Wisconsin follows the four-corners rule of insurance contract law, which compares a claim against an insured with the terms of an insurance policy to determine whether the claim falls within the “four corners” of the policy. In a bizarre per curium decision, the Wisconsin Supreme Court dismissed a petition for review as improvidently granted because the Court of Appeals below, and the parties before the Wisconsin Supreme Court, failed to fully analyze the insurance policy, including exclusions and exceptions to exclusions. In doing so, the majority reaffirmed that circuit courts must interpret the entire insurance policy in duty to defend cases.
In the case of Smith v. Anderson, 2017 WI 43, West Bend Mutual Insurance Company won a motion for summary judgment, in which the circuit court found there was no duty to defend its insured because the policy did not provide an initial grant of coverage and, even if it did, exclusions precluded coverage. The Court of Appeals, however, affirmed only on the issue of the initial grant of coverage; it did not analyze the exclusions. The parties before the Wisconsin Supreme Court, therefore, briefed only the issue whether there was an initial grant of coverage.
The Wisconsin Supreme Court initially granted the insured’s petition for review, presenting a number of insurance and coverage related issues. The parties briefed the issues and, following oral argument, the Wisconsin Supreme Court issued a written decision. The Wisconsin Supreme Court however dismissed the case because the four-corners rule was not fully applied by the Court of Appeals, nor was it briefed by the parties to the Wisconsin Supreme Court; the Court held it was duty bound to reverse its initial decision, granting the petition for review. The case is, yet again, another clear indication from the Wisconsin Supreme Court that circuit courts, Courts of Appeal, and the parties must fully analyze the entire insurance policy when evaluating an insurer’s duty to defend.