Auto-Owners Ins. Co. v. MARVIN DEVELOPMENT CORP.
| Decision Date | 12 October 2001 |
| Docket Number | No. 2D00-3232.,2D00-3232. |
| Citation | 805 So.2d 888 |
| Parties | AUTO-OWNERS INSURANCE COMPANY, a Michigan corporation, Appellant, v. MARVIN DEVELOPMENT CORPORATION, Appellee. |
| Court | Florida District Court of Appeals |
Curtright C. Truitt of Curtright C. Truitt, P.A., Fort Myers, for Appellant.
Aaron A. Haak and Mark A. Ebelini of Humphrey & Knott, P.A., Fort Myers, for Appellee.
Auto-Owners Insurance Company appeals from a final summary judgment that determined it was obligated to defend against a claim brought against Marvin Development Corporation. We reverse because the claim was not covered under the terms of the insurance policy issued by Auto-Owners and, as a result, Auto-Owners had no duty to defend against the claim.
Auto-Owners filed a complaint for declaratory judgment against Marvin Development, Karon Rathgeber, and Robert Rathgeber. The complaint alleged that the Rathgebers had previously filed suit against Marvin Development on numerous theories, including negligent misrepresentation.
The Rathgebers' claims arose from a 1988 building agreement with Marvin Development. They alleged in their revised fourth amended complaint that, pursuant to the agreement, Marvin Development was to construct a residence for them. The contract price included the purchase of the lot on which the house was to be built. Simultaneous with the execution of the building agreement, the Rathgebers entered into a separate contract to purchase the lot from its owner. The Rathgebers asserted that the lot was sold to them by representatives of Marvin Development, acting on behalf of Marvin Development and the lot owner, as part of the package for the construction of the house.
The Rathgebers took possession of the residence in May 1989, after construction was completed. They alleged that cracks appeared in 1993. They subsequently learned that the house was situated on pockets of debris which, as the debris decomposed, caused settling and deterioration of the house. The Rathgebers claimed that Marvin Development and the lot owner should have known that debris was buried under the lot and made the lot unsuitable as a home site. The Rathgebers asserted that they justifiably relied on the representations made by Marvin Development and the lot owner that the site was suitable for construction of a residence.
In its complaint for declaratory relief, Auto-Owners acknowledged that it insured Marvin Development under commercial general liability policies. The first policy became effective in November 1989, several months after the Rathgebers took possession of the residence. Coverage continued until November 1994. Auto-Owners sought a declaration that the damages claimed by the Rathgebers were not covered by the policies and that Auto-Owners had no duty to defend or indemnify Marvin Development against the Rathgebers' claims.
Marvin Development responded to the Auto-Owners' complaint and asserted various defenses. Eventually, Auto-Owners and Marvin Development filed competing motions for summary judgment. Auto-Owners reiterated its position that the Rathgebers' claims against Marvin Development were not covered by the insurance policies and that Auto-Owners had no duty to defend or to indemnify Marvin Development against the claims.
Marvin Development alleged that Auto-Owners had a duty to defend and indemnify Marvin Development against the claims. Marvin Development asserted that logs or wood piles were buried on the lot below the footer trenches of the house and were decaying; that Marvin Development did not bury the debris and was unaware of it; and that Marvin Development built the house but did not perform any site work on the lot.
The trial court entered a final summary judgment in favor of Auto-Owners and against Marvin Development concerning insurance coverage as to all but one of the claims made by the Rathgebers. As to the claim of negligent misrepresentation, the trial court entered summary judgment in favor of Marvin Development and concluded that Auto-Owners had the obligation to defend Marvin Development against that claim. The trial court did not decide whether Auto-Owners was liable to indemnify Marvin Development for any loss incurred as a result of the claim.
The only part of the judgment that is before this court is the ruling that Auto-Owners must defend Marvin Development against the Rathgebers' claim for negligent misrepresentation. Auto-Owners argues that because its policies did not provide coverage for the claim, it had no duty to defend Marvin Development. We agree. The applicable standard of review is de novo because the interpretation of an insurance contract is a question of law. Am. Equity Ins. Co. v. Van Ginhoven, 788 So.2d 388 (Fla. 5th DCA 2001). In considering whether Auto-Owners must defend Marvin Development against the Rathgebers' claim, the question is whether the complaint, "when fairly read, alleges facts which create potential coverage" under the policies. McCreary v. Fla. Residential Prop. & Cas. Joint Underwriting Ass'n, 758 So.2d 692, 695 (Fla. 4th DCA 1999). An insurer has no duty to defend a lawsuit where the underlying complaint does not allege facts that would bring the complaint within the coverage of the policy. Nat. Union Fire Ins. Co. v. Lenox Liquors, Inc., 358 So.2d 533, 536 (Fla. 1977); Aetna Commercial Ins. Co. v. Am. Sign Co., 687 So.2d 834, 836 (Fla. 2d DCA 1996).
The Auto-Owners' policies were commercial general liability policies. They were first issued in late 1989 after the alleged misrepresentations were made, after Marvin Development completed construction, and after the Rathgebers took possession of the residence. The pertinent policy language provided:
Apart from the coverage provision, a "Products-Completed Operations Hazard" exclusion stated:
This insurance does not apply to "bodily injury" or "property damage" included within the "products-completed operations hazard."
The exclusion, when read in the context of the entire policy, eliminated coverage for claims of bodily injury and property damage...
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