The High Court confirmed that under Wisconsin Law there were no exceptions to the rule that extrinsic evidence cannot create a duty to defend.
The Wisconsin Supreme Court, in a split decision, reaffirmed the "four corners" rule governing a liability insurance company's duty to defend. The High Court confirmed that under Wisconsin law there were no exceptions to the rule that extrinsic evidence cannot create a duty to defend.
In American Family Mut. Ins. Co. v. Hansen, 2016 CO 46, 275 P.3d 115 (Colo. 2016), the Colorado Supreme Court found that when a discrepancy exists between the policy declarations page and an extrinsic lienholder statement regarding who was an insured, the discrepancy did not create an ambiguity because the ambiguity can only be used under Colorado law to determine whether an ambiguity exists within the four-corners of the insurance contract itself and ambiguity could not be created by an extrinsic document which was not part of the insurance contract. For ambiguity to exist, it must appear in the four-corners of the document before extrinsic evidence could be considered. Extrinsic evidence could only be used as an aide in ascertaining the intent of the parties once an ambiguity was found.
In a split decision, the Wisconsin Supreme Court in Water Well Solutions Service Group, Inc. v. Consolidated Ins. Co., 2015 WI 54, 369 Wis.2d 607, 881 N.W.2d 285 (2016), reaffirmed the "four-corners" rule governing a liability insurer's duty to defend in Wisconsin. The Court unambiguously reaffirmed the rule and confirmed in the majority opinion that there were no exceptions to the rule that would permit extrinsic evidence to create a duty to defend where no duty to defend otherwise existed. According to the majority's view, the four-corners rule promoted certainty and avoided speculation over the underlying plaintiff's true allegation. A vigorous dissent by two Justices challenged the majority opinion both in principle and application. The dissent noted that Wisconsin was in a shrinking minority of jurisdictions clinging to a strict application of the four-corners rule and that Wisconsinites would be better served by a rule that recognized substance over form in allowing extrinsic evidence to inform the duty to defend decision.