Stimac Family Trust ex rel. Stimac v. Wisconsin Power & Light Co.
896 N.W.2d 383
Wis. Ct. App.2017Background
- West Bend insured Aquire Contracting; Aquire performed restoration on the Stimac residence after a sewer line was severed, and Stimac later sued for defective repairs (mold, odor, uninhabitable home).
- West Bend issued a reservation-of-rights defense for Aquire, moved to bifurcate coverage from liability, and sought a coverage determination by summary judgment.
- West Bend argued three policy exclusions (fungi/bacteria, pollutant, business risk) precluded coverage and submitted only the policy and counsel’s affidavit.
- Aquire and Stimac submitted extrinsic evidence (affidavits, evidence of scope of repair and damages) and requested further discovery; the circuit court stayed discovery and applied the four-corners rule.
- The circuit court granted West Bend summary judgment, dismissing it; the appellate court reversed, holding the court should have considered extrinsic evidence once the insurer provided a defense under reservation of rights.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the four-corners rule bars extrinsic evidence when insurer reserves rights but provides a defense and bifurcates coverage | Stimac/Aquire: Extrinsic evidence may be considered to resolve coverage once insurer defends under reservation of rights and coverage is bifurcated | West Bend: Four-corners rule applies; extrinsic evidence appropriate only in limited instances (e.g., depositions) | Court: Four-corners does not apply after insurer provides defense under reservation of rights; extrinsic evidence may be considered |
| Whether policy exclusions (fungi/bacteria, pollutant, business risk) preclude coverage based solely on complaint and policy | Aquire/Stimac: Exclusions may not apply to all alleged damages; extrinsic evidence can show coverage for some damages | West Bend: Exclusions bar coverage; only complaint and policy need be considered | Court: Remanded to let trial court consider extrinsic evidence and whether exclusions bar coverage in light of that evidence |
| Whether summary judgment was proper when discovery was stayed and affidavits were not considered | Aquire/Stimac: Court erred by denying consideration of submitted affidavits and by staying further discovery | West Bend: Staying discovery appropriate; decision could be made under four-corners | Court: Error to ignore affidavits; remand to consider submitted extrinsic evidence and need for further discovery |
| Proper remedy for circuit court’s application of four-corners rule | Aquire/Stimac: Reverse and remand for coverage determination considering extrinsic evidence | West Bend: Affirm dismissal | Court: Reversed and remanded for further proceedings consistent with allowing extrinsic evidence |
Key Cases Cited
- Water Well Sols. Serv. Grp. Inc. v. Consolidated Ins. Co., 369 Wis. 2d 607 (2016) (four-corners rule applies when insurer denies duty to defend and refuses to defend)
- Marks v. Houston Cas. Co., 369 Wis. 2d 547 (2016) (discussing duty-to-defend/complaint-policy comparison)
- Estate of Sustache v. American Family Mut. Ins. Co., 311 Wis. 2d 548 (2008) (when insurer defends under reservation of rights, courts may consider extrinsic evidence to resolve coverage)
- Olson v. Farrar, 338 Wis. 2d 215 (2012) (approving bifurcation and allowing extrinsic evidence after insurer provides defense under reservation of rights)
- Oddsen v. Henry, 368 Wis. 2d 318 (2016) (reinforcing that extrinsic evidence may be introduced where insurer defends under reservation of rights)