author: VERGERONT, J.

text:
    David Arnold and Mary Beth Arnold, Plaintiffs-Appellants, v. Cincinnati Insurance Company, Defendant-Respondent, American Building Restoration Products, Inc., ABC Insurance Company, Brent Hongsermeier d/b/a Wall Covering Arts a/k/a Beautiful Restorations, General Casualty Company of Illinois, Hallman Lindsay Paint and DEF Insurance Company, Defendants.
    Court of Appeals

      No. 03-2483.

      Submitted on briefs June 4, 2004.

    Decided September 23, 2004.

    2004 WI App 195
    (Also reported in 688 N.W.2d 708.)

      On behalf of the plaintiffs-appellants, the cause was submitted on the briefs of Alexander S. Kammer of Atterbury & Kammer, S.C., Middleton.
    On behalf of the defendant-respondent, the cause was submitted on the briefs of James J. Kriva and Matthew TV Moran of Kasdorf, Lewis & Swietlik, S.C., Milwaukee.
    Before Deininger, EJ., Dykman and Vergeront, JJ.
   VERGERONT, J.

¶ 1. David Arnold and Mary Beth Arnold appeal the circuit court's grant of summary judgment in favor of Cincinnati Insurance Company, their homeowner's insurance carrier. The circuit court concluded that certain damages to the exterior and the interior of the Arnolds' home were excluded under either the faulty workmanship exclusion or the faulty materials exclusion or both.

¶ 2. Based on the undisputed facts, we agree with the circuit court that the damage to the exterior of the Arnolds' house for which they seek coverage is excluded under either the faulty workmanship exclusion, the faulty materials exclusion, or both, as is the damage to the interior of the house caused by use of the pressure washer. However, we conclude that any damage to the interior of the house that was caused by rain in conjunction with the damaged caulking is a loss ensuing from the excluded loss caused by faulty workmanship or faulty materials. This ensuing loss is not excluded under those two exclusions; it is not otherwise excepted or excluded under the policy; and is therefore covered. In particular, neither the pollution nor the mold exception applies to this ensuing loss. Because there are genuine issues of material fact on the extent of the interior damage caused by rain in conjunction with the damaged caulking, the Arnolds are entitled to a trial on this issue.

¶ 3. We also conclude the Arnolds filed this action within one year of the inception of the losses for which they seek coverage. It was therefore timely filed under Wis. Stat. § 63l.83(l)(a).

¶ 4. Accordingly, we affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.

BACKGROUND

¶ 5. For purposes of this appeal, the facts in this paragraph and paragraphs 6 and 7 are not disputed. During the construction of the Arnolds' home in 1992, the cedar siding was stained with a Hallman Lindsay stain. The siding was restained with the same product in 1995. In late 1998, Arnold observed that the siding was darkening from the original medium brown to a much darker, blackish color. He determined that mold and mildew were growing in the siding and attacking the stain, causing the siding to blacken. Arnold contacted Hallman Lindsay which, in consultation with American Building Restoration Products, Inc. (ABRP), recommended that the cedar siding be cleaned and stripped using ABRP's products and then restained.

¶ 6. Arnold and Hallman Lindsay agreed the Ar-nolds would pay for the contractor's labor to do this work and Hallman Lindsay would pay for the materials. They also agreed that Brent Hongsermeier of Beautiful Restorations would perform the work according to specifications prepared by ABRP

¶ 7. The work began in early June 2001. During the first stage, the mold, mildew and stains on the siding were removed by applying the ABRP stripping product, then rinsing with a pressure washer, then applying a wood restorer, and then rinsing again with the pressure washer. During the second stage, the siding was restained with a different stain. The Arnolds were satisfied with the restained siding, but in the process of removing the old stain, other parts of their house were damaged.

¶ 8. The Arnolds filed this action in May 2002 alleging that the ABRP materials caused extensive damage to the exterior and interior of their house. They asserted claims for negligence and strict product liability against ABRP; negligence against Hongsermeier for failing to take steps to avoid damage to non-wood surfaces when he removed the stain and applied the new stain; and negligence and strict product liability claims against Hallman Lindsay for its materials used to stain their home prior to the work done by Hongser-meier. The complaint also named Cincinnati, alleging that its policy was in effect when the home was damaged by the process of removing the stain and applying the new stain.

¶ 9. Cincinnati moved for summary judgment on the ground that the Arnolds' damages were the direct result of faulty workmanship and faulty materials, which were excluded under the policy. It also asserted that the exceptions from coverage for pollution and mold applied, and that the one-year statute of limitations in Wis. Stat. § 631.83(l)(a) barred the claim under the policy. The Arnolds opposed summary judgment, disputing Cincinnati's construction of the policy exclusions and exceptions and arguing that there were genuine issues of material fact.

¶ 10. The Arnolds' submissions showed that during the first stage of the project, Arnold noticed that the ABRP stripping product was causing damage to the exterior of the aluminum windows and to the caulking around the windows. There was damage to the windows, gutters, driveway, porch, patio, roof, and doors due to direct contact with ABRP's stripping product, as well as damage to the interior of their home, including the walls, ceiling, and carpeting, due to water and the stripping product leaking in from the damaged seals of the windows and skylights. Although most of the damage occurred before Labor Day 2001, there was continuing and progressive damage caused by water coming in around the skylights. Arnold's opinion was that the damage to his home resulted from "negligent activity."

¶ 11. On the issue of causation, Cincinnati presented evidence from a Hallman Lindsay representative that failure to take proper measures in applying the stripping product caused stains to the roof, driveway, and windows: specifically, failing to place protective plastic coverings over the windows, failing to place a tarp over the driveway, and misuse of the pressure washer. Cincinnati's expert opined that chemical agents in the stripping product had damaged the windows, including the sealant, and other parts of the exterior of the house. In his opinion this occurred because Hong-sermeier did not properly protect the windows and other prefinished metals during the job and did not properly clean up after the job was completed.

¶ 12. In his deposition Hongsermeier disputed that he had improperly used the pressure washer, stating that he had ABRP representatives check the pressure to make sure it was correct. He also stated that he was given no instructions to guard against damage to the exterior of the house or driveway. He did, he said, tape plastic over the windows and doorframes, but the chemicals in the stripping product caused the tape to fuse with the frames, producing a gooey substance when he pulled off the tape, which removed the paint from the metal. He decided that this was causing at least as much damage as not covering would cause, so he did not cover the windows on the other sides of the house, which resulted in "a little overspray," and some discoloring.

¶ 13. According to Hongsermeier, he gradually increased the concentration of the stripping product at the direction of ABRP because it was not fully stripping the old stain and the mildew. The caulking around the windows began falling off on the first or second day of the job, even before the concentration was increased, and it continued to come off during the job. At one point when Hongsermeier was rinsing the stripping product off, he was aware that water was seeping into the house — he assumed where the caulking had come out —but he was told by either the Hallman Lindsay representative or ABRP to keep going. When Hongser-meier finished the job, he recaulked where the caulking had come off.

¶ 14. The trial court concluded that the faulty workmanship exclusion defeated coverage.

DISCUSSION

¶ 15. The Arnolds contend on appeal, as they did in the circuit court, that the faulty workmanship exclusion is ambiguous and must therefore be construed in favor of coverage. Cincinnati responds that the circuit court correctly concluded that coverage is excluded by the faulty workmanship and faulty materials provision. In addition, it asserts, the policy's pollution and mold exceptions defeat coverage and the statute of limitations expired before the action was filed.

¶ 16. A party is entitled to summary judgment if there are no genuine issues of material fact and that party is entitled to judgment as a matter of law. Wis. Stat. § 802.08(2). We apply the same methodology as the trial court and review de novo the grant or denial of summary judgment. Green Spring Farms v. Kersten, 136 Wis. 2d 304, 315-17, 401 N.W.2d 816 (1987).

¶ 17. When we construe an insurance policy, our aim is to give effect to the intent of the parties, expressed in the language of the policy itself. Folkman v. Quamme, 2003 WI 116, ¶ 12, 264 Wis. 2d 617, 665 N.W.2d 857. We give the language its common and ordinary meaning, that is, what a reasonable person in the position of the insured would understand it to mean. Id., ¶ 17. If the language of the policy is ambiguous, we construe it in favor of the insured. Id., ¶ 18.

I. Insurance Policy Coverage

¶ 18. This policy "insure[s] against risks of direct loss to property described in Coverages A [including the Arnolds' home], B and C only if that loss is a physical loss to property;" but the policy excepts from coverage certain causes of loss specified in the "Perils Insured Against" section and excludes certain other causes of loss in the "Exclusions" section. Cincinnati does not dispute that there is coverage for the damages to the Arnolds' home under the general coverage provision we have just quoted. The parties' dispute instead involves the application of the faulty workmanship and materials exclusion and the pollution and mold exceptions, which we examine in turn.

A. Faulty Workmanship and Materials Exclusions

¶ 19. The Exclusions section of the policy contains the following exclusions in paragraph 2:

2. We do not insure for loss to property .. . caused by any of the following. However, any ensuing loss to property described in Coverages A and B not excluded or excepted in this policy is covered.
c. Faulty, inadequate or defective;
(1)planning, zoning, development, surveying, sitting;
(2) design, specifications, workmanship, repair, construction, renovation, remodeling, grading, compaction;
(3) materials used in repair, construction, renovation or remodeling; or
(4)maintenance;
of part or all of any property whether on or off the resident premises.

We will refer to the exclusion in 2c(2) as the faulty workmanship exclusion and the exclusion in 2c(3) as the faulty materials exclusion.

¶ 20. The Arnolds argue both that the faulty workmanship exclusion is ambiguous and that the "ensuing loss" clause in the introductory language of paragraph 2 is ambiguous. They also assert there are disputed issues of fact on whether the damage was caused by the products used or by the manner in which they were used. Cincinnati's position is that, to the extent the cause is the former, the faulty materials exclusion applies, and, to the extent the cause is the latter, the faulty workmanship exclusion applies. The Arnolds do not argue that the faulty materials exclusion does not apply if, or to the extent that, the materials used in stripping caused the damage to their house— except insofar as the ensuing loss clause is ambiguous. Accordingly, in this section we address only their arguments regarding the application of the faulty workmanship exclusion. We address the ensuing loss clause in the next section.

¶ 21. The Arnolds argue that the faulty workmanship exclusion is ambiguous for three reasons. First, they assert that "workmanship" is not defined in the policy and the use of the words "construction" and "renovation" would lead a reasonable insured to understand this exclusion to apply only to major construction and renovation activities, not to removing and reapplying stain. We disagree. In the context of a policy covering physical loss to one's residence, a reasonable insured would understand that "workmanship" refers to the quality of work done on the residence regardless of the size or scope of the project. Similarly, the use of the word "repair" would be understood by a reasonable insured to refer to all repairs, regardless of the size. A reasonable insured would understand that "workmanship" includes the quality of work in stripping stain that has become darkened by mold and mildew and would also understand that this work is included within the term "repair."

¶ 22. Second, the Arnolds assert that the exclusion is ambiguous because it does not expressly refer to negligence. The Arnolds contend that a reasonable insured could understand that the exclusion does not apply to negligent conduct in the course of working on a residence, but rather simply means that the insurer is not a guarantor of the quality of the work performed. We have a difficult time understanding this distinction, and the Arnolds do not cite any authority to illuminate it. "Negligent conduct" expresses the legal conclusion that one of the elements of a cause of action for liability based on negligence is present: the failure to exercise ordinary care. See Wis JI — Civil 1005. However, the exclusion here plainly identifies certain causes of physical loss to the covered property: "faulty, inadequate, or defective... workmanship [or] repair"; it is not concerned with theories of liability. See American States Ins. Co. v. Skrobis Painting & Decorating, Inc., 182 Wis. 2d 445, 450, 452-53, 513 N.W.2d 695 (Ct. App. 1994) (application of pollution exclusion does not depend on theories of liability such as negligence, but on whether the damage was caused by "disbursal, release or escape of pollutants"). The conduct encompassed in the faulty workmanship exclusion may be negligent; but the proper inquiry is whether a reasonable insured would understand that the conduct described in the exclusion includes the failures to use protective coverings, to properly use the pressure washer, and to properly clean up. We conclude that a reasonable insured would understand that these failures constitute "faulty, inadequate, or defective . . . workmanship [or] repair."

¶ 23. Third, the Arnolds contend the exclusion may be reasonably understood to apply only to damage to the siding on which the work was being performed, not to other parts of the house. However, there is nothing in the language of the exclusion to suggest this meaning. The exclusion plainly applies to any loss to the covered property that is caused by the specified activities and events.

¶ 24. We conclude that "faulty, inadequate, or defective ... workmanship [or] repair" plainly includes the failure to use protective coverings, to properly use the pressure washer and to properly clean up in performing the task of removing and reapplying stain to the siding on the Arnolds' house. Accordingly, any loss caused by this conduct is excluded unless it is an "ensuing loss to [covered property] not excluded or excepted in this policy."

B. Ensuing Loss Clause

¶ 25. The Arnolds contend that the ensuing loss clause is ambiguous because the term "ensuing loss" is so broad that a reasonable insured could understand it to include the damages from: (1) water penetration into the home, which resulted from the damage done to the caulking; (2) the damage to the metallic surfaces of the windows, which resulted, at least in part, from the damage done by the tape and plastic used to shield the windows and doors; and (3) the damage to the roof and driveway, which, resulted from the failure to protect them from the stain in the stripping process. Cincinnati's position is that the ensuing loss clause is unambiguous and applies only if there is a "peril [that is] separate and independent in nature from the perils which precede[d] it" and that is covered. Under this construction, Cincinnati asserts, none of the damages to the Arnolds' home are covered, because they were all caused either by faulty workmanship or faulty materials, and not by a "separate and independent peril."

¶ 26. There are errors in each party's analysis. The correct analysis leads us to conclude that certain damage to the interior of the house may be an ensuing loss, depending on how disputed facts are resolved, but that the damage to the exterior of the house plainly is not an ensuing loss.

¶ 27. The parties have brought to our attention no Wisconsin case that construes the term "ensuing loss" in an insurance policy. We therefore begin with an examination of the policy language at issue. As noted above, we are to give words in a policy their common and ordinary meaning, Folkman, 264 Wis. 617, ¶ 12, and we may use a dictionary for that purpose. See Peace v. Northwestern Nat'l Ins. Co., 228 Wis. 2d 106, 126-27, 596 N.W.2d 429 (1999) (using a dictionary to establish the common meaning of words in an insurance policy). "Ensue" means to "2: take place afterward," either "a: to follow as a chance, likely, or necessary consequence ..." or "b: to follow in chronological succession." Webster's Third International Dictionary 756 (1993). Although "ensue" thus has two common meanings, we conclude that only one is reasonable in the context of the ensuing loss clause in this policy. A reasonable insured would understand that an ensuing loss is not simply any loss to covered property that chronologically follows a loss excluded in subsection 2. If there were no relationship other than this chronology between the excluded loss and the ensuing loss, there would be no logical reason to refer to the ensuing loss in this subsection. Thus, a reasonable insured would understand, based both on logic and on the use of "However" at the beginning of the sentence, that the meaning of "ensuing" here is a loss that follows the excluded loss "as a chance, likely, or necessary consequence" of that excluded loss.

¶ 28. Using this common meaning in the context of the faulty workmanship and faulty materials exclusions, an ensuing loss is a loss that is not directly caused by faulty workmanship or faulty materials, but nonetheless follows as a "chance, likely, or necessary consequence" of the loss caused by faulty workmanship or faulty materials.

¶ 29. The Arnolds apparently are of the view that it is reasonable to construe ensuing loss as all losses that follow and are a consequence of either faulty workmanship or faulty materials, even if the excluded cause is the only cause of the ensuing loss. This is not a reasonable construction of the ensuing loss clause because it completely eviscerates the preceding sentence, which plainly excludes losses caused by the activities, events, and materials listed in subparagraph c. We conclude that a reasonable insured would understand that, in addition to being a loss that follows as a chance, likely, or necessary consequence of the excluded loss, an ensuing loss must result from a cause in addition to the excluded cause.

¶ 30. This meaning of "ensuing loss" is supported by the contrasting introductory language to the exclusions in paragraph 1 of the "Exclusions" section: "1. We will not pay for loss resulting directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss." (Emphasis added.) Paragraph 1 thus explicitly excludes losses that directly or indirectly result from the listed causes, while paragraph 2 does not exclude losses indirectly resulting from the listed causes. Instead, paragraph 2 contains the ensuing loss clause, which tells an insured that losses indirectly resulting from the listed causes are covered if they are not excepted or excluded elsewhere in the policy.

¶ 31. We do not agree with the Arnolds that, simply because the common meaning of "ensuing" is broad, the clause is ambiguous. Nor do we find persuasive the Fifth Circuit case on which the Arnolds rely: Lake Charles Harbor & Terminal Dist. v. Imperial Cas. & Indem. Co., 857 F.2d 286 (5th Cir. 1988). There the court considered an exclusion for loss caused by "mechanical or machinery breakdown; unless an insured peril ensues, and then only for the actual loss or damage caused by the ensuing peril." Id. at 287. The court concluded this clause was ambiguous as to whether "the catastrophic damage to a machine resulting from an initial mechanical breakdown" was an "ensuing peril." Id. at 288. The court therefore construed the clause against the insurer. Id. However, the court did not explain how it reached this result, other than to say that the result is "further reinforced by the insurance broker's testimony that 'mechanical breakdown' exclusions usually are intended to exclude minor maintenance rather than catastrophic damage." Id. We do not find any analysis in Lake Charles that is helpful in construing the ensuing loss clause here.

¶ 32. Having construed the ensuing loss clause as a reasonable insured would understand it, we now apply that construction to the facts of this case. At this point, a Wisconsin case applying a similar clause is instructive. In Richland Valley Products, Inc. v. St. Paul Fire & Cas. Co., 201 Wis. 2d 161, 166-67, 548 N.W.2d 127 (Ct. App. 1996), the policy excluded loss to covered property "caused or made worse by" faulty workmanship and contamination, but each of those exclusions was followed by a clause providing that "If a loss that would otherwise be covered results from one of these causes, we'll pay for the direct loss that results." Id. The parties did not dispute the meaning of the terms used in the "resulting loss clause" clause, but, did dispute the application of the clause to the losses that occurred in that case.

¶ 33. In Richland Valley, a defect in a coil in a machine used to manufacture ice cream caused the ammonia in the coil to mix with the brine in the vat in which the coil was submerged. That mixing caused salts to crystallize and precipitate out of the solution and clog the piping system to which that machine was connected, forcing the company to shut down its entire manufacturing operation. Id. at 166. Because the defect in the coil was caused by defective workmanship, it was necessary to decide whether there was coverage under the resulting loss clause of that exclusion. We concluded that the mixing of the brine and ammonia was contamination, resulting in a loss consisting of impure ammonia, and that loss was therefore not covered. Id. at 174-75. We then applied the resulting loss clause of the contamination exclusion to decide whether the loss resulting from the impure ammonia — crystallization and precipitation of salts that spread and clogged the system — was covered. We concluded it was not because the spreading of the salt throughout the system was an additional contamination and therefore excluded. Id. at 175.

¶ 34. Richland Valley provides the following framework for our analysis here: (1) we first identify the loss caused by the faulty workmanship and faulty materials exclusions and exclude that loss; (2) we next identify each ensuing loss, if any — that is, each loss that follows as a chance, likely, or necessary consequence from that excluded loss; and (3) for each ensuing loss we determine whether that is an excepted or excluded loss under the policy.

. [12]

¶ 35. Turning to the evidence of loss and the causes thereof in this case, we consider first the loss consisting of the deterioration of the caulking, the discoloration or other damage to the window frames and door frames, and the discoloration or other damage to other parts of the exterior of the house and the driveway. There is no dispute that these losses were all caused only by faulty workmanship, faulty materials, or some combination of the two. Therefore, all of these losses are plainly excluded under the policy.

¶ 36. We next consider the damage to the interior of the house. The evidence reasonably suggests two different ways this damage occurred. There is evidence that some of this damage occurred as a result of Hongsermeier using the pressure washer to rinse off the siding, with the water and stripping product leaking through the damaged caulking. There is also evidence that some of this damage occurred because rain came in through the damaged caulking around windows and skylights. (This a reasonable inference from Arnold's deposition testimony that the water leakage continued well after Hongsermeier completed the job.)

¶ 37. As for any damage to the interior caused by leakage from the pressure washer, we conclude, based on the undisputed facts, that this damage was caused by faulty workmanship. We recognize that there is a dispute over whether Hongsermeier used the pressure washer as instructed. However, while that dispute is material to liability, it is not material to coverage. Even if Hongsermeier used the pressure washer as instructed, there can be no reasonable dispute that spraying water around windows with damaged caulking, so that water and the stripping product leak into the house, is faulty workmanship.

¶ 38. However, the evidence that at least some of the interior damage was caused by rain leaking in through the damaged caulking requires a different analysis. Apparently Cincinnati is of the view that this is not an ensuing loss because it is not a "separate and independent peril." Cincinnati does not base this argument on any policy language. Indeed, although "Perils Insured Against" is the title of the section that explains the risks of loss insured against, nowhere in the body of that section is the term "peril" defined, nor is coverage defined in terms of "perils." Rather, as we have explained above, the policy "insures against risks of direct loss," that is "a physical loss" to the Arnolds' home, unless the loss is caused by events that are specifically excepted or excluded. Thus, there is no requirement in the policy that a loss must be caused by a "peril" in order to be covered.

¶ 39. The case Cincinnati relies on for its position, Acme Galvanizing Co., Inc. v. Fireman's Fund Ins. Co., 221 Cal. App. 3d 170 (Cal. App. 1990), has a differently worded ensuing loss clause, which does refer specifically to "peril" in defining an ensuing loss. The policy under consideration there was an insurance policy for business personal and real property that, in the "Perils Excluded" section, contained an exclusion for latent defects, followed by this clause: "unless loss by a peril not otherwise excluded ensues and then the Company shall be liable only for such ensuing loss." Id. at 174. The court construed this clause to mean a" 'peril,1 i.e., a hazard or occurrence which causes a loss or injury, separate and independent but resulting from the original excluded peril, and this new peril is not an excluded one, from which loss ensues." Id. at 179-80. The construction the court in Acme gave that clause is not helpful in construing the ensuing loss clause in Cincinnati's policy, which does not refer to "peril."

¶ 40. We conclude there is no basis in the policy language for limiting the cause of an ensuing loss to a "separate and independent peril." There must, as we have already stated, be a cause in addition to the excluded cause, but nothing in the policy language defines the nature of that cause as Cincinnati proposes. We therefore conclude that loss caused by rain leaking in through the damaged caulking is an ensuing loss.

¶ 41. The third step in the analysis inquires whether loss caused by rain is excepted or excluded elsewhere in the policy. Cincinnati has not brought to our attention any exception or exclusion that would apply to rain. Our own review of the policy does not reveal an exclusion or exception that might arguably apply. There is an exclusion for "water damage" in subparagraph 1(c) of the Exclusions section, but it is specifically defined in a manner that does not include damage from rain. There is also an exclusion for "weather conditions" in subparagraph 2(a) of the Exclusions section, but "this exclusion only applies if weather conditions contribute in any way with a cause or event excluded in paragraph 1. above to produce the loss." Since there are no applicable exclusions in paragraph 1, the exclusion in subparagraph 2(a) plainly does not apply.

¶ 42. In summary, we conclude that, based on the undisputed facts, the faulty workmanship exclusion, the faulty materials exclusion, or both unambiguously exclude the loss consisting of the deterioration of the caulking, the discoloration or other damage to the window frames and door frames, and the discoloration or other damage to other parts of the exterior of the house and the driveway. The faulty workmanship exclusion also unambiguously excludes the loss caused to the interior of the house from use of the pressure washer. However, any loss caused to the interior of the house by rain in conjunction with the damaged caulking is an ensuing loss, and there is no exception or exclusion in the policy for loss caused by rain. It is therefore necessary to consider Cincinnati's contention that the pollution and mold exceptions nonetheless defeat coverage.

B. Pollution Exception

¶ 43. Cincinnati argues that the stripping product is a pollutant because it contains "liquid, irritant chemicals." These chemicals, Cincinnati asserts, "directly damaged the exterior finishes of aluminum clad windows and destroyed the weather-tight fit and integrity of windows and skylights allowing water damage." Therefore, in Cincinnati's view, the damage to the Arnolds' home was caused by a "discharge" or "release" of the stripping chemicals and is entirely excluded under the pollution exception. The "Perils Insured Against" section excepts from coverage loss caused by:

(e) discharge, dispersal, seepage, migration, release or escape of pollutants unless the discharge, dispersal, seepage, migration, release or escape is itself caused by a Peril Insured Against under Coverage C of this policy.
Pollutants mean any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed!;.]

Paragraph 1. (c)(4)(e).

¶ 44. Cincinnati focuses its argument on whether the stripping product meets the definition of "pollutant." However, the exclusion requires more than that the stripping product meets the above definition of "pollutant." The loss must be caused by the "discharge, dispersal, seepage, migration, release or escape" of a pollutant. Cincinnati asserts that the stripping product was "discharged" or "released" without analyzing the meaning of those words. In Peace v. Northwestern Nat'l Ins. Co., 228 Wis. 2d 106, 126-27, 596 N.W.2d 429 (1999), the court construed the words "discharge" and "release" in a pollution exclusion. Consulting a dictionary, the court stated: "In its transitive form, the verb 'discharge' is defined: 'To release, as from confinement . . . .' In its intransitive form, the verb 'discharge' is defined, in part, as 'to pour forth, emit, or release contents.'" (Citation omitted.) Relying on a California case, the court cited with approval the meaning of "release" as "a liberation, freeing, or permitting to escape." Id. at 127. Applying these definitions and also the common meanings of "escape" and "dispersal," the court concluded that "when lead based paint either chips, flakes, or deteriorates to dust, that action is a discharge, dispersal, release or escape within the meaning of the terms in the policy." Id. at 148.

¶ 45. In this case, the stripping chemicals were applied to the siding to remove materials on the siding —the intended purpose of the product. No reasonable construction of the words "discharge" or "release" in-eludes the deliberate application of the stripping product to the siding for that purpose. Nor does the fact that the stripping product may have caused the caulking to deteriorate arguably come within the common definition of "discharge" or "release." Therefore, the damage to the interior of the Arnolds' house, which was caused by rain in conjunction with the damaged caulking, plainly was not caused by the "release" or "discharge" of the chemicals in the stripping product.

¶ 46. We conclude that, based on the undisputed facts, the pollution exception does not apply to the damage caused to the interior of the Arnolds' home by rain in conjunction with the damaged caulking.

C. Mold Exception

¶ 47. The "Perils Insured Against" section also excepts from coverage loss caused by mold. Paragraph 1. (c)(4)(c). Cincinnati makes a brief argument that, because the growth of mold on the earlier stain was the reason the stripping product was applied, none of the Arnolds' damages are covered.

¶ 48. "Cause" is not defined in the policy. Although "cause" as a noun or verb has legal meanings, we are here concerned with its common and ordinary meaning as a reasonable insured would understand it when reading this policy. The verb "to cause" means "1: to serve as cause or occasion of: bring into existence ... ." Webster's Third International Dictionary 356 (1993). The noun "cause" in turn is defined in part as: "la: a person, thing, fact or condition that brings about an effect or that produces or calls forth a resultant action or state ... b: a reason or motive for an action or condition ...."

¶ 49. The mold from the earlier stain was the reason for the application of the stripping product, and in that sense the mold may be said to have "caused" the application of the stripping product. However, the mold was not the reason for or the occasion of either a faulty stripping product or faulty application of the stripping product; nor did the mold bring about or produce a faulty stripping product or faulty application of the stripping product. It is the faulty stripping product or its faulty application, or both, in conjunction with rain, that caused the loss we are considering. Even if the common meaning of "cause" might be stretched to encompass the relationship between the mold and the faulty stripping product or its faulty application, we are convinced that a reasonable insured would not necessarily understand such a broad meaning. Under any of the dictionary definitions we have cited above, a reasonable insured in the Arnolds' position could understand "cause" to require a relationship between the mold and the faulty stripping product or its faulty application that is plainly lacking here.

¶ 50. We conclude that based on the undisputed facts, the mold exception does not exclude the damage to the interior of the Arnolds' home caused by rain in conjunction with damaged caulking.

II. Statute of Limitations

¶ 51. Cincinnati contends that the Arnolds' claim for coverage under their policy is barred by Wis. Stat. § 631.83(l)(a), which requires that an action on a "fire insurance policy must be commenced within 12 months after the inception of the loss." Cincinnati's position is that "the inception of loss" occurred in 1998 when the mold first began to grow on the siding. The Arnolds reply that they are not seeking coverage for the damage to the siding, but to other parts of the exterior of the house and to the interior.

¶ 52. Although the term "fire insurance policy" in Wis. Stat. § 631.83(l)(a) might appear to raise the question whether the statute applies to the Arnolds' policy, case law has established that the term "fire insurance" as used in the statute is a generic term that encompasses all types of property indemnity insurance. Villa Clement v. National Union Fire Ins. Co. of Pittsburgh, 120 Wis. 2d 140, 148, 353 N.W.2d 369 (Ct. App. 1984). The Arnolds do not argue that the statute does not apply to their policy, and we take this as a concession that it does. Schlieper v. DNR, 188 Wis. 2d 318, 322, 525 N.W.2d 99 (Ct. App. 1994) (we may take as conceded a proposition put forth in a responsive brief that is not disputed in the reply brief).

¶ 53. However, we agree with the Arnolds that the statute does not bar their claim for damages to the exterior of their house, other than the siding, or for damages to the interior of their house. The physical loss to their house for which the Arnolds seek coverage did not occur before Hongsermeier applied the stripping product to their house. There is no dispute that he began this work in early June 2001. Therefore the action, filed May 21, 2002, was filed within one year of the inception of the loss.

CONCLUSION

¶ 54. Based on the undisputed facts, the damage to the exterior of the Arnolds' house for which they seek coverage is excluded under either the faulty workmanship exclusion, the faulty materials exclusion, or both, as is damage to the interior of the house caused by use of the pressure washer. However, any damage to the interior of the house that was caused by rain in conjunction with the damaged caulking is a loss ensuing from the excluded faulty workmanship or faulty materials. This ensuing loss is not excluded under those two exclusions; it is not otherwise excepted or excluded under the policy; and it is therefore covered. In particular, neither the pollution or the mold exception applies to this ensuing loss. Because there are genuine issues of material fact on the extent of the interior damage caused by rain in conjunction with the damaged caulking, the Arnolds are entitled to a trial on this issue.

¶ 55. We also conclude the Arnolds timely filed this action within one year of the inception of the losses for which they seek coverage. It was therefore timely filed under Wis. Stat. § 631.83(l)(a).

By the Court. — Judgment affirmed in part; reversed in part and cause remanded with directions.

       All references to the Wisconsin Statutes are to the 2001-02 version unless otherwise noted.

       When we refer to "Arnold," we mean David Arnold.

       We also use "faulty" in this opinion as a shorthand for "faulty, inadequate, and defective."

       There is, as the Arnolds point out, evidence that ABRP's failure to provide adequate specifications and failure to adequately monitor Hongsermeier's use of its stripping product caused, at least in part, his failures to use protective coverings, to properly use the pressure washer, and to properly clean up. However, that evidence does not affect the conclusion that a reasonable insured would understand that those failures constitute "faulty, inadequate, or defective ... workmanship [or] repair."

       The headings to the exclusions in paragraph 1 are: a. Ordinance or Law; b. Earth Movement; c. Water Damage; d. Power Interruption; e. Neglect; f. War; g. Nuclear Hazard; h. Intentional Loss.

       The Exclusions section contains only these two paragraphs.

       Our construction of "ensuing loss" appears consistent with that employed by three of the cases cited by Cincinnati: Schloss v. The Cincinnati Ins. Co., 54 F. Supp. 2d 1090, 1094 (M.D. Ala. 1999), aff'd without opinion, 211 F.3d 131 (11th Cir. 2000) (The ordinary meaning of "ensuing loss" is not ambiguous: to "ensue" means "to take place afterward; to follow as a chance, likely, or necessary consequence."); McDonald v. State Farm Fire & Cas. Co., 837 P.2d 1000, 1005 (Wash. 1992) (reasonably interpreted, the ensuing loss clause says that if one of the specified uncovered events takes place, any ensuing loss that is otherwise covered by the policy will remain covered); Alwart v. State Farm Fire & Cas. Co., 508 S.E.2d 531 (N.C. App. 1998) (ensuing loss clause is not a grant of coverage for a loss that is otherwise excluded under the policy). We do not discuss these cases in further detail because their results depend on facts that are significantly different from this case, on other policy language different from that before us, or on case law from other jurisdictions.

       We noted in Richland Valley Products, Inc. v. St. Paul Fire & Cas. Co., 201 Wis. 2d 161, 174 n.3, 548 N.W.2d 127 (Ct. App. 1996), that the parties referred to that clause as the "ensuing loss" clause, and we ourselves used that term in that opinion. However, because that clause used the word "resulting" rather than "ensuing," we refer to it here as the "resulting loss clause." We do not intend thereby to imply any conclusion regarding whether the difference in the wording of the two clauses is significant.

       Paragraph (1) of the Exclusions section provides:
      c. Water Damage, meaning:

        (1) flood, surface water, waves, tidal water, overflow of a body of water, or spray from any of these, whether or not driven by the wind;
      (2) water which backs up through sewers or drains; or
      (3) water below the surface of the ground, including water which exerts pressure on, or seeps or leaks through a building, sidewalk, driveway, foundation, swimming pool or other structure.

       The exceptions in the "Perils Insured Against" section, like paragraph 1 of the "Exclusions" section, make no provision for an "ensuing loss." Thus, if the pollution or mold exception to coverage applies, "ensuing" rain damage would arguably also be excepted from coverage.

       Cincinnati cites two cases in addition to Peace v. Northwestern Nat'l Ins. Co., 228 Wis. 2d 106, 596 N.W.2d 429 (1999), but neither construes or applies the words "discharge" or "release," and the facts bear no resemblance to the facts of this case: Production Stamping Corp. v. Maryland Cas. Co., 199 Wis. 2d 322, 329-31, 544 N.W.2d 584 (Ct. App. 1996) (applying to soil and groundwater contamination a pollution exclusion that excluded all damages caused by pollution; rejecting argument that there was coverage under the personal injury section of the policy because the contamination was "an invasion of the right of private occupancy"). Id. at 330; American States Ins. Co. v. Skrobis, 182 Wis. 2d 445, 449, 450, 513 N.W.2d 695 (Ct. App. 1994) (applying a somewhat differently worded pollution exclusion to a fuel spill; rejecting argument that the exclusion had a latent ambiguity because pollution exclusion under prior policy did not apply to construction accidents).

       We do not decide whether the chemicals in the stripping product meet the definition of "pollutant."

       For example, in Wis JI — Civil 1500 a person's negligence "caused" the injury or accident if it "was a substantial factor in producing" the injury or accident.


source: Caselaw Access Project

author: DEININGER, PJ.

license: Public Domain

text:
    All Star Rent A Car, Inc., Petitioner-Appellant, v. Wisconsin Department of Transportation and Wisconsin Division of Hearings and Appeals, Respondents-Respondents.

    Court of Appeals

      No. 03-2668.

      Submitted on briefs February 11, 2004.

    Decided September 23, 2004.

    2004 WI App 198
    (Also reported in 688 N.W.2d 681.)

      On behalf of the petitioner-appellant, the cause was submitted on the briefs of Richard J. Ward, of RJW Legal Services Group, S.C., Madison.
    On behalf of the respondents-respondents, the cause was submitted on the brief of F. Thomas Creeron III, assistant attorney general, and Peggy A. Lauten-schlager, attorney general.
    Before Deininger, PJ., Dykman and Vergeront, JJ.

       Petition for review granted 2-9-2005.

   DEININGER, PJ.

¶ 1. All Star Rent A Car, Inc., appeals an order dismissing its petition for judicial review of an administrative decision and order that revoked All Star's motor vehicle dealer license and affirmed the denial of its application for license renewal. The circuit court dismissed All Star's petition because All Star had not served the Division of Hearings and Appeals (DHA), which issued the challenged administrative decision and order, within the time period required by Wis. Stat. § 227.53(1) (2001-02). We conclude that the statutes prescribing which administrative entity All Star was required to serve in order to comply with § 227.53(1) are ambiguous, and, therefore, that All Star's service of its petition on the Wisconsin Department of Transportation (DOT) was sufficient to permit the circuit court to consider the merits of All Star's petition. Accordingly, we remand to the circuit court for a determination on the merits of All Star's challenge to the administrative decision and order.

BACKGROUND

¶ 2. An entity that "sells, leases, exchanges, buys, offers or attempts to negotiate a sale, consumer lease or exchange of an interest in motor vehicles" must obtain a "motor vehicle dealer" license from the Wisconsin Department of Transportation. Wis. Stat. §§ 218.0101(23); 218.0114(1). If the DOT denies an application for a license, the applicant may petition the Division of Hearings and Appeals, which is a "division ... in the department of administration," Wis. Stat. § 227.43(1), for "a hearing to review the denial." Wis. Stat. § 218.0116(2). Similarly, if the DOT seeks to revoke or suspend a license it previously granted to a motor vehicle dealer, it may do so only by persuading the DHA, after a hearing upon notice to the licensee, that there are proper grounds to do so. See § 218.0116(4). Any person aggrieved by a DHA decision regarding the denial or revocation of a motor vehicle dealer license may obtain judicial review "as provided in [Wis. Stat.] ch. 227." Section 218.0116(9).

¶ 3. All Star Rent A Car, Inc., held a motor vehicle dealer license issued by the DOT that permitted All Star to sell motor vehicles to retail buyers. The DOT instituted an administrative proceeding before the DHA to revoke All Star's dealer license because of its alleged violations of statutes and regulations applicable to motor vehicle dealers. While awaiting a hearing on the revocation, All Star sought to renew its dealer license, which the DOT denied. All Star petitioned DHA for review of the nonrenewal decision, and the two matters were consolidated in a single administrative proceeding. In a written order dated May 15, 2003, the administrator of the DHA ordered All Star's motor vehicle dealer license revoked and affirmed the DOT'S refusal to renew All Star's license.

¶ 4. All Star filed a petition for judicial review of the administrative decision and order in the Dane County Circuit Court on May 27, 2003. The petition named the DOT as respondent. All Star caused its petition and an accompanying summons to be served on both the DOT and the attorney general's office on May 28th. All Star neither named DHA as a party nor served it with notice of the court action. The DOT moved to dismiss All Star's petition on the grounds that the circuit court lacked both personal jurisdiction over it and subject matter jurisdiction over the petition because All Star had failed to name or serve the DHA within thirty days of DHA's decision and order as required by Wis. Stat. § 227.53(1).

¶ 5. In response, All Star filed an amended summons and petition for judicial review on July 22, 2003, naming both the DOT and the DHA as respondents, and it served the DHA with copies of both its original and amended summons and petition on July 25th. The circuit court concluded that, because All Star had failed to serve the DHA within the thirty days mandated by statute, the court lacked jurisdiction to consider All Star's petition for review. Accordingly, the court ordered All Star's petition dismissed and subsequently denied All Star's motion for reconsideration. All Star appeals.

ANALYSIS

¶ 6. The issue before us involves the interpretation of Wisconsin statutes governing the requirements for service of petitions for judicial review of administrative decisions under Wis. Stat. ch. 227. Thus, the appeal presents a question of law that we decide de novo without deference to the circuit court's conclusions. See Sunnyview Village, Inc. v. DOA, 104 Wis. 2d 396, 402, 311 N.W.2d 632 (1981).

¶ 7. The basic filing and service requirements seem, at first blush, quite straightforward:

1. Proceedings for review shall be instituted by serving a petition therefor personally or by certified mail upon the agency or one of its officials, and filing the petition in the office of the clerk of circuit court for the county where the judicial review proceedings are to be held....
2. Unless a rehearing is requested under s. 227.49, petitions for review under this paragraph shall be served and filed within 30 days after the service of the decision of the agency upon all parties under s. 227.48 .... The 30-day period for serving and filing a petition under this paragraph commences on the day after personal service or mailing of the decision by the agency.

Wis. Stat. § 227.53(1)(a). The "agency" which must be served is "the agency whose decision is sought to be reviewed," and that agency must be named as the "respondent" in the caption of the petition. Section 227.53(l)(b); Sunnyview, 104 Wis. 2d at 402-03 ("[Although the statutes do not explicitly so state... a petitioner [must] name and serve as respondent that governmental entity which has made the decision of which review is sought.").

¶ 8. The failure to serve the agency that made the decision for which review is sought within the statutory thirty-day period "deprives the circuit court of jurisdiction." Id. at 399. Because DHA was the agency that made the decision for which All Star seeks review, and because All Star did not serve DHA with its petition until well after the thirty-day period, the circuit court concluded, somewhat reluctantly, that it had no choice but to dismiss the petition. All Star maintains, however, that its service on the DOT was sufficient because the statutory service requirements are ambiguous when applied to the present facts, and thus, we must permit All Star's petition to be considered on its merits because it could reasonably conclude that the DOT was the proper agency to be served. We agree.

¶ 9. Parties who wish to have administrative decisions reviewed in circuit court are required to strictly comply with statutory requirements for service of process, and a failure to strictly comply may produce harsh consequences. See Dietrich v. Elliott, 190 Wis. 2d 816, 827, 528 N.W.2d 17 (Ct. App. 1995). Wisconsin case law also establishes, however, that "[w]hen an ambiguity exists regarding the specific party to be served, procedural statutes must be construed liberally" to allow for determination of the controversy on its merits. McDonough v. DWD, 227 Wis. 2d 271, ¶ 22, 595 N.W.2d 686 (1999). Put another way, when statutes governing procedure are ambiguous because they lack "specific direction clearly indicating who is to be served," service "is sufficient for a court to acquire jurisdiction, if such service was reasonable under the circumstances." State ex rel. Grzelak v. Bertrand, 2003 WI 102, 23, 25, 263 Wis. 2d 678, 665 N.W.2d 244. We conclude that to be the case here.

¶ 10. A statute is ambiguous "if it is capable of being understood by reasonably well-informed persons in two or more senses.... [T]he test for ambiguity examines the language of the statute 'to determine whether 'well-informed persons should have become confused,' that is, whether the statutory. . . language reasonably gives rise to different meanings.'" State ex rel. Kalal v. Circuit Court for Dane County, 2004 WI 58, ¶ 47, 271 Wis. 2d 633, 681 N.W.2d 110 (citations omitted).

¶ 11. Here, an ambiguity first arises from the definition of "agency" in Wis. Stat. § 227.01(1), which defines "agency" for purposes of Wis. Stat. ch. 227 as "the Wisconsin land council or board, commission, -committee, department or officer in the state government, except the governor, a district attorney or a military or judicial officer." The DHA, however, is not a state "board, commission, committee, department or officer." Rather, it is a "division... which is attached to the department of administration under s. 15.03." Wis. Stat. § 15.103(1). A "division" does not appear in the § 227.01(1) definition of "agency." Thus, a reasonable person reading Wis. Stat. § 227.53(1), in conjunction with § 227.01(1) and § 15.103(1), could reasonably conclude that the DHA is not an agency, and thus cannot be the entity which must be served in order to satisfy § 227.53(1). And, because it was the DOT that decided to seek revocation of All Star's motor vehicle dealer license and to deny its renewal, All Star could reasonably conclude that the DOT, a "department" and thus an "agency," was the proper entity to name as respondent and serve under § 227.53(1).

¶ 12. Adding to the ambiguity of Wis. Stat. § 227.53(1) are Wis. Stat. §§ 227.43(1)(bg) and 227.46(2m). The first provides that the administrator of the DHA shall "[a]ssign a hearing examiner to preside over any hearing or review" regarding DOT license denials and revocations. Section 227.43(l)(bg). The second provides that the DHA hearing examiner shall prepare a "proposed decision," which may be adopted or modified by the DHA administrator, and the "decision of the administrator of the [DHA] is a final decision of the agency subject to judicial review under s. 227.52" (emphasis added). Section 227.46(2m). This last provision could reasonably be read to mean that the DHA administrator's decision becomes the final decision of the DOT. This is so because (1) the DHA is not an "agency" within the governing statutory definition, but the DOT is; (2) saying that "[t]he decision of the administrator of the DHA is a final decision" of the DHA seems superfluous; and (3) when DHA personnel review administrative actions taken by other state entities, the DHA hearing examiner's decision may "by rule or... order" become "the final decision of the agency" whose action was reviewed. See Wis. Stat. § 227.46(3)(a).

¶ 13. The DOT argues, however, that the foregoing provisions plainly establish that the DHA. is the final decision-maker in motor vehicle dealer license renewal and revocation actions. The DOT points out that the DHA is an entity separate and distinct from the DOT, and it argues that the DHA is the agency whose decision is subject to review, and in turn, the agency that must be named as the respondent and served under Wis. Stat. § 227.53(1). This is especially so, in the DOT's view, when legislative history is consulted because the office of commissioner of transportation previously performed the administrative reviews of DOT dealer licensing decisions now performed by the DHA, and the commissioner's decisions were both de novo and final for purposes of judicial review. See DOT v. Office of Comm'r of Transp., 159 Wis. 2d 271, 463 N.W.2d 870 (Ct. App. 1990).

¶ 14. The DOT also argues that there can be no confusion regarding whether the DHA is the agency to be named and served in this case because the DHA had the power to reverse or modify the DOT'S initial non-renewal decision. Wis. Stat. § 218.0116(2). The DOT also points to § 218.0116(4)(c), which plainly states that license revocation issues "shall be heard and decided upon by the division of hearings and appeals" (emphasis added). The DOT notes as well that Wis. Stat. § 227.46(2m) provides that the DOT itself may petition for review of an adverse decision by the DHA administrator, which would mean that if the DHA administrator's decision were deemed "the final decision" of the DOT, the DOT would in effect be seeking review of its own final decision. Finally, the DOT notes that the hearing took place in the offices of the DHA and that the DHA appended an unambiguous notice to its final decision that it should be named as the respondent in any petition for review.

¶ 15. The DOT may be correct that, notwithstanding the ambiguity arising on account of the DHA's not coming within the definition of "agency" in Wis. Stat. § 227.01(1), a resort to legislative history and other statutes might well result in the DOT's interpretation being deemed the more reasonable. The purpose of our present inquiry, however, is not to determine which interpretation more closely reflects the apparent legislative intent, but whether the actual language of Wis. Stat. § 227.53(1) can reasonably be read in more than one way. As we have explained, we conclude that the statute is subject to more than one reasonable reading, and accordingly, All Star must get the benefit of the doubt created by the ambiguous statutory language. See DOT v. Peterson, 226 Wis. 2d 623, ¶ 21, 594 N.W.2d 765 (1999) (noting that "where an ambiguity exists '[procedural statutes are to be liberally construed so as to permit a determination upon the merits of the controversy if such construction is possible'" (citation omitted)).

¶ 16. In sum, we are not persuaded that any of the matters raised by the DOT renders All Star's reading of the service statute unreasonable. For the reasons we have explained, All Star could reasonably read the statutes at issue to mean that it must name and serve the DOT, which unlike the DHA, is an "agency" within the definition of Wis. Stat. § 227.01(1). The ambiguity in these statutes, when applied to the present facts, requires that we apply a liberal interpretation of the service requirements in Wis. Stat. § 227.53(1). McDonough, 227 Wis. 2d 271, ¶ 22. Accordingly, we reverse the circuit court's order dismissing All Star's petition for review, and we remand to the circuit court for consideration of All Star's petition on its merits.

CONCLUSION

¶ 17. For the reasons discussed above, we reverse the appealed 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 2001-02 version unless otherwise noted.

       WISCONSIN Stat. § 227.53(1) specifies that when the decision to be reviewed is that of the tax appeals commission or the banking, credit union, or savings institutions review boards, certain, specified agencies are to be named as respondents and service is to be made on both the decision-maker and the specified respondent. No similar provisions address the present circumstances, i.e., where the Division of Hearings and Appeals (DHA) has made the decision for which judicial review is sought.

       Although the court did not specify in Sunnyview whether it was referring to subject matter jurisdiction or personal jurisdiction over the proper respondent, we assume it was the latter. See Village of Trempealeau v. Mikrut, 2004 WI 79, ¶ 1, 273 Wis. 2d 76, 681 N.W.2d 190 ("Circuit courts in Wisconsin are constitutional courts with general original subject matter jurisdiction over 'all matters civil and criminal.' Wis. Const, art. VII, § 8. Accordingly, a circuit court is never without subject matter jurisdiction.").

       The court said that this "case demonstrates the harshness of the 'strict compliance' rule .... The agency decision, whether good or bad, right or wrong, must now stand impervious to review."

       Both the DOT and the DHA are named as respondents in this appeal, and they are represented by the same assistant attorney general who filed a single response brief. For convenience, we will refer to the respondents collectively as "the DOT."

       On the final page of the DHA decision, below the administrator's signature, is a "NOTICE", which in the next to last sentence of the second numbered paragraph informs a reader: "Any petition for judicial review shall name the Division of Hearings and Appeals as the respondent." We note, however, that the sentence which follows advises that "[pjersons desiring to file for judicial review are advised to closely examine all provisions of Wis. Stat. §§ 227.52 and 227.53 to insure strict compliance with all its requirements." Although this is good advice, it directs prospective petitioners to the very statutory ambiguity we have noted regarding what entity is the "agency" to be named and served. Moreover, the impact of the directive in the appended notice that a petitioner should name the DHA as respondent is somewhat diminished by the very first page of the DHA decision, which informs a reader that in "accordance with Wis. Stat. §§ 227.47 and 227.53(l)(c), the PARTIES are certified as follows: All Star Rent a Car, Inc.,... [and] Wisconsin Department of Transportation." We agree with the supreme court's observation regarding a similarly worded statutory predecessor of § 227.53(1) that the statutory service requirement is "troublesome" and "not easy to understand" in that it is "complex and becomes confusing not only when read in a cursory fashion but also when read in conjunction with sec. 227.01(1) which defines agency." Sunnyview Village, Inc. v. DOA, 104 Wis. 2d 396, 399-400, 311 N.W.2d 632 (1981).


author: HOOVER, PJ.

text:
    In re the Commitment of Thomas H. Bush: State of Wisconsin, Petitioner-Respondent, v. Thomas H. Bush, Respondent-Appellant.

    Court of Appeals

      No. 03-2306.

      Submitted on briefs August 24, 2004.

    Decided September 28, 2004.

    2004 WI App 193
    (Also reported in 688 N.W.2d 752.)

      On behalf of the respondent-appellant, the cause was submitted on the briefs of Robert G. LeBell, Milwaukee.
    On behalf of the petitioner-respondent, the cause was submitted on the brief of Peggy A. Lautenschlager, attorney general, and Sally L. Wellman, assistant attorney general.
    Before Cane, C.J., Hoover, PJ., and Wedemeyer, J.

       Petition to review granted 12-15-2004.

   HOOVER, PJ.

¶ 1. Thomas Bush appeals an order denying two pretrial motions challenging the constitutionality of Wis. Stat. ch. 980. We conclude Bush is procedurally barred from raising these challenges and therefore affirm the order.

¶ 2. In June 1988, Bush was convicted of entering a nursing home and attempting to sexually assault an elderly patient. In 1992, he was released from prison and allowed to leave Wisconsin for a sex offender program in Georgia. While there, he was charged with operating a motor vehicle while intoxicated. He was acquitted on that charge but was returned to Wisconsin. His parole was revoked and he was sent back to prison.

¶ 3. In March 1997, the State filed a ch. 980 commitment petition alleging Bush was still sexually violent. Following trial, a jury agreed and Bush was committed. He appealed and this court reversed because of a prejudicial jury instruction.

¶ 4. Bush was retried in 2000 and the jury returned the same result. Bush appealed again and we affirmed in all respects except for an issue regarding a ninety-day filing requirement imposed upon the State. On remand, the circuit court heard evidence and determined that the State had complied with the filing deadline.

¶ 5. Meanwhile, Bush filed a petition for release pursuant to Wis. Stat. § 980.09(2) in August 2002. In pretrial motions to the court, he claimed ch. 980: (1) denies him due process and equal protection because it "fails to require a finding that there are no less restrictive alternatives to confinement throughout the proceedings," and (2) denies him due process because it "fails to require proof of a recent overt act."

¶ 6. The court denied the pretrial motions. A jury determined Bush was still sexually violent and his petition for discharge was therefore denied. Bush renewed his constitutional challenges in a postverdict motion that the circuit court also denied. Bush appeals.

¶ 7. Bush raises no claim of error regarding the actual trial on his discharge petition. Instead, he assails the constitutionality of the statutes underlying his initial commitment. The State contends that while Bush is entitled to a review for error relating to the petition, he should not be allowed to collaterally attack the underlying commitment when he could have and should have made a challenge in his two prior appeals. We agree with the State.

¶ 8. We start our discussion with State v. Escalona-Naranjo, 185 Wis. 2d 168, 517 N.W.2d 157 (1994). Escalona-Naranjo discusses criminal postcon-viction proceedings. Nevertheless, its reasoning for why all constitutional challenges should be raised in a first appeal is persuasive and, ultimately, we deem it useful here.

¶ 9. In Escalona-Naranjo, the supreme court examined Wis. Stat. § 974.06. A § 974.06 motion does not permit an attack on the initial factual predicate for the conviction; that is, on the event leading to the defendant's status as a convicted criminal. Instead, § 974.06(1) allows a prisoner in custody to claim

the right to be released upon the ground that the sentence was imposed in violation of the U.S. constitution or the constitution or laws of this state, that the court was without jurisdiction to impose such sentence, or that the sentence was in excess of the maximum authorized by law or is otherwise subject to collateral attack....

¶ 10. Specifically, the statute is narrowed by Wis. Stat. § 974.06(4), which states in part, "All grounds for relief available to a person under this section must be raised in his or her original, supplemental or amended motion." The supreme court therefore concluded that § 974.06 could not be used to review issues which were or could have been litigated on prior direct appeal or other applicable postconviction proceeding. See Escalona-Naranjo, 185 Wis. 2d at 173.

¶ 11. In reaching this conclusion, the court explained:

We need finality in our litigation.
Section 974.06(4) was not designed so that a defendant, upon conviction, could raise some constitutional issues on appeal and strategically wait to raise other constitutional issues a few years later. Rather, the defendant should raise the constitutional issues of which he or she is aware as part of the original postconviction proceedings.

Id. at 185-86. This statutory remedy is, however, still available if there is a sufficient explanation for why the challenge "was not asserted or was inadequately raised." Wis. Stat. § 974.06(4). In addition, a § 974.06 motion is considered civil in nature, although it is part of the original criminal action. See Wis. Stat. § 974.06(6).

¶ 12. Escalona-Naranjo was later extended to appeals by writ of certiorari from parole and probation revocations. State ex rel. Macemon v. Christie, 216 Wis. 2d 337, 342, 576 N.W.2d 84 (Ct. App. 1998). Writs of certiorari are also civil in nature. State ex rel. Cramer v. Court of Appeals, 2000 WI 86, ¶ 48, 236 Wis. 2d 473, 613 N.W.2d 591. The Macemon court wrote:

A thread runs through our entire jurisprudence that not only is an appeal guaranteed, but it should be a meaningful one.
However, there is no requirement in our system of jurisprudence that a defendant be permitted to file successive appeals from the same action.
Because Escalona-Naranjo determined that due process for a convicted defendant permits him or her a single appeal of that conviction and a single opportunity to raise claims of error, it logically follows that to permit a revoked parolee or probationer the same opportunity to contest a revocation comports with due process. An aggrieved defendant should raise all claims of which he or she is aware in the original writ.... Successive, and often reformulated, claims clog the court system and waste judicial resources.

Macemon, 216 Wis. 2d at 342-43 (citations omitted).

¶ 13. Similarly, the reasoning of Escalona-Naranjo should apply to a petition for release under Wis. Stat. § 980.09(2). Like a Wis. Stat. § 974.06 motion or a writ of certiorari, a ch. 980 commitment is civil. See State v. Brunette, 212 Wis. 2d 139, 141, 567 N.W.2d 647 (Ct. App. 1997). Any constitutional challenge to the statutory commitment scheme should be raised in appeal of the initial commitment. A denial of the petition for release is similar to probation revocation in that the initial proceedings — either the initial commitment or the underlying criminal action — are not the subject matter in controversy. When probation is revoked, there can be no challenge to the underlying conviction; appellate review is limited to the sentencing after revocation. See State v. Drake, 184 Wis. 2d 396, 399, 515 N.W.2d 923 (Ct. App. 1994). When a petition for release is filed, the only factual issue in controversy is whether, at the time of the petition, the committee remains sexually violent, not whether the initial commitment was appropriate.

¶ 14. Here, Bush's petition for release was denied. Rather than raise a claim of error relative to the proceedings, he challenges the underlying statutory scheme. The problem is that his challenges are to procedures of his initial ch. 980 commitment and they should have been raised in the first appeal.

¶ 15. Bush's first constitutional challenge here is that he is denied due process and equal protection because ch. 980 fails to require a finding of a less restrictive alternative. Bush attempted this argument in his first appeal, but failed to sufficiently develop it enough for our review. He may not reformulate his argument and make a second attempt.

¶ 16. Bush's second constitutional challenge is that he is denied due process because ch. 980 fails to require proof of a recent overt act. His explanation for why the argument was not raised in earlier appeals is that the case on which he relies, In re Albrecht, 51 P.3d 73 (Wash. 2002), was not decided until after his first two appeals.

¶ 17. Albrecht does not discuss Wisconsin law. Any constitutional challenge to ch. 980 based on failure to require proof of an overt act could have been made without direction from Albrecht. Bush fails to present a sufficient reason to justify his failure to raise this constitutional challenge in his prior appeals.

¶ 18. We need finality in litigation. While an individual committed under ch. 980 is entitled to petition for release and regular review of his commitment, it is undesirable to allow the individual to "raise some constitutional issues on appeal and strategically wait to raise other constitutional issues a few years later" when those later issues were known from the outset. See Escalona-Naranjo, 185 Wis. 2d at 185-86.

¶ 19. In much the same way as a prisoner challenging his sentence, Bush is attempting to argue his commitment is "in violation of the U.S. constitution or the constitution or laws of this state ...." See Wis. Stat. § 974.06(1); see also Escalona-Naranjo, 185 Wis. 2d at 179-80. He does not challenge the procedures underlying or the factual basis for the denial of his petition for release. Like a revoked parolee filing multiple writs, Bush had an opportunity to "raise all claims of which he ... [was] aware in the original [petition]." See Macemon, 216 Wis. 2d at 343. Bush's constitutional challenges to ch. 980 could have and should have been raised in previous appeals and we therefore decline to address them further.

By the Court. — Order affirmed.

       All references to the Wisconsin Statutes are to the 2001-02 version unless otherwise noted. In addition, all further references to Wis. Stat. ch. 980 will be noted as "ch. 980" without denoting 'Wisconsin Statutes."

       The notice of appeal says that Bush is appealing: (1) denial of the pretrial motions; (2) the actual verdict; and (3) denial of his postverdict motions. However, Bush only briefed arguments relating to the pretrial motions and we confine our review accordingly. See Reiman Assocs. Inc. v. R/A Adver., Inc., 102 Wis. 2d 305, 306 n.1, 306 N.W.2d 292 (Ct. App. 1981) (issues not briefed deemed abandoned).

       Bush argues that "it is true that, as a general rule, the constitutionality of a statute cannot be first questioned on appeal, [but] such rule may, under various circumstances, be abrogated." The waiver rule to which Bush refers is applied when arguments are made before this court for the first time, without ever giving the circuit court a chance to make a ruling. Such is not the situation here, and this particular waiver rule is inapplicable.

       This is a challenge to which he would otherwise be entitled if there were error.


author: BROWN, J.

text:
    Steven R. Van Deurzen, Scott D. Van Deurzen, and Susan Van Deurzen, Plaintiffs-Appellants, Healthcare Cost Recovery, Inc., a/k/a Touchpoint Health Plan, Involuntary-Plaintiff-Respondent, v. Yamaha Motor Corporation USA, Yamaha Motor Manufacturing Corporation of America, Yamaha Motor Company, Ltd, Indemnity Company of North America, c/o Cigna Property and Casualty Company, Defendants-Respondents.
    Court of Appeals

      No. 03-2417.

      Submitted on briefs August 11, 2004.

    Decided September 29, 2004.

    2004 WI App 194
    (Also reported in 688 N.W.2d 777.)

      On behalf of the plaintiffs-appellants, the cause was submitted on the briefs of David W. Neeb, Kathy L. Nusslock and Daniel J. Borowski of Davis & Kuelthau, S.C. of Milwaukee.
    On behalf of the defendants-respondents Indemnity Company of North America, c/o Cigna Property and Casualty Company, the cause was submitted on the brief of Timothy A. Bascom and Amy J. Wilkinson of Bascom, Budish & Ceman, S.C. of Wauwatosa.
    On behalf of the defendants-respondents Yamaha Motor Corp., USA, Yamaha Motor Manufacturing Corp. of America, and Yamaha Motor Co., Ltd., the cause was submitted on the brief of Peter J. Hickey and Kenneth R. Baumgart of Everson, Whitney, Everson & Brehm, S.C. of Green Bay.
    Before Anderson, EJ., Brown and Snyder, JJ.
   BROWN, J.

¶ 1. This action by Steven R. Van Deurzen, his mother and his brother arose from a jet ski accident in which Steven's arm was amputated. The plaintiffs successfully convinced the trial court that the accident occurred on navigable waters and that maritime law should apply. It turned out to be a Pyrrhic victory when a judgment and order of the trial court dismissed the claim as time-barred by a maritime statute of limitations. Now on appeal, new counsel takes the opposite position, arguing that the trial court erred in applying maritime law to this action. This case presents a textbook example of judicial estoppel, and we therefore affirm. The appellants went to great lengths to persuade the court that Little Lake Butte des Morts was a navigable waterway, and we will not now hold that the court's factual finding was erroneous.

¶ 2. The accident occurred on June 12, 1997. Gordon H. Anderson allowed his son Adam and a group of other boys, including Steven and Scott Van Deurzen, to take out his Yamaha WaveRunner III on Little Lake Butte des Morts. Scott and Steven, ages seventeen and fourteen, respectively, had little experience with personal watercraft. Scott had never operated a personal watercraft alone, and Steven had never even ridden on such a vehicle. While the first boy skied, Scott operated the WaveRunner and Steven spotted, facing the rear of the craft. When five or ten minutes had passed, the skier finished and Steven began to wind up the ski rope, looping it around his right elbow. The boys had planned to go back to the dock to pick up another skier, so when Steven had gathered the rope, he hung onto the boat with his free hand and signaled to his brother that he was ready. Scott accelerated, and Steven fell overboard. Because he still had the tow rope wrapped around his elbow, his arm snapped off during the fall. The boys were able to retrieve the amputated arm, which doctors later reattached, but Steven no longer has significant use of the arm.

¶ 3. Three years and two weeks after the accident, on June 26, 2000, Steven filed suit for the injuries he sustained from the incident. His mother, and brother are coplaintiffs in this action. Susan sued for loss of enjoyment of Steven's companionship during his youthful years, and Scott brought suit for negligent infliction of emotional harm "from witnessing his brother's injury and participating in the injurious event." The complaint named several defendants, including: (1) Gordon Anderson; (2) Indemnity Insurance Company of North America and USAA Insurance Company, Anderson's two insurers; and (3) Yamaha Motor Corp., USA, the manufacturer of the WaveRunner III. The Van Deurzens later amended their complaint to name two designers of the craft as additional defendants: Yamaha Motor Manufacturing Corp. of America and Yamaha Motor Co., Ltd.

¶ 4. On the morning of May 5, 2003, the day trial was to begin, the defendants moved to adjourn, having just learned the previous Friday that the plaintiffs planned, for strategic reasons, to invoke maritime law instead of Wisconsin substantive law. The court elected to let the trial proceed, given that whether maritime law applied would not change the factual issues. It indicated that its ruling on the issue of which substantive law to apply would ultimately turn on the factual question of whether the scene of the accident was a navigable waterway. Accordingly, midtrial, the plaintiffs made an offer of proof with respect to Little Lake Butte des Morts navigability status. Their witness, the project manager for the U.S. Army Corps of Engineers, gave the following testimony:

Q: Did we ask you to check and see if the Corps of Engineers had any records relative to the navigability of the Fox River?
A: Yes you did.
A: This is a copy of a General Permit that the Corps of Engineers issues for activities in waterways in the State of Wisconsin ....
Q: And does it have any indication on the face of it as to whether or not the Fox River and Lake Butte des Morts in particular is a navigable waterway as far as the Corps of Engineers is concerned?
A: Yes. As part of the document [admitted as Exhibit 34], we have a list of the waterways that the Corps of Engineers has indicated are navigable and under our jurisdiction under Section 10 of the Rivers and Harbors Act of 1899. One of the waterways listed is the Fox River including Little Lake Butte des Morts.

Following this testimony, the court indicated that it would probably rule in favor of applying maritime law, so the defendants moved to dismiss, based on 46 U.S.C. app. § 763a (2004). Section 763a is a three-year maritime statute of limitations with no tolling period for minority. The jury returned a verdict favorable to Steven, but the court ruled postverdict that maritime law, including § 763a, applied, resulting in dismissal. The Van Deurzens appeal this ruling as error.

¶ 5. We hold that judicial estoppel precludes the Van Deurzens from asserting that maritime law was inapplicable to their case. When we invoke this doctrine, we determine independently the elements and the considerations involved. State v. Johnson, 2001 WI App 105, ¶ 9, 244 Wis. 2d 164, 628 N.W.2d 431. Judicial estoppel has three identifiable boundaries: (1) the party's position is clearly inconsistent with his or her prior position; (2) the party to be estopped succeeded below in selling its position to the court; and (3) the facts at issue are the same. Id., ¶ 10. The Van Deurzens' contention that maritime law is inapplicable because Little Lake Butte des Morts is not navigable clearly contradicts their position at trial that maritime law applied because the accident occurred on navigable waters. Moreover, this earlier position succeeded at trial.

¶ 6. We conclude that the third, "same facts" requirement also supports judicial estoppel in this case. The Van Deurzens' assertion that their "proposed supplementation of the record establishes beyond any doubt that Little Lake Butte des Morts fails [the navigability] test" wholly ignores the fact that this supplementation is not currently part of the record. We do not normally consider evidence presented for the first time on appeal. Cf. Jenkins v. Sabourin, 104 Wis. 2d 309, 313-14, 311 N.W.2d 600 (1981) (court will not consider facts outside of pleadings in its review of a motion to dismiss). Moreover, we decline the Van Deurzens' invitation to make these supplemental facts part of the record via judicial notice. Presumably, a great deal of this information was available for them to present at trial, including, among others, public records consistent with their current representations that "[ojperation of locks on the Upper Fox River was suspended in 1951," lock operating machinery removed, and the lock gates themselves removed in the early 1960s.

¶ 7. The Van Deurzens protest that judicial notice of state and federal statutes is mandatory. Thus, they argue, we must nonetheless take notice of certain Wisconsin and federal statutory provisions that indicate the nonnavigable nature of the waterway in question. The substance of those statutes is irrelevant, however, because they are not new facts. They are the "same facts" that were available at trial. Cf. State v. Fosnow, 2001 WI App 2, ¶ 9, 240 Wis. 2d 699, 624 N.W.2d 883 ("[n]ewly discovered evidence" does not include the newly discovered importance of evidence available at trial but not used).

¶ 8. Not surprisingly, the Van Deurzens attempt to get out from under judicial estoppel by arguing that it does not apply. Their argument is basically as follows: Parties may not stipulate to subject matter jurisdiction, nor may they confer it on a court that lacks it by estoppel or waiver. Maritime law is a matter of subject matter jurisdiction. In 28 U.S.C. § 1333(1), Congress gave federal district courts exclusive subject matter jurisdiction over civil cases of admiralty and maritime jurisdiction, except that state courts retained concurrent jurisdiction to the extent that they would otherwise have provided a remedy for the suitor. Thus, unless Little Lake Butte des Morts was a navigable waterway for purposes of maritime law, this case involved no maritime tort. The trial court therefore had no concurrent maritime jurisdiction and had no authority to apply maritime substantive law to this case, even if the parties so requested.

¶ 9. We are unconvinced that the trial court lacked subject matter jurisdiction. When we review whether a court had subject matter jurisdiction, we apply the de novo standard of review. J.W. v. M.W.G., 145 Wis. 2d 308, 310, 426 N.W.2d 112 (Ct. App. 1988). Our supreme court in Mueller v. Brunn, 105 Wis. 2d 171, 313 N.W.2d 790 (1982), clarified that the Wisconsin Constitution confers upon the circuit courts "subject matter jurisdiction to entertain actions of any nature whatsoever." Id. at 176 (emphasis added). The Van Deurzens' argument, however, hints that 28 U.S.C. § 1333 somehow restricts concurrent jurisdiction by preemption. Assuming this proposition is correct, they still cannot prevail. All of the parties agree that if maritime law applied, the trial court certainly had jurisdiction. Thus, we are left with the mixed factual and legal question of whether Little Lake Butte des Morts was navigable, such that maritime law applied. All parties further agree that, as a matter of law, maritime law will apply if the waters were navigable at the time of the incident, so we need not reach the legal aspect. The navigability of the lake presents a question of fact, however, because it merely describes the condition of the lake at the time of the incident without attributing any significance thereto. See Clarence Morris, Law and Fact, 55 Harv. L. Rev. 1303, 1329 (1942). We normally leave a circuit court's findings of fact undisturbed in the absence of clear error. See Fireman's Fund Ins. Co. of Wis. v. Bradley Corp., 2003 WI 33, ¶ 67, 261 Wis. 2d 4, 660 N.W.2d 666.

¶ 10. The trial court accepted as credible the only evidence it heard on the matter: the project manager's testimony and an exhibit, which stated that the lake was in fact navigable and that the United States Army Corps of Engineers regulated it accordingly. We do not consider that acceptance to be clear error when the parties failed to bring any other pertinent law or facts bearing on the issue to the court's attention. If the evidence was misleading, we will not attribute the error to the trial court.

¶ 11. Although the Van Deurzens cannot prevail for the reasons discussed above, we also remain unconvinced by their contention that the application of maritime law is jurisdictional rather than merely a matter of which substantive law applies. According to The Law of Damages in Wisconsin, ch. 27, pp. 3-4 (Russell M. Ware ed., 3d ed. 2000):

Jurisdiction in admiralty is not to be confused with the applicability of maritime law. Courts have created confusion between these two concepts by improper use of the term "admiralty law." Admiralty is a jurisdictional term. Maritime is a substantive law term.... Maritime substantive law applies to all cases arising out of occurrences on navigable waters of the United States.

See also Wheeldin v. Wheeler, 373 U.S. 647, 665 n.14 (1963) (Brennan, J., dissenting) (characterizing general maritime law as a body of federal decisional law). Because we conclude that the application of maritime law merely involved choice of law considerations, the Van Deurzens were free to stipulate to which law they wished to apply to their suit. See Muslin v. Frelinghuysen Livestock Managers, Inc., 777 F.2d 1230, 1231 n.1 (7th Cir. 1985) (parties may waive or stipulate to choice of substantive law).

¶ 12. We conclude that the trial court's finding that Little Lake Butte des Morts was a navigable waterway constitutes a final historical fact which may not be revisited. Consequently, its application of maritime law was proper. Even if it were not, whether or not to apply maritime law involved a choice of substantive law only, not a question of subject matter jurisdiction. Thus, the doctrine of judicial estoppel applies. The Van Deurzens cannot now contest the trial court's factual finding that the lake was navigable when they were the parties who urged the court to so find.

By the Court. — Judgment and order affirmed.

       All references to the United States Code are to the 2004 version unless otherwise noted.

       We note that Attorneys David W Neeb and Kathy L. Nusslock, appellate counsel for the Van Deurzens, coauthored ch. 27. See The Law of Damages in Wisoonsin, ch. 27, p. 1 (Russell M. Ware ed., 3d ed. 2000).


author: SNYDER, J.

text:
    Liberty Credit Services, Inc., as assignee of Citibank, a foreign corporation, Plaintiff-Respondent, v. Nancy Quinn, Defendant-Appellant.
    Court of Appeals

      No. 03-3254.

      Submitted on briefs August 30, 2004.

    Decided September 29, 2004.

    2004 WI App 202
    (Also reported in 688 N.W.2d 768.)

      On behalf of the defendant-appellant, the cause was submitted on the briefs of Allan D. Krezminski, Milwaukee.
    On behalf of the plaintiff-respondent, the cause was submitted on the brief of Jonathan H. Dudley of Howard, Solochek & Wéber, S.C., Milwaukee.
    Before Anderson, PJ., Brown and Snyder, JJ.
   SNYDER, J.

¶ 1. Nancy Quinn appeals from a judgment in favor of Liberty Credit Services, Inc. for $17,779.87, plus costs and disbursements. Quinn contends that Liberty's action to collect on her overdue credit card account is time-barred and therefore the judgment of the trial court should be reversed. Quinn asserts that the trial court erred when it ruled that a payment made, and subsequently withdrawn, was sufficient to toll the applicable statute of limitations. We disagree and affirm the judgment of the trial court.

¶ 2. The underlying facts are brief and largely undisputed. Liberty is in the business of purchasing various types of consumer debt and acquiring the right to pursue the debtors for the past due balances. Quinn opened a credit card account with Citibank and subsequently defaulted on the account. Citibank sold the account to Liberty and in doing so transferred the account's electronic media to Liberty as well.

¶ 3. Liberty filed a collection action against Quinn on September 27, 2001. At that time, Quinn's account was past due in the principal sum of $7,416.34 plus interest in the amount of $10,363.53 for a total of $17,779.87. Quinn filed a motion for summary judgment, arguing that Liberty's action was filed beyond the six-year statute of limitations applicable to contracts. See Wis. Stat. § 893.43 (2001-02). Quinn testified that she made her last payment to Citibank on June 21, 1994. Liberty contended that Quinn made an additional payment on September 28,1995. Liberty also described a telephone conversation with Quinn on April 11, 2000, during which she authorized a $250 payment toward the account. As a result of this conversation, Liberty generated a form that looked like a standard personal check but included the language "Customer Verbal Authorization" and "Signature Not Required." Liberty deposited the check and issued a provisional credit against Quinn's overdue credit card account. The next day, Quinn's husband informed Liberty of his intent to stop payment on the check. On April 18, the check was returned to Liberty marked "ACCOUNT CLOSED" and Liberty removed the credit from Quinn's account.

¶ 4. The trial court held that the June 21, 1994 payment extended the statute of limitations through June 21, 2000. The court also held that the telephonic payment on April 11, 2000, further extended the statute of limitations and, therefore, Liberty's September 27, 2001 complaint was timely. The case proceeded to trial and the court entered judgment requiring Quinn to pay the past due principal and accumulated interest, plus costs and disbursements.

¶ 5. The issue before us is whether the telephone transaction, which was subsequently canceled, constituted a payment for purposes of extending the statute of limitations. Where the facts of the transaction are undisputed, the legal significance of the facts is a question of law that we review de novo. See Ball v. District No. 4, Area Bd. of Vocational, Technical & Adult Educ., 117 Wis. 2d 529, 537, 345 N.W.2d 389 (1984).

¶ 6. Wisconsin Stat. § 893.43 provides that an action based on a contract "shall be commenced within 6 years after the cause of action accrues or be barred." A partial payment on the contractual obligation made before the statute of limitations has run tolls the statute and sets it running from the date of payment. Saint Mary's Hosp. Med. Ctr. v. Tarkenton, 103 Wis. 2d 422, 424, 309 N.W.2d 14 (Ct. App. 1981). Generally, a statute of limitations exists to insure prompt litigation of claims and to protect defendants against fraudulent or stale claims. Parr v. Milwaukee Bldg. & Constr. Trades, 177 Wis. 2d 140, 148, 501 N.W.2d 858 (Ct. App. 1993). A partial payment on a contract claim extends the statute of limitations to encourage settlement agreements without litigation. See id. Periodic partial payments on a debt may be made beyond the ordinary statutory limitation period without the creditor losing the right to pursue the unpaid balance. Id.

¶ 7. Quinn posits that the fact that no funds actually transferred as a result of the telephone transaction demonstrates that no payment was made on April 11, 2000. We disagree. A payment by check is made when the check is accepted and negotiated. See id. Black's Law Dictionary defines "negotiate" as follows: "To transfer (an instrument) by delivery or indorsement, whereby the transferee takes the instrument for value, in good faith, and without notice of conflicting title claims or defenses." Black's Law Dictionary 1064 (8th ed. 2004). Quinn admits that she authorized the $250 transaction over the telephone. Liberty then created a computer-generated check representing the verbally authorized payment. Liberty deposited the check with its bank and entered a provisional credit on Quinn's account. It is not necessary for the funds to have actually transferred from Quinn's bank account to Liberty's account to constitute payment. Here we have payment tendered and negotiated in good faith. Quinn's subsequent cancellation of payment does not detract from the fact that, for purposes of extending the statute of limitations, a payment occurred on April 11, 2000.

¶ 8. We conclude that a payment is not conditioned on the actual transfer of funds, but on the recipient's action of negotiating the instrument. Liberty's actions constituted acceptance and negotiation of the amount tendered by Quinn. Accordingly, the statute of limitations, set to run on June 21, 2000, was extended by the telephone transaction on April 11, 2000. Liberty's collection action was timely filed on September 27, 2001.

By the Court. — Judgment affirmed.

       "Electronic media" refers to computer records of account information, interest rates, balances, payments, and so forth.

       All references to the Wisconsin Statutes are to the 2001-02 version unless otherwise noted.

       Liberty argues that the trial court erred in failing to rule that the September 28, 1995 payment, contested by Quinn but apparent in the electronic media, was sufficient to toll the statute of limitations. The trial court stated that it was not satisfied that the alleged 1995 payment was made. Liberty has not filed a cross-appeal on the issue, however, and because we affirm the trial court's ruling regarding the April 11, 2000 payment, we need not address Liberty's argument here.