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COURT OF APPEALS DECISION DATED AND RELEASED FEBRUARY 18, 1997 |
NOTICE |
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A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62(1), Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 96-2066-FT
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT III
THOMAS F. WOODS,
ROBERT E. WOODS,
JAMES W. WOODS, JANE
WOODS FOLEY,
MICKEY J. MARSH,
MICHAEL D. MARSH,
PATRICK F. MARSH AND
PEGGY L. KNEIB,
Plaintiffs,
v.
MARSHALL & ILSLEY
TRUST COMPANY,
Defendant-Third-Party Plaintiff,
STEIGERWALDT LAND SERVICES,
INC.,
Third-Party Defendant-Appellant,
ROBERT ANDERSON, D/B/A
ROBERT
ANDERSON PULPWOOD
PRODUCTION,
Third-Party Defendant,
HERITAGE MUTUAL
INSURANCE COMPANY,
Intervening Third-Party Defendant-Respondent.
APPEAL from a judgment
of the circuit court for Oneida County:
ROBERT E. KINNEY, Judge. Affirmed.
Before Cane, P.J.,
LaRocque and Myse, JJ.
PER CURIAM. Steigerdwaldt Land Services, Inc., appeals
a summary judgment declaring that its Heritage Mutual Insurance Company
commercial general liability policy did not provide coverage for allegations
against Steigerwaldt in Marshall & Ilsley Trust Company's third-party
complaint.[1] Steigerwaldt argues that the trial court
misinterpreted the completed operations coverage and misapplied the various
exclusions to deny coverage. We disagree
and affirm the judgment.
This action was
commenced by various beneficiaries of a trust agreement. The principal defendant, M&I,
administered the trust. One of the
assets the trust managed was a parcel of forested lakefront property on Lake
Tomahawk. The beneficiaries claim that
areas of this and other forested trust properties were negligently logged off
and clear-cut.
M&I retained
Steigerwaldt to plan and supervise the harvest and Robert Anderson Pulpwood
Production to do the actual timber harvesting.
M&I claimed that any alleged damages were caused by Steigerwaldt's
negligence, which planned and supervised the timber harvest, and Anderson,
which conducted the timber harvest.
M&I further alleged that Steigerwaldt was negligent in connection with
forestry consulting and appraisal services provided to defendant trust company
and breached its duties to plaintiffs and defendant trust company.
M&I's third-party
complaint against Steigerwaldt alleged:
[T]he defendant Trust Company employed a
forestry manager pursuant to an agreement that provided for compensation to the
forestry manager on a basis of a percentage of the wood harvested and that said
contractual arrangement was not standard industry practice, and contributed to
excessive harvesting of timber which substantially decreased the recreational
value of certain properties managed by the defendant Trust Company and owned by
the trust.
[T]he
logging ... was imprudent, excessive and harmful, and was ... done ... for the
benefit of the forestry company.
Steigerwaldt was insured
by a commercial general liability policy with Heritage. Heritage's policy provides that it
"will pay those sums that the insured becomes legally obligated to pay as
damages because of bodily injury or property damage to which this
insurance applies." It also states
that various provisions restrict coverage and directs the insured to read the
entire policy to determine coverage.
The trial court concluded that various policy exclusions barred coverage
and entered summary judgment in favor of Heritage. Steigerwaldt appeals.
When reviewing summary
judgment, we apply the standard set forth in § 802.08(2), Stats., in the same manner as the
circuit court. Kreinz v. NDII
Secs. Corp., 138 Wis.2d 204, 209, 406 N.W.2d 164, 166 (Ct. App.
1987). We have detailed the procedure
in numerous cases, including Grams v. Boss, 97 Wis.2d 332, 338,
294 N.W.2d 473, 476-77 (1980), and do not repeat it here. Determining whether a policy provides coverage
is a question of law we review de novo.
Grube v. Daun, 173 Wis.2d 30, 72, 496 N.W.2d 106, 122 (Ct.
App. 1992).
To determine whether an
insurer is obligated to assume the defense of a third-party suit, it is
necessary to determine whether the complaint alleges facts that if proven would
give rise to liability under the terms and conditions of the policy. Sola Basic Indus. v. USF&G,
90 Wis.2d 641, 646, 280 N.W.2d 211, 213 (1979). Interpretation of insurance policies is governed by the general
principles of contract construction. Sprangers
v. Greatway Ins. Co., 182 Wis.2d 521, 536, 514 N.W.2d 1, 6 (1994). The objective is to carry out the intention
of the parties as evidenced by the plain policy language. Id. We interpret policy language to mean what a reasonable person in
the position of the insured would have understood the words to mean. Id.
Steigerwaldt argues that
it purchased coverage for the claims made in this action when he purchased
"products-completed operations" coverage with an aggregate
limit of $1,000,000. Steigerwaldt
argues that the work that Steigerwaldt is claimed to have done negligently,
forest services, is listed on the declarations page. It contends that the completed operations definition providing
coverage for property damage to completed operations "arising out of your
work" creates an ambiguity when read with other exclusions. We disagree.
Under the facts alleged,
we conclude that the "products-completed operations" coverage
would not apply. The policy contains the
following definitions:
15. "Your work" means:
a. Work or operations
performed by you or on your behalf ....
11. a. "Products - completed
operations.1 hazard" includes all bodily injury and property
damage occurring away from premises you own or rent and arising out of your
product or your work except:
(1) Products that are still in your
possession; or
(2)
Work that has not yet been completed or abandoned.
The "products-completed
operations" definition refers to liability for accidental bodily
injury or property damage following the completion of work. The pleadings allege no accidental injury or
damage. Also, the excessive harvesting
is alleged to have occurred well before the timber harvest was completed. The entire thrust of the complaint is that
the logging should have been completed or abandoned well before it resulted in
the excessive harvest. Under the facts
alleged in the complaint, we reject Steigerwaldt's contention that the "products-completed
operations" definition creates an ambiguity to confer coverage.
We further conclude that
the "contractual liability" exclusion bars coverage. The policy further states:
2.
Exclusions.
This insurance does not apply to:
....
b. Bodily injury
or property damage for which the insured is obligated to pay damages by
reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability
for damages:
(1) Assumed in a contract or agreement
that is an insured contract; or
(2)
That the insured would have in the absence of the contract or agreement.
Liability policies are
intended to cover tort liability, not contractual obligations the insured has
chosen to assume. In Nelson v.
Motor Tech, Inc., 158 Wis.2d 647, 650, 462 N.W.2d 903, 904 (Ct. App.
1990), we interpreted a similar exclusion.
We stated: "The above
provision clearly excludes coverage for incidents involving purely contractual
liabilities. The policy covers
incidents only if there is liability independent of the contract."
In Bulen v. West Bend Mut. Ins. Co.,
125 Wis.2d 259, 371 N.W.2d 392 (Ct. App. 1985), we explained the purpose of a
comprehensive general liability policy:
The
risk intended to be insured is the possibility that the goods, products or work
of the insured, once relinquished or completed, will cause bodily injury or
damage to property other than to the product or completed work itself, and for
which the insured may be found liable.
... The coverage is for tort liability for physical damages to
others and not for contractual liability of the insured for economic loss
because the product or completed work is not that for which the damaged person
bargained.
Id. at
264-65, 371 N.W.2d at 394 (emphasis added) (quoting Weedo v.
Stone-E-Brick, Inc., 405 A.2d 788, 791 (N.J. 1979)).
We conclude that
exclusion 2.b bars coverage. The
complaint alleges that Steigerwaldt's alleged liability arises out of its
failure to provide forestry services and that it entered into a fee agreement
that contributed to the excessive logging.
It also alleges that Steigerwaldt negligently performed its duties of
planning and supervising the timber harvest and that damages resulted from an
excessive harvest. Steigerwaldt's
obligations arise out of its agreement with M&I to provide forestry
services. Because the complaint alleges
the damages resulted from Steigerwaldt's failure to carry out its contractual
obligation to properly plan and supervise the timber harvest, Steigerwaldt's
alleged liability would result from its contractual obligations within the
meaning of exclusion 2.b.[2] Because we conclude that exclusion 2.b
applies, we need not discuss other exclusions.[3]
By the Court.—Judgment
affirmed.
This opinion will not be
published. Rule 809.23(1)(b)5, Stats.
[3] Therefore, we do not address the applicability of other exclusions, including the professional services exclusion. See Jones v. Sears Roebuck & Co., 80 Wis.2d 321, 331, 259 N.W.2d 70, 74 (1977) ("This court will not, through contract construction of one exclusion, find coverage of injuries which are unambiguously excluded by another.").