Insurance Claim – Duty to Defend

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WI Court of Appeals – District IV

Case Name: Paustian Medical & Surgical Center, S.C., v. IMT Insurance Company, et al.,

Case No.: 2019AP141

Officials: Blanchard, Kloppenburg and Graham, JJ.

Focus: Insurance Claim – Duty to Defend

This is an insurance coverage dispute between Paustian Medical & Surgical Center, S.C., and IMT Insurance Company involving the determination of whether IMT owes a duty to defend or indemnify its insured, RC Heating & Cooling, against the claims that Paustian has brought against RC. Whether IMT owes such a duty hinges on whether RC has coverage under the IMT insurance policy for Paustian’s negligence and breach of contract claims arising out of a project to design and install an HVAC system in Paustian’s facility.

The circuit court granted IMT’s motions for summary judgment and declaratory judgment and dismissed IMT from the action, ruling that Paustian’s allegations do not establish an “occurrence” or “property damage” under the terms of the insurance policy, and that, even if an occurrence and property damage had occurred, the policy’s “impaired property” exclusion applies to bar coverage.

We conclude that IMT has no duty to defend RC against the allegations in Paustian’s amended complaint (referred to in this opinion as the complaint) under the IMT policy, because assuming, without deciding, that Paustian’s allegations establish that an occurrence and property damage occurred, the allegations also establish that the policy’s “impaired property” exclusion applies to bar coverage for Paustian’s claims. We also deem Paustian to concede that no exception to the exclusion applies to restore coverage. Accordingly, we affirm the circuit court’s order dismissing IMT from this action.

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Derek A Hawkins is trademark corporate counsel for Harley-Davidson. Hawkins oversees the prosecution and maintenance of the Harley-Davidson’s international trademark portfolio in emerging markets.