Fred Steinheider and Sons, Inc. v. Iowa Kemper Ins. Co., 42213

• Citation: 204 Neb. 156,281 N.W.2d 539
• Decision Date: 24 July 1979
• Docket Number: No. 42213,42213
• Parties: FRED STEINHEIDER AND SONS, INC., a corporation, Appellant, v. IOWA KEMPER INSURANCE COMPANY, a corporation, et al., Appellees.
• Court: Supreme Court of Nebraska

Page 539

281 N.W.2d 539

204 Neb. 156

FRED STEINHEIDER AND SONS, INC., a corporation, Appellant, v. IOWA KEMPER INSURANCE COMPANY, a corporation, et al., Appellees.

No. 42213.

Supreme Court of Nebraska.

July 24, 1979.

Syllabus by the Court

1. Insurance. Insurance companies have the same right as individuals to limit their liability.

2. Insurance: Contracts. In construing a contract, the instrument must be read as a whole, giving force and effect to all its provisions to determine whether or not any ambiguity exists and whether, if such ambiguity does exist, the contract is confusing and uncertain in its terms.

3. Pleadings. In the furtherance of justice the trial court may exercise its discretion in granting an amendment to the pleading at any stage of the proceedings.

Blevens, Blevens & Jacobs, Seward, for appellant.

Baylor, Evnen, Baylor, Curtiss & Grimit, Lincoln, for appellees.

Heard before KRIVOSHA, C. J., McCOWN, and WHITE, JJ., and RONIN and HAMILTON, District Judges.

KRIVOSHA, Chief Justice.

This appeal seeks to reverse an order of the District Court for Seward County, Nebraska, sustaining the appellee's (Iowa Kemper) motion for a directed verdict and dismissing appellant's (Steinheider) petition for a declaration of its rights under an insurance policy issued by Iowa Kemper to Steinheider. From an examination of all of the matters involved in this action, we believe the trial court acted correctly and therefore affirm the judgment of the trial court.

The facts which give rise to the present controversy are essentially without dispute. Steinheider was engaged in a seed and farm supply business and in connection therewith purchased from Iowa Kemper a comprehensive general liability insurance policy. The policy provided, in part: "The company will pay on behalf of the insured all sums which the insured shall be come legally obligated to pay as damages because of A. bodily injury or B. property damage to which this insurance applies, caused by an occurrence * * *."

The policy further contained, among other definitions, a specific definition for "completed operations hazard" and for "products hazard." "Completed operations hazard" is defined to include "bodily injury and property damage arising out of operations or reliance upon a representation or warranty made at any time with respect thereto, but only if the bodily injury or property damage occurs after such operations have been completed or abandoned and occurs away from premises owned by or rented to the named insured. * * * Operations shall be deemed completed at the earliest of the following times: (1) when all operations to be performed by or on behalf of the named insured under the contract have been completed, (2) when all operations to be performed by or on behalf of the named insured at the site of the operations have been completed, or (3) when the portion of the work out of which the injury or damage arises has been put to its intended use by any person or organization other than another contractor or subcontractor engaged in performing operations for a principal as a part of the same project."

"Products hazard" is defined as "bodily injury and property damage arising out of the named insured's products or reliance upon a representation or warranty made at any time with respect thereto, but only if the bodily injury or property damage occurs away from premises owned by or rented to the named insured and after physical possession of such products has been relinquished to others;"

The policy further contained a specific endorsement page entitled "EXCLUSION (Completed Operations Hazard and Products Hazard)" and recited: "This endorsement Modifies such insurance as is afforded by the provisions of the policy relating to the following: COMPREHENSIVE GENERAL LIABILITY INSURANCE * * *. It is agreed that such insurance as is afforded by the Bodily Injury Liability Coverage and the Property Damage Liability Coverage Does not apply to bodily injury or property damage included within the Completed Operations Hazard or the Products Hazard." (Emphasis supplied.) In other words, the policy specifically provided, by endorsement, that any coverage for bodily injury or property damage occasioned by reason of acts within the definition of "completed operations hazard" or "products hazard" was excluded and not provided.

On April 30, 1975, a customer of Steinheider placed an order with it for a product known as "Teat-Dip" to be used as a mastitis preventative on dairy cattle. Due to the apparent negligence of an employee of Steinheider, a different chemical, "Wayne-O-Dyne," packaged similarly to "Teat-Dip," was mistakenly delivered to the customer. The chemical was used by the customer in his dairy operation. After approximately 10 days of use, the customer reported that he was running into trouble with his cows. The cows were experiencing sore udders, sore teats, and the customer, himself, was experiencing problems with the skin on his hands from using the product delivered.

The record indicates that "Teat-Dip" is a chemical used on the teats of the cows after milking as a disinfectant to reduce the incidence of mastitis, and is not as stringent as "Wayne-O-Dyne." "Wayne-O-Dyne" is a very strong disinfectant which is used for sterilizing hog barns and is supposed to be effective in killing any residue that might cause problems with hogs or dairy barn floors. The containers of both products are equal in size, color, and material, and both contain a disinfectant chemical known as taimodine.

The evidence reflects that on July 14, 1975, Steinheider's counsel wrote to Steinheider concerning the claim made by the customer against Steinheider. The letter indicated Steinheider had been advised by Iowa Kemper that coverage was being denied. The letter recites, in part: "We understand the company has suggested the Completed Operations Hazard and Products Hazard exclusion affixed to your policy would exculpate it from liability * * *." On August 7, 1975, a letter from Iowa Kemper to Steinheider's counsel indicated "There was no products liability or completed operations coverage" at that time, and further made specific reference to endorsement L-9141 and set out in detail that coverage was denied because it did not apply to " 'bodily injury or property damage included within the completed operations hazard or the products hazard.' "

Steinheider filed a petition for declaratory judgment praying that it be declared and determined the liability insurance coverage provided by Steinheider's policy did not exclude the negligence of an employee in misdelivering a product. Attached to the petition was the letter of August 7, 1975, from Iowa Kemper to Steinheider's counsel, wherein coverage was denied because of the absence of a products liability or completed operations coverage. Iowa Kemper filed a general denial and trial was had on the matter before the court on December 9, 1977, and January 6, 1978. On January 6, 1978, following the taking of evidence in this matter on December 9, 1977, but before a decision was issued by the trial court, Iowa Kemper sought leave to file an amended answer, affirmatively pleading the exclusions contained in the endorsement referred to in its letter of August 7, 1975. After argument, the trial court granted leave to file the amended answer.

Steinheider maintains the trial court erred in two major respects: (1) In finding that the alleged negligent delivery of the wrong product to Steinheider's customer was either within the completed operations hazard or the products hazard, thereby excluding coverage under the policy by reason of the endorsement; and (2) in permitting Iowa Kemper to amend its answer after trial to affirmatively...