Columbia Nat. Ins. v. Pacesetter Homes, Inc.

• Court: Nebraska Supreme Court
• Writing for the Court: CAPORALE, FAHRNBRUCH, WRIGHT, and CONNOLLY, JJ., and MILLER-LERMAN, Judge, and GRANT; WRIGHT; WHITE, C.J., and LANPHIER
• Citation: Columbia Nat. Ins. v. Pacesetter Homes, Inc., 248 Neb. 1, 532 N.W.2d 1 (Neb. 1995)
• Decision Date: 19 May 1995
• Docket Number: No. S-93-311,S-93-311
• Parties: COLUMBIA NATIONAL INSURANCE, Formerly Known as National American Insurance Company of Nebraska, a Division of Columbia Insurance Group, Appellee, v. PACESETTER HOMES, INC., a Nebraska Corporation, and Joseph Fingerlin, Appellants.

Page 1

532 N.W.2d 1

248 Neb. 1

COLUMBIA NATIONAL INSURANCE, Formerly Known as National American Insurance Company of Nebraska, a Division of Columbia Insurance Group, Appellee, v. PACESETTER HOMES, INC., a Nebraska Corporation, and Joseph Fingerlin, Appellants.

No. S-93-311.

Supreme Court of Nebraska.

May 19, 1995.

Syllabus by the Court

1. Declaratory Judgments: Appeal and Error. When a declaratory judgment action presents questions of law, an appellate court has an obligation to reach its conclusion independent from the conclusion reached by the trial court with regard to those questions.

2. Declaratory Judgments: Appeal and Error. Determinations of factual issues in a declaratory judgment action will not be disturbed on appeal unless they are clearly wrong.

3. Insurance: Contracts: Appeal and Error. The construction of an insurance contract or policy is a question of law, in connection with which an appellate court has an obligation to reach an independent, correct conclusion irrespective of the determination made by the court below.

4. Insurance: Intent. In order to determine whether the insured intended to do the specific act which caused injury or harm, the court must examine the quality and purpose of the transaction as a whole.

5. Words and Phrases. The term "occupancy" normally refers to the state of being inhabited. The right of "private occupancy" can only refer to those rights associated with an individual's act of inhabiting the premises, and not to rights associated with the individual's right to use and enjoy the inhabited premises.

6. Words and Phrases. Ejusdem generis principles draw on the sensible notion that words such as "or other invasion of the right of private occupancy" are intended to encompass actions of the same general type as, though not specifically embraced within, "wrongful entry or eviction."

7. Intent. Where an intentional act results in injuries which are the natural and probable consequences of the act, the injuries as well as the act are intentional.

Robert J. Huck and Robert S. Lannin, of Croker, Huck, Kasher, DeWitt, Anderson & Gonderinger, P.C., Omaha, for appellants.

William J. Brennan and Joseph A. Jordano, of Fitzgerald, Schorr, Barmettler & Brennan, P.C., Omaha, for appellee.

CAPORALE, FAHRNBRUCH, WRIGHT, and CONNOLLY, JJ., and MILLER-LERMAN, Judge, and GRANT, J., Retired.

WRIGHT, Justice.

I. INTRODUCTION

Columbia National Insurance (Columbia) brought this action for declaratory judgment, seeking a determination of whether it had a duty to defend Pacesetter Homes, Inc. (Pacesetter), and Joseph Fingerlin, one of Pacesetter's former employees, in three suits brought in Sarpy County (the Sarpy County actions). The district court held that Columbia had no duty to defend. Pacesetter and Fingerlin appeal.

II. SCOPE OF REVIEW

When a declaratory judgment action presents questions of law, an appellate court has an obligation to reach its conclusion independent from the conclusion reached by the trial court with regard to those questions. How v. Mars, 245 Neb. 420, 513 N.W.2d 511 (1994); Jaksha v. Thomas, 243 Neb. 794, 502 N.W.2d 826 (1993).

Determinations of factual issues in a declaratory judgment action will not be disturbed on appeal unless they are clearly wrong. Beatrice Nat. Bank v. Southeast Neb. Co-op, 230 Neb. 671, 432 N.W.2d 842 (1988); Havelock Bank v. Western Surety Co., 217 Neb. 560, 352 N.W.2d 855 (1984).

The construction of an insurance contract or policy is a question of law, in connection with which an appellate court has an obligation to reach an independent, correct conclusion irrespective of the determination made by the court below. Katskee v. Blue Cross/Blue Shield, 245 Neb. 808, 515 N.W.2d 645 (1994); Dalton Buick v. Universal Underwriters Ins. Co., 245 Neb. 282, 512 N.W.2d 633 (1994).

III. FACTS

1. BACKGROUND

In the late 1970's, Pacesetter began developing a subdivision in Sarpy County known as Millard Highlands South. The first plat was filed in 1976. Also in the late 1970's, the Nebraska Department of Roads hired an engineering firm to design a set of proposed plans for an Interstate 80-Harrison Street interchange (126th Street).

At a public hearing held on July 7, 1980, in Ralston, Nebraska, functional plans were presented in order to allow public comment on the proposed interchange. The plans showed both the location of 126th Street in relation to the Millard Highlands South eastern property line as originally platted and the anticipated limits of construction or right-of-way that would be needed. The plans depicted the trees running along the eastern border of Pacesetter's property as falling within the limits of the proposed construction. According to the Douglas County surveyor, the trees and the hill on which they stood had to be removed to make way for 126th Street.

In 1986, the engineering firm hired by Pacesetter completed Millard Highlands South replat IV. This replat was done to accommodate the expected limits of construction for 126th Street outlined in the 1980 functional plans. The replat was accepted by the Sarpy County Board of County Commissioners on April 7, 1987. On March 9, 1988, Ralph Heavrin, as president of Pacesetter, transferred by warranty deed to the Department of Roads the portion of the subdivision which was to be included in the 126th Street right-of-way. The right-of-way property sold to the Department of Roads included the hill and trees depicted in the 1980 functional plans.

2. REAL ESTATE PURCHASES

On March 11, 1986, Rayne and Cheryl Balwanz, plaintiffs in the Sarpy County actions, were induced by Fingerlin to purchase Lot 48, Millard Highlands South replat IV. In May 1986, the Balwanzes were informed that a portion of Lot 48 was to be condemned for the 126th Street right-of-way. The Balwanzes then changed their purchase to Lot 53. On July 31, 1988, David and Lisa Ammerman, plaintiffs in the Sarpy County actions, were induced by Fingerlin to purchase Lot 602, Millard Highlands South replat IV. This lot backed up to the property sold by Pacesetter to the Department of Roads for the 126th Street right-of-way. On September 21, 1988, Scott and Teri Schaefer, also plaintiffs in the Sarpy County actions, were induced by Fingerlin to purchase Lot 600, Millard Highlands South replat IV. This lot also backed up to the property sold by Pacesetter for the right-of-way.

3. REAL ESTATE COMMISSION PROCEEDINGS

On April 4 and May 9, 1990, respectively, the Schaefers and the Ammermans filed formal complaints with the State Real Estate Commission (Commission). The Schaefers and Ammermans alleged that Heavrin and Fingerlin, acting on behalf of Pacesetter, made material representations regarding the condition of the lots they purchased in 1988. These representations related to the ownership and permanency of the hill and trees east of their property lines, the same hill and trees deeded in 1988 to the Department of Roads. The Schaefers and Ammermans alleged that Fingerlin misrepresented the nature of 126th Street and the location of 126th Street in relation to Lots 600 and 602 by indicating that the hill and trees would be a natural buffer. The Commission conducted a formal adjudication of the complaints and, on September 24, 1990, issued an order stating specific findings of fact and conclusions of law regarding the complaints. The Commission generally found that Fingerlin knowingly and intentionally made misrepresentations. The Commission's order was not appealed.

4. THE SARPY COUNTY ACTIONS

In March 1991, the Schaefers, Ammermans, and Balwanzes filed the Sarpy County actions against Pacesetter and Fingerlin. These plaintiffs alleged that Fingerlin knowingly made misrepresentations about their respective lots in connection with the purchase of their homes. They alleged Fingerlin represented that the hill and trees bordering Lots 600 and 602 and adjacent to Lot 53 were owned by Pacesetter, that Pacesetter intended to keep the hill and trees in place, and that Pacesetter did not intend to remove the hill or trees. The plaintiffs alleged Fingerlin told them that 126th Street would be built a sufficient distance from their lots and that 126th Street was not to be a connecting on-off ramp, just a four-lane street. They claimed that as a direct and proximate result of the actions of Pacesetter and Fingerlin they had been damaged in the following respects: (1) diminution in the value of their property and (2) loss of enjoyment of the trees.

Pacesetter and Fingerlin denied any wrongdoing and filed a claim with Columbia requesting that it assume the defense of these lawsuits. Based upon a review of the petitions and upon Columbia's knowledge of the complaints filed with the Commission, Columbia denied the claim and declined to defend, contending (1) there was no coverage under the policy for an intentional act, (2) the conduct alleged was not an occurrence as defined by the policy, and (3) the damages claimed were not property damage as defined by the policy.

5. THE POLICY

Columbia issued to Pacesetter a special multiperil comprehensive general liability insurance policy covering the period from January 1, 1988, to January 1, 1989. No issue is raised as to whether the policy was in effect at the time of the misrepresentations or as to whether this fact would affect the coverage. Therefore, we do not decide that issue.

Section II of the policy addresses liability coverage. That section contains the following provisions relating to bodily injury liability and property damage liability:

I. The [c]ompany will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of

bodily injury or

property damage

to which this insurance applies, caused by an occurrence, and arising out of the ownership, maintenance or use of the insured premises and all operations necessary or incidental to the business of the named insured conducted at or from the insured...