American States Ins. Co. v. Mathis
| Citation | 974 S.W.2d 647 |
| Decision Date | 18 August 1998 |
| Docket Number | Nos. 73560,73561,s. 73560 |
| Parties | AMERICAN STATES INSURANCE COMPANY, Plaintiff/Respondent, v. W. Jon MATHIS, Emco Contracting Company, Inc., and Guarantee Electrical Company, Defendants/Appellants. |
| Court | Court of Appeal of Missouri (US) |
David R. Bohm, Richard A. Stockenberg, Danna McNary, Stockenberg & Soraghan, P.C., St. Louis, for appellant Guarantee Electrical Company.
Charles R. Abele, St. Louis, for defendant W. Jon Mathis & EMCO Contracting Co. Mark G. Burns, Burns & Marshall, LLP, Clayton, for respondent.
Insurer sought a declaratory judgment against subcontractor, sub-subcontractor, and sub-subcontractor's owner that it had no duty to defend and indemnify sub-subcontractor or owner under a commercial general liability policy in a negligence, negligent misrepresentation, and breach of contract action brought by subcontractor to recover damages it incurred when it had to remove and replace sub-subcontractor's improperly trenched and constructed duct banks and repair and replace electrical conduit, cable, and wire installed in the ducts by others. The trial court entered summary judgment in favor of insurer on the grounds that the conduct which caused the damage was not an "occurrence" as defined in the policy. Subcontractor, sub-subcontractor, and sub-subcontractor's owner appeal. We affirm.
Plaintiff, American States Insurance Company (American States), issued a commercial general liability policy to EMCO Contracting Co., Inc. (EMCO) 1 which was in effect at the time of the underlying incident. The policy covers property damage caused by an "occurrence" that takes place in the coverage territory and occurs during the policy period.
The policy defines the term "occurrence" as:
an accident, including continuous or repeated exposure to substantially the same general harmful conditions.
Defendant Guarantee Electrical Company (Guarantee) was the electrical subcontractor for the construction of a federal penitentiary in Pekin, Illinois. Its responsibility was to install an integrated electrical, security, and communications system. It sub-subcontracted a portion of its work to EMCO to trench, excavate, and install duct banks in the trenches which would carry conduit for the integrated electrical system. EMCO began work in August, 1992.
Approximately one year later, while EMCO was still working on the project, Guarantee discovered that EMCO had constructed the trenches and duct banks at the wrong grade and slope and failed to install rebar. After notice, Guarantee terminated the contract and retained other contractors to tear out the improperly constructed duct banks, to remove the electrical conduit, cable, and wire therein, to retrench those areas according to plans and specifications, to reinstall the duct banks, conduit, cable, and wire, and install rebar that EMCO failed to install.
Thereafter, Guarantee filed an action against EMCO and its owner, W. Jon Mathis (Mathis). In Counts I, III, and V of its Third Amended Petition, the relevant counts on this appeal, Guarantee sought damages against EMCO and Mathis for negligence and negligent misrepresentation and against EMCO for breach of contract. Guarantee alleged that EMCO had dug the trenches at the wrong grade in violation of contract documents and failed to reinforce the ducts with rebar as required by the contract. The negligence and negligent misrepresentation counts were based on the same acts. Guarantee alleged that, as a result of EMCO and Mathis's faulty work, it had to spend additional project management time correcting the work and it had to expend money to retain other contractors to remove the improperly installed duct banks, retrench those areas in accordance with the plans and specifications, and reinstall the duct banks.
EMCO and Mathis requested American States to defend them under their commercial general liability policy. American States undertook their defense, pursuant to a non-waiver agreement and a reservation of rights. It filed this declaratory judgment action to resolve its duty to defend and indemnify.
In April, 1997 the trial court in the Guarantee/EMCO/Mathis action approved a settlement agreement and entered a consent judgment in favor of Guarantee. The consent On October 22, 1997 the trial court in this action entered summary judgment in favor of American States on the ground that Guarantee's damages were not caused by an "occurrence" because the improper construction of the duct banks was within EMCO and Mathis's control and was not an accident.
judgment held EMCO and Mathis jointly and severally liable for $418,543.64 in damages, plus $126,191.43 in interest, for a total of $544,735.07. Further, in settlement of EMCO and Mathis's counterclaim, Guarantee agreed to pay them a portion of amounts collected from American States.
In its sole point relied on, Guarantee asserts that the trial court erred in ruling that its damages were not caused by an "occurrence" as defined and used in the policy. It claims that the damages it sustained from EMCO and Mathis's failure to trench at the proper slope and grade 2 were the result of an "accident" in that EMCO and Mathis neither intended nor expected these damages to result from their work. American States responds that there was no "occurrence" because the construction of the duct banks was within EMCO and Mathis's control and not an accident.
An insurer's duty to defend a suit against its insured is determined by the language of the policy and the allegations asserted in the plaintiff's petition. Scottsdale Ins. Co. v. Ratliff, 927 S.W.2d 531, 532 (Mo.App.1996). Under Missouri law 3 the plaintiff has the burden of showing that the loss and damages are covered by the policy; the defendant insurer has the burden of demonstrating the applicability of any exclusions on which it relies. Taylor-Morley-Simon, Inc. v. Michigan Mut. Ins. Co., 645 F.Supp. 596, 599 (E.D.Mo.1986).
Unless an ambiguity exists, we must enforce the policy as written, giving the language of the policy its ordinary meaning....
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