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COURT OF APPEALS
DECISION
DATED AND FILED
September 22, 2010
A.
John Voelker
Acting Clerk of Court of Appeals
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NOTICE
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This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official
Reports.
A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See Wis. Stat. § 808.10 and Rule 809.62.
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Appeal No.
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STATE OF WISCONSIN
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IN COURT OF
APPEALS
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James F. Accola and Suzanne Pierce Accola,
Plaintiffs-Appellants,
v.
Fontana Builders, Inc.,
Defendant,
Westfield Insurance Company,
Defendant-Respondent.
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APPEAL
from a judgment of the circuit court for Walworth County: John
R. race, Judge. Reversed and
cause remanded.
Before Brown, C.J., Neubauer, P.J., and Anderson, J.
¶1 BROWN, C.J. James
and Suzanne Accola are suing Fontana Builders, Inc., along with its liability
insurer, Westfield Insurance Company, to recover damages for their personal
property that burned while they were asleep in their soon-to-be home. Westfield
claims that because the house was still owned by Fontana—the general contractor working to put
finishing touches on the home at the time of the fire—the house and its contents were excluded from
coverage. Specifically, Westfield
contends that the contents of the house are excluded as property in the “care,
custody, or control” of Fontana. The Accolas argue that their personal
property was neither owned by nor in the “care, custody, or control” of Fontana—and was therefore
covered. The trial court agreed with Westfield, and granted
summary judgment in its favor, dismissing it from the lawsuit. We disagree, and reverse.
FACTS
¶2 The relevant facts of this case are complicated, but
undisputed. The Accolas were sleeping in
a house with their children when a fire broke out, destroying both the house
and its contents. At the time of the
fire, the house was owned by Fontana,
but legally occupied by the Accolas under a thirty-day temporary occupancy
permit. Interestingly, James Accola
happens to be both owner and president of Fontana. The fire was allegedly caused by some dirty
(and apparently flammable) rags left behind by a Fontana employee.
¶3 After the fire, the Accolas filed a negligence claim against Fontana and Westfield, Fontana’s liability
insurer. They acknowledged that damage
to the house itself was not covered because the liability policy excludes
coverage for property owned by the insured (here, Fontana).
However, they claim that the personal property they moved into the house
was covered because it was not owned
by Fontana and was not in Fontana’s care, custody, or control.
¶4 Westfield
filed for summary judgment, claiming that the Accolas’ personal property was
excluded from their policy by the “care, custody, or control” exclusion. It claims that this exclusion is in place to
avoid precisely this scenario, where an insured allows valuable property to be
stored on its property while it is still doing work on it. Westfield also claims that James Accola’s
status as owner of Fontana strengthens its argument that his personal property
should be excluded because it was under supervision “24 hours a day” by a
Fontana employee—Accola himself. The
trial court granted summary judgment to Westfield
and dismissed it from the lawsuit. The
Accolas appeal.
DISCUSSION
¶5 We review summary judgment de novo. See
Green
Spring Farms v. Kersten, 136 Wis. 2d
304, 317, 401 N.W.2d 816 (1987). We use
the same methodology as the trial court, but we owe it no deference. Id. at
315-17; Silverton Enters., Inc. v. General Cas. Co. of Wis., 143 Wis. 2d 661, 669,
422 N.W.2d 154 (Ct. App. 1988). Summary
judgment is appropriate when there are no genuine issues of material fact and a
party is entitled to a judgment as a matter of law. Green Spring Farms, 136 Wis. 2d at 315; Wis. Stat. § 802.08(2) (2007-08).
¶6 The question that is central to this case is whether the
Accolas’ personal property is excluded by the “care, custody, or control”
clause of Westfield’s policy with Fontana. The parties agree as to all of the relevant
facts: the Accolas owned personal property inside the house, but Fontana still
owned the house itself; the Accolas had permission to move themselves and their
belongings into the house; and James Accola was (and is) president and owner of
Fontana, but he was asleep with his family inside when the fire occurred. Thus, the only remaining question is one of
law—how do these undisputed facts fit with the law regarding the “care,
custody, or control” exclusion? Both
parties were able to provide us with Wisconsin
case law addressing this type of clause.
Predictably, they disagree as to how the facts apply.
¶7 We begin with some basic insurance law principles. Insurance companies, of course, may limit
coverage, but they must do so explicitly and with clear language. Meiser v. Aetna
Cas. & Sur. Co., 8 Wis.
2d 233, 238, 98 N.W.2d 919 (1959). If an
exclusion clause is ambiguous, it must be construed against the insurer. Id. The purpose of the strict construction
is to protect the reasonable expectations of the insured. See
Patrick
v. Head of the Lakes Coop. Elec. Ass’n, 98 Wis. 2d 66, 69, 295 N.W.2d 205 (Ct. App. 1980).
¶8 Our supreme court has already found the “care, custody, or
control” clause to be ambiguous. Meiser,
8 Wis. 2d
at 238. We even have a test
that we use to determine whether property is covered by the “care, custody, or
control” clause of an insurance contract.
See id. at 236, 238; Silverton, 143 Wis. 2d at 670-71.
Property is in the care, custody, or control of the insured if
it is “under the supervision of the insured” and it is a necessary element of the work involved. Silverton, 143 Wis.
2d at 670-71; see also Meiser,
8 Wis. 2d at
236, 238. We agree with Westfield that the personal property was under the general
supervision of Fontana
as general contractor. But we cannot see
how the Accolas’ personal property was necessary
to the work involved in finishing—or, for that matter, building—their
house.
¶9 We know of two Wisconsin
cases that discuss the “care, custody, or control” test in depth, and both
confirm our reasoning. In Meiser,
the insured was a subcontractor whose job was to plaster walls and ceilings in
a house. Meiser, 8 Wis. 2d at 239. The general contractor asked him to
clean some stray plaster off of the windows, and the windows were scratched
when one of his employees did so. Id. at
234, 239. Our supreme court held that
the damaged windows were not under the care, custody, or control of the insured
subcontractor because they were not “essential,” or necessary, to the work of
plastering walls and ceilings. Id. at
239-40.
¶10 In Silverton, the insureds were two companies in the business of
repairing automobile transmissions. Silverton, 143
Wis. 2d
at 669. They argued for coverage of
damage to automobiles left in their garage for repair. Id. at
670. The court of appeals said that the
cars were excluded from coverage by the “care, custody, or control” exclusion
because “[s]upervision over an automobile left with plaintiffs for repair is a
necessary element of the repair.” Id. at
671.
¶11 Westfield
argues that both Meiser and Silverton show that supervision is a
“primary element of an insured’s ‘necessary work.’” Its brief states,
The [Meiser] Court
ultimately ruled that the windows were not in the “care, custody, or control”
of the plasterer, after concluding that work on the windows were not an
essential part of the plastering work. [Meiser,
8 Wis. 2d]
at 240. It did so, however, by
concluding that the general contractor,
not the subcontracting plasterer, “had
supervision of all of the work on the premises; he was on the job several times
a day during the time the house was under construction; it was his obligation
to take care of the premises; it was he who was responsible for the general
cleaning up ….” Id. at 239. (Emphasis added).
Westfield goes on to liken
Fontana, a general contractor in this case, to the general contractor in Meiser,
pointing out that “[a]s general contractor, the law is clear that Fontana’s
‘essential work’ was to supervise every component involving the materials,
labor, and structure.”
¶12 Westfield’s
argument ignores key elements of the Meiser and Silverton holdings. First, even if Fontana is like the general contractor in Meiser,
that case was about the subcontractor,
not the general contractor. See Meiser,
8 Wis. 2d at
239. In the paragraph quoted by
Westfield, the Meiser court was drawing a comparison between the
responsibilities of the insured subcontractor and the general contractor in that case to illustrate why the
windows were not in the “care, custody, or control” of the insured
subcontractor. Id.
It said nothing about whether the windows were legally in the “care, custody, or
control” of the general contractor. So, the argument fails.
¶13 Second, Westfield’s argument that supervision is, by
definition, “necessary to the work involved” basically conflates the supreme
court’s two-element test into a single element.
As we stated above, the Meiser/Silverton test for
whether property is under the “care, custody, or control” of the insured has two elements: it must be under the supervision of the
insured and necessary to the work
involved. Meiser, 8 Wis. 2d at 236, 238; Silverton, 143 Wis. 2d at
670-71. To state that because Accola had
close supervision of his own personal property, the supervision ipso facto was
necessary to the work being done subsumes the necessity element into the
supervision element of the test. That is
not what the Meiser court intended.
¶14 We can understand why Westfield
feels strongly, and why the trial court agreed, that the Accolas should not be
able to sue Fontana
to recover for damage done to their personal property based on the negligence
of construction laborers who worked for and under James Accola himself. Indeed, the issue of James Accola’s degree of
supervision of the property may well be relevant to the merits of the potential
negligence claim. But the odd facts of
this case do not change the legal standard that must be applied under Meiser
and Silverton.
¶15 In order to win under the “care, custody, or control” exclusion
of its policy at the summary judgment level, Westfield
had to show that the Accolas’ personal property was necessary to the work being
done by Fontana
and this is something it has not done.
Accordingly, we reverse the trial court’s summary judgment in favor of Westfield and remand for
further proceedings not inconsistent with this opinion.
By the Court.—Judgment reversed and
cause remanded.