Commercial Union Ins. Co. v. R.H. Barto Co., a Div. of Atlas Air Conditioning Corp., 81-1512

• Decision Date: 21 September 1983
• Docket Number: No. 81-1512,81-1512
• Citation: 440 So.2d 383
• Parties: COMMERCIAL UNION INSURANCE COMPANY, Appellant, v. The R.H. BARTO COMPANY, A DIVISION OF ATLAS AIR CONDITIONING CORPORATION, Appellee.
• Court: Florida District Court of Appeals

Page 383

440 So.2d 383

COMMERCIAL UNION INSURANCE COMPANY, Appellant, v. The R.H. BARTO COMPANY, A DIVISION OF ATLAS AIR CONDITIONING CORPORATION, Appellee.

No. 81-1512.

District Court of Appeal of Florida Fourth District.

Sept. 21, 1983.

Rehearing Denied Nov. 21, 1983.

Richard A. Sherman of Wicker, Smith, Blomqvist, Davant, Tutan, O'Hara & McCoy, Miami, for appellant.

Edna L. Caruso, P.A., and Montgomery, Lytal, Reiter, Denney & Searcy, P.A., West Palm Beach, for appellee.

DOWNEY, Judge.

Appellant, Commercial Union Insurance Company, has perfected this appeal from a judgment of the trial court finding Commercial Union liable to appellee, The R.H. Barto Company, for breach of an insurance contract in refusing to defend its insured Barto.

The factual background reflects that Barto entered into a subcontract with an owner, Ecclestone, to install the air conditioning equipment in towers A and B of the Forum III office complex in West Palm Beach. After the building was occupied the air conditioning equipment continually malfunctioned even after repair and replacement. Eventually, Ecclestone sued Barto and Dunham-Bush, Inc., the manufacturer of the air conditioning equipment, seeking damages for expenses incurred in repairing and replacing the malfunctioning equipment and for the loss of rentals resulting from lost tenants. Barto notified its insurance carrier, Commercial Union, and demanded the carrier assume defense of the suit; however, Commercial Union refused to defend Barto, contending that the policy in question did not cover the damages which Ecclestone sought to recover. The Ecclestone-Barto suit was ultimately settled and the present suit was instituted by Barto against Commercial Union for Barto's damages resulting from Commercial Union's breach of contract in refusing to defend Barto.

It is axiomatic that an insuror's duty to defend is determined by the allegations of the complaint filed by a third party against the insured. Klaesen Brothers v. Harbor Insurance Co., 410 So.2d 611 (Fla. 4th DCA 1982); Auto-Owners Insurance Co. v. Jones, 397 So.2d 317 (Fla. 4th DCA 1981); Buchwald v. Hartford Accident & Indemnity Co., 319 So.2d 164 (Fla. 3d DCA 1975). Even though some of the claims made by the third party are not within the coverage, the insuror has the duty to defend as long as any of the claims made are covered by the policy. 31 Fla.Jur.2d Insurance § 822. It therefore is necessary to look to both the complaint against the insured and the provisions of the policy to determine whether a defense is required by the carrier.

The Ecclestone complaint charged that Barto had installed the air conditioning equipment knowing what was required of it but that the equipment was inadequate. It broke down continuously; required constant repair and eventually replacement but even then it failed to meet the needs of the buildings and their occupants. As a consequence it is alleged that Ecclestone was required to expend large sums for labor and materials to repair and replace the equipment. In addition, the complaint alleges Ecclestone "lost rentals, tenants, and the opportunity to obtain other and additional high quality business and commercial tenants."

The Commercial Union policy is known as a Comprehensive General Liability policy. It provides that the company will pay on behalf of the insured all sums which the insured becomes obligated to pay because of "property damage" or bodily injury to which this insurance applies caused by an "occurrence." An occurrence is defined in the policy as:

[A]n accident, including continuous or repeated exposure to conditions, which results in property damage neither expected nor intended from the standpoint of the insured.

Property damage is defined as:

(1) Physical injury to or destruction of tangible property which occurs during the policy period, including the loss of use thereof at any time resulting therefrom, or (2) Loss of use of tangible property which has not been physically injured or destroyed, providing such loss of use is caused by an occurrence during the policy period.

Barto contends that the claim made by Ecclestone falls within the foregoing provisions because the allegations of the complaint refer to an occurrence, i.e., "an accident, including continuous and repeated exposure to conditions, which results in ... property damage neither expected nor intended from the standpoint of the insured." The property damage envisioned by Barto is the loss of use of parts of its office building due to inadequate air conditioning which caused the offices to become uninhabitable.

Commercial Union on the contrary argues that its policy simply does not cover the type of claim made by Ecclestone; a claim based on the fact that the air conditioners did not work right. The carrier contends there was no occurrence because there was no accident. Furthermore, there are exclusions which would eliminate this coverage if it pertained in the first instance. For example, the policy further provides:

Exclusions

This insurance does not apply:

(h) ¹ to loss of use of tangible property which has not been physically injured or destroyed resulting from (1) a delay in or lack of performance by or on behalf of the named insured of any contract or agreement or

(2) the failure of the named insured's products or work performed by or on behalf of the named insured to meet the level of performance, quality, fitness or durability warranted or represented by the named insured;

but this exclusion does not apply to loss of use of other tangible property resulting from the sudden and accidental physical injury to or destruction of the named insured's products or work performed by or on behalf of the named insured after such products or work have been put to use by any person or organization other than an insured;

(i) to property damage to the named insured's products arising out of such products or any part of such products;

(j) 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 or equipment furnished in connection therewith;

(k) to damages claimed for the withdrawal, inspection, repair, replacement of the named insured's products or work completed by or on behalf of the named insured or of any property of which such products or work form a part, if such products, work or property are withdrawn from the market or from use because of any known defect or suspected defect or deficiency therein.

A further exclusion is contained in subsection (a) which provides that the insurance does not apply:

(a) to liability assumed by the insured under any contract or agreement except an

incidental contract; but this exclusion does not apply to a warranty of fitness or quality of the named insured's products or a warranty that work performed by or on behalf of the named insured will be done in a workmanlike manner.

This type of insurance coverage is...