C.D. Walters Const. Co., Inc. v. Fireman's Ins. Co. of Newark, New Jersey

• Decision Date: 28 March 1984
• Docket Number: No. 0176,0176
• Court: South Carolina Court of Appeals
• Parties: C.D. WALTERS CONSTRUCTION CO., INC., Appellant, v. FIREMAN'S INSURANCE COMPANY OF NEWARK, NEW JERSEY, Respondent. . Heard

Page 709

316 S.E.2d 709

281 S.C. 593

C.D. WALTERS CONSTRUCTION CO., INC., Appellant, v. FIREMAN'S INSURANCE COMPANY OF NEWARK, NEW JERSEY, Respondent.

No. 0176.

Court of Appeals of South Carolina.

Heard March 28, 1984.

Decided May 21, 1984.

J. Kevin Holmes and David T. Pearlman, Steinberg, Levkoff, Spitz & Goldberg, Charleston, for appellant.

John J. Kerr and Bachman S. Smith, III, Brockington, Brockington & Smith, Charleston, for respondent.

PER CURIAM:

This is a declaratory judgment action by the appellant C.D. Walters Construction Co., Inc. (Walters), against the respondent Fireman's Insurance Company of Newark, New Jersey (Fireman's), concerning whether a comprehensive general liability insurance policy indemnifies Walters against damages in an action for negligence, breach of contract, and trespass arising out of Walters faulty workmanship and whether the policy requires Fireman's to defend the action. Since an exclusion embraced the risks in question, we affirm the trial court's judgment that the policy neither indemnifies Walters nor requires Fireman's to provide Walters with a defense.

The trial court's order properly sets forth and disposes of the issues before us; therefore, we adopt the order as modified and supplemented and publish it as our view. Ellipses and bracketed material reflect our changes.

ORDER OF JUDGE FIELDS

[An action] was filed against [Walters] by ... Andrew Giannelli alleging ... causes of action for negligence, breach of contract, and trespass and seeking $130,000 in actual and punitive damages. [Fireman's] determined that there was no coverage for the damages alleged ... in [Giannelli's] complaint and refused to defend the ... action .... [Walters maintains that the policy affords coverage and that Fireman's owes it a defense.]

[T]he obligation of a liability insurance company under a policy provision requiring it to defend an action brought against the insured by a third party is to be determined by the allegations of the [third party's] complaint .... [ Boggs v. Aetna Casualty and Surety Co., 272 S.C. 460, 252 S.E.2d 565 (1979). If the facts alleged in the complaint against the insured fail to bring the action within the policy coverage, the insurance company is not obligated to defend. R.A. Earnhardt Textile Machinery Division, Inc. v. S.C. Insurance Co., 277 S.C. 88, 282 S.E.2d 856 (1981); General Ins. Co. v. Palmetto Bank, 268 S.C. 355, 233 S.E.2d 699 (1977).]

[Here, the complaint's first cause of action alleges that Giannelli owns 6.24 acres in Charleston County, South Carolina, and that Walters contracted with Giannelli to perform clearing operations for a roadway and to excavate and prepare a pond on Giannelli's property. It further alleges that Walters performed in a "careless, negligent, willful, wanton and unworkmanlike manner." Giannelli seeks actual and punitive damages claiming that Walters "cut and damaged trees (Giannelli) specifically instructed (Walters) to avoid" and that Walters "dug a ditch on (Giannelli's) property against (his) specific ... instructions." The second cause of action alleges that Walters breached its contract with Giannelli because Walters cut "certain trees" and dug a ditch against Giannelli's specific instructions. The third cause of action alleges that Walters trespassed upon the property when it "dug a ditch ... and cut down certain trees without [Giannelli's] consent and against [his] specific instructions."] [E]ach of the causes of action allege[s] damage[ ] to the property upon which the operations were being performed by [Walters]. ¹

....

While there appears to be no case on point in this state, [similar cases elsewhere] have ... decided ... that the damages Giannelli [seeks] to recover [by] his complaint are [typically] excluded from the coverage of [a comprehensive] general liability policy [like that] issued to Walters .... See [ Western Employers Ins. Co. v. Arciero and Sons, Inc., 146 Cal.App.3d 1027, 194 Cal.Rptr. 688 (1983) ]; Weedo v. Stone-E-Brick, Inc., 81 N.J. 233, 405 A.2d 788 (1979); [ St. Paul Fire and Marine Ins. Co. v. Coss, 80 Cal.App.3d 888, 145 Cal.Rptr. 836 (1978) ]; Biebel Brothers, Inc. v. United States Fidelity and Guaranty Co., 522 F.2d 1207 (8th Cir.1975); Aetna Insurance Co. v. Pete Wilson Roofing and Heating Co., Inc., 289 Ala. 719, 272 So.2d 232 (1972); Haugan v. Home Indemnity Co., 86 S.D. 406, 197 N.W.2d 18 (1972). [A] review of [these] cases [reveals that] the coverage and exclusion provisions in the policy under consideration are basically standard [to] all comprehensive general liability policies....

[In Weedo v. Stone-E-Brick, Inc., supra, the Supreme Court of New Jersey] gave an excellent comparison of "business risks" assumed by the insured-contractor in the ordinary, normal course of business and "insurable risks" assumed by the ... insurance company [under a comprehensive general liability policy]....

The insured-contractor can take pains to control the quality of the goods and services supplied. At the same time he undertakes the risk that he may fail in this endeavor and thereby incur contractual liability whether express or implied. The consequence of not performing well is part of every business venture; the replacement or repair of faulty goods and works is a business expense, to be borne by the insured-contractor in order to satisfy customers. See Tinker, ["Comprehensive General Liability Insurance--Perspective and Overview", 25 Feder.Ins.Coun.Q. 217, 224 (1975); Henderson, "Insurance Protection for Products Liability and Completed Operations--What Every Lawyer Should Know," 50 Neb.L.Rev. 415, 441 (1971).]

There exists another form of risk in the insured-contractor's line of work, that is, injury to people and damage to property caused by faulty workmanship. Unlike business risks of the sort described above, where the tradesman commonly absorbs the cost attendant upon the repair of his faulty work, the accidental injury to property or persons substantially caused by his unworkmanlike performance exposes the contractor to almost limitless liabilities. While it may be true that the same neglectful...