Commercial Union Assur. Co. v. Gilford Marina, Inc., 78-175

• Decision Date: 14 November 1979
• Docket Number: No. 78-175,78-175
• Citation: 408 A.2d 405,119 N.H. 788
• Parties: COMMERCIAL UNION ASSURANCE COMPANY v. GILFORD MARINA, INC., George Joyce and Frank Cannavino.
• Court: New Hampshire Supreme Court

Page 405

408 A.2d 405

119 N.H. 788

COMMERCIAL UNION ASSURANCE COMPANY v. GILFORD MARINA, INC., George Joyce and Frank Cannavino.

No. 78-175.

Supreme Court of New Hampshire.

Nov. 14, 1979.

Devine, Millimet, Stahl & Branch, Manchester (David H. Barnes, Manchester, orally), for plaintiff.

David M. Copithorne, Laconia (on brief and orally), for defendant, Gilford Marina, Inc.

BROCK, Justice.

This is a petition for declaratory judgment under RSA 491:22. Commercial Union Assurance Company seeks to determine its obligations under a "Special Multi-Peril" insurance policy issued to Gilford Marina, in regard to an action brought against Gilford Marina by George Joyce and Frank Cannavino, alleging negligence and breach of warranty.

The case is submitted on an agreed statement of facts. During the winter of 1975-1976, Joyce and Cannavino stored their forty-three foot Chris Craft Motor Yacht at the Gilford Marina. The owners requested that certain repairs be performed. It is their contention that Gilford Marina failed to perform the repairs in a workmanlike manner and that this negligent failure to properly repair the vessel caused further damage. The Master (Walter L. Murphy, Esq.) found that the Commercial Union was obligated to defend the action and if the allegations in the complaint were established to provide coverage up to limits of the policy. The Court (Keller, C. J.) approved the master's recommendation. We affirm.

In the liability section of the policy issued to Gilford Marina, Commercial Union agreed to

pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of . . . property damage . . . 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. (Emphasis added).

The policy then goes on to exclude certain areas of coverage. Exclusion (a) of the policy provides that "(t)his insurance does not apply . . . to liability assumed by the insured under any contract . . . but this exclusion does not apply to a . . . warranty that work performed by or on behalf of the named insured will be done in a workmanlike manner." Gilford Marina contends that the broad coverage provided by the liability section, coupled with exclusion (a), would lead a reasonable person in the position of the insured to conclude that property damage caused by unworkmanlike repairs is covered under the policy.

Commercial Union denies coverage on the basis of two other exclusions which state that:

(t)his insurance does not apply . . . (k) to property damage to . . . (3) property in the care, custody or control of the insured or as to which the insured is for any purpose exercising physical control . . . (o) to property damage to work performed by or on behalf of the named insured arising out of the work or any portion thereof, or out of materials, parts of equipment furnished in connection therewith.

This case presents a familiar issue, namely, "whether the ordinary layman in the position of the insured could reasonably be expected to understand that certain exclusions qualified the policy's grants of coverage." Commercial Union Assurance Cos. v. Gollan, 118 N.H. 744, 745, 394 A.2d 839, 841 (1978). The burden of proving noncoverage is on the insurer. RSA 491:22-a (Supp.19...