Breach of Contract – Negligent Misrepresentation

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WI Court of Appeals – District I

Case Name: Stacy Miller et al v. Bryan Mardak

Case No.: 2015AP206

Officials: Curley, P.J., Brennan and Brash, JJ.

Focus: Breach of Contract – Negligent Misrepresentation

Bryan Mardak appeals the grant of summary judgment to intervenor AMCO Insurance Company (AMCO) in this suit for monetary damages brought by the buyers of a condominium previously owned by Mardak. The trial court also relieved AMCO of any duty to defend Mardak in that suit. Mardak contends that the trial court erred in determining that his commercial general liability (CGL) insurance policy issued by AMCO covered no damages being sought in the underlying action, which alleges that Mardak failed to reveal a sewer lateral defect in the condominium that he sold. The buyers claim that Mardak: 1) breached the contract (warranty) for the sale of the home; 2) intentionally misrepresented the condition of the home; 3) violated WIS. STAT. § 100.18 (2013-14) ; and 4) negligently misrepresented the condition of the home. Mardak concedes that there is no coverage for breach of contract, intentional misrepresentation, or a violation of WIS. STAT. § 100.18, as these causes of action allege intentional conduct. However, Mardak contends that the trial court erred in finding no initial grant of coverage for the claim alleging he negligently misrepresenting the condition of the sewer lateral. This is so, according to Mardak, because he made no misrepresentation of a defect to the buyers. Rather, he believes the sewer issue is a maintenance problem that can be remedied when serviced periodically. Thus, he maintains that there is a genuine issue of material fact preventing the trial court from granting summary judgment. We disagree and affirm. We are obligated, when interpreting an insurance policy, to compare the allegations in the complaint to the terms of the insurance policy. Estate of Sustache v. American Family Mut. Ins. Co., 2008 WI 87, ¶20, 311 Wis. 2d 548, 751 N.W.2d 845. Here, the buyers allege that Mardak misrepresented both orally and in the Real Estate Condition Report that there was no defect in the sewer lateral. There is no mention in the amended complaint of a maintenance problem. When we look at the amended complaint and compare it to the policy language defining “property damage” and an “occurrence,” we conclude that here, there was neither “property damage” nor an “occurrence” alleged. Thus, the trial court correctly granted summary judgment to AMCO.

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.