City of Sioux Falls v. Henry Carlson Co., Inc.
| Decision Date | 20 October 1977 |
| Docket Number | No. 11805,11805 |
| Citation | 258 N.W.2d 676 |
| Parties | CITY OF SIOUX FALLS, South Dakota, a Municipal Corporation, Plaintiff and Appellant, v. HENRY CARLSON COMPANY, INC., Defendant and Respondent, and Ron M. Fiegen, Inc., Defendant and Respondent. . Opinion Filed |
| Court | South Dakota Supreme Court |
Richard W. Sabers of Dana, Golden, Moore & Rasmussen, Sioux Falls, for plaintiff and appellant.
Carleton R. Hoy of Davenport, Evans, Hurwitz & Smith, Sioux Falls, for defendant and respondent Henry Carlson Company, Inc.
William G. Taylor, Jr., of Woods, Fuller Shultz & Smith, Sioux Falls, for defendant and respondent Ron M. Fiegen, Inc.
The City of Sioux Falls (City) has appealed from the trial court's determination denying its claim for refund of progress payments made to defendants Henry Carlson Company, Inc. (Carlson) and Ron M. Fiegen, Inc. (Fiegen) pursuant to a remodeling contract for the Sioux Falls Coliseum Annex prior to its destruction. We affirm.
In 1972, the City contracted with Carlson and Fiegen to remodel the Sioux Falls Coliseum Annex. The remodeling project was substantially completed when a fire destroyed the Annex on January 5, 1973. Before the fire, Carlson had received $61,529.40 on a contract total of $70,430, and Fiegen had received $4,976.58 on a contract total of $29,823 in the form of progress payments.
Following the fire, the City received $646,644.73 from its own fire insurance carrier for damages to the Coliseum and the Annex. Carlson received $8,906.48 from its own insurance carrier, and Fiegen received $23,320.03 from its insurance carrier.
After making demands upon the defendants and their insurance carriers, the City sued the defendants for refund of the progress payments, asserting that under the remodeling contract's provision requiring insurance, the defendants or their insurers were liable for any loss to the project work resulting from the fire. The defendants answered, denying the City's claim, stating that the City had been fully reimbursed by its own insurance carriers, and they counterclaimed for the balance of the contract price on their respective contracts. The case was tried to the court, and findings of fact and conclusions of law and judgment were entered holding that the City, having been fully compensated by its insurer, had no claim against the defendants, and that the defendants, likewise, had no claim against the City. Only the City appeals from the trial court's determination.
The questions presented by the City are: (1) Did the trial court err in failing to hold that all responsibility for maintenance of property insurance on the work and for payment of sums for damage arising out of all perils remained with the contractor until the work was complete and accepted in writing by the City? (2) Did the trial court err in receiving evidence concerning the City's own insurance policy? and (3) Did the defendants sustain their burden of proof that the City had been fully compensated for the fire loss?
The resolution of this appeal centers upon the interpretation of the contract's insurance provisions. The City's separate contracts with Carlson and Fiegen each contained the following clauses:
These clauses replaced those found in the AIA (American Institute of Architects) Document A201, 1970 Edition, 1 the form otherwise adopted by the City and made a part of the remodeling contracts.
The City concedes that if it had not modified these AIA provisions, it would have had to provide insurance coverage for the losses suffered by all parties from the fire. It is also obvious that had the City not maintained a policy which covered "alterations and repairs," the contractors would have been liable for the loss.
Under the contract provisions, the trial court determined:
"CONCLUSIONS OF LAW
"In accordance with Section 11.3 of the supplemental general conditions of the contract, the Plaintiff waived any right of recovery against the Defendant to the extent of any valid and collectible insurance in force on the date of the fire.
"In accordance with Section 11.3 of the supplemental general conditions of the contract, the Defendant waived any right of recovery against the Plaintiff to the extent of any valid and collectible insurance in force on the date of the fire.
"That Plaintiff is not entitled to recover on its Complaint and Defendant is not entitled to recover on its Counterclaim because each party had in full force and effect a valid and collectible policy of fire insurance on the date of the fire."
The crux of this appeal is whether the court properly determined the import of the provisions of Section 11.3. The appellant maintains that the court did not construe the provisions of Section 11.3 as a whole but only considered its last paragraph and, accordingly, wrongly concluded that each party waived the right to recover from each other. However, in doing so, the City emphasizes only the second paragraph of Section 11.3 and ignores the language of the last paragraph.
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