Contract damages can survive expiration of contract action.

• Date: 06 February 2002

Byline: David Ziemer

Damages for breach of an insurance contract are recoverable in a bad faith tort action, even when the insureds breach of contract claim is barred by the statute of limitations, the Wisconsin Supreme Court held on February 1.

Leaning Home

In 1993, Thomas and Joan Jones insured a residence and motel in Woodruff with a fire insurance policy from Secura Insurance Company. Fire insurance includes all types of property indemnity insurance. In May 1997, they presented a notice of loss to Secura for damages, reporting that the home was leaning toward the lake, the chimney was separating form the house, and the deck was slanting.

The Secura claims adjuster, however, concluded that the damage was the result of an on-going situation, rather than a collapse, and was not covered by the policy.

In March, 1999, the Joneses filed suit against Secura, alleging both breach of contract and bad faith. Judge James B. Mohr granted summary judgment in favor of Secura on the breach of contract claim, concluding it was barred by the one-year statute of limitations contained in sec. 631.83(1)(a).

Secura then moved for declaratory judgment that the Joneses claims for contract damages lost use of...