Caldwell v. Transportation Ins. Co., 850019
| Citation | 364 S.E.2d 1,234 Va. 639 |
| Decision Date | 15 January 1988 |
| Docket Number | No. 850019,850019 |
| Parties | William F. CALDWELL, Jr. v. TRANSPORTATION INSURANCE COMPANY. Record |
| Court | Supreme Court of Virginia |
Stuart C. Sullivan, III (Franklin, Franklin, Denney & Heatwole, Waynesboro, on briefs), for appellant.
Deborah M. Wassenaar (Jay T. Swett, Charlottesville, Bonnie L. Paul, Harrisonburg, McGuire, Woods & Battle, Charlottesville, on brief), for appellee.
Present: All the Justices.
The sole question presented by this appeal is whether exclusionary language in an insurance policy is sufficient to avoid coverage of a loss.
The facts are undisputed. William F. Caldwell, Jr., is an experienced well-driller doing business in Augusta County. On July 8, 1981, he was engaged in drilling a water well for a customer in an area near New Hope, where the substrata consist primarily of shale, a relatively soft rock. After drilling to a depth of 405 feet, he encountered an adequate supply of good water. The drilling process, which had been uneventful, was then complete. Caldwell then raised the bit slightly, "pulled up, off the bottom," and began a process called "blowing out the hole" to remove mud and stone chips. The purpose of this operation was to "clean out the hole, so when you put a pump in, you don't burn the pump up."
The cleaning process involved rotating the drilling bar, to which the bit was attached, in the well hole while blowing water up from the bottom with compressed air in order to bring debris to the surface. After the drilling equipment had been rotated 20 to 25 minutes, Caldwell heard a rush of air which indicated that the bar had broken. He withdrew the bar, which consisted of 15-foot sections threaded together, and ascertained that a break had occurred at a depth of 120 feet. All sections of the bar below 120 feet, as well as the bit, remained in the ground and all efforts to extract them failed.
The broken section of drill bar was produced at a deposition, which was offered in evidence. The bar was "reasonably brand new," exhibited no significant signs of wear, and showed no evidence of any inherent defect.
Caldwell's uncontroverted expert opinion was that there had been a change in the slope of the rock strata at a depth of 120 feet, which caused the drill to depart from a true vertical at that level. This change of direction introduced a "dog leg" in the bar. He said that such a deflection "cannot be detected by any of the gauges on the machine, by noise, or feel." He also said that such a deflection will not cause a bar to break during the drilling process, but "[i]f you take the same bar, and stop it in one place, and keep turning it for twenty or thirty minutes, you will break it." He testified that "it's always this type of condition that will break a bar" and that breakage from this cause is one of the risks inherent in the well-drilling business.
Caldwell had purchased an insurance policy from Transportation Insurance Company in 1979, which was in effect on the date of loss, and which specifically described the well-drilling equipment which is the subject of this action as "property insured." The "amount of insurance" provided for the equipment was $93,000. The declaration page of the policy recited that the business of the insured was "Plumber-Drilling Wells." The coverage was contained in a "scheduled property floater" attached to part III of the policy, captioned "Inland Marine." The equipment was described in a "CONTRACTORS' EQUIPMENT ENDORSEMENT--Broad Form."
The "Perils Insured" clause provides: "This policy insures against all risks of direct physical loss of or damage to the insured property from any external cause (including general average and salvage charges) except as hereinafter excluded." Two exclusionary clauses are pertinent:
2. Property Excluded. This policy does not cover:
....
(c) property while in cofferdams or while below the ground surface in mining, tunneling or similar operations, unless specifically endorsed hereon;
....
7. Perils Excluded. This policy does not insure against:
....
(c) Loss or damage caused by any repairing or restoration or remodeling process, structural or mechanical or electrical breakdown or failure unless fire ensues and then only for the loss or damage by such ensuing fire.
Caldwell made claim under the policy for the loss, the insurer denied coverage, and Caldwell brought this action. The case was, by agreement, submitted to the court upon Caldwell's deposition, a copy of the policy, and briefs of counsel. The court entered summary judgment for the insurer, finding that the loss was not covered by the policy. We granted Caldwell an appeal.
The insurer argues on brief that the coverage of the policy is not broad enough, irrespective of its exclusionary language, to include Caldwell's loss. This argument is based on the history and general nature of "inland marine" insurance, which the insurer asserts was never intended to cover risks inherent in the insured's business. That argument is entirely inapposite to this case, however, because of the broad sweep of the "Perils Insured" clause quoted above. Here, the loss is clearly covered unless excluded by one of the clauses quoted above.
In St. Paul Ins. v. Nusbaum & Co., 227 Va. 407, 316 S.E.2d 734 (1984), we most recently considered the interpretation of an exclusionary clause in an insurance policy. We said:
Insurance policies are contracts whose language is ordinarily selected by insurers rather than by policyholders. The courts, accordingly, have been consistent in construing the language of such policies, where there is doubt as to their meaning, in favor of that interpretation which grants coverage, rather than that which withholds it. Where two constructions are equally possible, that most favorable to the insured will be adopted. Language in a policy purporting to exclude certain events from coverage will be construed most strongly against the insurer.
Id. at 411, 316 S.E.2d at 736 (emphasis added) (citations omitted).
We apply the foregoing principles to the exclusionary clauses considered here. The well-drilling operation was neither "mining" nor "tunneling," so as to be excluded by the specific terms of clause 2(c), nor does the insurer so contend. Rather, insurer and insured debate...
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