WANTA v. MUELLER, 98-3448-FT (Wis.Ct.App. 6-8-1999)

Court of Appeals of Wisconsin.
Case No. 98-3448-FT.
Opinion Released: June 8, 1999 Opinion Filed: June 8, 1999 This opinion will not be published. See Rule 809.23(1)(b)5, Stats.

APPEAL from a judgment of the circuit court for MarathonCounty: RAYMOND F. THUMS, Judge. Affirmed.

Before Cane, C.J., Myse, P.J., and Hoover, J.

PER CURIAM.

Richard and Carol Wanta and Wanta Homes, Inc. appeal a summaryjudgment dismissing their insurer, Citizens Security MutualInsurance Company, from this lawsuit.[1] They argue thatthe trial court should not have considered matters outside thecomplaint when determining Citizens Security’s duty to defend andthat the court erred when it determined that the Wantas’ allegedmisrepresentation can only be intentional and therefore notcovered by the insurance policy. We reject these arguments andaffirm the judgment.
The Wantas agreed to sell Frederick and Beth Mueller a “newhouse” that had never been inhabited but had undergone more than$45,000 repair costs due to water damage. The Muellers backed outof the sale and the Wantas sued them for breach of contract. TheMuellers counterclaimed, alleging negligent, intentional andstrict responsibility misrepresentation. Citizens Security hiredan attorney to represent the Wantas, requested bifurcation on thecoverage issue and, upon completion of discovery, moved forsummary judgment. The trial court concluded that the insurancepolicy did not cover intentional misrepresentation and that theevidence would not support a negligent misrepresentation claim.Therefore, it granted summary judgment dismissing the actionagainst Citizens Security and relieving it of its duty to defendthe Wantas.
The trial court properly considered matters outside thecomplaint when it determined that the evidence would not supporta negligent misrepresentation finding. The rule that the courtwill only consider the complaint, like the duty to defend, doesnot extend indefinitely. The appropriate procedure was set outin Kenefick v. Hitchcock, 187 Wis.2d 218, 234-36, 522 N.W.2d 261, 267-68 (Ct.App. 1994). When the insurer requests a bifurcated procedure and defends its insured until coverage issues are resolved in the insurer’s favor, the insurer has satisfied its duty to defend. Whether the coverage issue is resolved by summary judgment or trial, the issue at that stage of the proceedings is not restricted solely to examining the complaint.

The evidence presented on summary judgment establishes as a matter of law that the Wantas’ misrepresentations, if any, were intentional. The Muellers do not claim losses based on the water damage, but on the Wantas’ failure to inform them of the water damage. The Wantas admit that they knew the house had suffered extensive water damage, researched whether they had a duty to disclose damage and repair, and deliberately chose not to inform the Muellers. The decision not to inform prospective buyers of the water damage was a deliberate act that is not covered under the insurance policy.

By the Court. — Judgment affirmed.