Flint v. Universal Mach. Co.

• Decision Date: 06 August 1996
• Docket Number: No. 15238,15238
• Citation: 238 Conn. 637,679 A.2d 929
• Court: Connecticut Supreme Court
• Parties: Virginia A. FLINT v. UNIVERSAL MACHINE COMPANY.

Page 929

679 A.2d 929

238 Conn. 637

Virginia A. FLINT v. UNIVERSAL MACHINE COMPANY.

No. 15238.

Supreme Court of Connecticut.

Argued Jan. 16, 1996.

Decided Aug. 6, 1996.

Thomas L. Brayton, Waterbury, for appellant (defendant-third party plaintiff Universal Machine Company).

Lloyd D. Pedersen, Hartford, for appellee (third party defendant Seaco Insurance Company).

Before BORDEN, BERDON, NORCOTT, KATZ and PALMER, JJ.

NORCOTT, Justice.

The principal issue in this appeal is whether a "products-completed operations hazard" exclusion in a comprehensive general liability insurance policy relieves an insurer of its duty to defend where the complaint ¹ against the insured alleged injuries caused by the insured's negligent repair of a machine press, but failed explicitly to allege that the defective work was "completed" for purposes of coverage. The third party plaintiff, Universal Machine Company (Universal), the insured and defendant in the underlying negligence action, appeals from the judgment of the trial court in favor of the third party defendant, Seaco Insurance Company (Seaco), on the third party complaint. We affirm the judgment of the trial court.

The facts relevant to this case are set forth in the complaint filed by the plaintiff in the underlying action, Virginia A. Flint, and are undisputed. Universal is a machine shop engaged in the business of repairing industrial machinery. On various dates in October, 1990, Universal visited the site of Selmix-Alco Company (Selmix-Alco), ² Flint's employer, to perform a retrofitting procedure on a fifty ton machine press used by Selmix-Alco in the manufacture of machine parts. Subsequent to these retrofitting procedures, the press malfunctioned, by repeating the operation cycle without warning.

The complaint further alleges that Universal made several failed attempts at correcting the problem. On December 5, 1990, while Flint was operating the press as part of her employment duties, the press once again malfunctioned, crushing several of her fingers in its mechanism.

Thereafter, Flint brought an action against Universal alleging negligence in repairing the press and in failing to warn her of the machine's dangerous condition. The negligence action resulted in a stipulated judgment against Universal in the amount of $43,000, and caused Universal to incur reasonable attorney's fees of $30,000 in defense of the action.

Universal then brought a third party action against its insurer, Seaco, alleging that Seaco's failure to defend Universal in Flint's negligence action was a breach of the parties' insurance contract, and sought damages for the full amount of the judgment including defense costs. See Missionaries of Co. of Mary, Inc. v. Aetna Casualty & Surety Co., 155 Conn. 104, 113-14, 230 A.2d 21 (1967) (breach of duty to defend requires insurer to reimburse insured for full amount of obligation reasonably incurred by such insured as result of breach).

The comprehensive general liability policy issued by Seaco that was in effect on the date the repair work was performed and on the date Flint was injured contained an exclusion entitled "products-completed operations hazard." According to the definition in the policy, a "products-completed operations hazard" exclusion removes from coverage all occurrences of " 'bodily injury' and 'property damage' ... arising out of 'your product' or 'your work.' " Excepted from this exclusion is "[w]ork that has not yet been completed or abandoned." ³ Thus, Seaco claims that if work has been completed the exclusion applies, and it is not obligated to defend an action alleging injuries arising out of such work.

Universal alleges in its third party complaint that Seaco, after conducting an investigation into the allegations of Flint's complaint, wrongly disclaimed coverage under the policy and wrongly declined both to defend and to indemnify Universal. Following a court trial, the trial court determined that the allegations set forth in Flint's complaint against Universal fell within the policy exclusion and, therefore, did not trigger Seaco's duty to defend Universal in that action. ⁴ Accordingly, the court rendered judgment for Seaco on the third party complaint. Universal appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to Practice Book § 4023 and General Statutes § 51-199(c).

On appeal, Universal claims that the trial court improperly determined that Seaco had not been not required to defend Universal in the underlying action. Specifically, Universal argues that: (1) the policy exclusion relied upon by Seaco is ambiguous and thus should be construed against Seaco; (2) alternatively, the allegations of Flint's complaint were sufficient for the trial court to conclude that Seaco's duty to defend was triggered; and (3) even if the exclusion applied, the complaint's allegation of a failure to warn of the negligent repair work did not fall within the exclusion. Seaco argues that it did not have a duty to defend Universal because it could be clearly determined from the face of Flint's complaint that the alleged negligent work performed by Universal had been completed when her injury occurred, thus bringing the work within the exclusion. We agree with Seaco that the allegations contained in Flint's complaint did not trigger a duty to defend and, accordingly, affirm the judgment of the trial court.

I

We address at the outset Universal's claim that the "products-completed operations hazard" exclusion relied upon by Seaco in refusing to defend Flint's claim is ambiguous and, therefore, must be construed against the drafter of the policy. We agree with the trial court's determination that the terms of the policy, particularly the foregoing exclusion, are clear and unambiguous and, therefore, leave no room for construction.

"It is the function of the court to construe the provisions of the contract of insurance." Gottesman v. Aetna Ins. Co., 177 Conn. 631, 634, 418 A.2d 944 (1979). Our review of the trial court's decision of this issue is de novo. "Unlike certain other contracts ... where ... the intent of the parties and thus the meaning of the contract is a factual question subject to limited appellate review ... construction of a contract of insurance presents a question of law for the court which this court reviews de novo." (Citations omitted.) Aetna Life & Casualty Co. v. Bulaong, 218 Conn. 51, 58, 588 A.2d 138 (1991). Although there have been cases in which the interpretation of an insurance contract has rested on factual questions; see, e.g., Libero v. Lumbermen's Mutual Casualty Co., 141 Conn. 574, 580, 108 A.2d 533 (1954); this is not such a case. It is undisputed that Universal's repair work had been performed negligently, and that Flint's injuries occurred as a result of such negligence. The only questions raised in this case are whether the allegations set forth in Flint's complaint triggered Seaco's obligation to defend Universal, its insured in the underlying action, and whether the "products-completed operations hazard" exclusion is ambiguous. These issues present questions of law, which we review de novo.

It is axiomatic that a contract of insurance must be viewed in its entirety, and the intent of the parties for entering it derived from the four corners of the policy. Cox v. Peerless Ins. Co., 774 F.Supp. 83, 86 (D.Conn.1991); see Ceci v. National Indemnity Co., 225 Conn. 165, 175-76, 622 A.2d 545 (1993). Universal's contention that the exclusion is ambiguous focuses on the manner in which "products-completed operations hazard" is phrased. It argues that because the term "hazard" is singular, and the terms "products" and "completed operations" are coordinated under the same hyphenated provision, an insured would reasonably assume that the exclusion only applies to situations involving the negligent manufacture or sale of a product, and not to Universal's day-to-day work, which is the off-premises repair of the equipment of others. We are not persuaded.

In Smedley Co. v. Employers Mutual Liability Ins. Co., 143 Conn. 510, 123 A.2d 755 (1956), we addressed the issue of whether a claim of negligence arising solely out of the rendering of services fell within a "products hazard" exclusion, the definition of which contained, and thus excluded from coverage, completed operations. In Smedley Co., the insured owner of a warehouse sought to recover from the insurer attorney's fees that the insured had incurred in defending itself in an action brought against it for negligently delivering to a buyer goods other than those ordered. Id., at 513, 123 A.2d 755. The insurer had refused to defend the action on the ground that the allegations of the underlying complaint fell within the "products hazard" exclusion of the comprehensive general liability policy. Id., at 513-14, 123 A.2d 755. The term "products hazard" was defined in the policy to include: " '(2) operations, if the accident occurs after such operations have been completed or abandoned at the place of occurrence thereof and away from premises owned, rented or controlled by the insured....' " Id., at 514, 123 A.2d 755. ⁵

We considered the definition of "products hazard" to create some ambiguity in the policy and noted that "[t]here might have been less awkwardness of expressed intent had the policy before us, instead of utilizing the paragraph as an additional definition of 'products hazard,' segregated it in a 'completed operations' clause, and then excluded such operations." Id., at 515-16, 123 A.2d 755. We concluded, nevertheless, that the definition was sufficiently clear to exclude from coverage liability arising out of the insured's operations. Id.

Similarly in the present case, although the title "products-completed operations hazard" retains some of the same general flaws of expression that were at issue in the comprehensive general liability policy in Smedley Co.; see...