Title: Charles G. Vogel v. Gilbert Russo

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

2000 WI 85 
 
SUPREME COURT OF WISCONSIN 
 
 
Case No.: 
97-2192 
 
 
Complete Title 
of Case: 
 
Charles G. Vogel and Kathleen A. Vogel,  
 
Plaintiffs, 
 
v. 
Gilbert Russo, an individual d/b/a Russo  
Builders, and Milwaukee Mutual Insurance  
Company,  
 
Defendants-Third-Party Plaintiffs-
 
Respondents, 
 
v. 
West Bend Mutual Insurance Company,  
 
Third-Party Defendant-Appellant-Petitioner, 
Interstate Heating Company, Betty  
Limbach, f/d/b/a Limbach Construction  
Company and ABC Insurance Company,  
 
Third-Party Defendants.  
 
 
ON REVIEW OF A DECISION OF THE COURT OF APPEALS 
Reported at: 
227 Wis. 2d 217, 587 N.W.2d 213 
 
 
 
(Ct. App. 1998 – Unpublished) 
 
 
Opinion Filed: 
July 7, 2000 
Submitted on Briefs: 
      
Oral Argument: 
January 5, 2000 
 
 
Source of APPEAL 
 
COURT: 
Circuit 
 
COUNTY: 
Ozaukee 
 
JUDGE: 
Joseph D. McCormack 
 
 
JUSTICES: 
 
Concurred: 
      
 
Dissented: 
ABRAHAMSON, C.J., dissents (opinion filed). 
 
 
BABLITCH, J., joins dissent. 
 
Not Participating:       
 
 
ATTORNEYS: 
For the third-party defendant-appellant-
petitioner, there were briefs by James J. Pauly, Rollin E. 
Krafft, Christopher C. Zwygart and Law Offices of James J. Pauly, 
West Bend, and oral argument by James J. Pauly. 
 
 
For the defendants-third-party plaintiffs-
respondents there was a brief by Gregory J. Cook, Patti J. Kurth, 
and Kasdorf, Lewis & Swietlik, S.C.¸ Milwaukee, and oral argument 
by Gregory J. Cook. 
 
 
 
2000 WI 85 
 
NOTICE 
This opinion is subject to further editing 
and modification.  The final version will 
appear in the bound volume of the official 
reports. 
 
 
No. 97-2192 
 
STATE OF WISCONSIN               :  
IN SUPREME COURT 
 
 
Charles G. Vogel and Kathleen A. Vogel,  
 
          Plaintiffs, 
 
     v. 
 
Gilbert Russo, an individual d/b/a Russo  
Builders, and Milwaukee Mutual Insurance  
Company,  
 
          Defendants-Third- 
          Party Plaintiffs-Respondents, 
 
     v. 
 
West Bend Mutual Insurance Company,  
 
          Third-Party Defendant-Appellant- 
          Petitioner, 
 
Interstate Heating Company, Betty  
Limbach, f/d/b/a Limbach Construction  
Company and ABC Insurance Company,  
 
          Third-Party Defendants. 
 
 
REVIEW of a decision of the Court of Appeals.  Reversed and 
cause remanded. 
 
FILED 
 
JUL 7, 2000 
 
Cornelia G. Clark 
Clerk of Supreme Court 
Madison, WI 
 
 
 
 
 
No. 
97-2192 
 
 
2 
¶1 
DIANE S. SYKES, J.   This case presents an insurance 
coverage dispute and requires us to determine whether a 
comprehensive 
general 
liability 
insurance 
policy 
provides 
coverage for diminution in value of a home that resulted from a 
subcontractor's faulty masonry work.  The appeal arises out of a 
breach of contract and negligence action filed by Charles and 
Kathleen Vogel against Russo Builders, the general contractor 
that built their home, and Russo's insurer, Milwaukee Mutual 
Insurance Company.  Russo had subcontracted the masonry work on 
the Vogels' home to Limbach Construction, and impleaded Limbach 
and its insurer, West Bend Mutual, for contribution.  Limbach 
was insured under a standard comprehensive general liability 
policy.  The jury found for the Vogels and awarded damages, 
measured under two alternate theories: cost of repair and 
diminution in value. 
¶2 
After trial, the circuit court adopted the diminution 
in value measure of damages, and entered judgment accordingly.  
On the coverage issue, the court concluded that West Bend's 
insurance policy provided coverage for diminution in value 
damages, and included in the order for judgment an award for 
contribution in favor of Russo and its insurer and against 
Limbach and West Bend.  The court of appeals affirmed, and we 
accepted review.  Because we conclude that most of the damages 
awarded by the jury are excluded by West Bend's insurance 
policy, we reverse. 
¶3 
In 1987, Charles and Kathleen Vogel hired general 
contractor Gilbert Russo, d/b/a Russo Builders, to build their 
No. 
97-2192 
 
 
3 
new home, at a cost of approximately $400,000 (excluding the 
lot).  Russo subcontracted the masonry work to Michael Limbach, 
d/b/a Limbach Construction Company.  Limbach performed all of 
the foundation work, the flat work, concrete work and brick work 
on the home.  Limbach also constructed the chimney and installed 
the home's footings, the basement floor, drain tiles, exterior 
brick, and the masonry fireplaces. 
¶4 
In mid-August of 1988, construction was complete and 
the Vogels moved in.  They soon began noticing problems.  During 
the winter of 1988-89, the Vogels noticed moisture in the home. 
 Water spots appeared on the walls in the east bedroom.  
Efflorescence, a whitish salt appearance resulting from water 
penetration, appeared around the perimeter of the basement.  The 
Vogels also noticed other stains from water penetration 
¶5 
In late 1990 or early 1991, the home's chimney caps 
crumbled and needed to be replaced.  In the summer of 1991, the 
Vogels noticed more water penetration in the east bedroom, a 
problem 
that 
persisted 
through 
the 
next 
several 
years, 
culminating when the Vogels returned from a vacation in March of 
1993 and discovered wet carpeting below the bedroom door jamb, 
water stains on the ceiling, and water running down the side of 
the back stairway.  Subsequent heavy rains caused more water to 
leak into the east bedroom, down a wall, and into the kitchen 
below, where it curled the wallpaper, warped a baseboard and 
eventually pooled in the basement.   
¶6 
The Vogels also had trouble with their chimneys.  
Because the dampers would not open, Michael Limbach returned to 
No. 
97-2192 
 
 
4 
the home to remove excess mortar from the living room fireplace. 
 Eventually, the Vogels hired an engineering consultant who 
examined the home and advised them not to use their fireplaces. 
¶7 
The same consultant found a number of other problems 
with 
the 
home's 
masonry. 
 
The 
brick 
head 
joints 
were 
incompletely filled.  Limbach had used 28 gauge wall ties to 
hold the brick in place, even though the building code required 
22 gauge wall ties, approximately twice the thickness of those 
Limbach used.  According to the consultant, if the 28 gauge ties 
corroded or broke off, the walls of the home could collapse.  
Limbach also failed to install weep holes in the brick, which 
are designed to let water escape the brick and to provide 
ventilation to keep the brick and underlying wood frame dry. 
¶8 
Ultimately, the Vogels sued Russo for breach of 
contract and negligence in the construction of their home.  
Russo and his insurer, Milwaukee Mutual Insurance Company, in 
turn brought a third-party action against Betty Limbach,1 f/d/b/a 
Limbach Construction Company, and its insurer, West Bend Mutual 
Insurance Company.  Milwaukee Mutual also impleaded Interstate 
Heating,2 the subcontractor that installed the heating and 
cooling systems in the home, which were also problematic. 
                     
1 Betty Limbach is the widow of Michael Limbach, the owner 
and 
operator 
of 
Limbach 
Construction 
Company, 
a 
sole 
proprietorship.  Michael Limbach died in 1993 before the Vogels 
began this suit.  
2 Interstate Heating settled with Russo and Milwaukee Mutual 
during the trial and is not a party to this appeal.  
No. 
97-2192 
 
 
5 
¶9 Limbach was insured by West Bend under a standard 
comprehensive general liability policy; however, West Bend 
denied that its policy covered the claims asserted in the third-
party complaint and Betty Limbach retained separate counsel.  
West Bend then filed for declaratory judgment and moved for 
partial summary judgment on the coverage issue.  The Circuit 
Court for Ozaukee County, the Honorable Joseph D. McCormack, 
held that the motion was premature and that the coverage issue 
would be determined after trial. 
¶10 At trial, the jury was asked to decide whether Russo 
breached its contract and was negligent in the construction of 
the Vogels' home, and whether Limbach and Interstate Heating 
were negligent for their part in the construction of the Vogels' 
home.  The jury was also asked to consider two separate damages 
measures: cost of repair (itemized as to the general and 
subcontractors), and diminution in value.  The jury found that 
Russo breached his contract with the Vogels and that Russo, 
Limbach and Interstate Heating each were negligent in the 
construction of the home.  The jury apportioned negligence as 
follows: 30 percent to Russo, 60 percent to Limbach and ten 
percent to Interstate Heating. 
¶11 As to the damages questions on the special verdict, 
the jury determined diminution in value and cost of repair to be 
the same: $320,000.  As to the cost of repair measure of 
damages, the jury itemized the $320,000 as follows: $235,100 to 
repair Limbach's masonry work; $70,700 to repair work performed 
by Russo, Interstate Heating and other subcontractors; $10,700 
No. 
97-2192 
 
 
6 
to repair interior water damage attributable to Interstate 
Heating; and $3,500 to repair interior water damage attributable 
to Limbach's work. 
¶12 The circuit court decided the coverage dispute between 
Milwaukee Mutual and West Bend on motions after verdict.  The 
court concluded that Limbach's shoddy masonry work was so 
badessentially the equivalent of gross negligencethat it 
constituted "property damage" within the meaning of the coverage 
language of West Bend's policy.  In the circuit court's view, 
"Limbach's actions were property damage as much as they would 
have been had he accidentally run into the building with a 
bulldozer."  The court then adopted the diminution in value 
measure of damages, concluding that, in light of testimony that 
the Vogels' home was essentially a "tear-down," repair or 
replacement would constitute economic waste.  The court ordered 
judgment entered on the jury's verdict, including an award of 
$192,000 in favor of Russo and Milwaukee Mutual for contribution 
against Limbach and West Bend (60 percent of $320,000). 
¶13 West Bend appealed, and the court of appeals affirmed 
in an unpublished decision.  The court of appeals focused on the 
circuit court's choice of diminution in value as the appropriate 
measure of damages, and applied Sola Basic Industries, Inc. v. 
United States Fidelity & Guaranty Co., 90 Wis. 2d 641, 654, 280 
N.W.2d 211 (1979), to conclude that because the entire home was 
worthless, "property damage" within the meaning of West Bend's 
policy had occurred.  We accepted review. 
No. 
97-2192 
 
 
7 
¶14 This case involves the interpretation of an insurance 
contract and thus presents a question of law that we review de 
novo.  Katze v. Randolph & Scott Mut. Fire Ins. Co., 116 Wis. 2d 
206, 212, 341 N.W.2d 689 (1984).  Judicial interpretation of a 
contract, including an insurance policy, seeks to ascertain and 
give effect to the intent of the contracting parties. Wisconsin 
Label Corp. v. Northbrook Property & Cas. Ins. Co., 2000 WI 26, 
¶23, 233 Wis. 2d 314, 328, 607 N.W.2d 276; Gorton v. Hostak, 
Henzl & Bichler, S.C., 217 Wis. 2d 493, 506, 577 N.W.2d 617 
(1998).  Insurance policies are construed as they would be 
understood by a reasonable person in the position of the 
insured.  Kremers-Urban Co. v. American Employers Ins. Co., 119 
Wis. 2d 722, 735, 351 N.W.2d 156 (1984); Hedtcke v. Sentry Ins. 
Co., 109 Wis. 2d 461, 487, 326 N.W.2d 727 (1982).  However, we 
do not interpret insurance policies to provide coverage for 
risks that the insurer did not contemplate or underwrite and for 
which it has not received a premium.  Wisconsin Label, 233 
Wis. 2d at ¶25; Smith v. Katz, 226 Wis. 2d 798, 807, 595 N.W.2d 
345 (1999). 
¶15 We note at the outset that, although the parties argue 
back and forth about the applicability of the economic loss 
doctrine, this is not in fact an economic loss doctrine case.  
The economic loss doctrine precludes recovery in tort of purely 
economic losses for the failure of a product or service to live 
up to contractual expectations. Wausau Tile, Inc. v. County 
Concrete Corp., 226 Wis. 2d 235, 245-46, 593 N.W.2d 445 (1999); 
Sunnyslope Grading, Inc. v. Miller, Bradford & Risberg, Inc., 
No. 
97-2192 
 
 
8 
148 Wis. 2d 910, 921, 437 N.W.2d 213 (1989).  Where a product is 
defective or fails in its intended use, and is therefore 
diminished in value or causes purely economic loss to the 
purchaser (lost profits, for example), the economic loss 
doctrine applies, preserving the traditional distinction between 
tort and contract law and leaving the purchaser to his contract 
remedies.  Wausau Tile, 226 Wis. 2d at 247-48 (citing East River 
S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 871 
(1986)). 
¶16 Here, however, no one is claiming that the Vogels are 
precluded by the economic loss doctrine from recovering the 
damages awarded by the jury.  The parties are fighting only 
about who pays.  This is a coverage dispute between two 
insurance companies, governed by the language of the policy in 
question.  While there are some theoretical overlaps with the 
case law involving the economic loss doctrine (because the cases 
sometimes also involve coverage questions), the economic loss 
doctrine is not really implicated here. 
¶17 Comprehensive 
general 
liability 
(CGL) 
insurance 
policies like the one at issue in this case were developed by 
the 
insurance 
industry 
in 
1940 
and 
have 
been 
revised 
periodically since then; today, most are written on standardized 
forms.  Wisconsin Label, 233 Wis. 2d at ¶27 n.3 (citing Hartford 
Fire Ins. Co. v. California, 509 U.S. 764, 772 (1993) and Laurie 
Vasichek, Note, Liability Coverage for "Damages Because of 
Property Damage" Under the Comprehensive General Liability 
Policy, 68 Minn. L. Rev. 795, 798-99 & n.14 (1984)).  Coverage 
No. 
97-2192 
 
 
9 
under a CGL policy does not extend to "business risks"risks 
relating to the repair or replacement of the insured's faulty 
work or products, or defects in the insured's work or product 
itself.  Bulen v. West Bend Mut. Ins. Co., 125 Wis. 2d 259, 264-
65, 371 N.W.2d 392 (Ct. App. 1985). 
 
The risk intended to be insured [in a CGL policy] is 
the possibility that the goods, products or work of 
the insured, once relinquished or completed, will 
cause bodily injury or damage to property other than 
to the product or completed work itself, and for which 
the insured may be found liable.  The insured, as a 
source of goods or services, may be liable as a matter 
of contract law to make good on products or work which 
is defective or otherwise unsuitable because it is 
lacking in some capacity.  This may even extend to an 
obligation 
to 
completely 
replace 
or rebuild the 
deficient product or work.  This liability, however, 
is not what the coverages in question are designed to 
protect against.  The coverage is for tort liability 
for physical damages to others and not for contractual 
liability of the insured for economic loss because the 
product or completed work is not that for which the 
damaged person bargained. 
Id. (quoting Weedo v. Stone-E-Brick, Inc., 405 A.2d 788, 791 
(N.J. 1979))(emphasis added).  A CGL policy's sole purpose is to 
cover the risk that the insured's goods, products, or work will 
cause bodily injury or damage to property other than the product 
or the completed work of the insured.  Jacob v. Russo Builders, 
224 Wis. 2d 436, 447, 592 N.W.2d 271 (Ct. App. 1999)(Jacob II). 
 A CGL policy, therefore, is not a performance bond.  Id. at 
448; Wisconsin Label, 233 Wis. 2d at ¶58. 
¶18 The relevant language of the CGL policy West Bend 
issued to Limbach is as follows: 
 
COVERAGE E


BUSINESS LIABILITY 
No. 
97-2192 
 
 
10
 
The Company will pay on behalf of the insured all sums 
which the insured shall become legally obligated to 
pay as damages because of bodily injury, property 
damage, or personal injury caused by an occurrence to 
which this insurance applies. 
"Property damage" is defined as: 
 
(a) physical injury to or destruction of tangible 
property 
which occurs 
during the 
policy 
period, 
including the loss of use thereof at any time 
resulting therefrom, or (b) loss of use of tangible 
property which has not been physically injured or 
destroyed provided such loss of use is caused by an 
occurrence during the policy period. 
 
"Occurrence" is defined as: 
 
 
an accident, including continuous or repeated exposure 
to conditions, which results in bodily injury or 
property damage neither expected nor intended from the 
standpoint of the insured . . .  
 
The policy also contains a business risk exclusion: 
 
BUSINESS LIABILITY EXCLUSIONS 
Under Coverage E, this policy does not apply: . . . 
 
11. to damage to property:  . . .  
 
(b)(4) that particular part of any property, not on 
premises owned by or rented to the insured . . .  
 
(iii) the restoration, repair or replacement of which 
has been made or is necessary by reason of faulty 
workmanship 
thereon 
by 
or 
on 
behalf 
of 
the 
insured . . .  
 
13. to property damage to the named insured's products 
arising out of such products or any part of such 
products. 
¶19 The language of the policy is clear.  It provides 
coverage for 1) physical injury to or destruction of tangible 
property resulting from a covered occurrence, including loss of 
No. 
97-2192 
 
 
11
use attributable to the injury or damage; and 2) loss of use of 
tangible 
property 
which 
has 
not 
been 
physically 
injured 
resulting from a covered occurrence.  The business liability or 
"business risk" exclusion excludes coverage for repair or 
replacement 
damages 
associated 
with 
the 
insured's 
faulty 
workmanship or property damage to the insured's own work or 
product. 
¶20 The foregoing language of West Bend's CGL policy has 
already been construed to exclude coverage for the lion's share 
of the damages awarded in this case.  In Jacob II, a case 
involving another victim of the Russo-Limbach home building 
operation, the court of appeals held that the West Bend CGL 
policy, by virtue of the coverage and exclusion language quoted 
above, did not provide coverage for the cost of repairing or 
replacing Limbach's defective work.  Jacob II, 224 Wis. 2d at 
448. 
 
Bulen instructs that CGL coverage exists for tort 
damages but not for economic loss resulting from 
contractual liability.  As we have noted, the parties 
agree (as do we) that the replacement and repair of 
Limbach's masonry product is economic loss to the 
Jacobs based on Limbach's contractual liability and is 
not covered under the West Bend CGL policy.  Were it 
otherwise, West Bend's CGL policy would truly have 
been converted to a performance bond contrary to 
Bulen.  
Id.   
¶21 The court of appeals in Jacob II went on to analyze 
whether other categories of the homeowners' damages were covered 
under West Bend's CGL policy, ultimately concluding that those 
No. 
97-2192 
 
 
12
relating directly to the repair or replacement of Limbach's 
defective 
work 
were 
not 
covered, 
but 
those 
relating 
to 
"collateral damage" to the homeowners' "other property" were. 
 
[O]ther categories of the Jacobs' damages such as 
relocation costs, temporary repairs, loss of use and 
enjoyment of the residence, and repair of the interior 
of the residence are not directly the consequence of 
repairing 
or 
replacing 
Limbach's 
defective 
work.  
Rather, they 
represent 
collateral 
damage 
to the 
Jacobs' 
"other 
property" 
(the 
interior 
of 
the 
residence) and the costs associated with addressing 
and correcting that situation.  As we have noted, 
these represent economic losses which can be recovered 
in tort, and, as such, they are covered by West Bend's 
CGL policy. 
Id. at 451.  This case concerns the same CGL policy, and we 
adopt the court of appeals' interpretation of it from Jacob II. 
¶22 Applying that interpretation here, it is clear that 
the policy does not cover most of the jury's damages award.  The 
jury in this case was asked to evaluate the Vogels' damages on 
the basis of two measures: diminution of value and cost of 
repair.  It did so, awarding the same amount, $320,000, by each 
measure.  The jury was also asked to separately itemize the cost 
of repair damages, and in so doing, assessed the cost to repair 
Limbach's masonry work at $235,100.  The jury also found Limbach 
responsible for $3,500 worth of water damage to the interior of 
the Vogels' home.  If we were applying the Jacob II analysis to 
the cost of repair measure of damages, the $235,100 cost to 
repair Limbach's masonry work would not be covered by West 
Bend's CGL policy, but the $3,500 attributable to "collateral 
damage" caused by Limbach would be. 
No. 
97-2192 
 
 
13
¶23 But the circuit court found the cost of repair measure 
of 
damages 
to 
be 
economically 
wasteful 
and 
adopted 
the 
diminution of value measure instead.  The election of this 
alternate measure of damages, however, does not change the 
nature and character of the damages or provide coverage under 
the CGL policy where it otherwise does not exist.  The bulk of 
the damages awarded by the jury in this case were repair or 
replacement 
damages 
attributable 
to 
Limbach's 
faulty 
workmanship, for which the CGL policy clearly does not provide 
coverage.  The circuit court's characterization of Limbach's 
negligence as tantamount to gross negligence at common law is 
certainly understandable under the facts of this case, but it 
does not convert otherwise uncovered damages into covered 
damages under the insurance policy. 
¶24 The court of appeals in this case relied upon Sola 
Basic, 90 Wis. 2d at 641, to conclude that "the diminution in 
value determination reflects that the entire home was worthless" 
and therefore "property damages within the policy occurred."  
Vogel v. Russo, No. 97-2192, unpublished slip op. at 6 
(September 16, 1998).  In Sola Basic we interpreted the standard 
CGL policy in use at the time and held that "the term 'property 
damage' to tangible property does not necessarily require 
physical damage [and] tangible property may be damaged in that 
it is diminished in value or made useless, irrespective of 
actual physical injury to the tangible property."  Sola Basic, 
90 Wis. 2d at 653-54.   
No. 
97-2192 
 
 
14
¶25 However, as the court of appeals in Jacob II noted, 
"[t]he standard CGL policy language has since changed.  It now 
defines 'property damage' as 'physical injury to or destruction 
of tangible property.'  (Emphasis added.) Thus, the court's 
reasoning in Sola Basic does not apply to the definition of 
property damage in West Bend's policy."  Jacob II, 224 Wis. 2d 
at 454 n.9; see also, Wisconsin Label, 233 Wis. 2d at ¶48.  We 
agree with the court of appeals in Jacob II that Sola Basic does 
not apply.3 
¶26 Nor do the damages in this case constitute "loss of 
use" damages under the insurance policy.  There is no evidence 
that the Vogels ever lost the use of their home, and the jury 
was not asked to and did not award any loss of use damages.  
Diminution in valueeven to the point of worthlessnessis not 
the same as "loss of use" under the insurance policy, which by 
its plain language contemplates some sort of loss of use in 
fact, not a reduction in value.  In any event, as we have noted 
above, the diminution in value award in this case was simply an 
alternate measure of the cost of repair damages, and did not 
fundamentally recharacterize the nature of the harm in such a 
                     
3 As we noted earlier this year in Wisconsin Label Corp. v. 
Northbrook Property & Casualty Insurance Co., 2000 WI 26, ¶47, 
233 Wis. 2d 314, 607 N.W.2d 276, the case relied upon most 
heavily in Sola Basic, Hauenstein v. St. Paul-Mercury Indemnity 
Co., 65 N.W.2d 122 (Minn. 1954), was later declared inapplicable 
to current CGL policies for essentially the same reasonbecause 
the property damage definition in standard CGL policies has 
changed.  See Federated Mut. Ins. Co. v. Concrete Units, Inc., 
363 N.W.2d 751, 756 (Minn. 1985).   
No. 
97-2192 
 
 
15
way as to trigger coverage under West Bend's CGL policy.  
"Diminution in value and cost of repair are not two separate 
harmsthey are two different ways of measuring the same harm.  
If the harm . . . is not covered as measured by diminished 
value, it is not covered as measured by cost of repair."  New 
Hampshire Ins. Co. v. Vieira, 930 F.2d 696, 701-02 (9th Cir. 
1991) (citation omitted).  The opposite is true as well. 
¶27 The jury found Limbach responsible for two types of 
harm: the harm to the interior of the Vogel's home caused by the 
defective masonry work ($3,500 in damages), and the harm 
associated with the cost to repair the defective masonry work 
itself ($235,100 in damages).  There clearly is no coverage for 
the latter; Milwaukee Mutual essentially concedes as much, 
arguing only that diminution in value is covered.  And West Bend 
concedes coverage for the $3,500 in damage to the interior of 
the Vogels' home caused by the defective masonry work. 
¶28 Insurance coverage does not come into being where it 
otherwise does not exist simply by virtue of a judicial election 
of 
an 
alternate 
measure 
of 
damages. 
 
The 
underlying 
harmdefective masonry work costing a substantial sum to 
repairremains the same.  West Bend's CGL policy covers only the 
collateral property damage associated with the defective masonry 
work ($3,500), not the defective masonry itself, the cost to 
repair it, or any effect on the home's value it may have had.  
¶29 Therefore we conclude that the diminution in value to 
the Vogels' home was not covered by West Bend's CGL policy.  
Accordingly, we reverse. 
No. 
97-2192 
 
 
16
By the Court.—The decision of the court of appeals is 
reversed and the cause is remanded. 
 
 
 
 
 
 
 
No. 97-2192.ssa 
 
1 
¶30 SHIRLEY S. ABRAHAMSON, CHIEF JUSTICE (dissenting).  
The majority opinion determines that diminution in value of the 
Vogels' home is not covered by the West Bend comprehensive 
general liability insurance policy because the damages do not 
constitute "property damage" or "loss of use" and are excluded 
under the business risk exclusion of the policy.  Majority op. 
¶¶ 19-21, 26.  I disagree. 
¶31 I agree with the circuit court and court of appeals 
that there was physical injury to tangible property other than 
Limbach's work product, namely the entire home, and that this 
injury constitutes property damage covered by the West Bend 
policy.  The damage to the Vogels' home extended beyond damaged 
woodwork, flooring and carpeting.  According to the engineering 
consultant, the walls could collapse and the ventilation was 
inadequate to keep the brick and wood frame dry.  Majority op. ¶ 
7.  These problems have in turn affected and reduced the 
structural integrity of the home.  Such a defective home can 
constitute "loss of use," which is explicitly defined in the 
policy as property damage.  
¶32 The diminished value of the home reflects the fact 
that the home was beyond repair, that it was not saleable, and, 
therefore, was essentially useless.  Diminution of value is 
merely a means of measuring the damages sustained as a result of 
the property damage.  
No. 97-2192.ssa 
 
2 
¶33 The business liability or business risk exclusion 
denying coverage for repair or replacement expenses associated 
with the insured's faulty workmanship or property damage to the 
insured's own work or work product does not come into play in 
this case.  The property damage here is to the entire home 
caused by the faulty workmanship of the insured; thus, it falls 
outside the exclusion and is properly the subject of the policy. 
¶34 For the reasons stated, I dissent. 
¶35 I am authorized to state that Justice WILLIAM A. 
BABLITCH joins this dissent. 
 
No. 97-2192.ssa 
 
1