personal and
advertising injury" to which this insurance does not
apply . . . .
b. This insurance applies to "personal and advertising
injury" caused by an offense arising out of your
business but only if the offense was committed in the
"coverage territory" during the policy period.
V--DEFINITIONS" of the CGL policy defines
"advertisement" and "personal and advertising
1. "Advertisement" means a notice that is broadcast
or published to the general public or specific market
segments about your goods, products or services for the
purpose of attracting customers or supporters. For the
purposes of this definition:
a. Notices that are published include material placed on the
Internet or on similar electronic means of communication; and
b. Regarding web-sites, only that part of a website that is
about your goods, products or services for the purposes of
attracting customers or supporters is considered an
14. "Personal and advertising injury" means injury,
including consequential "bodily injury," arising
out of one or more of the following offenses:
f. The use of another's advertising idea in your
g. Infringing upon another's copyright, trade dress or
slogan in your "advertisement."
"COVERAGE B," the CGL policy contains exclusions
for both "Knowing Violation of Rights of Another"
and "Criminal Acts":
insurance does not apply to:
a. Knowing Violation of Rights of Another
"Personal and advertising injury" caused by or at
the direction of the insured with the knowledge that the act
would violate the rights of another and would inflict