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Strauss v. Chubb Indem. Ins. Co.

United States Court of Appeals, Seventh Circuit

November 18, 2014

RANDAL STRAUSS AND DIANE STRAUSS, Plaintiffs-Appellees,
v.
CHUBB INDEMNITY INSURANCE COMPANY, VIGILANT INSURANCE COMPANY, FEDERAL INSURANCE COMPANY, AND GREAT NORTHERN INSURANCE COMPANY, Defendants-Appellants

Argued February 10, 2014.

Page 1027

Appeal from the United States District Court for the Eastern District of Wisconsin. No. 11 CV 981 -- Aaron E. Goodstein, Magistrate Judge.

For Randal Strauss, Diane Strauss, Plaintiffs - Appellees: Andrea L. Murdock, Attorney, Halloin & Murdock, S.C., Milwaukee, WI.

For Chubb Indemnity Insurance Company, Vigilant Insurance Company, Federal Insurance Company, Great Northern Insurance Company, Defendants - Appellants: Todd S. Schenk, Attorney, Tressler Llp, Chicago, IL; Frederick J. Strampe, Attorney, Borgelt, Powell, Peterson & Frauen, Milwaukee, WI.

For American Insurance Association, Wisconsin Insurance Alliance, Lloyd's America, Incorporated, Amici Curiae: Sheila M. Sullivan, Attorney, Bell, Moore & Richter, S.C., Madison, WI.

Before HAMILTON, Circuit Judge, and KENDALL, District Judge.[1]

OPINION

Page 1028

Kendall, District Judge.

Randal and Diane Strauss constructed a home in Mequon, Wisconsin in 1994. The Strausses insured the home with a number of policies (collectively, " the Policy" ) issued by Chubb Indemnity Insurance Company, Vigilant Insurance Company, Federal Insurance Company, and Great Northern Insurance Company (collectively, " the Chubb Defendants" ) from October 1994 to October 2005. Water infiltrated and damaged the home through a defect present since the completion of construction; however, the damage went undiscovered until 2010, well after the Policy expired. When the Strausses submitted a claim to the Chubb Defendants seeking recovery for the damage, they refused coverage, contending that because the damage manifested in 2010 and the " manifestation" trigger applies to first-party property insurance, it could not be responsible for the damage. The Chubb Defendants additionally asserted that the claim was submitted well beyond the applicable statute of limitations. See Wis. Stat. § 631.83(1)(a). The Strausses subsequently brought this action. The district court concluded that the " continuous" trigger theory applied due to the language of the Policy such that coverage existed for the entire loss. Because the continuous trigger theory applied, the district court found that the claims were not time-barred. The Chubb Defendants now appeal, arguing that (1) the manifestation trigger theory applies to first-party property insurance policies universally and (2) the Strausses' suit was not timely filed. For the following reasons, we affirm.

I. Background

The Strausses built their home in Mequon, Wisconsin in 1994. To insure the home, they purchased a " Chubb Masterpiece Deluxe Home Coverage" first-party property insurance policy. The Policy was issued by the Chubb Defendants over the years, from the time of construction in October 1994 through October 2005.[2]

Page 1029

From 2005 onward, the Strausses obtained insurance coverage for the home from other providers.

The Policy states that coverage is limited " only to occurrences that take place while this policy is in effect." " Occurrence" is defined as " a loss or accident to which this insurance applies occurring within the policy period. Continuous or repeated exposure to substantially the same general conditions unless excluded is considered to be one occurrence." Under the Policy taken out by the Strausses, a " 'covered loss' includes all risk of physical loss to [the] house or other property . . . unless stated otherwise or an exclusion applies." In addition, the Policy includes a " Legal Action Against Us" clause, mandating that any action against the Chubb Defendants be brought " within one year after a loss occurs."

In October 2010, the Strausses discovered that water infiltration had been causing damage within the building envelope of the home. The infiltration was ongoing and progressive in nature, beginning around the time of original construction and continuously occurring with each subsequent rainfall. On December 22, 2010, the Strausses submitted a claim to the Chubb Defendants for the discovered damage. The Chubb Defendants denied coverage, relying on two bases: (1) the damage was not discovered during any of their policy periods; and (2) any legal action was time-barred pursuant to both the ...


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