Olson v. Farrar
2012 WI 3
| Wis. | 2012Background
- Mt. Morris Mutual Insurance seeks review of a court of appeals decision reversing a circuit court grant of declaratory and summary judgment in Mt. Morris' favor.
- Olson sued Farrar for property damage to Olson's trailer home and vehicle; Farrar's insurer Mt. Morris sought a declaration of no duty to defend or indemnify.
- Mt. Morris argued the four-corners rule requires resolution of coverage issues solely within policy language and complaint, citing exclusions for motorized vehicles and care/use of insured.
- Policy includes an Incidental Motorized Vehicle Coverage exception to a motorized vehicle exclusion, and an exclusion for damage to property that is used by or in the care of an insured.
- Court held the four-corners rule is implicated but extrinsic evidence may be used at a coverage stage; the terms 'results from' and 'motor vehicle' are ambiguous and construed in favor of coverage; remanded for factual determination on whether the trailer was used by or in the care of Farrar.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether four-corners governs no-coverage inquiry | Mt. Morris: four-corners precludes extrinsic evidence | Farrar: extrinsic evidence admissible for coverage | Four-corners implicated; extrinsic evidence allowed for coverage determination. |
| Whether 'results from' and 'motor vehicle' are ambiguous and favor coverage | Mt. Morris: both terms unambiguous and exclude coverage | Farrar: terms ambiguous, favor coverage | Both terms ambiguous; construed in favor of coverage. |
| Whether Farrar's tractor is a 'motor vehicle' under the policy | tractor is a motor vehicle under policy | tractor is not a motor vehicle because not designed for public roads | tractor not a 'motor vehicle' under the policy; coverage potentially reinstated. |
| Whether the exclusion for damage to property 'used by, or in the care of' an insured precludes coverage | exclusion applies if property was used by insured | exclusion not limited to sole possession | Needs factual development; remanded to resolve use/care issue. |
Key Cases Cited
- Sustache v. American Family Mut. Ins. Co., 311 Wis. 2d 548 (2008 WI 87) (established four-corners framework and coverage determination principles)
- Johnson Controls, Inc. v. London Mkt., 325 Wis. 2d 176 (2010 WI 52) (duty to indemnify and defend discussed; independent review of law)
- Elliott v. Donahue, 169 Wis. 2d 310 (1992) (duty to defend depends on potential coverage regardless of merits)
- Schleusner v. IMT Ins. Co., 297 Wis. 2d 368 (2006 WI App 240) (discusses interpretation of 'designed for use on public roads')
- Varda v. Acuity, 284 Wis. 2d 552 (2005 WI App 167) (riding lawn mower not designed for highways)
- Snorek v. Boyle, 18 Wis. 2d 202 (1962) (discusses definition of 'motor vehicle' in certain statutes)