Estrin Const. Co., Inc. v. Aetna Cas. and Sur. Co., WD
| Decision Date | 02 February 1981 |
| Docket Number | No. WD,WD |
| Parties | ESTRIN CONSTRUCTION COMPANY, INC., Appellant, v. The AETNA CASUALTY AND SURETY COMPANY, Respondent. 31323. |
| Court | Missouri Court of Appeals |
Arthur H. Stoup and Thomas E. Thompson, Kansas City, for appellant.
John R. Gibson and C. Michael Mattix, Morrison, Hecker, Curtis, Kuder & Parrish, Kansas City, for respondent.
Before TURNAGE, P. J., and SHANGLER and MANFORD, JJ.
The Estrin Construction Company sued Aetna Casualty and Surety Company for the costs and damages incurred from the refusal by Aetna to defend an action for negligence brought against Estrin under a comprehensive general liability policy issued by Aetna. The court found that coverage was excluded and entered judgment for Aetna.
The plaintiff Estrin as general contractor was engaged by Mi-Mo Investment Company to construct a warehouse for lease to a manufacturer according to designs and specifications of architect Morris. Estrin subcontracted the masonry and steel work on the walls to Keystone Masonry Company. The Estrin work activity was insured against builders risk and general liability to comply with the general conditions of the contract. Estrin insured the builders risk with Home Insurance Company and the general liability with Aetna. In the course of construction, a heavy wind toppled some of the unfinished wall construction. The damage some $26,500 was presented to Home and paid under the builders risk coverage. The walls were rebuilt to the original plan and stood at the time of trial.
In due course, Home, as subrogee of Estrin and the others under the builders risk coverage, sued the architect Morris and subcontractor Keystone Masonry for the amount paid to Estrin under the builders risk coverage for the wall collapse. Home alleged three counts for recovery: Count I was against both defendants, Morris and Keystone Masonry on the theory of res ipsa loquitur. Count II alleged negligence against subcontractor Keystone singularly. Count III alleged against architect Morris singularly, not only the negligent design and specifications for the walls, but for failure to obtain or ensure that the subcontractor Keystone had acquired builders risk coverage as required by contract of performance. The architect Morris, in turn, brought a third-party petition against Estrin to indemnify Morris as architect (as agreed by the general conditions of contract) against all loss or liability incurred for destruction of property from the negligence of the contractor or subcontractor. Estrin tendered the defense of the Morris third-party petition to Aetna under the comprehensive liability policy, but Aetna declined on the contention there was no coverage. Estrin then engaged private counsel to defend the third-party action. The suit was ultimately determined in favor of Estrin. The cost of defense and counsel fee, some $11,000, was borne by Estrin.
The litigation on appeal is the separate action by Estrin to recover from Aetna the cost of the defense of the Morris third-party petition, a defense due Estrin (so the assertion goes) under the terms of insurance contract. The suit seeks also to recover the cost of the prosecution of the separate action enhanced by the statutory penalty for vexatious nonpayment. The court determined that Estrin was precluded from the cause of action by two express exclusions from coverage.
The rights of the parties rest on the terms of a Comprehensive Liability Policy as augmented by a Contractual Liability Coverage Endorsement issued by Aetna to the Estrin Construction Company.
The comprehensive liability policy by Coverage D obligated Aetna to pay for property damage caused by accident for which Estrin was legally liable. That undertaking to insure was subject to formal Exclusions:
This policy does not apply:
(j) under coverage D, to injury to or destruction of (1) property owned or occupied by or rented to the Insured, or ... (3) ... property in the care, custody or control of the Insured or property as to which the Insured for any purpose is exercising physical control.
The court found from the evidence that the collapse of the wall was a loss as to property both occupied and in the custody or control of the general contractor Estrin and so excluded from Coverage D.
The contractual liability coverage endorsement undertook to pay for property damage caused by accident for which Estrin assumed the liability under any written contract. That undertaking to insure was subject to formal Exclusions:
This endorsement does not apply:
(a) if the Insured or indemnitee is an architect (and) injury ... or destruction aris(es) out of defects in maps, plans, designs or specifications prepared, acquired or used by the Insured or indemnitee.
The court found from the evidence that Morris, the proffered indemnitee under the third-party petition, was an architect and so excluded from the coverage of the endorsement.
The written contract under which Morris claims indemnity from Estrin (and Estrin, in turn, a defense from Aetna under the contractual liability endorsement to the Morris third-party petition) is the General Conditions document of the Contract of Construction. The general contractor Estrin undertakes by the terms of agreement, among other things, to "indemnify and hold harmless" the architect from liability for injury to person or property "from execution of work provided for in (the) contract." Aetna contends that the contractual liability endorsement precludes coverage to an architect altogether. Aetna misreads the policy. The terms of formal exclusion from that coverage deny indemnity to an architect where the injury results from defects in the designs or specifications prepared, acquired or used by the architect. The duty of an insurer to defend an action depends upon whether the allegations of petition state a claim within the policy coverage. Zipkin v. Freeman, 436 S.W.2d 753, 754(1) (Mo. banc 1969). A comparison of the Morris third-party petition against Estrin with the terms of the architect exclusion from the contractual liability coverage endorsement shows, at once, that Count III of the Home Insurance Company petition against Morris (and made integral to the third-party petition against Estrin by reference) alleges more than a defect in design, but that injury resulted from a negligent failure of the architect to inspect the construction of the walls, among other causes. That activity falls within the indemnity of the General Conditions promised by Estrin to Morris for injury "from execution of the work provided for in (the) contract" and falls within the exclusion from indemnity for the liability of an architect from defects in specifications.
The Count I res ipsa loquitur statement of claim against architect Morris and subcontractor Keystone, jointly, also at least arguably asserts a cause of action for negligent injury not excluded by the defect in specification term of the contractual liability coverage endorsement. To be sure, that Count prefaces the inference of negligence from the control and superior knowledge of the architect and subcontractor of the wall construction with allegations that the erection of that structure was according to the specifications and drawings. Those allegations construed most favorably to coverage, however, do not allege the plans as the source of injury, but rather as an indicium of the control and superior knowledge by the architect and subcontractor of the instrumentality of injury. If the proof allows even only presumptively a cause of action within the coverage, then the insurer must accept defense of the claim. 7C Appleman, Insurance Law and Practice § 4683, p. 42 (1979); Annotation, Liability Insurer Duty to Defend, 50 A.L.R.2d 458, 504 (1956). Aetna was not excused from the defense of the Morris third-party petition against Estrin on the basis of the contractual liability coverage endorsement exclusion. 1
The question remains whether Aetna, nevertheless, was excused from that defense by the policy term that excludes injury to property in the care or control of Estrin from the comprehensive liability coverage.
At the time of the casualty, the walls of the warehouse had taken form: the walls were topped out along most of the lengths and the steel framework was in place to that extent. The construction was concrete blocks tied in by roof joints at places. It was Thanksgiving week. That Wednesday the work ceased from rainfall and it rained on Thursday, as well. The mud impaired work on Friday so that only a token crew was on the job site. From that Friday night until the next Monday morning Estrin had no regular employees on the job site, either as watchmen, supervisors or surveillers. Richard Estrin, vice-president of the general contractor firm, became concerned about the construction on that Sunday because gusts and high winds had felled a forty-foot elm tree by his home. He went to the job site at about three in the afternoon and found everything in order. The scaffolds loaded with ballast were in place and tied to the walls with wire to ensure stability according to standard construction procedure. The job superintendent for Estrin, Bryson, was also concerned about the wind, and went to the job site that Sunday. Fred Estrin, president of the contractor company, also went by the construction. On each occasion of inspection, everything was in order. On the next day, Monday, vice-president Estrin received a call from job superintendent Bryson that the wind had toppled a portion of the wall. The scaffolds were buried under the debris and some of the steel structure was bent.
The formal provisions of contract imposed duty on the general contractor to protect the work from damage and the property of the owner from injury. A separate provision imposed other duty on...
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