W.R. Berkley Corp., et al. v. Rea's Country Lane Constr., Inc.
| Docket Number: | 2009-CA-01223-COA Linked Case(s): 2009-CA-01223-COA ; 2009-CT-01223-SCT |
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| Court of Appeals: |
Opinion Link Opinion Date: 07-30-2013 Opinion Author: Maxwell, J. Holding: Reversed and Rendered |
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| Additional Case Information: |
Topic: Insurance - Duty to defend - Property damage - Duty to indemnify - Occurrence - Business risk exclusions Judge(s) Concurring: Lee, C.J., Irving and Griffis, P.JJ., Barnes, Ishee, Roberts, Carlton, Fair and James, JJ. Procedural History: Bench Trial Nature of the Case: CIVIL - INSURANCE |
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| Trial Court: |
Date of Trial Judgment: 06-17-2009 Appealed from: Wayne County Chancery Court Judge: J. Buffington; Majority Opinion: Maxwell, J. Disposition: AWARDED $193,684.95 JUDGMENT IN FAVOR OF INSURED Case Number: 2001-21 |
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| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | W.R. Berkley Corporation, Union Standard Insurance Group, Union Standard Insurance Company, and Great River Insurance Company |
ROBERT P. THOMPSON
THOMAS T. BUCHANAN
CARYN ANLAGE MILNER |
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| Appellee: | Rea's Country Lane Construction, Inc. | CLYDE H. GUNN III CHRISTOPHER C. VAN CLEAVE | ||
Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Insurance - Duty to defend - Property damage - Duty to indemnify - Occurrence - Business risk exclusions |
| Summary of the Facts: | Margaret Broom entered into a $100,000 contract with Kent Excavating for Kent to buy dirt for a Mississippi Department of Transportation project. The contract allowed Kent to dig large pits on Broom’s property. Kent never completed the Broom contract and defaulted on its MDOT contract. Kent’s bonding company stepped in and assumed Kent’s obligations. The bonding company hired a contractor, J.B. Talley & Company, who in turn hired Rea’s Country Lane Construction, Inc., to work on the uncompleted contracts. W.C. Pitts, L & J Construction, Inc., and L & J Trucking were then hired as subcontractors. According to Broom, three pits were dug—but not to the specifications in the Kent contract. Nor was Broom ever properly compensated. Broom sued Kent, Kent’s bonding company, J.B. Talley & Company, Rea’s, L & J Construction, and L & J Trucking. Broom asserted claims of breach of contract, negligence, gross negligence, conversion, equitable relief, unjust enrichment, and fraud. Rea’s liability insurer, Great River Insurance Company, took the position that, under the commercial general liability policy, it had no duty to defend and/or indemnify Rea’s against Broom’s claims. So Rea’s in turn filed a third-party complaint against Great River. The judge held Great River had breached its duty to defend and awarded Rea’s $193,684.95. These damages included Rea’s expenses to defend Broom’s lawsuit, Rea’s $60,000 settlement with Broom, and Rea’s attorney’s fees and expenses incurred in suing Great River. Great River appeals, and Rea cross-appeals. |
| Summary of Opinion Analysis: | To prove Great River’s duty to defend was triggered, Rea’s had to show that Broom alleged she suffered “property damage”; Broom alleged the property damage was caused by an “occurrence”; and no valid exclusion applied. It is the allegations in the complaint, and particularly the conduct alleged in the complaint, that determine whether an insurer is required to defend an action. Looking at the conduct alleged in Broom’s complaint, together with the policy, Great River had no duty to defend. Based on the policy’s language, Great River had the duty to indemnify (reimburse) Rea’s for any amount it became legally obligated to pay to another party because of covered property damage. It also had the broader duty to defend any lawsuit against Rea’s in which there was a potential of covered damages for which Rea’s would become liable. But Great River had no duty to defend against alleged conduct that fell outside the policy’s coverage. Great River had a duty to defend against Rea’s potential liability for “property damage,” but only if the “‘property damage’ [wa]s caused by an ‘occurrence,” which the policy defined as an “accident.” And here, there were no allegations of an accident. There were allegations of “property damage” which the policy defined as “[p]hysical injury to tangible property, including all resulting loss of use of that property.” Broom alleged her property had been physically injured by pits being dug, topsoil being stripped, and mounds of waste dirt being dumped. Thus, her complaint included allegations of “property damage.” Under the policy, however, mere allegations of property damage do not trigger the duty to defend. The CGL policy is clear that only property damage caused by an “occurrence” is covered. The policy defines “occurrence” as an “accident.” And Broom’s complaint contains no allegations that her property damage was accidental. Further, Rea’s failed to show coverage based on the applicable policy exclusions. Even if Broom had alleged property damage caused by an occurrence—which she did not—Great River’s duty to defend still would not have been triggered because Broom’s alleged property damage fell within the CGL policy’s “business-risk” exclusions. Exclusion j(5) excludes property damage to “[t]hat particular part of real property on which [Rea’s] or any contractors or subcontractors working directly or indirectly on [Rea’s] behalf are performing operations, if the ‘property damage’ arises out of those operations[.]” And exclusion j(6) excluded property damage to “[t]hat particular part of [Broom’s] property that must be restored, repaired, or replaced because ‘your work’”—i.e., “[w]ork or operations performed . . . on [Rea’s] behalf”—“was incorrectly performed on it.” Because Broom sought compensation for damage done only to those parts of her real property where the defendants were working and sought compensation to restore her property to the condition it would have been in had the dirt work been performed according to the Kent contract, her alleged property damage fell under these business-risk exclusions. Because there was no duty to defend, the judgment is reversed and rendered in favor of Great River and other defendants. |
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