source: Caselaw Access Project

author: ¶ 1. DEININGER, J.

license: Public Domain

text:
    Clara Farr, Plaintiff-Appellant, Medicare Part A, Medicare Part B, and Connecticut General Life Insurance Company, Subrogated-Plaintiffs, v. Alternative Living Services, Inc. n/k/a Alterra Healthcare and Atlantic Mutual Insurance Company, Defendants-Respondents.

    Court of Appeals

      No. 01-0971.

      Submitted on briefs November 8, 2001.

    Decided March 28, 2002.

    2002 WI App 88
    (Also reported in 643 N.W.2d 841.)

      On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Matthew H. Boiler of Murphy, Vaughan, Boiler & Pressentin, L.L.C., Monona.
    On behalf of the defendants-respondents, the cause was submitted on the brief of Steven T. Caya of Fellows, Piper & Schmidt, Milwaukee.
    Before Vergeront, PJ., Deininger and Lundsten, JJ.

       Petition to review denied 7-26-02.

   ¶ 1. DEININGER, J.

Clara Farr appeals an order which dismissed her second amended complaint against Alternative Living Services, Inc., and denied her motion to amend the complaint or "revert back" to an earlier one. Farr contends that we should reinstate her claims because: (1) her second amended complaint states a negligence cause of action; (2) the court erroneously exercised its discretion in failing to allow her to amend her complaint; (3) justice has miscarried and we should therefore reverse under Wis. Stat. § 752.35 (1999-2000); and (4) Wis. Stat. ch. 50 provides a private cause of action for violations of Farr's rights as a resident of a community-based residential facility.

¶ 2. We conclude that Farr's second amended complaint states a cause of action for negligence, and thus we do not reach Farr's second and third claims. With regard to the fourth, we conclude that the legislature did not intend to provide residents of community-based residential facilities a private cause of action for statutory or code violations. We therefore reverse and remand for further proceedings on Farr's negligence claim.

BACKGROUND

¶ 3. Clara Farr, an 85-year-old woman suffering from dementia and other health problems, resided at Woven Hearts of Middleton, a community-based residential facility (CBRF). Woven Hearts is a subsidiary of Alternative Living Services, Inc., a provider of care for individuals suffering from Alzheimer's disease. Farr eloped from the Woven Hearts facility, wearing only a thin nightgown, on a winter morning when the temperature was approximately twelve degrees. A passerby found her between 4:00 and 5:00 in the morning, walking away from the facility with her walker, barefoot on a frost-covered sidewalk. She was returned to the facility and subsequently admitted to a hospital, where she was treated for frostbite injuries to both feet.

¶ 4. Prior to Farr's elopement, the Department of Health and Family Services, Bureau of Quality Assurance, had investigated Woven Hearts in response to complaints of inadequate treatment. The investigation revealed that the facility had not complied with certain provisions of Wis. Admin. Code § HFS 83, and the bureau ordered the facility not to admit any additional residents until the department received plans of correction. Following Farr's elopement, the department again conducted an investigation that revealed the facility was still in noncompliance with the law. With regard to Farr's elopement, the department reported in its "Statement of Deficiencies" that the facility failed to report Farr's elopement as required; that the facility failed to meet Farr's treatment needs by waiting until two days after her elopement before seeking medical intervention for her injuries; that staff knew of her potential risk to elope from the facility; and that an exit door alarm was not functioning properly at the time of Farr's elopement thus failing to alert staff.

¶ 5. Farr commenced this action against Alternative Living asserting a claim of negligence and seeking compensatory and punitive damages. In her original complaint, Farr alleged that the facility was "negligent in regard to supervision, control and prevention of harm to a resident and administration of prompt and adequate treatment to [her]." Farr sought punitive damages based on the facility's alleged "intentional disregard of [her] rights." She first amended her complaint to correctly name the parties, and later moved to amend her complaint a second time. The court granted Farr leave to file a second amended complaint.

¶ 6. Unlike the first complaint, which plainly pled a negligence cause of action, the second amended complaint does not contain the word "negligence," but frames the cause of action largely in terms of alleged violations of Farr's rights under Wis. Stat. ch. 50 and Wis. Admin. Code § HFS 83. Alternative Living moved for summary judgment, seeking dismissal of Farr's second amended complaint on the basis that it alleged only violations of Farr's statutory and administrative rights, for which a private cause of action does not lie. In response, Farr moved to again amend her complaint "in the interest of justice, to conform to the record evidence." Alternatively, she requested that she be allowed "to revert back" to her previous complaint. She asserted that her second amended complaint incorporated all previous pleadings and that "the basis of the Complaint, as amended, lies in negligence." The court disagreed, denying Farr's motion and granting Alternative Living's motion for summary judgment on the grounds that the second amended complaint "does not allege negligence," and that the cause of action Farr pled was not permitted under Wisconsin law. Farr appeals.

ANALYSIS

¶ 7. We review the granting or denial of summary judgment de novo, using the same methodology as the trial court. Wis. Stat. § 802.08; State v. Dunn, 213 Wis. 2d 363, 368, 570 N.W.2d 614 (Ct. App. 1997). That methodology is well established. We first examine the complaint to determine whether it states a claim. Id. In this case, our review need go no further because the sole basis of Alternative Living's motion for summary judgment is the alleged failure of Farr's second amended complaint to state a cognizable claim.

¶ 8. We thus begin by evaluating the legal sufficiency of. the complaint, which presents a question of law for our de novo review. Williams v. Security Sav. & Loan Ass'n, 120 Wis. 2d 480, 482, 355 N.W.2d 370 (Ct. App. 1984). In determining whether a plaintiff has sufficiently stated a claim for relief, the facts pleaded by the plaintiff and all reasonable inferences arising from the factual allegations made by the plaintiff are accepted as true. Prah v. Maretti, 108 Wis. 2d 223, 229, 321 N.W.2d 182 (1982). A court must liberally construe the allegations, and a complaint "should be dismissed as legally insufficient only if 'it is quite clear that under no circumstances can the plaintiff recover.'" Id.

¶ 9. Farr contends that her second amended complaint states a cause of action for negligence because it alleges all of the elements necessary for a negligence claim. Alternative Living disagrees, contending that "[n]owhere in the second amended complaint does [Farr] allege any common law negligence claim.... [Farr]'s second amended complaint relies solely upon statutory claims predicated upon a violation of Wis. Stat. § 50.10 and/or Chapter 83 of the Wisconsin Administrative Code." Alternative Living argues further that, because Farr's second amended complaint does not incorporate by reference any part of the original complaint, the earlier complaint is "extinguished" by the later one. See Holman v. Family Health Plan, 227 Wis. 2d 478, 487, 596 N.W.2d 358 (1999) ("An amended complaint supplants the original complaint when the amended complaint makes no reference to the original complaint and incorporates by reference no part of the original complaint.").

¶ 10. We conclude that Farr's second amended complaint, liberally construed, states a claim for negligence. To maintain a cause of action for negligence, four elements must exist: "(1) A duty of care on the part of the defendant; (2) a breach of that duty; (3) a causal connection between the conduct and the injury; and (4) an actual loss or damage as a result of the injury." Rockweit v. Senecal, 197 Wis. 2d 409, 418, 541 N.W.2d 742 (1995) (citations omitted). Farr's second amended complaint alleges the following things:

8. ... Farr .. . was accepted and admitted by... Alternative Living... as a resident pursuant to a written contract.... [Alternative Living] promised to provide ... Farr with such care as her condition reasonably required. At that time.. . Farr was suffering from a primary diagnosis of dementia secondary to cerebral vascular disease, all of which were well-known to [Alternative Living],
9. As a result of accepting... Farr as a community based residential facility resident, Woven Hearts was under a statutory duty to provide . . . Farr with certain rights and liberties pursuant to Chapter 50, Wis. Statutes, and Wisconsin Administrative Code, Chapter HFS 83 ... .
10. ... Farr's statutory rights . .. were violated. The actions of Woven Hearts in violation of. . . Farr's rights included, but are not limited to the following:
a. Failing to properly monitor Clara Farr and allowing her to elope from the facility;
b. Failing to properly and/or timely contact Clara Farr's responsible party and physician to report significant changes in Clara Farr's physical condition;
c. Failing to properly chart and/or otherwise document Clara Farr's injuries;
d. Failing to have adequate staffing to provide Ms. Farr with an appropriate level of care and monitoring;
e. Failing to notify Ms. Farr, her family and Power of Attorney of the inadequate, untrained staffing deficiencies.
f. Failing to perform proper hygiene procedures, including but not limited to, failing to timely change Clara Farr's diapers, failing to bathe Clara Farr and allowing her to lie for extended periods of time in soiled diapers and/or excrement;
g. Failing to dispense and properly order pain medications to Clara Farr;
h. Failing to treat Clara Farr physically and mentally by physically and mentally abusing and neglecting her;
i. Failing to properly hire and train staff in accordance with the minimum requirements established by the State of Wisconsin;
j. Failing to transfer Ms. Farr from the community based residential facility when the facility could no longer adequately meet the needs of Clara Farr.
11. As a direct and proximate result of Wovén Heart[']s violations of... Farr's statutory rights and liberties, she has suffered serious physical injuries and permanent disabilities, physical pain and mental and emotional anguish. She has incurred expenses for medical care and other care.

(Emphasis added.)

¶ 11. As the emphasized phrases demonstrate, the complaint alleges that Alternative Living undertook the duty to provide adequate care to Farr, which it failed to do in various ways, and that, as a result of these failures, Farr suffered physical and emotional injuries. The complaint includes all of the essential elements of a negligence claim, and we thus conclude it sufficiently states a cause of action in negligence, despite the absence of the word "negligence" in the allegations. Wisconsin is a notice pleading state, and a pleading need only notify the opposing party of the pleader's position in the case — no "magic words" are required. Norwest Bank Wis. Eau Claire v. Plourde, 185 Wis. 2d 377, 388, 518 N.W.2d 265 (Ct. App. 1994). A complaint need not even "state [] the cause of action the plaintiff believes he has pleaded"; it will be upheld if it" 'states any facts on which the plaintiff can recover.'" De Bauche v. Knott, 69 Wis. 2d 119, 121-22, 230 N.W.2d 158 (1975) (citations omitted).

¶ 12. Alternative Living argues, however, that by citing statutory and code violations, and by failing to expressly incorporate the allegations of her earlier complaint, Farr should be deemed to have abandoned her negligence claim. Alternative Living claims that the amended complaint deprived it of notice that Farr was continuing to pursue a negligence claim. We reject these arguments. In an affidavit attached to Farr's motion for leave to amend her complaint, Farr's attorney states that the proposed amended complaint "does not add . . . an additional cause of action" but "streamlines the two causes of action," an apparent reference to the negligence-based claims for compensatory and punitive damages set forth in the original complaint. At the September 14, 2000 hearing on Farr's request, her attorney repeatedly asserted that the proposed amended complaint alleged the same causes of action as the original complaint. We thus reject Alternative Living's suggestion that it was somehow misled into believing that Farr no longer intended to pursue a claim in negligence after filing her second amended complaint.

¶ 13. Because we conclude that the second amended complaint states a claim on which relief may be granted, it is not necessary for us to address Farr's arguments concerning the court's denial of her request to further amend the complaint or to "revert back" to an earlier one. Our disposition also renders unnecessary any consideration of whether to exercise our discretionary reversal authority pursuant to Wis. Stat. § 752.35. We do address, however, whether Farr may on remand pursue a claim for relief grounded solely on alleged statutory or code violations, irrespective of any negligence on the part of Alternative Living or its employees. We conclude she may not.

¶ 14. Farr claims that she has a private right of action for violations of her rights as a resident of a CBRF as set forth in Wis. Stat. ch. 50 and Wis. Admin. Code § HFS 83. Whether a statute creates a private cause of action presents a question of statutory interpretation, subject to our de novo review, during which our goal is to "ascertain and give effect to the legislature's intent." Hausman v. St. Croix Care Ctr., Inc., 207 Wis. 2d 400, 406, 558 N.W.2d 893 (Ct. App. 1996), rev'd on other grounds, 214 Wis. 2d 655, 571 N.W.2d 393 (1997). "[A] private right of action is only created when (1) the language or the form of the statute evinces the legislature's intent to create a private right of action, and (2) the statute establishes private civil liability rather than merely providing for protection of the public." Grube v. Daun, 210 Wis. 2d 681, ¶ 12, 563 N.W.2d 523 (1997).

¶ 15. The Department of Health and Family Services must, under Wis. Stat. § 50.02(2), "by rule . . . develop, establish and enforce regulations and standards for the care, treatment, health, safety, rights, welfare and comfort of residents in community-based residential facilities." The department has established these standards in Wis. Admin. Code § HFS 83 ("Community-Based Residential Facilities"). Farr bases her entitlement to a private cause of action for violations of the statute and regulations on Wis. Stat. § 50.10, which provides as follows:

50.10 Private cause of action.

(1) Any person residing in a nursing home has an independent cause of action to correct conditions in the nursing home or acts or omissions by the nursing home or by the department, that:
(a) The person alleges violate this subchapter or rules promulgated under this subchapter; and
(b) The person alleges are foreseeably related to impairing the person's health, safety, personal care, rights or welfare.
(2) Actions under this section are for mandamus against the department or for injunctive relief against either the nursing home or the department.

¶ 16. The plain language of Wis. Stat. § 50.10 demonstrates that the section applies only to residents of a "nursing home," which is different from a CBRF by statutory definition. Moreover, the private remedy under § 50.10 is limited to an action for mandamus or injunctive relief. Suits for monetary damages, such as the present one, are not mentioned. In short, we find no "clear indication" of a legislative intent in chapter 50 to permit CBRF residents to sue for compensatory and punitive damages based solely on alleged violations of the standards for CBRFs set out in the statutes or administrative code. See Grube, 210 Wis. 2d at ¶ 12.

¶ 17. Farr argues, however, that such an intent may be inferred from Wis. Stat. § 50.11, which provides:

The remedies provided by this subchapter are cumulative and shall not be construed as restricting any remedy, provisional or otherwise, provided by law for the benefit of any party, and no judgment under this subchapter shall preclude any party from obtaining additional relief based upon the same facts.

We agree with Alternative Living that this section simply allows both nursing home and CBRF residents to pursue common-law remedies against facilities and their employees for alleged breaches of common-law duties. As we have discussed, we conclude that Farr has presented just such a claim in her second amended complaint.

¶ 18. We are similarly unpersuaded by Farr's reliance on Kujawski v. Arbor View Health Care, 139 Wis. 2d 455, 407 N.W.2d 249 (1987). The plaintiff in Kujawski was a nursing home resident who claimed nursing home employees negligently caused her injury in a fall from a wheelchair. Id. at 457-58. There was no discussion in Kujawski of whether the plaintiff could bring a private cause of action for violations of Wis. Stat. ch. 50 or administrative regulations enacted thereunder. The plaintiffs claim was brought exclusively under a common-law negligence theory, and the disputed issues on appeal were (1) the necessity for expert testimony to establish the applicable standard of care, and (2) the sufficiency of the evidence in establishing causation. Id. at 458. The opinion in Kujawski is thus of no assistance to us here.

CONCLUSION

¶ 19. For the reasons discussed above, we reverse the appealed order and remand to the trial court for further proceedings consistent with this opinion.

By the Court. — Order reversed and cause remanded.

       All references to the Wisconsin Statutes are to the 1999-2000 version unless otherwise noted.

      " 'Community-based residential facility' means a place where 5 or more adults who are not related to the operator or administrator and who do not require care above intermediate level nursing care reside and receive care, treatment or services that are above the level of room and board but that include no more than 3 hours of nursing care per week per resident." Wis. Stat. § 50.01(1g).

       For example, Farr's counsel contended that "[t]his amended complaint.. . has not changed really in any way from the first amended complaint.... Since day one they have been the same two causes of action."

       See Wis. Stat. § 50.01(3); see also Juneau County v. Sauk County, 217 Wis. 2d 705, 711-12, 580 N.W.2d 694 (Ct. App. 1998) (concluding that "a CBRF is not a nursing home" under an earlier statutory definition).

       A CBRF resident's only "remedy" for statutory or code violations appears to lie in certain reporting requirements and a mandated grievance procedure. See Wis. Stat. § 50.09; Wis. Admin. Code § HFS 83.21.

       We do not address, because the parties have not, any issues regarding the admissibility or import of evidence that Alternative Living allegedly violated statutory or regulatory requirements on the question of whether the care it provided to Farr failed to meet common-law standards. See, e.g., Taft v. Derricks, 2000 WI 103, ¶¶ 11-22, 235 Wis. 2d 22, 613 N.W.2d 190.


author: ¶ 1. LUNDSTEN, J.

text:
    In re Elaine J. Hamilton, Petitioner v. Walter Junior Hamilton, Respondent: State of Wisconsin, Petitioner-Respondent, v. Walter Junior Hamilton, Respondent-Appellant.
    Court of Appeals

      No. 01-1014.

      Submitted on briefs September 12, 2001.

    Decided March 28, 2002.

    2002 WI App 89
    (Also reported in 644 N.W.2d 243.)

      On behalf of the respondent-appellant, the cause was submitted on the briefs of Robert A. Ramsdell, Madison.
    On behalf of the petitioner-respondent, the cause was submitted on the brief of Randy A. Woodford, Assistant Corporation Counsel for Dane County.

      Before Dykman, Deininger and Lundsten, JJ.

       Petition to review granted 6-11-02.

   ¶ 1. LUNDSTEN, J.

Walter Junior Hamilton appeals a circuit court order denying his motion to dismiss an action brought by the Dane County Corporation Counsel on behalf of the State of Wisconsin to collect unpaid child support. The circuit court granted the State's request for an order for child support arrearages and rejected Walter's contention that the action was outside the twenty-year statute of limitations pertaining to actions upon a judgment under Wis. Stat. § 893.40 (1999-2000). While we hold that the State's action was timely with respect to part of the child support arrearages, we disagree with the circuit court that the State's action was timely as to the entire arrearage. Accordingly, we reverse and remand for further proceedings.

Background

¶ 2. Walter and Elaine Hamilton were divorced in Grant County on June 22, 1970. The divorce judgment required Walter to pay $10.00 every two weeks to Elaine as alimony, and $20.00 for each of their two children every two weeks for child support. On November 9, 1977, the Dane County Circuit Court entered an order amending the judgment pursuant to a stipulation by Elaine and Walter. The 1977 order expunged all alimony arrearages and eliminated Walter's future obligation to pay alimony. Walter's child support payments were changed to $50.00 every two weeks, payable for the support of "the minor children... until further order of the Court." There was no further order regarding child support directed at Walter, and the youngest of the two Hamilton children reached majority on April 4, 1985. From the date of the original divorce judgment in 1970 through the time the youngest child reached majority in 1985, Walter failed to make a substantial number of child support payments.

¶ 3. Elaine died in June of 1989. On May 22, 2000, the State filed a motion requesting child support arrear-ages and interest accumulating up to January 12, 2000. In an affidavit filed with the motion, the State alleged that, pursuant to Wis. Stat. § 767.075, it is a real party in interest in this case. Various documents in the record reveal that the State is, at least in part, seeking to recoup AFDC payments made to Elaine during a period of time when Walter was failing to make child support payments. The State sought $15,501 in child support arrearages and $10,948 in interest.

¶ 4. Walter argued, first before a family court commissioner and then before the circuit court, that the statute of limitations barred the State's action. The circuit court concluded that the twenty-year statute of limitations in Wis. Stat. § 893.40 applied. Relying on case law, the court determined that the State's cause of action accrued on the date Walter and Elaine's youngest child reached majority and, therefore, the State's action was timely because it had twenty years from April 4, 1985, to bring the action.

¶ 5. The circuit court remanded the matter to the family court commissioner, who ordered Walter to pay $15,024 in child support arrearages and $7,944 in interest on the arrearage owed to the State. The matter returned to the circuit court, which affirmed the arrear-age amount but reversed the interest requirement on the basis that the State waited an unreasonable amount of time to seek enforcement. The State has not appealed the circuit court's ruling denying interest, but Walter appeals the order requiring him to pay the $15,024 child support arrearage.

Discussion

¶ 6. Walter asserts the circuit court erred when it ruled that the State's action to obtain child support arrearages accumulating between 1972 and 1985 was not barred by the twenty-year statute of limitations pertaining to actions on judgments. Walter believes the circuit court correctly concluded that the new statute, Wis. Stat. § 893.40, governs. Nonetheless, he argues that under the plain language of the new statute, the State, as Elaine's assignee, had twenty years after entry of either the original divorce judgment or an amended judgment to bring an action, and the State missed both deadlines by several years. The State responds that the enactment of § 893.40 did not change the rule that the twenty-year time limit commences when a cause of action for child support arrearages accrues at the time the youngest child reaches majority. Because Elaine's youngest child reached majority in 1985, the State asserts its filing in 2000 was timely. In the alternative, the State asserts that former Wis. Stat. §§ 893.14 and 893.16(1) (1977) are applicable to the entire arrearage with the same result.

¶ 7. Although we agree with several statements of law contained in the parties' briefs, neither party recognizes that this case involves two groups of missed child support payments: missed payments before the effective date of the new statute and missed payments after that date. As explained below, this situation leads us to conclude (1) that the old statute of limitations applies to the first group and the State's action is timely as to that group, and (2) that the new statute of limitations applies to and bars the State's action with respect to the second group.

¶ 8. In this case, we are asked to construe statutes and apply them to undisputed facts. The application of a statute to undisputed facts is a question of law which this court reviews without deference to the circuit court. State v. Wilke, 152 Wis. 2d 243, 247, 448 N.W.2d 13 (Ct. App. 1989). When construing a statute, we first look to the language of the statute itself. State v. Woolen, 130 Wis. 2d 18, 24, 386 N.W.2d 47 (1986). A "statute must be interpreted on the basis of the plain meaning of its terms." State v. Williquette, 129 Wis. 2d 239, 248, 385 N.W.2d 145 (1986). Only when statutory language is ambiguous may we examine other construction aids such as legislative history, context, and subject matter. Waalen, 130 Wis. 2d at 24.

The Determination Whether to Apply an Old or New Statute of Limitations

¶ 9. In the absence of specific direction from the legislature, when a statute of limitations is changed, Wis. Stat. §§ 990.06 and 991.07 apply to determine which statute governs. See Betthauser v. Med. Protective Co., 172 Wis. 2d 141, 153, 493 N.W.2d 40 (1992). The provisions of §§ 990.06 and 991.07 "are virtually identical and have been interpreted that way." Kohnke v. St. Paul Fire & Marine Ins. Co., 140 Wis. 2d 80, 86 n.3, 410 N.W.2d 585 (Ct. App. 1987), aff'd, 144 Wis. 2d 352, 424 N.W.2d 191 (1988).

¶ 10. Wisconsin Stat. § 990.06 provides:

In any case when a limitation or period of time prescribed in any act which shall be repealed for the acquiring of any right, or barring of any remedy, or for any other purpose shall have begun to run before such repeal and the repealing act shall provide any limitation or period of time for such purpose, such latter limitation or period shall apply only to such rights or remedies as shall accrue subsequently to the time when the repealing act shall take effect, and the act repealed shall be held to continue in force and be operative to determine all such limitations and periods of time which shall have previously begun to run unless such repealing act shall otherwise expressly provide.

(Emphasis added.) Similarly, Wis. Stat. § 991.07 provides:

In any case when a limitation or period of time prescribed in any act which is hereby repealed for the acquiring of any right or the barring of any remedy or for any other purpose shall have begun to run and a limitation or period of time for such purpose shall be prescribed in these revised statutes, the limitation or period prescribed by these statutes shall be held to apply only to such rights or remedies as shall accrue subsequently to the time when the same shall take effect; and the act repealed shall be held to continue in force and operative to determine all such limitations and periods of time, which shall have previously begun to run, unless in special cases in these revised statutes a different rule shall be prescribed.

(Emphasis added.)

¶ 11. Simply stated, when a statute of limitations is replaced or amended, a cause of action that has accrued prior to the effective date of the new statute or amendment is governed by the prior statute, unless the legislature specifies otherwise. Conversely, a cause of action that has not yet accrued prior to the effective date of the new statute or amendment is governed by the new language, unless otherwise specified. See, e.g., Betthauser, 172 Wis. 2d at 146 (old statute of limitations applied to plaintiffs medical malpractice action because, prior to the effective date of the new statute of limitations, the plaintiffs cause of action accrued and he maintained a right to sue under the old statute until he was nineteen years of age); Kohnke, 140 Wis. 2d at 85-86 (old statute of limitations did not apply to plaintiffs medical malpractice action because it was repealed prior to the date plaintiffs cause of action accrued, that is, when he discovered his injury).

¶ 12. With regard to Wis. Stat. § 893.40, we have reviewed the enacting legislation and find that the legislature has not provided specific guidance on when to apply this revised and renumbered statute. See Laws of 1979, ch. 323, § 31; see also Kroeger v. Kroeger, 120 Wis. 2d 48, 53, 353 N.W.2d 60 (Ct. App. 1984) ("Chapter 323, Laws of 1979, contained no express provision for claims which accrued prior to July 1, 1980."). Accordingly, the determination whether we should apply the old or new statute of limitations in this case turns on determining whether a "cause of action" had accrued against Walter prior to the effective date of the new statute of limitations.

Former §§ 893.14 and 893.16(1) and Current § 893.40

¶ 13. Prior to July 1, 1980, Wis. Stat. § 893.14 read:

893.14 Actions, time for commencing. The following actions must he commenced within the periods respectively hereinafter prescribed after the cause of action has accrued except that the period shall not be considered to have expired when the court before which the action is pending shall be satisfied that the person originally served knowingly gave false information to the officer with intent to mislead him in the performance of his duty in the service of any summons or civil process. In the event the court so finds the period of limitation shall be extended for one year.

(Emphasis added.) The statute of limitations on an "action upon a judgment" prior to July 1-, 1980, was Wis. Stat. § 893.16(1), which provided:

893.16 Within 20 years. Within 20 years:

(1) An action upon a judgment or decree of any court of record of this state or of the United States sitting within this state.

In the context of child support arrearages, these statutes have been read in conjunction as follows: " 'An action upon a judgment or decree . . must be commenced within twenty years after the cause of action accrued." Kroeger, 120 Wis. 2d at 53, quoting § 893.16.

¶ 14. In 1980, Wis. Stat. ch. 893 was repealed and recreated. In effect, § 893.14 was amended and renumbered § 893.10, and § 893.16(1) was amended and renumbered § 893.40. These changes became effective July 1, 1980. See Laws of 1979, ch. 323, §§ 28 and 34. Section 893.40 currently reads:

893.40 Action on judgment or decree; court of record. Except as provided in s. 846.04(2) and (3), action upon a judgment or decree of a court of record of any state or of the United States shall be commenced within 20 years after the judgment or decree is entered or be barred.

The reference to Wis. Stat. § 846.04 was added in 1997, see 1997 Wis. Act 27, § 5217g, but that amendment is not pertinent to this appeal. The relevant language in § 893.40 has remained the same since 1980: an "action upon a judgment or decree of a court of record . .. shall be commenced within 20 years after the judgment or decree is entered or be barred."

¶ 15. The plain language of Wis. Stat. § 893.40 changed the starting date for the twenty-year time limit on an "action upon a judgment or decree." Under the new statutory scheme, the twenty-year period starts running when the "judgment or decree is entered." A judgment or decree is "entered" when it is "filed in the office of the clerk of court." Wis. Stat. §§ 806.06(1)(b) and 807.11(2). Because the revised statute contains its own unambiguous start date, there is no reason to read the new time limit in conjunction with the current § 893.04, as suggested by the State and addressed below in ¶ 28, or in conjunction with § 893.10, the successor statute to the old § 893.14.

Application of the Law to this Case

¶ 16. Turning to the facts of this case, we discern two time periods deserving separate treatment. The time period prior to and the time period after the effective date of the new statute of limitations, Wis. Stat. § 893.40.

¶ 17. Using the procedure specified in §§ 990.06 and 991.07, we look to June 30,1980, the day before the effective date of the new statute of limitations. On June 30, 1980, a cause of action had accrued against Walter for his missed June 1980 payments and all prior missed payments. On that date, by virtue of former §§ 893.14 and 893.16(1), the State, as Elaine's assignee, had a vested right to sue Walter for the accumulated arrear-age within twenty years of Walter's last missed June 1980 payment. Because twenty years from June of 1980 is June of 2000, the State's action, filed in May of 2000, is timely with respect to child support payments Walter missed prior to July 1, 1980.

¶ 18. When Walter continued to miss payments after July 1, 1980, the right to obtain relief from those missed payments was governed by the statute of limitations then in effect, namely § 893.40. This is true because, at the time of the effective date of the new statute of limitations, neither Elaine nor the State had a vested right to the application of the prior statute of limitations for failures that had not yet occurred. Therefore, we apply the new statute of limitations to the State's action to the extent it seeks arrearages accumulating after July 1, 1980.

¶ 19. Section 893.40 provides that an action on a judgment may be brought within twenty years of the time the judgment "is entered." Wis. Stat. § 893.40. Thus, we must determine when the judgment requiring Walter to make child support payments on and after July 1, 1980, was entered. That judgment is an amended divorce judgment entered November 9, 1977. This 1977 amended judgment expunged all alimony arrearages, eliminated Walter's future obligation to pay alimony, and required Walter to pay child support in the amount of $50.00 every two weeks. When Walter missed payments after July 1, 1980, he was violating the 1977 amended judgment. Because the State's action was filed in May of 2000, about twenty-three years after entry of the amended judgment, the State's action is barred with respect to arrearages accumulating on and after July 1, 1980.

¶ 20. We now respond to several of the specific arguments made by the parties.

¶ 21. Walter contends that all of the arrearages are governed by Wis. Stat. § 893.40. Walter surmises that the State's action is barred because the State missed the twenty-year statute of limitations by either ten or three years, depending on whether this court looks to entry of the original 1970 divorce judgment or to entry of the 1977 amended judgment. We agree with much of Walter's analysis, including his assertion that § 893.40 is plain on its face in that it starts the twenty-year clock running when the judgment is entered. However, as explained above, Walter's analysis fails to take into account the vested right the State had in the prior statute of limitations at the time the new statute became effective.

¶ 22. In the alternative, Walter asserts that neither the new § 893.40 nor the old §§ 893.14 and 893.16(1) apply. He contends instead that Wis. Stat. § 893.87, the ten-year time limit governing "[a]ny action in favor of the state," applies. However, apart from other possible problems with this argument, § 893.87 only applies "if no other limitation is prescribed in this chapter." This case involves an "action upon a judgment," the type of action that falls under § 893.40 and its predecessor statutes, §§ 893.14 and 893.16(1). See Kroeger, 120 Wis. 2d at 52.

¶ 23. Turning now to the State's arguments, it first contends that former §§ 893.14 and 893.16(1) are applicable to the entire arrearage accumulated prior to the time in 1985 when the youngest child reached majority. The State cites Kroeger and Halmu v. Halmu, 247 Wis. 124, 19 N.W.2d 317 (1945), for the proposition that under the former statutes it had twenty years after the youngest child reached majority to bring its action. Relying on §§ 990.06 and 991.07, the State contends it had a vested right to this longer time limit "prior to the repeal of [former §§ 893.14 and 893.16(1),] and the enactment of sec. 893.40, Stats., cannot disturb those substantive rights." We disagree with this analysis.

¶ 24. The State's approach ignores the fact that Walter's arrearage was built on a series of individual failures to abide by the child support orders and that each of these failures gave rise to a cause of action. In Halmu, for instance, the plaintiff brought contempt proceedings over twenty times based on the payor's repeated failure to make required payments. Halmu, 247 Wis. at 126-30.

¶ 25. Also, the State misreads Halmu and Kroeger. Halmu and Kroeger do not hold that the accrual date for a cause of action for child support arrearages is always the date of the youngest child's majority. Indeed, there are other events that can and do give rise to a last-cause-of-action date in child support arrearage cases, such as the last missed payment prior to a child's death or prior to the time a child becomes self-supporting. In Halmu, Kroeger, and other similar cases, the youngest child's majority simply happened to be the last time a cause of action for child support accrued. See Halmu, 247 Wis. at 126-27, 131; Kroeger, 120 Wis. 2d at 49, 53; see also Paterson v. Paterson, 73 Wis. 2d 150, 152, 242 N.W.2d 907 (1976). Furthermore, the last-cause-of-action accrual date in all three of the above cases was prior to enactment of the new statute of limitations. Thus, the courts in those cases were not asked to determine the last-cause-of-action date in light of a revision to the statute of limitations occurring prior to a last missed payment. In sum, none of the cases the State relies on undercut our conclusion that neither Elaine nor the State as her assignee had, prior to enactment of the new statute of limitations, a vested right to the application of former §§ 893.14 and 893.16(1) to an action regarding payments that had yet to be missed.

¶ 26. The State points to language in Wall v. Wall, 140 Wis. 2d 341, 410 N.W.2d 593 (Ct. App. 1987), stating: "We believe that the statute of limitations rule set out in Paterson [that the twenty-year time limit begins to run only after the youngest child reaches majority] is based on the potential for a child support order to be revised upon a showing of changed circumstances anytime before the child attains majority." Id. at 344. The State apparently argues that this policy reason remains valid and should guide our interpretation of §893.40.

¶ 27. However, regardless whether the Wall court's observation constitutes a policy reason behind the manner in which former §§ 893.14 and 893.16(1) have been applied to child support arrearages, none of the cases cited by the State involve a change in the statute of limitations during the time a paying parent was obligated to make child support payments. Perhaps more to the point, the new statute has clear language identifying the new time limit as "within 20 years after the judgment or decree is entered." Wis. Stat. § 893.40. This is an unambiguous substantive legislative change. The establishment of a statute of limitations on causes of action is a policy question within the province of the legislature. See Miller v. Kretz, 191 Wis. 2d 573, 580, 531 N.W.2d 93 (Ct. App. 1995); see also Hansen v. A.H. Robins Co., 113 Wis. 2d 550, 556-57, 335 N.W.2d 578 (1983).

¶ 28. Nor do we agree with the State that § 893.40 must be read in conjunction with Wis. Stat. § 893.04. Section 893.04 provides: "Unless otherwise specifically prescribed by law, a period of limitation within which an action may be commenced is computed from the time that the cause of action accrues until the action is commenced." (Emphasis added.) In this case, the law specifically prescribes that the twenty-year limitation period for actions on judgments begins to run at the entry of the judgment. See § 893.40.

¶ 29. Finally, the State argues that our interpretation of § 893.40 produces absurd results because the time for bringing an action after a final missed payment can vary drastically depending on the timing of the child support order in relation to the ages of the children. We conclude that the State's absurd-results argument is without merit. First, an arrearage builds over time, and the greater the time a payor fails to pay, the greater the notice a payee has that an action needs to be brought. Furthermore, even under the scenario posited by the State, in which a divorce judgment is entered when a child is an infant and support is ordered until the child attains the age of nineteen pursuant to Wis. Stat. § 767.25, the child support payee would still have approximately one year to bring an arrearage action. We also note that nothing in this decision affects the possibility of seeking child support arrearages through contempt proceedings. The supreme court in Griffin v. Reeve, 141 Wis. 2d 699, 416 N.W.2d 612 (1987), explained that the contempt sanction remains available "after the child reaches majority, and so long as that obligation imposed by court order continues" because a "parent's failure to pay child support after the child reaches majority is a continuing disobedience of a court order." Id. at 708-09.

¶ 30. At the same time, we agree with the State that the new statutory scheme creates widely differing time limits depending on when a couple is divorced in relation to the ages of the children or whether an amended judgment was entered, factors that appear unrelated to the purpose of § 893.40. Although the Judicial Council Committee's Note suggests an awareness that § 893.40 contains a substantive change, see WIS. STAT. ANN. § 893.40, Judicial Council Committee's Note — 1979, at 362 (West 1997), we do not know whether the legislature was cognizant of the effect this change would have on child support arrear-age actions.

¶ 31. In summary, the State's action was timely under §§ 893.14 and 893.16(1) with respect to arrear-ages accumulating prior to July 1, 1980. However, the State's action was time-barred by § 893.40 with respect to arrearages that accumulated starting July 1, 1980. Because the circuit court's order did not segregate these time periods, we reverse the entire order and remand for further proceedings consistent with this opinion.

By the Court. — Order reversed and cause remanded with directions.

       All references to the Wisconsin Statutes are to the 1999-2000 version unless otherwise noted.

       Although the caption on the State's May 2000 pleading has the same case number as the original divorce action, both Walter and the State say that the State's motion is an "independent action" upon the judgment. Neither party suggests that the State may not bring a motion within the context of the original action. We do not address this issue because, regardless whether the State's motion is an independent action or instead a motion in the divorce case, our decision would remain the same. Cf. Halmu v. Halmu, 247 Wis. 124, 133, 19 N.W.2d 317 (1945) (although action was commenced as a contempt proceeding, court could properly treat the matter as an independent action for money because the trial court had jurisdiction and doing so did not prejudice the defendant), overruled on other grounds, Griffin v. Reeve, 141 Wis. 2d 699, 416 N.W.2d 612 (1987).

       WISCONSIN Stat. § 893.40 is hardly "new," having been enacted in 1980, but we refer to it as the new statute simply to differentiate it from its predecessor statutes.

       All further references to Wis. Stat. §§ 893.14 and 893.16(1) are to the 1977 version.

       We note that one of the cases cited by the State and relied on by the circuit court, Douglas County Child Support Enforcement Unit v. Fisher, 185 Wis. 2d 662, 517 N.W.2d 700 (Ct. App. 1994), contains misleading language. In Douglas County, this court erroneously referred to the new Wis. Stat. § 893.40 when, instead, the applicable statutes were former §§ 893.14 and 893.16(1). This court stated:
      The parties agree that this is an independent action seeking a money judgment for child support arrearages. They agree that an independent action is governed by the twenty-year statute of limitations, § 893.40, STATS., Kroeger v. Kroeger, 120 Wis. 2d 48, 353 N.W.2d 60 (Ct. App. 1984), and may not he brought until the child in question attains the age of majority. Because the two children here turned eighteen in 1975 and 1977, respectively, the action is within the statutory time.

        Id. at 667. It is evident from the timing of the events in Douglas County that this court meant to apply and refer to former §§ 893.14 and 893.16. In any event, the time limit on the action was not disputed in Douglas County and this court did not intentionally take up and decide the issue. Thus, the reference to § 893.40 is dicta. See State v. Taylor, 205 Wis. 2d 664, 670, 556 N.W.2d 779 (Ct. App. 1996).

       The record contains an order dated October 8, 1981. However, this order is not directed at Walter, but is instead directed at the clerk of the circuit court. It instructs the clerk of the circuit court to remit Walter's future payments to Elaine, rather than the State as previously ordered. The 1981 order is not a judgment or decree within the meaning of § 893.40 for purposes of this case because the State is not seeking recovery of payments required by that order.


author: ¶ 1. ROGGENSACK, J.

text:
    Nu-Pak, Inc., Plaintiff-(In T.ct.), v. Wine Specialties International, Ltd., Defendant-Appellant, James E. Hutchison and Stephen E. Welter, Third-Party Defendants-(In T. Ct.), Transportation Insurance Company, Third-Party Defendant-Respondent.
    Court of Appeals

      No. 01-1314.

      Submitted on briefs November 8, 2001.

    Decided March 28, 2002.

    2002 WI App 92
    (Also reported in 643 N.W.2d 848.)

      On behalf of the defendant-appellant, the cause was submitted on the briefs of Sheila Stuart Kelley and Christopher D. Stombaugh of Kopp, McKichan, Geyer and Skemp, LLP of Platteville.
    On behalf of the third-party defendant-respondent, the cause was submitted on the brief of David F. Farley and Laurie E. Meyer of Borgelt, Powell, Peterson & Frauen, S.C. of Milwaukee.
    Before Vergeront, PJ., Roggensack and Deininger, JJ.

       Petition to review denied 6-11-02.

   ¶ 1. ROGGENSACK, J.

Wine Specialties International, Inc. is pursuing a direct action against the commercial general liability insurer of Nu-Pak, the company that Wine Specialties contracted with to process and package a Wine Specialties' product. Wine Specialties alleges that Nu-Pak's negligence in hiring, training and supervising its employees caused substantial quality control problems with the Wine Specialties' product, ultimately rendering the product unmerchantable and causing substantial losses for Wine Specialties. The circuit court granted summary judgment to Nu-Pak's insurer after concluding that none of Wine Specialties' claims for relief is covered by the insurance policy. We conclude that the policy clearly and unambiguously provides no coverage for the property damage caused by Nu-Pak's alleged negligence. In addition, because the policy does not cover damage to intangible property or damages incidental to an uncovered type of damage, the insurer has no liability for any of Wine Specialties' incidental losses. Accordingly, we affirm the judgment of the circuit court.

BACKGROUND

¶ 2. Wine Specialties is the developer of "Freeze and Squeeze," an alcoholic beverage intended to be packaged and sold to consumers in a freezable, stand-up pouch. Under the terms of a written contract, Nu-Pak was to mix and package the new product, using ingredients provided by Wine Specialties. At the time that Wine Specialties and Nu-Pak entered into the agreement, Wine Specialties had already secured contingent sales contracts for the product with various vendors and liquor distributors.

¶ 3. When Wine Specialties did not pay Nu-Pak's bill, Nu-Pak initiated an action for payment. Wine Specialties counterclaimed against Nu-Pak and filed a third-party complaint against Transportation Insur-anee Company (Transportation), Nu-Pak's commercial general liability (CGL) insurer. According to Wine Specialties, various quality control problems at Nu-Pak led to improper formulations of the product and improper packaging such that the product became contaminated with bacteria and failed to meet other quality standards rendering it unmerchantable and unfit for human consumption.

¶ 4. The counterclaims and third-party claims were based on three principal theories: (1) Nu-Pak's alleged breach of contract; (2) Nu-Pak's alleged negligent hiring, training and supervision of its employees; and (3) Nu-Pak's alleged intentional misrepresentations designed to induce Wine Specialties to enter the contract. Although Wine Specialties experienced direct injury to its property (i.e., loss of the ingredients Wine Specialties provided for the product), Wine Specialties contends that Transportation, as Nu-Pak's insurer, is also liable for Wine Specialties' incidental losses, such as the cost of removal of the tainted product, lost revenue from the contingent contracts and future sales, as well as damage to Wine Specialties' business reputation.

¶ 5. Wine Specialties reached a settlement with Nu-Pak, leaving the third-party claims against Transportation as the sole remaining claims in the suit. Transportation moved for summary judgment on coverage, contending that Nu-Pak's CGL policy does not provide coverage for any of Wine Specialties' claims for relief. Treating the factual allegations in Wine Specialties' pleadings as undisputed for purposes of summary judgment, the circuit court granted Transportation's motion and dismissed Wine Specialties' claims, concluding that even if Wine Specialties proved its claims, there would be no coverage under the policy. Wine Specialties appeals.

DISCUSSION

Standard of Review.

¶ 6. We review a circuit court's decision to grant summary judgment de novo, using the same standards applied by the circuit court. Guenther v. City of Onalaska, 223 Wis. 2d 206, 210, 588 N.W.2d 375, 376 (Ct. App. 1998). We first examine the complaint to determine whether it states a claim, and then we review the answer to determine whether it joins a material issue of fact or law. Smith v. Dodgeville Mut. Ins. Co., 212 Wis. 2d 226, 232, 568 N.W.2d 31, 34 (Ct. App. 1997). If we conclude that the complaint and answer are sufficient to join issue, we examine the moving party's affidavits to determine whether they establish a prima facie case for summary judgment. Id. at 232-33, 568 N.W.2d at 34. If they do, we look to the opposing party's affidavits to determine whether there are any material facts in dispute that entitle the opposing party to a trial. Id.

¶ 7. For purposes of our review, the parties agree that the facts alleged in Wine Specialties' pleadings can be treated as undisputed. The ultimate issue before us is whether, under the undisputed facts, Transportation's CGL policy covers Wine Specialties' claims against Nu-Pak. Interpretation of a written insurance policy is a question of law, which we review without deference to the decision of the circuit court. Guenther, 223 Wis. 2d at 210, 588 N.W.2d at 377.

The CGL Policy.

¶ 8. The CGL policy provides in relevant part:

COVERAGE A. BODILY INJURY *AND PROPERTY DAMAGE LIABILITY
1. Insuring Agreement.
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies ....
b. This insurance applies to "bodily injury" and "property damage" only if:
(1) The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory"; and
(2) The "bodily injury" or "property damage" occurs during the policy period.

(Footnotes added.) The policy's coverage for bodily injury and property damage is further restricted by numerous express exclusions, several of which are relevant to this appeal.

2. Exclusions.
This insurance does not apply to:
b. Contractual Liability
"Bodily injury" or "property damage" for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages:
(1) Assumed in a contract or agreement that is an "insured contract," provided the "bodily injury" or
"property damage" occurs subsequent to the execution of the contract or agreement; or
(2) That the insured would have in the absence of the contract ór agreement.
j. Damage to Property
"Property damage" to:
(6) That particular part of any property that must be restored, repaired or replaced because "your work" was incorrectly performed on it.
k. Damage to Your Product
"Property damage" to "your product" arising out of it or any part of it.

(Footnotes added.)

Policy Interpretation.

¶ 9. The interpretation of an insurance policy is governed by rules of construction that are similar to those applied to other contracts. Vogel v. Russo, 2000 WI 85, ¶ 14, 236 Wis. 2d 504, 613 N.W.2d 177. If words or phrases in a policy are susceptible to more than one reasonable construction, they are ambiguous, Smith v. Atlantic Mut. Ins. Co., 155 Wis. 2d 808, 811, 456 N.W.2d 597, 598-99 (1990), and we will construe the policy as it would be interpreted by a reasonable insured. Holsum Foods Div. of Harvest States Coops, v. Home Ins. Co., 162 Wis. 2d 563, 568-69, 469 N.W.2d 918, 920 (Ct. App. 1991). However, if the policy is not ambiguous, we will not rewrite it by construction to impose liability for a risk the insurer did not contemplate and for which it has not been paid. Taylor v. Greatway Ins. Co., 2001 WI 93, ¶ 10, 245 Wis. 2d 134, 628 N.W.2d 916; Smith v. Katz, 226 Wis. 2d 798, 807, 595 N.W.2d 345, 350 (1999).

¶ 10. In Bulen v. West Bend Mut. Ins. Co., 125 Wis. 2d 259, 371 N.W.2d 392 (Ct. App. 1985), we construed the purpose of CGL policies in light of similar exclusions. We explained:

The risk intended to be insured is the possibility that the goods, products or work of the insured, once relinquished or completed, will cause bodily injury or damage to property other than to the product or completed work itself, and for which the insured may be found liable. The insured, as a source of goods or services, may be liable as a matter of contract law to make good on products or work which is defective or otherwise unsuitable because it is lacking in some capacity. This may even extend to an obligation to completely replace or rebuild the deficient product or work. This liability, however, is not what the coverages in question are designed to protect against. The coverage is for tort liability for physical damages to others and not for contractual liability of the insured for economic loss because the product or completed work is not that for which the damaged person bargained.

Id. at 264-65, 371 N.W.2d at 394 (quoted source omitted). We concluded that the CGL policy at issue, which covered bodily injury and property damage, was intended to provide coverage for torts, not for breaches of contract. Id. at 265, 371 N.W.2d at 395; see also Vogel, 2000 WI 85 at ¶ 17 ("A CGL policy's sole purpose is to cover the risk that the insured's goods, products, or work will cause bodily injury or damage to property other than the product or the completed work of the insured.").

¶ 11. In apparent recognition of Bulen's interpretation of the purpose and extent of CGL coverage, Wine Specialties pursues only the tort claim that Nu-Pak negligently hired, trained and supervised the employees who were to perform the services specified in the processing and packaging agreement. Wine Specialties offers two separate theories to support its argument in favor of coverage. First, it contends that the exclusions in the policy do not apply to the claim that Nu-Pak negligently hired, trained and supervised its employees, and therefore, Wine Specialties may proceed directly on' that claim. Second, Wine Specialties contends that Nu-Pak expressly assumed various tort liabilities as part of the processing and packaging agreement and that those assumed liabilities fall within the "insured contracts" exception to the policy's exclusion of contractually assumed liabilities.

¶ 12. Because all of Wine Specialties' claimed damages in this case flow from Nu-Pak's failure to properly mix and package Wine Specialties' product, which was never consumed, the only type of coverage that applies to Wine Specialties' claim is the coverage for "property damage" that is caused by an "occurrence." There is no dispute that Nu-Pak's alleged negligence caused injury to Wine Specialties' tangible property (i.e., Nu-Pak damaged the ingredients that Wine Specialties supplied to Nu-Pak). However, we note that the damage to Wine Specialties' product is the only injury to tangible property alleged in this case.

1. The "your product" and "your work" exclusions.

¶ 13. Assuming for the sake of argument that the damage to tangible property caused by Nu-Pak's alleged negligence falls under the policy's statement of coverage, the next question is whether one or more exclusions apply. Transportation contends that both the "your product" and "your work" exclusions clearly and unambiguously apply in this case. We conclude that although there is some potential ambiguity in the "your work" exclusion, we agree with Transportation as to the "your product" exclusion.

¶ 14. We begin our analysis of the exclusions with the following basic observation about Nu-Pak's CGL policy: The CGL policy defines coverage (and some of the exclusions) in terms of the particular injury that results from a particular occurrence. Stated another way, the test for coverage has multiple elements, each of which must be satisfied before coverage is available under the CGL policy. See Katz, 226 Wis. 2d at 818, 595 N.W.2d at 354-55 (concluding that the insurer was obligated to provide coverage under a CGL policy similar to Nu-Pak's policy only if there were proof of (1) an occurrence that (2) caused (3) property damage). In this case, Wine Specialties argues that Nu-Pak's negligent hiring, training and supervision of employees caused damage to the product that was processed and packaged at the Nu-Pak facility. Accordingly, the question before us is whether the "your work" exclusion or the "your product" exclusion applies to this particular combination of an occurrence and resulting property damage.

¶ 15. Under the "your work" exclusion, the policy excludes coverage for property damage to "[t]hat particular part of any property that must be restored, repaired or replaced because 'your work' was incorrectly performed on it." The policy defines "your work" to include "work or operations performed by you or on your behalf." Transportation contends that the "your work" exclusion is not ambiguous because a reasonable insured in Nu-Pak's position would interpret the phrase "work or operations" to include managerial operations, such as the hiring, training and supervision of line employees. Wine Specialties, on the other hand, contends that:

[The "your work" exclusion] would appear to directly relate to the measuring, mixing and packaging of the [Wine Specialties] product; in other words the hands-on work with the product. Conversely, negligent hiring, training or supervision deals with a company's failure with the workers on the operation, not the product itself.

¶ 16. Wine Specialties' argument appears to rely on the language of the "your work" exclusion requiring that property damage he excluded from coverage if it occurs "because 'your work' was incorrectly performed on it." (Emphasis added.) According to Wine Specialties, the negligence of the Nu-Pak line employees and the negligence of Nu-Pak management both may be causes of Wine Specialties' damages, but the "your work" exclusion should be read to apply only to the former because only the line employees' work was incorrectly performed on the damaged product itself. While we appreciate Wine Specialties' argument, we need not decide whether the "your work" exclusion is ambiguous and could be applied to Wine Specialties' claim because the "your product" exclusion clearly precludes coverage.

¶ 17. Under the "your product" exclusion, there is no coverage for property damage to goods or products "manufactured" or "handled" by the insured. Here, Nu-Pak's alleged negligence purportedly was a cause of damage to property that Nu-Pak "manufactured" and "handled" in the course of attempting to fulfill its obligations under the processing and packaging agreement. See Holsum Foods, 162 Wis. 2d at 565, 569-70, 469 N.W.2d at 919, 921-22 (concluding that the insured company was in the business of manufacturing a product within the meaning of a CGL policy when it mixed, cooked, jarred and packaged ingredients for a customer's product). Accordingly, we conclude, as we did in Holsum Foods, that the damage to Wine Specialties' tangible property is excluded under the unambiguous terms of the "your product" exclusion.

¶ 18. Additionally, Wine Specialties' asserted distinction between the negligence of Nu-Pak's line employees and the negligence of Nu-Pak's management is not relevant under the unambiguous language of the "your product" exclusion. Unlike the "your work" exclusion, which arguably refers to the cause of the property damage, the scope of the "your product" exclusion is defined solely by the type of property damage at issue. And, because the alleged property damage in this case is damage to a product manufactured by Nu-Pak, the "your product" exclusion applies whether the property damage was caused by the negligence of Nu-Pak's management, the negligence of Nu-Pak's line employees or the negligence of both management and the line employees. Moreover, it is irrelevant that the policy might provide coverage for negligent hiring, training and supervision of employees in cases where a different injury is alleged.

¶ 19. Because we conclude that there is no coverage for the property damage allegedly caused by Nu-Pak's negligent hiring, training and supervision of its employees, we also conclude that there is no coverage for Wine Specialties' other damages, such as the costs of removing the contaminated product, the value of lost future sales and the damage to Wine Specialties' reputation. In addition to failing to qualify as damages to tangible property as the policy requires, Transportation is not liable because these damages are incidental damages that flow solely from excluded property damage. See Wisconsin Label Corp. v. Northbrook Prop. & Cas. Ins. Co., 2000 WI 26, ¶¶ 56-57, 233 Wis. 2d 314, 607 N.W.2d 276 (economic losses did not result from either of the types of damages covered under the policy; therefore, there was no coverage); Trio's, Inc. v. Jones Sign Co., 151 Wis. 2d 380, 384-85, 444 N.W.2d 443, 445 (Ct. App. 1989) (concluding that lost profits attributable to loss of use of the insured's product were not recoverable because "the insurance policy unambiguously excludes from coverage damage to the insured's product").

¶ 20. Wine Specialties cites Jacob v. Russo Builders, 224 Wis. 2d 436, 592 N.W.2d 271 (Ct. App. 1999), to support the contention that its incidental losses are covered by the CGL policy. In Jacob, a subcontractor's faulty brick work caused physical damage not only to the subcontractor's own work or product, but also to other property. Id. at 448, 592 N.W.2d at 276. The court then determined that there was coverage under the CGL policy for the other property damage and for economic losses that were "collateral" to covered property damage. Id. at 451, 592 N.W.2d at 277. Here, in contrast to Jacob, we have concluded that none of the property damage caused by Nu-Pak's alleged negligence is covered under the CGL policy, and, as stated above, Transportation is not liable for losses that are incidental to excluded property damage.

2. Contractually assumed liability.

¶ 21. Wine Specialties' alternative argument is that Nu-Pak expressly assumed various tort liabilities as part of the processing and packaging agreement and that those assumed liabilities fall within the "insured contracts" exception to the policy's contractual liability exclusion. In support of this argument, Wine Specialties relies on the policy definition of "insured contracts" and the following provision from the processing and packaging agreement:

ARTICLE 11.

INDEMNIFICATION AND INSURANCE

11.1) NUPAK shall indemnify and hold WSI, its employees and agents, and/or any direct or indirect customer of WSI harmless from and against any and all liabilities, damages, injuries, claims, suits, expenses (including attorneys' fees, court costs and out-of-pocket expenses)... that may in any way arise from breach of warranty, express or implied, or any tort actions or claims, as to the quality of the Product, or any portion thereof, its merchantability, its fitness for the purpose for which it was sold, or the failure of the Product to maintain its quality standard for the duration of the Product's shelf life, except for such liabilities, damages, etc. caused solely by the negligence or willful misconduct of WSI or its employees.
11.2) NUPAK further shall indemnify and hold WSI, its employees and agents, harmless from any losses or damages to the Product and any WSI property (and related expenses) located in NUPAK's plant during the term of this Agreement.

¶ 22. We begin with the language of the CGL policy. The general rule established by the policy's contractual liability exclusion is that there is no coverage for property damage for which "the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement." However, the policy also provides that the contractual liability exclusion does not apply to an "insured contract." An insured contract includes:

That part of any other contract or agreement pertaining to your business ... under which you assume the tort liability of another party to pay for "bodily injury" or "property damage" to a third person or organization. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement.

(Emphasis added.)

¶ 23. In this case, any part of the processing and packaging agreement that might be read to address Nu-Pak's liability to Wine Specialties for negligent hiring, training and supervision would not be the assumption of the tort liability "of another party." Stated another way, any tort liability that Nu-Pak could have to Wine Specialties for negligent hiring, training and supervision is its own and could be enforced without any "assumption" of such liability in the agreement. Moreover, even if the exceptions to the contractual liability exclusion were in some way ambiguous, it would not be reasonable to interpret them to extend to Nu-Pak any coverage that the "your product" exclusion clearly and unambiguously denies. See Bulen, 125 Wis. 2d at 263-64, 371 N.W.2d at 394. Therefore, we conclude this provision provides no basis for coverage.

CONCLUSION

¶ 24. We conclude that the policy clearly and unambiguously provides no coverage for the property damage caused by Nu-Pak's alleged negligence. In addition, because the policy does not cover damage to intangible property or damages incidental to an uncovered type of damage, the insurer has no liability for any of Wine Specialties' incidental losses. Accordingly, we affirm the judgment of the circuit court.

By the Court. — Judgment affirmed.

       Wine Specialties' claim that Nu-Pak negligently hired, trained and supervised its employees was not listed as a separate claim in the pleadings. However, the circuit court determined that, for purposes of Transportation's motion for summary judgment, it was appropriate to consider the claim because "there is a strong likelihood that the court would allow [Wine Specialties'] pleadings amended again to include this new claim, as there would be little prejudice to [Transportation] by permitting this amendment." For the same reason, we will address the negligence claim.

       Under the policy, "property damage" is defined as:
      a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall he 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.

       Under the policy, an "occurrence" is defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions."

       The policy defines "insured contract" to mean, in relevant part:
      That part of any other contract or agreement pertaining to your business... under which you assume the tort liability of another party to pay for "bodily injury" or "property damage" to a third person or organization. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement.

       The policy defines "your work" to mean:
      a. Work or operations performed by you or on your behalf; and
      b. Materials, parts or equipment furnished in connection with such work or operations.
      'Your work" includes:
      a. Warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of "your work"; and
      b. The providing of or failure to provide warnings or instructions.

       The policy defines "your product" to mean:
      a. Any goods or products, other than real property, manufactured, sold, handled, distributed or disposed of by:
      (1) You;
      "Your product" includes:
      a. Warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of "your product"; and
      b. The providing of or failure to provide warnings or instructions.

       Wine Specialties makes no argument on this appeal that Transportation is liable under the CGL for Nu-Pak's breach of contract. Similarly, Wine Specialties makes no argument that Transportation must indemnify Nu-Pak if Nu-Pak is found liable for intentional misrepresentation. Accordingly, we do not address either the breach of contract claim or the claim for intentional misrepresentation.

       Wine Specialties also seeks damages for the cost of removing the tainted product, for lost revenue from contingent contracts and future sales, as well as for damage to its business reputation.

       The policy contains multiple exclusions that use the term "your work." When we refer to the "your work" exclusion, we are referring to exclusion j.(6) of the policy, quoted above, which is the exclusion that the circuit court's decision relied upon and that the parties' briefs primarily address.

       Wine Specialties contends that there must be coverage for negligent hiring, training and supervision because there is no express exclusion for negligent hiring, training and supervision. However, even if we were to assume, arguendo, that the policy covers negligent hiring, training and supervision of employees, in the abstract, as an "occurrence," the policy language is not applied in the abstract. It is applied to the particular combination of negligent act (i.e., the occurrence) and resulting injury (i.e., the property damage) alleged in the pleadings. Accordingly, the argument that the policy covers negligent hiring, training and supervision in the absence of an express exclusion for that tort is insufficient precisely because the test for coverage involves multiple elements.

       Wine Specialties concedes in its brief that if the Nu-Pak employees who directly mixed and packaged the product were negligent, their negligence "may be excluded under what is commonly known as the business risk exclusion or in the case of this policy, the 'your work' exclusion."

       Thus, contrary to Wine Specialties' contention, we conclude that this is not a case involving "concurrent causes" where one cause of the asserted damages is a covered risk and the other cause is uncovered or subject to an exclusion. See, e.g., Valley Bancorporation v. Auto Owners Ins. Co., 212 Wis. 2d 609, 618, 569 N.W.2d 345, 349 (Ct. App. 1997) (noting that "it is well settled" that there is liability for the covered risk in a concurrent cause situation).

       Wine Specialties cites several cases from other jurisdictions where courts found coverage under CGL policies for an insured's negligent hiring, training and supervision of employees. None of those cases required the courts to apply a "your product" exclusion to an occurrence that caused "property damage." The nature of Wine Specialties' alleged injury and the specific exclusion at issue are critical to our analysis.

        Wisconsin Label Corp. v. Northbrook Property & Casualty Insurance Co., 2000 WI 26, 233 Wis. 2d 314, 607 N.W.2d 276, also relies on the economic loss doctrine to bar recovery. Id. at ¶ 58 (citing Wausau Tile, Inc. v. County Concrete Corp., 226 Wis. 2d 235, 266-68, 593 N.W.2d 445, 459-60 (1999)). However, since neither party raises the applicability of the economic loss doctrine to Wine Specialties' claim, we do not address it.