Maya Elaine Smith v. Jeff Anderson
893 N.W.2d 790
Wis.2017Background
- Maya Smith sued seller Jeff Anderson for breach of contract and misrepresentation after buying a house with a leaking basement and clogged drain tiles; she sought repair costs and other damages.
- Anderson impleaded 4th Dimension Design and R&B Construction, seeking indemnity or contribution if he is held liable to Smith; Anderson alleged R&B performed basement repairs and provided warranties.
- R&B tendered defense to its insurer West Bend Mutual; West Bend intervened and moved for summary judgment, arguing no duty to defend because the complaints did not allege "property damage" caused by an "occurrence" and (in circuit court) relying on exclusions.
- The circuit court granted summary judgment for West Bend (no duty to defend); the court of appeals affirmed on the coverage (initial grant) ground and did not address exclusions.
- The Wisconsin Supreme Court granted review but dismissed the petition as improvidently granted because the parties and the court had not briefed/examined policy exclusions and Water Well requires a full four‑corners analysis of the entire policy (grant plus exclusions).
Issues
| Issue | Plaintiff's Argument (R&B/Anderson/Smith) | Defendant's Argument (West Bend) | Held |
|---|---|---|---|
| Whether a third‑party complaint can trigger insurer duty to defend when underlying suit alleges misrepresentation | The third‑party complaint (and attached Smith complaint) alleges physical property damage (leaks, clogged drain tiles) and thus triggers coverage for R&B because Anderson seeks indemnity/contribution based on R&B's allegedly negligent work | Insurer: underlying theories are misrepresentation/pecuniary loss (not covered); third‑party claim does not allege property damage from an "occurrence" so no duty to defend | Supreme Court: Dismissed review as improvidently granted (majority). Justice Abrahamson (dissent) would have reversed court of appeals and held duty to defend because complaints allege property damage caused by an occurrence and third‑party indemnity/contribution claims are distinct and covered |
| Whether a third‑party defendant may supplement pleadings with extrinsic facts to show duty to defend | R&B: reasonable inferences from complaints (and attached facts) show a covered claim; courts should construe pleadings liberally in favor of insured | West Bend: duty determined by four‑corners—only pleaded facts control; no covered allegation exists | Court: emphasized Water Well four‑corners rule requires examining the entire policy; majority found briefing did not address exclusions so review improvidently granted; dissent applied four‑corners liberally and would find duty to defend |
| Whether insurer can be entitled to final determination of no duty to defend at summary judgment notwithstanding later developments | R&B: later developments (denial of third‑party summary judgment; factual disputes) show allegations could give rise to coverage and duty to defend | West Bend: initial pleadings show no coverage so summary judgment denying defense is proper | Court: refused to resolve because policy exclusions and exceptions were not briefed; dissent would have reversed and remanded for further proceedings on duty to defend |
| Whether policy exclusions (e.g., "Your Work") preclude duty to defend even if initial grant exists | R&B: did not press — relied on showing initial grant of coverage | West Bend: argued exclusions precluded coverage (raised in circuit court but not briefed before the supreme court) | Court: majority declined to decide (improvidently granted) because exclusions were not briefed; dissent noted West Bend waived exclusions by not presenting them on review and would have found duty to defend nonetheless |
Key Cases Cited
- Water Well Solutions Service Group, Inc. v. Consolidated Ins. Co., 369 Wis. 2d 607 (Wis. 2016) (four‑corners rule requires examination of the entire policy—coverage grant and exclusions)
- Marks v. Houston Cas. Co., 369 Wis. 2d 547 (Wis. 2016) (interpretation of CGL policies and insurer duties in duty‑to‑defend analysis)
- American Family Mut. Ins. Co. v. American Girl, Inc., 268 Wis. 2d 16 (Wis. 2004) (faulty workmanship may still cause an "occurrence" when it results in unexpected physical damage)
- Everson v. Lorenz, 280 Wis. 2d 1 (Wis. 2005) (misrepresentation claims generally are not "occurrences" because of volitional conduct)
- Kalchthaler v. Keller Constr. Co., 224 Wis. 2d 387 (Wis. 1999) (faulty workmanship that causes leaking windows constituted an "occurrence")
- Wausau Tile, Inc. v. County Concrete Corp., 226 Wis. 2d 235 (Wis. 1999) (economic loss rule and distinction between pecuniary loss and property damage)