Phillips v. Parmelee
826 N.W.2d 686
Wis. Ct. App.2012Background
- Phillips appeals a trial court grant of declaratory/summary judgment in favor of American Family on insurance coverage issues.
- American Family issued a business owner’s policy to Parmelee for the apartment building Phillips purchased from Parmelee.
- Phillips alleges damages from asbestos dispersal due to Parmelee’s misrepresentation and failure to disclose asbestos-related conditions.
- American Family intervened and argued no coverage due to policy exclusions, especially the asbestos exclusion; the trial court agreed.
- The court held there was an initial grant of coverage for occurrence and property damage, but the asbestos exclusion precluded coverage and duty to defend.
- Prior reports suggested possible asbestos presence; Parmelee’s statements in real estate disclosures were at issue, and asbestos was discovered after purchase, causing substantial damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was there an initial grant of coverage? | Phillips contends the complaint shows occurrence and property damage triggering coverage. | American Family argues exclusions foreclose any coverage despite an initial grant. | There was an initial grant of coverage. |
| Does the asbestos exclusion bar coverage for the alleged damages? | Exclusion is ambiguous and does not cover all claims. | Asbestos exclusion broadly excludes any loss related to asbestos, including dispersal and presence. | Asbestos exclusion applies and precludes coverage. |
| Do other exclusions or theories (e.g., total pollution, expected/intentional injury) affect the outcome? | Some damages may fall outside asbestos-related exclusion. | Exclusions beyond asbestos are not necessary to reach result; asbestos exclusion suffices. | Not addressed; asbestos exclusion resolves coverage issue. |
Key Cases Cited
- Jares v. Ullrich, 266 Wis.2d 322 (2003) (covers occurrence/property damage in context of nondisclosure)
- Qualman v. Bruckmoser, 471 N.W.2d 282 (Ct. App. 1991) (damages concept in policy context)
- Benjamin v. Dohm, 525 N.W.2d 371 (Ct. App. 1994) (damages vs. property damage distinction)
- Smith v. Katz, 595 N.W.2d 345 (Ct. App. 1999) (property damage interpretation scope)
- Olson v. Farrar, 338 Wis.2d 215 (2012) (insurance policy interpretation; initial grant followed by exclusions)
- State Farm Fire & Casualty Co. v. Acuity, 280 Wis.2d 624 (2005) (arising out of broad pollution exclusion interpretation)
- Pro-Tech Coatings, Inc. v. Union Standard Insurance Co., 897 S.W.2d 885 (Tex. App. 1995) (asbestos exclusion framed broadly)
- LaFleur v. Hollier Floor Covering, Inc., 774 So.2d 359 (La. Ct. App. 3 Cir. 2000) (asbestos exclusion upheld)
- Great American Restoration Services Inc. v. Scottsdale Insurance Co., 78 A.D.3d 773 (N.Y. App. Div. 2010) (asbestos exclusion ambiguity discussion)
- Schinner v. Gundrum, 2012 WI App 31 (Wis. Ct. App. 2012) (definition of accident for coverage purposes)