Wisconsin “property damage” and exclusion l.

In General Casualty Co. of Wis. v. Rainbow Insulators, Inc., No. 2010AP347 (Wis. Ct. App. March 31, 2011), claimant condominium project general contractor KBS sued insured framing and drywall contractor E&A for breach of contract alleging that, as a result of E&A’s negligent installation of channels to the drywall resulting in noise problems, residents of the project suffered loss of use of their units and KBS incurred costs in repairing E&A’s work by demolishing E&A’s work and correctly reinstalling the channels.   KBS also sued E&A’s CGL insurer Acuity.   Acuity moved for a judicial declaration of no duty to defend E&A. The trial court entered summary judgment for Acuity.  On appeal, the intermediate court of appeals affirmed.  Applying Wisconsin law, the court first held that, based on American Family Mut. Ins. Co. v. American Girl, Inc., 673 N.W.2d 65 (Wis. 2004), the KBS complaint sufficiently alleged “property damage,” both physical injury to tangible property and loss of use.  However, the court then held that all of the property damage fell within exclusion l. for property damage to E&A’s work arising out of E&A’s completed work.

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