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Court denies award in Lake Geneva fire

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Kevin Murphy
December 8, 2011
— A jury must decide if a homebuilder who constructed a house for his family can collect on two fire insurance policies—one issued to the company and another to the company’s owner, a state appeals court ruled Wednesday.

The ruling by the District 2 Court of Appeals overturns a $3 million award from Walworth County Court.


Fontana Builders, owned by James Accola, was constructing a home for Accola’s family at 1527 Muirfield Court in Lake Geneva. Construction was substantially completed, and Accola and his family moved in with $500,000 of their personal property in May 2007.


Fontana Builders had obtained a builder’s risk policy from Assurance Co. of America when construction began in 2005, but the policy lapsed. As the construction cost increased, Fontana Builders obtained a $1.49 million policy from Assurance in April 2007.


A week before a July 2007 fire consumed the house, Accola obtained a $3 million homeowners policy from Chubb Insurance covering up to $1 million of his personal property. Despite not having the title to the house in his name, Chubb paid Accola $1.5 million after the fire.


Assurance denied coverage of its builder’s policy, saying the policy expired because the owners obtained the Chubb policy and took occupancy of the house.


Fontana Builders sued Assurance for breach of contract and bad faith denial of coverage. Walworth County Judge James Carlson ordered the jury not be told about the $1.5 million Accola received from Chubb.


In April 2010, jurors awarded Fontana Builders $1.39 million for compensatory losses and $1.21 million for bad faith. Interest and costs boosted the total award to $3 million in a July 2010 judgment.


On appeal, Assurance argued that Carlson erred by deciding a question of fact that should been left to the jury. On Wednesday, the appeals court agreed that a jury must decide when Assurance’s coverage terminated.


William Ehrke, one of Assurance’s attorneys, said he was “pleased” with the appeals opinion, which allows the case to be retried.


“The real question will be whether or not two policies were in effect on the date of the fire,” said Ehrke.


Assurance’s policy precluded additional coverage and treated additional payouts as repeat payments for the same damages, he said.


The opinion also allows jurors to learn about Chubb’s payment to Accola.


The Gazette was not able to reach Fontana’s attorney, Chris Trebatoski, for comment.


Accola also sued his own company, Fontana Builders, for the value of the personal property he lost in the fire. In that suit, Westfield Insurance had issued Fontana Builders a policy to cover negligence during construction of Accola’s house. After it was determined that the fire was caused by an employee of Fontana Builders, who negligently stored staining rags in the garage, Accola sued when Westfield denied coverage.


Circuit Judge John Race dismissed the suit, finding that Accola was responsible for his employee’s conduct. That decision also was overturned on appeal, and the case remains pending in Walworth County.



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