Sedgeley Farm, Inc. v. Mt. Morris Mutual Insurance Company

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
February 15, 2022
A party may file with the Supreme Court a
Sheila T. Reiff petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10
and RULE 809.62.

Appeal No. 2021AP642 Cir. Ct. No. 2019CV124

STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT III

SEDGELEY FARM, INC., LARRY BJORK AND LUCY BJORK,

PLAINTIFFS-APPELLANTS,

V.

MT. MORRIS MUTUAL INSURANCE COMPANY, KADO & ASSOCIATES AND
AMERICAN ALTERNATIVE INSURANCE CORPORATION,

DEFENDANTS-RESPONDENTS.

APPEAL from an order of the circuit court for Dunn County:
EMILY M. LONG, Judge. Affirmed.

Before Stark, P.J., Hruz and Gill, JJ.

Per curiam opinions may not be cited in any court of this state as precedent

or authority, except for the limited purposes specified in WIS. STAT. RULE 809.23(3).
No. 2021AP642

¶1 PER CURIAM. Sedgeley Farm, Inc., Larry Bjork, and Lucy Bjork
(collectively, “Sedgeley Farm”) appeal a grant of summary judgment in favor of
Mt. Morris Mutual Insurance Company, Kado & Associates (“Kado”), and Kado’s
insurer, American Alternative Insurance Corporation. The circuit court
determined that an insurance policy Mt. Morris issued to Sedgeley Farm was
unambiguous and did not provide coverage for a hay shed barn on Sedgeley
Farm’s property. The court further determined, based upon the undisputed facts,
that Sedgeley Farm could not prevail on its claim that Kado negligently failed to
procure an insurance policy that provided coverage for the hay shed barn. We
conclude the court properly granted summary judgment on both of Sedgeley
Farm’s claims, and we therefore affirm.

BACKGROUND

¶2 Sedgeley Farm is owned and operated by Larry and Lucy Bjork.
Prior to July 2010, Sedgeley Farm had a farmowner’s insurance policy through
Wisconsin Mutual Insurance Company. The Wisconsin Mutual policy covered
four buildings on the farm premises, which were described on the policy’s
declarations page as follows: (1) “machine shed”; (2) “36X50 barn”; (3) “loafing
barn”; and (4) “16 X 32 horse barn.” It is undisputed that the farm contained other
buildings that were not covered by the Wisconsin Mutual policy.

¶3 Sometime in 2010, Larry Bjork contacted Kado, an insurance
agency, about procuring a different insurance policy for Sedgeley Farm. Kado
subsequently obtained a farmowner’s policy for Sedgeley Farm from Mt. Morris,
with an initial policy period from July 27, 2010, to July 27, 2011. Thereafter,
Sedgeley Farm renewed the Mt. Morris policy on an annual basis. This appeal
involves the policy period from July 27, 2017, to July 27, 2018.

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¶4 Under “Coverage E – Farm Barns, Buildings, and Structures,” the
Mt. Morris policy provides an initial grant of coverage for “additional farm
dwellings, farm barns, farm buildings, portable buildings and structures, tenant’s
improvements and betterments, and other structures located on the ‘insured
premises’ for which a ‘limit’ is shown on the ‘declarations.’” The policy further
provides that Mt. Morris “insure[s] against direct physical loss to property covered
under Coverage[] E” that is caused by fire.

¶5 The policy’s declarations page includes a “Schedule of Barns,
Buildings, Structures and Additional Farm Buildings – Coverage E” (hereinafter,
“the Schedule”). The Schedule states: “‘We’ cover only the following classes or
items of property for which a specific limit is shown. ‘Our’ Liability shall not
exceed such limit.” The Schedule then lists four limits of liability, each of which
is accompanied by a “description.” The four descriptions are as
follows: (1) “Barns (Type 2) Dimensions: 36X50”; (2) “Machine Shed
(Type 1) … Dimensions: 32X78”; (3) “Horse Shed (Type 1) …
Dimensions: 16X32”; and (4) “Loafing Shed (Type 1) … Dimensions: 16X40.”
The “Type 1” and “Type 2” designations signified the conditions of the buildings
for purposes of determining the premiums to be charged. Like the Wisconsin
Mutual policy, it is undisputed that the Mt. Morris policy did not cover every
building on Sedgeley Farm’s premises.

¶6 On October 28, 2017, a fire destroyed a structure on Sedgeley
Farm’s property that is variously referred to in the record as a “hay shed barn,” a
“hay shed,” a “hay barn,” and a “detached garage.” Mt. Morris denied coverage
for the loss of the hay shed barn on the basis that it was not one of the structures
listed on the Schedule.

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¶7 In May 2019, Sedgeley Farm commenced the instant lawsuit against
Mt. Morris, Kado, and Kado’s insurer.1 Sedgeley Farm asserted that the hay shed
barn was covered by the Mt. Morris policy, and that Mt. Morris had therefore
breached the parties’ contract by denying coverage for the loss of that building.2
Alternatively, in the event the circuit court determined that the Mt. Morris policy
did not cover the loss of the hay shed barn, Sedgeley Farm asserted that Kado was
negligent by failing to procure an insurance policy that provided that coverage.

¶8 Mt. Morris and Kado moved for summary judgment, and the circuit
court ultimately granted both motions in an oral ruling. The court concluded that
the Mt. Morris policy was unambiguous and did not provide coverage for the loss
of the hay shed barn. The court reasoned that although the Schedule used the
plural term “barns” when describing one of the categories of covered structures,
only one set of dimensions was listed for that category—“a 36 by 50 building.”
Because those dimensions did not correspond to the dimensions of the hay shed
barn, the court stated the hay shed barn “clearly … is not the same building that is
listed on the schedule of buildings that were included in the insurance.” The court
further reasoned that Sedgeley Farm had “presumably benefited from the fact that
they weren’t paying a premium on that building, and they should not now benefit
from that.”

1
For the remainder of this opinion, when we discuss arguments made or actions taken
during this litigation by Kado and its insurer, we refer to them collectively as “Kado.”
2
In the alternative, Sedgeley Farm asserted a claim against Mt. Morris for reformation of
the policy based on a mutual mistake as to whether the policy provided coverage for the hay shed
barn. Sedgeley Farm later withdrew that claim, however, and we therefore do not address it
further.

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¶9 The circuit court also concluded there was “no dispute that the
Bjorks asked for the same coverage they had with [Wisconsin Mutual,] and that’s
what Kado provided.” The court stated Sedgeley Farm had a duty to review the
Mt. Morris policy, which unambiguously did not cover the hay shed barn. The
court therefore reasoned that Sedgeley Farm “should have been on notice” that the
hay shed barn was not covered. As such, the court determined, as a matter of law,
that Sedgeley Farm could not prevail on its negligence claim against Kado.
Sedgeley Farm now appeals.

DISCUSSION

I. Breach of contract claim against Mt. Morris

¶10 We independently review a grant of summary judgment, using the
same methodology as the circuit court. Hardy v. Hoefferle, 2007 WI App 264, ¶6,
306 Wis. 2d 513, 743 N.W.2d 843. Summary judgment is appropriate if there is
no genuine issue of material fact and the undisputed facts show that the moving
party is entitled to judgment as a matter of law. WIS. STAT. § 802.08(2)
(2019-20).

¶11 In this case, the circuit court determined that Mt. Morris was entitled
to summary judgment on Sedgeley Farm’s breach of contract claim because the
unambiguous language of the Mt. Morris policy showed that the policy did not
provide coverage for the loss of the hay shed barn. The interpretation of an
insurance policy presents a question of law that we review independently.
Danbeck v. American Fam. Mut. Ins. Co., 2001 WI 91, ¶10, 245 Wis. 2d 186,
629 N.W.2d 150. “An insurance policy is construed to give effect to the intent of
the parties, expressed in the language of the policy itself, which we interpret as a
reasonable person in the position of the insured would understand it.” Id. We

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therefore give the words in an insurance policy their common and ordinary
meaning, and where the policy language is plain and unambiguous, we enforce it
as written without resort to rules of construction. Id. “We do not construe policy
language to cover risks that the insurer did not contemplate or underwrite and for
which it has not received a premium.” Estate of Sustache v. American Fam.
Mut. Ins. Co., 2008 WI 87, ¶19, 311 Wis. 2d 548, 751 N.W.2d 845.

¶12 If an insurance policy is ambiguous, however, we construe the
policy language in favor of coverage. Danbeck, 245 Wis. 2d 186, ¶10. Policy
language is ambiguous when it is susceptible to more than one reasonable
interpretation. Id. Whether policy language is ambiguous presents a question of
law for our independent review. Janssen v. State Farm Mut. Auto. Ins. Co., 2003
WI App 183, ¶6, 266 Wis. 2d 430, 668 N.W.2d 820.

¶13 Sedgeley Farm argues the Mt. Morris policy is ambiguous as to
whether it provides coverage for the hay shed barn because the Schedule uses the
plural term “barns” when listing the covered buildings. Sedgeley Farm asserts that
the use of the plural term “barns” led it to believe that multiple barns were covered
by the policy—specifically, the hay shed barn and another structure on the
property known as the “old dairy barn.” Sedgeley Farm argues that if Mt. Morris
had intended the policy to cover only the old dairy barn, it should have used the
singular term “barn” or a more descriptive designation, such as “old dairy barn,”
when listing the covered structures. Alternatively, Sedgeley Farm asserts that
Mt. Morris could have included a definition of the term “barns” in the policy that
clarified which structures that term was meant to encompass. Because Mt. Morris
did not do so, Sedgeley Farm contends we must apply the common and ordinary
meaning of the plural term “barns,” which “mean[s] more than one.”

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¶14 We reject Sedgeley Farm’s argument because it improperly reads the
term “barns” in isolation, without regard for the surrounding policy language.
“Provisions in an insurance policy should not be read in isolation, but rather
should be read in the context of the policy as a whole.” Johnson Controls, Inc. v.
London Mkt., 2010 WI 52, ¶25, 325 Wis. 2d 176, 784 N.W.2d 579. Although the
Schedule uses the plural term “barns” as the “description” associated with the first
“limit of liability” shown on the Schedule, underneath the word “barns” a single
set of dimensions is provided—“36X50.” The listing of a single set of dimensions
would have alerted a reasonable insured that the term “barns” included only one
structure. Moreover, it is undisputed that the dimensions listed underneath the
term “barns” do not correspond to the dimensions of the hay shed barn. Under
these circumstances, a reasonable insured would have concluded that the hay shed
barn was not one of the structures covered by the Mt. Morris policy.

¶15 In addition, we agree with Mt. Morris that if the plural term “barns”
included every barn on Sedgeley Farm’s property, then the dimensions listed
underneath that term would be superfluous. Stated differently, if the use of the
plural term “barns” signified that every barn on the property was covered, it would
not have been necessary to list the dimensions of one particular barn. Where
possible, we avoid interpretations that render policy language superfluous. Bulen
v. West Bend Mut. Ins. Co., 125 Wis. 2d 259, 263, 371 N.W.2d 392 (Ct. App.
1985).

¶16 Sedgeley Farm asserts that both Larry and Lucy Bjork reviewed the
Mt. Morris policy prior to the fire and believed the plural term “barns” meant that
both the old dairy barn and the hay shed barn were covered. Sedgeley Farm also
cites Larry’s deposition testimony that during a May 2017 inspection of Sedgeley
Farm’s property, an adjuster from Mt. Morris took pictures of and paid particular

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attention to the hay shed barn. Sedgeley Farm contends that based on the
adjuster’s actions, Larry “presum[ed]” that the hay shed barn “was one of the
buildings covered” by the Mt. Morris policy.

¶17 These arguments fail because we apply an objective standard when
interpreting an insurance policy, asking what a reasonable person in the insured’s
position would have understood the policy to mean. See Danbeck, 245 Wis. 2d
186, ¶10. Any subjective belief by the Bjorks that the Mt. Morris policy covered
the hay shed barn is not relevant, in the face of the unambiguous policy language
showing that the hay shed barn is not covered.

¶18 Sedgeley Farm also emphasizes that when Mt. Morris’s adjuster
inspected the farm premises in May 2017 and took measurements of various
buildings, no structure that the adjuster measured matched the “36X50”
dimensions listed under the term “barns” on the Schedule. Sedgeley Farm argues
this discrepancy rendered the policy ambiguous as to which structure or structures
were included within the term “barns.”

¶19 We disagree, for two reasons. First, regardless of whether the
dimensions listed on the Schedule matched any other building on Sedgeley Farm’s
property, it is undisputed that the dimensions did not match the hay shed barn,
which Mt. Morris measured as having dimensions of twenty-six feet by thirty feet.
Second, during the 2017 inspection, Mt. Morris measured the old dairy barn as
having dimensions of thirty-four feet by forty-eight feet—which is only two feet
off in each direction from the dimensions listed under “barns” on the Schedule.
Under these circumstances, a reasonable insured would not have concluded that
the dimensions listed on the Schedule referred to the hay shed barn.

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¶20 Finally, Sedgeley Farm argues an email that Mt. Morris sent to Kado
in June 2017 shows that “Mt. Morris itself was uncertain as to what structures
were covered under its own policy at the time of the July renewal—just three
months before the fire.” Sedgeley Farm argues that in light of Mt. Morris’s own
“uncertainty or confusion” as to which buildings were covered, its current claim
that the policy was not ambiguous is “illogical.”

¶21 We reject this argument because the email in question clearly shows
that Mt. Morris understood that its policy did not cover the hay shed barn. In the
email, a Mt. Morris employee expressly stated, “On the policy we have 4 buildings
that we are insuring.” After raising questions about several other buildings on the
property, the Mt. Morris employee asked, “There is a detached garage 26x30 on
the inspection that we are not insuring. Should we be adding this to the policy?”
(Emphasis added.) It is undisputed that the “detached garage” referenced in the
email is the hay shed barn. As such, the email clearly shows that as of June 2017,
Mt. Morris understood, without any confusion or uncertainty, that the term “barns”
in its policy did not include the hay shed barn, and that its policy therefore did not
cover the hay shed barn.

¶22 For all of the reasons explained above, we reject Sedgeley Farm’s
claim that the Mt. Morris policy is ambiguous with respect to whether the hay
shed barn is a covered structure. Based on the unambiguous policy language, a
reasonable insured would have understood that the policy did not provide
coverage for the hay shed barn. We therefore affirm the circuit court’s decision
granting summary judgment in favor of Mt. Morris on Sedgeley Farm’s breach of
contract claim.

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II. Negligence claim against Kado

¶23 Sedgeley Farm next argues that the circuit court erred by granting
Kado summary judgment on Sedgeley Farm’s claim that Kado negligently failed
to procure an insurance policy that provided coverage for the hay shed barn. To
prevail on its negligence claim, Sedgeley Farm would need to prove four
elements: (1) a duty on the part of Kado; (2) a breach of that duty; (3) a causal
connection between Kado’s conduct and Sedgeley Farm’s injury; and (4) actual
loss or damage. See Avery v. Diedrich, 2007 WI 80, ¶20, 301 Wis. 2d 693, 734
N.W.2d 159.

¶24 An insurance agent has a duty to exercise reasonable skill and
diligence in the transaction of the business entrusted to the agent. Id., ¶23. As
such, the agent “must use reasonable skill and diligence to put into effect the
insurance coverage requested by his or her policy holder.” Appleton Chinese
Food Serv., Inc. v. Murken Ins., Inc., 185 Wis. 2d 791, 803 n.4, 519 N.W.2d 674
(Ct. App. 1994) (citation omitted). “When an insurance agent fails to act with
reasonable care, skill, and diligence in procuring coverage he or she agreed to
procure, the agent has breached his or her duty to the insured.” Avery, 301
Wis. 2d 693, ¶23.

¶25 Absent “special circumstances,” however, an insurance agent’s duty
to an insured is limited. Id., ¶26 (citation omitted). For instance, Wisconsin cases
have held that without special circumstances, an insurance agent has no duty to:

“inform about or recommend policy limits higher than
those selected by the insured,” “update the contents limit of
the [insureds’] policy or to advise them regarding the
adequacy of coverage,” “advise [the insured] to increase
the limits of its insurance coverage for personal property,”
or “anticipate what liabilities an insured may expect a

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policy to cover or to identify which exclusions in a policy
an insured may deem important.

Id., ¶28 (citations omitted). Stated differently, without special circumstances, an
insurance agent “does not have an affirmative duty to advise a client regarding the
availability or adequacy of coverage.” Nelson v. Davidson, 155 Wis. 2d 674, 682,
456 N.W.2d 343 (1990).

¶26 “Special circumstances exist when something more than a standard
insured-insurer relationship exists, such as an express agreement that an agent will
advise the insured about his or her coverage.” Avery, 301 Wis. 2d 693, ¶27.
Special circumstances may also be present if an insured pays the insurance agent
compensation for his or her advice, if the insured has entrusted the agent to an
extent that the agent appreciates that he or she has an enhanced duty of providing
advice, or if the insured relies on the agent’s advice after the agent held him- or
herself out as a highly skilled insurance expert. Id.

¶27 Sedgeley Farm does not argue that special circumstances exist in this
case. Absent special circumstances, we conclude Kado was entitled to summary
judgment on Sedgeley Farm’s negligence claim because the undisputed facts show
that Kado did not have a duty to procure a policy that included coverage for the
hay shed barn, or a duty to advise Sedgeley Farm about the availability of such
coverage.

¶28 Instead, Kado had a duty to procure an insurance policy that
provided the coverage requested by Sedgeley Farm. See Appleton Chinese Food,
185 Wis. 2d at 803 n.4. Larry Bjork expressly testified during his deposition that
he asked Kado to procure a policy for Sedgeley Farm that provided the same
coverage as Sedgeley Farm’s prior policy from Wisconsin Mutual. As noted

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above, the Wisconsin Mutual policy provided coverage for four buildings: (1) a
“machine shed”; (2) a “36X50 barn”; (3) a “loafing barn”; and (4) a “16 X 32
horse barn.” The Mt. Morris policy that Kado obtained for Sedgeley Farm
provided coverage for the same four structures. The undisputed facts therefore
show that Kado fulfilled its duty to Sedgeley Farm by obtaining a policy that
provided the coverage Sedgeley Farm had requested. Absent a specific request
from Sedgeley Farm, Kado had no additional duty to procure a policy that also
provided coverage for the hay shed barn. Moreover, Kado had no duty to advise
Sedgeley Farm about the availability of coverage for the hay shed barn or about
the wisdom of obtaining such coverage. See Nelson, 155 Wis. 2d at 682 (absent
special circumstances, an insurance agent has no duty to advise the insured about
the availability or adequacy of coverage).

¶29 Sedgeley Farm argues there is a genuine issue of material fact as to
whether it requested coverage for the hay shed barn. According to Sedgeley Farm,
Larry Bjork “maintains he believed he made himself clear to [Kado] that he
wanted five essential buildings covered, which included the hay shed barn.”
Sedgeley Farm does not, however, cite any evidence supporting the proposition
that Larry, or anyone else from Sedgeley Farm, made a specific request for
coverage of the hay shed barn. Instead, Sedgeley Farm cites a portion of Larry’s
deposition testimony in which he asserted that he did not believe he had
communicated with Gregg Kado (one of Kado’s owners) “about adding other
buildings for coverage … in October of 2010.” That testimony does not show that
Larry asked Kado to procure a policy that provided coverage for the hay shed
barn.

¶30 Sedgeley Farm also asserts, based on Lucy Bjork’s deposition
testimony, that Larry “told [Lucy] that he was insuring the five buildings with

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[Kado,] including the hay shed barn.” What Larry may have told Lucy does not,
however, show that Larry or anyone else told Kado that Sedgeley Farm wanted
coverage for the hay shed barn. Simply put, evidence regarding the coverage that
Sedgeley Farm’s principals wanted, or the coverage that they believed Sedgeley
Farm had, does not create a genuine issue of material fact as to what coverage they
actually requested from Kado.

¶31 Sedgeley Farm further claims there is a genuine issue of material
fact as to whether Gregg Kado followed his normal practices when procuring the
Mt. Morris policy. During his deposition, Gregg Kado testified that when
procuring an insurance policy for a farm in 2010, he would typically review the
declarations page from the farm’s prior policy in order to formulate an initial
quote, and he would later go to the farm to take pictures and obtain measurements
of the structures. Sedgeley Farm asserts there is a dispute of fact as to whether
Gregg Kado followed these standard practices in the instant case.

¶32 Although there may be a dispute of fact as to whether Gregg Kado
followed his standard practices when procuring the Mt. Morris policy, Sedgeley
Farm has failed to show that any such factual dispute is material. A material fact
is one that impacts the resolution of the controversy. Strasser v. Transtech
Mobile Fleet Serv., Inc., 2000 WI 87, ¶32, 236 Wis. 2d 435, 613 N.W.2d 142.
Here, Sedgeley Farm cites no authority in support of the proposition that
Gregg Kado had a duty to follow his standard practices when obtaining insurance
coverage for Sedgeley Farm. As explained above, under our case law, Kado
instead had a duty to procure a policy that provided the coverage Sedgeley Farm
had requested. Kado fulfilled that duty by procuring a policy that provided the
same coverage as Sedgeley Farm’s prior policy from Wisconsin Mutual. Under
these circumstances, whether Gregg Kado followed his standard practices when

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procuring the Mt. Morris policy is not material, as it has no impact on either the
scope of Kado’s duty to Sedgeley Farm or whether Kado breached that duty.

¶33 Sedgeley Farm also argues that Kado breached its duty to exercise
reasonable skill and diligence when it failed to “follow up on” Mt. Morris’s
June 2017 email. As discussed above, in that email, a Mt. Morris employee noted
that the hay shed barn was not covered and asked, “Should we be adding this to
the policy?” Sedgeley Farm asserts that upon receipt of this email, Kado had a
duty to inform Sedgeley Farm that the hay shed barn was not covered and to ask
whether Sedgeley Farm wanted to obtain coverage for that structure.

¶34 We do not find this argument persuasive. Again, the undisputed
facts show that Sedgeley Farm asked Kado to procure a policy that provided the
same coverage as its prior Wisconsin Mutual policy, which did not cover the hay
shed barn. When Mt. Morris later noted that the hay shed barn was not covered
and asked whether it should be added to the policy, Kado could reasonably rely on
Sedgeley Farm’s earlier representation that it wanted the same coverage provided
by the Wisconsin Mutual policy.

¶35 In addition, the copy of the email contained in the appellate record
includes a handwritten notation by a Kado employee, Georgene Close,
stating: “Spoke to [Lewis Bjork] about all this[.] Will get back to me[.]” During
her deposition, Close testified that after she received the Mt. Morris email, she was
unable to reach Larry Bjork, so she called his son Lewis, who was listed as an
additional insured on the policy. During that conversation, Close asked Lewis
about adding coverage for the hay shed barn “because they have no insurance on
it.” Lewis said that he would get back to her, but he did not do so. We reject
Sedgeley Farm’s contention that, having contacted Lewis and inquired about

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obtaining coverage for the hay shed barn, Kado had a duty to take further action to
address that issue when neither Lewis nor anyone else from Sedgeley Farm
responded to Kado’s initial inquiry.

¶36 We therefore conclude, based upon the undisputed facts, that Kado
did not have a duty to obtain an insurance policy for Sedgeley Farm that provided
coverage for the hay shed barn, or a duty to advise Sedgeley Farm regarding the
availability or desirability of such coverage. Accordingly, the circuit court
properly granted summary judgment to Kado on Sedgeley Farm’s negligence
claim.3

By the Court.—Order affirmed.

This opinion will not be published. See WIS. STAT.
RULE 809.23(1)(b)5. (2019-20).

3
Sedgeley Farm also argues that when granting summary judgment in favor of Kado, the
circuit court “erroneously determined that Sedgeley Farm’s claim was barred by its own review
of the policy.” We need not address this argument because we have already concluded, for the
reasons explained above and upon our independent review, that Kado was entitled to summary
judgment on Sedgeley Farm’s negligence claim. We may affirm a grant of summary judgment on
different grounds than those relied upon by the circuit court. International Flavors &
Fragrances, Inc. v. Valley Forge Ins. Co., 2007 WI App 187, ¶23, 304 Wis. 2d 732, 738 N.W.2d
159.

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