Commercial Constr. Endeavors, Inc. v. Ohio Sec. Ins. Co., 2019-045

• Decision Date: 13 December 2019
• Docket Number: No. 2019-045,2019-045
• Citation: 2019 VT 88
• Court: Vermont Supreme Court
• Parties: Commercial Construction Endeavors, Inc. v. Ohio Security Insurance Company

2019 VT 88

Commercial Construction Endeavors, Inc.
v.
Ohio Security Insurance Company

No. 2019-045

Supreme Court of Vermont

September Term, 2019
December 13, 2019

NOTICE: This opinion is subject to motions for reargument under V.R.A.P. 40 as well as formal revision before publication in the Vermont Reports. Readers are requested to notify the Reporter of Decisions by email at: JUD.Reporter@vermont.gov or by mail at: Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801, of any errors in order that corrections may be made before this opinion goes to press.

On Appeal from Superior Court, Addison Unit, Civil Division

Helen M. Toor, J. (summary judgment orders); Alison S. Arms, J. (final judgment)

Kevin E. Brown of Langrock Sperry & Wool, LLP, Middlebury, for Plaintiff-Appellant.

Susan J. Flynn of Clark Werner & Flynn PC, Burlington, and Paul T. Sullivan of Zelle LLP, Framingham, Massachusetts, for Defendant-Appellee/Cross-Appellant.

PRESENT: Reiber, C.J., Robinson, Eaton and Carroll, JJ., and Morris, Supr. J. (Ret.), Specially Assigned

¶ 1. EATON, J. On a winter night in 2014, strong winds blew through the town of Georgia, causing a partially constructed livestock barn to collapse. Commercial Construction Endeavors, Inc. (CCE), the contractor building the barn, sought recompense for the resulting losses from its insurer, Ohio Security Insurance Company. However, insurer and insured disagreed as to policy coverage for costs incurred by CCE in removing the remains of the collapsed barn and rebuilding it to its pre-collapse state. Ultimately, CCE sued Ohio Security for breach of contract. In successive summary-judgment rulings, the trial court held that the contractor's rebuilding expenses were covered under the policy, but the cost of debris removal was not. Ohio Security

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cross-appeals from the first ruling and CCE appeals from the second; we reverse the first ruling and affirm the second.¹

¶ 2. The essential facts are undisputed. CCE was hired to construct a livestock barn in Georgia, Vermont. By late December 2014, the barn was partially complete—the foundation had been laid, wood framing erected, and roof trusses installed. However, on the night of Christmas Eve or early Christmas morning, strong winds caused the structure to collapse. CCE subsequently began clearing debris and rebuilding the barn, incurring additional labor and material costs.

¶ 3. CCE reported the collapse to Ohio Security shortly after it occurred, and the adjustment process began. Ohio Security determined that CCE was at fault because the barn was not properly braced to withstand the weather conditions, and that the resulting loss was covered under a policy endorsement for "Off[-]Premises Property Damage Including Care, Custody, or Control," which provided coverage for damage to real property upon which CCE was performing operations where the damage resulted from those operations. Upon adjustment, Ohio Security paid CCE $24,750—the full amount available under that endorsement, less an applicable $250 deductible.

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¶ 4. However, although Ohio Security indicated that the off-premises endorsement payment exhausted the coverage available under the policy, CCE asserted that coverage was also available under the "Property Floater Coverage Form" included therein. The floater, captioned "COMMERCIAN [sic] INLAND MARINE," read, in relevant part, as follows:

A. COVERAGE

We will pay for "loss" to Covered Property from any of the Covered Causes of Loss.

1. COVERED PROPERTY, as used in this Coverage Form, means:

Business personal property you own, including but not limited to equipment, tools, items, or materials to be installed and office business personal property. Business personal property owned by others including but not limited to employees [sic] tools or rented equipment or tools, while they are in your care, custody or control and for which you have accepted responsibility.

. . . .

3. COVERED CAUSES OF LOSS

Covered Causes of Loss means RISK OF DIRECT PHYSICAL "LOSS" to Covered Property except those causes of "loss" listed in the Exclusions.

4. ADDITIONAL COVERAGE - COLLAPSE

We will pay for direct "loss" caused by or resulting from risks of direct physical "loss" involving collapse of all or part of a building or structure caused by one or more of the following:

a. [W]indstorm . . . as covered in this Coverage Form;

. . . .

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f. Use of defective materials or methods in construction . . . if the collapse occurs during the course of the construction . . . .

5. COVERAGE EXTENSION

a. DEBRIS REMOVAL

(1) We will pay your expenses to remove debris of Covered Property caused by or resulting from a Covered Cause of Loss that occurs during the policy period. The expenses will be paid only if they are reported to us in writing within 180 days of the direct physical loss or damage[.]

Section B of the floater, titled "Exclusions," went on to provide that insurer would not pay for "loss" caused by or resulting from "[c]ollapse except as provided in the Additional Coverage - Collapse section of the Coverage Form."

¶ 5. Ohio Security determined that there was no coverage for CCE's loss under the floater, advising its insured that "the policy does not provide coverage 'for materials after they have been installed into the building project under the Property Floater Coverage.' " CCE sued Ohio Security for breach of contract, contending that coverage lay under A(4)(a) and (f) of the floater.

¶ 6. In the first of two summary-judgment motions, Ohio Security argued that its off-premises endorsement payment exhausted the coverage available for the barn's collapse under the policy because: the property floater, in section A, unambiguously limited its coverage to losses to "Covered Property"; "Covered Property" was defined as "[b]usiness personal property"; and the unfinished barn did not meet the definition of "business personal property" in A(1) because it was comprised of materials which had already been installed in a structure. In its response, CCE

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disputed that the components of the barn were transformed from business personal property to real property upon installation, but argued that such characterization was irrelevant in any event because the "Additional Coverage - Collapse" subsection—in contrast to other portions of the floater—did not expressly limit coverage to "Covered Property," and, therefore, the coverage provided by that subsection was not confined to business personal property.

¶ 7. The trial court categorized the barn as real property, not business personal property, but denied Ohio Security's summary judgment motion. Because it found merit in both parties' arguments, it concluded that the policy was necessarily ambiguous, noting that, "in the insurance world, ties go to the insured." Thus, the court held that the "Additional Coverage - Collapse" subsection was not limited to "Covered Property" as defined therein.

¶ 8. In its second summary-judgment motion, Ohio Security argued that the "Debris Removal" provision in the property floater at A(5)(a) did not provide coverage for costs incurred by CCE in removing the collapsed structure because these costs were not submitted within the 180-day timeframe set forth in the policy, and, in any event, the debris-removal coverage extension was explicitly limited to "Covered Property," and the unfinished barn was not "Covered Property." CCE no longer argued that the barn was "Covered Property," conceding that the debris-removal provision was thus inapplicable. However, it asserted that it could recoup debris-removal costs through the "Additional Coverage - Collapse" provision as the court construed it in response to the first summary judgment motion, because debris removal constituted a "loss." The court concluded that the 180-day deadline did not bar coverage because Ohio Security failed to show prejudice, but determined that the express provision for debris-removal coverage in A(5)(a) compelled the conclusion that debris removal was not covered in the collapse coverage in A(4) by its use of general term "loss."

¶ 9. This Court...