Crossmann Cmtys. of N.C., Inc. v. Harleysville Mut. Ins. Co., 5292.
| Decision Date | 28 January 2015 |
| Docket Number | No. 5292.,5292. |
| Citation | 411 S.C. 506,769 S.E.2d 453 |
| Parties | CROSSMANN COMMUNITIES OF NORTH CAROLINA, INC., and Beazer Homes Investment Corp., Appellants, v. HARLEYSVILLE MUTUAL INSURANCE COMPANY, Cincinnati Insurance Company, Defendants, Of Whom Cincinnati Insurance Company is the Respondent. Appellate Case No. 2012–213245. |
| Court | South Carolina Court of Appeals |
411 S.C. 506
769 S.E.2d 453
CROSSMANN COMMUNITIES OF NORTH CAROLINA, INC., and Beazer Homes Investment Corp., Appellants
v.
HARLEYSVILLE MUTUAL INSURANCE COMPANY, Cincinnati Insurance Company, Defendants
Of Whom Cincinnati Insurance Company is the Respondent.
Appellate Case No. 2012–213245.
No. 5292.
Court of Appeals of South Carolina.
Heard Oct. 7, 2014.
Filed Jan. 28, 2015.
David B. Miller, of Bellamy, Rutenberg, Copeland, Epps, Gravely & Bowers, P.A., of Myrtle Beach, and Martin M. McNerney and Taylor T. Lankford, of King & Spalding, LLP, of Washington, D.C., for Appellants.
Franklin J. Smith, Jr., of Richardson, Plowden, Carpenter & Robinson, P.A., of Columbia, for Respondent.
Opinion
SHORT, J.
In this insurance dispute, Crossmann Communities of North Carolina, Inc. (Crossmann) and Beazer Homes Investment Corp. (Beazer) (collectively, Appellants) appeal the trial court's order finding Cincinnati Insurance Company (Cincinnati) has no obligation to Appellants for costs incurred by Beazer to repair property damage at several condominium projects. Appellants argue the trial court erred in (1) determining commercial general liability (CGL) insurance policies underlying
Cincinnati's umbrella policies were not exhausted and (2) finding Cincinnati was not bound by a 2007 judgment. We affirm.
FACTS
Between 1992 and 1999, Appellants and other contractors and subcontractors constructed multiple condominium projects in South Carolina and were subsequently sued by numerous homeowners alleging property damage arising from construction defects.1 Appellants settled with the homeowners for approximately $16.8 million.2 Appellants then filed a declaratory action seeking coverage for the settlement payments it made from numerous insurers, including Harleysville Mutual Insurance Company (Harleysville) under a series of CGL policies and Cincinnati under a series of CGL umbrella policies. Prior to trial, several of Appellants' other insurers settled with Appellants for $8.6 million, providing coverage for
the homeowners' claims. Crossmann II, 395 S.C. at 46 n. 2, 717 S.E.2d at 592 n. 2.
Harleysville provided Appellants CGL primary and excess coverage. The Harleysville primary policies provided a $1 million “each occurrence” limit and a $2 million “products completed operations aggregate” limit for the policy periods from 7/29/93 to 8/29/98. The Harleysville excess policies provided a $10 million “each occurrence” limit and an “aggregate limit” from July 29, 1994 to August 29, 1998. The Harleysville policies defined “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions” and “property damage” as “[p]hysical injury to tangible property, including all resulting loss of use of that property.”
Cincinnati provided excess umbrella policies for the policy periods from July 1, 1998 to July 1, 2002 and provided $10 million coverage for “each occurrence annual limit and annual aggregate limit.” These policies defined “occurrence” as “[a]n accident, including continuous or repeated exposure to substantially the same general harmful conditions” and defined “property damage” as “[p]hysical injury to or destruction of tangible property[,] including all resulting loss of use.”
The parties stipulated to the facts and amount of damages and presented only the coverage and allocation questions to the trial court. The jury panel was dismissed, and the trial court determined the coverage issue as a matter of law. The parties' stipulations, inter alia, were as follows:
1) If there is an “occurrence” or are “occurrences” under the Harleysville and Cincinnati policies (the “Policies”), then the damages at the underlying projects that resulted from water intrusion and that meet the definition of “property damage” in the Policies are $7.2 million. If the Court finds that there has been an occurrence or occurrences, then the Court shall find that [Appellants'] insured loss is $7.2 million....
2) The parties agree that the damage referred to in paragraph 1 above began within 30 days after the Certificate of Occupancy was issued for each building and that such damage, and new damage, progressed until repaired or until
[Appellants] paid to settle the underling (sic) cases, whichever came first.
* * *
6) Harleysville and Cincinnati agree that, for purposes of the disposition of this matter at the trial court level, they will not raise the applicability of policy exclusions with respect to [the trial court's] consideration of the issues identified below in paragraph 9. Harleysville and Cincinnati preserve the right to raise the applicability of policy exclusions on appeal to the extent permitted by the South Carolina Rules of Appellate Procedure and South Carolina
law in response to contentions raised by [Appellants] that give rise to a policy exclusion.
7) The parties agree that the record in this case shall consist of all settlement documents, pleadings, discovery, and depositions, in both the coverage case and the underlying cases[,] which have been produced and exchanged in discovery in the case.
8) The parties agree that the following matters are the only issues of law to be addressed by [the trial court]:
a. Did the property damage giving rise to [Appellants'] claims for coverage arise from an “occurrence”;
b. In the event the Court finds that there was an occurrence or occurrences, how shall the $7.2 million in insured damages referred to in paragraph 1 above be allocated, whether by “joint and several” or by “time on the risk”;
c. In the event judgment is entered for [Appellants], and that the Court determines that “time on the risk” is the proper allocation method, what is the proper period over which the “time on the risk” should be calculated. All parties reserve their right to argue, from the applicable facts and law, the appropriate start date and end date for any pro rata time on the risk allocation period....
* * *
9) The parties agree that Cincinnati can argue to the Court that the underlying insurance has not been exhausted and that Cincinnati has no obligation to “drop down” and cover [Appellants] for losses in the Underlying Lawsuits, and [Appellants] can oppose Cincinnati's contention and argue that Cincinnati's policies are presently triggered.
10) The parties agree that all rights to appeal are preserved as to any and all rulings and judgments of the trial court.
* * *
13) Cincinnati's applicable policies are excess policies with a “follow from” endorsement applicable to completed operations.
At the first hearing on remand, the trial court asked the parties if the stipulations remained the “status quo, a part and partial [sic] of this case.” All parties agreed they did.
By order filed May 3, 2007, the trial court found, inter alia, (1) coverage because “property damage” arose from an “occurrence” under the Harleysville and Cincinnati policies; (2) the parties had stipulated the loss was $7.2 million; (3) the condominium projects sustained “property damage” during the policy periods; (4) damages against Harleysville in the amount of $7.2 million and entered judgment accordingly; and (5) because the combined limits of the Harleysville policies exceeded the $7.2 million in stipulated damages and the damages were to be allocated in accordance with the joint and several methodology, the court need not rule on whether the Cincinnati excess/umbrella policies were triggered. Harleysville appealed the 2007 order. Cincinnati did not appeal.
Our supreme court affirmed the trial court's finding of coverage, but it reversed the trial court's finding that damages were to be allocated by the joint and several liability method. Crossmann II, 395 S.C. at 66–67, 717 S.E.2d at 603. Instead, the supreme court found Harleysville's liability was limited to its pro rata share of the losses based on the “time on the risk” allocation of liability method. Id. at 63, 717 S.E.2d at 601. The court found the standard CGL policy
require[s] that each insurer cover only that portion of a loss attributable to property damage that occurred during its policy period. In light of the difficulty in proving the exact amount of damage incurred during each policy period, we adopt the [time-on-risk] formula ... as the default method for allocating shares of the loss.... [T]he premise [is] that each insurer is responsible only for a pro rata...
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