COURT OF APPEALS DECISION DATED AND FILED February 22, 2012 A. John Voelker Acting Clerk of Court of Appeals |
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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
from an order of the circuit court for
Before Brown, C.J., Neubauer, P.J., and Gundrum, J.
¶1 PER CURIAM. Gunnar Vagenius,[1]
d/b/a Gunnar’s Yacht and Ship, appeals from an order granting summary judgment
in favor of his insurer, Cincinnati Insurance Company, declaring that
¶2 The material facts are undisputed. Vagenius brokered the sale of a semi-custom sailboat between sellers Donald and Mary Stitt and buyer Thomas Tabor. Tabor intended to use the boat for sailing races and regattas. Peter Kronich, hired by Tabor to inspect the boat before purchase, deemed it in satisfactory condition. Tabor claims he later discovered the hull had serious moisture problems that made the boat structurally unsafe and unsuitable for racing.
¶3 Tabor filed suit against the Stitts, Vagenius and Kronich,
asserting that prior to his purchase they all were aware of, but failed to
disclose, the boat’s compromised integrity.
The claims against Vagenius—a violation of Wis. Stat. § 100.18 (2009-10),[2]
intentional misrepresentation, theft by fraud and negligence—are the only ones
relevant to this appeal.
¶4
¶5 Cincinnati also argued that the complaint did not state a claim for “property damage,” defined in the policy as:
a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or
b. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the “occurrence” that caused it.
Tabor’s complaint,
¶6 We review a circuit court’s grant of summary judgment de
novo, using the same familiar methodology as the circuit court. See Green Spring Farms v. Kersten, 136
¶7 In relevant part, Tabor’s complaint alleges the
following:
55. The significant delamination and moisture contamination of the Boat’s hull has caused it to be defective, not fit for its particular purpose, and structurally unsafe and unsailable.
….
74. Sellers, by knowingly selling a deficient, not seaworthy, unsafe, unsound, and unfit for its particular purpose boat in need of considerable repair, breached the contract.
….
83. The Boat, due to the major structural defects, was not suitable nor safe for the particular purpose of sailing, much less the high structural demands of racing.
….
85. Buyer has suffered significant direct and consequential damages including, but not limited to the inability to compete in prestigious sailing races and regattas, and boat storage and maintenance fees that continue to accrue. Said damages are properly to be determined at trial.
¶8 Vagenius argues that the circuit court erred by finding that these loss-of-use allegations did not constitute “property damage” under the terms of the policy. We disagree.
¶9 Neither party cited Qualman to the circuit court. The court nevertheless relied on Qualman,
observing that it was the reported decision most analogous to the facts
here. In that case, the Qualmans bought
a house from the Bruckmosers. Qualman,
163
¶10 And so it is here. The
claimed defects in the boat existed before Vagenius allegedly made the
misrepresentations that are Tabor’s theory of recovery. Vagenius suggests that the
¶11 We also are not persuaded by Vagenius’ argument that Qualman has been “superseded” or “rejected” by our supreme court. He points out that, in Smith v. Katz, 226 Wis. 2d 798, 595 N.W.2d 345 (1999), for example, the supreme court observed: “We are not saying that strict responsibility misrepresentations or negligent misrepresentations can never cause ‘property damage’ as defined in the policies, particularly when ‘property damage’ can include ‘loss of use of tangible property that is not physically injured.’” Id. at 816. Two things strike us, however. First, as Vagenius acknowledges, the court says in the very next sentence: “But we recognize that the majority view in the cases is that misrepresentations and omissions do not produce ‘property damage’ as defined in insurance policies. They produce economic damage.” Id. at 816-17.
¶12 Second, by way of illustrating an instance of “loss of use of tangible property that is not physically injured,” the court offers a “compare” citation to Sola Basic Industries, Inc. v. United States Fidelity & Guaranty Co., 90 Wis. 2d 641, 280 N.W.2d 211 (1979). There, the insurer was ordered to cover economic damages a purchaser of a product from its insured suffered due to the insured’s negligent repair of the product. Id. at 644. While the product, a transformer, was being repaired, the client lost the use of a functional electric furnace and incurred expenses to keep its manufacturing processes going by some alternate means. Id.
¶13 In no way does Smith stand for the proposition that simply pleading “loss of use” triggers coverage when, as here, the “loss of use” is due to preexisting damage and the theory of recovery is misrepresentation. Qualman controls. Accordingly, we affirm the order of the circuit court.[4]
By the Court.—Order affirmed.
This opinion will not be published. See Wis. Stat. Rule 809.23(1)(b)5.
[1] The appellant’s surname is spelled “Vagenis” in the complaint and in the case caption. Since he spells his name “Vagenius” in the affidavit he submitted in support of his motion for summary judgment and in his brief on appeal, we will do likewise.
[2] All references to the Wisconsin Statutes are to the 2009-10 version unless noted.
[3] Vagenius
and the Stitts also moved for summary judgment but only the decision on
[4] We do not address Cincinnati’s request to address the circuit court’s finding that the complaint alleges an occurrence. Cases should be decided on the narrowest grounds possible. See State v. Blalock, 150 Wis. 2d 688, 703, 442 N.W.2d 514 (Ct. App. 1989). If a decision on one point disposes of the appeal, we will not decide the other issues raised. See Gross v. Hoffman, 227 Wis. 296, 300, 277 N.W. 663 (1938).