Gary L. Shaw Builders, Inc. v. State Auto. Mut. Ins. Co.

• Decision Date: 18 March 1987
• Docket Number: No. 73470,73470
• Parties: GARY L. SHAW BUILDERS, INC. v. STATE AUTOMOBILE MUTUAL INSURANCE COMPANY.
• Court: Georgia Court of Appeals

Page 130

355 S.E.2d 130

182 Ga.App. 220

GARY L. SHAW BUILDERS, INC. v. STATE AUTOMOBILE MUTUAL INSURANCE COMPANY.

No. 73470.

Court of Appeals of Georgia.

March 18, 1987.

James B. Wall, Augusta, for appellant.

J. Arthur Davison, Percy J. Blount, William C. Reed, Augusta, for appellee.

McMURRAY, Presiding Judge.

State Automobile Mutual Insurance Company (State Automobile) initiated this declaratory judgment action seeking a determination as to whether it has a duty to defend Gary L. Shaw Builders, Inc. (Shaw Builders) in an action filed against Shaw Builders by James E. and Sheila M. Clark (Clarks).

In 1978 Shaw Builders constructed a house in Augusta, Georgia for Mr. and Mrs. Dick Rumbley (Rumbleys). Thereafter, a dispute arose between Shaw Builders and the Rumbleys concerning the structual integrity of the house. To resolve the dispute, Shaw Builders purchased the house from the Rumbleys on March 11, 1985. Shaw Builders then performed certain repairs on the house and, in April 1985 purchased a comprehensive general liability (CGL) insurance policy from State Automobile covering the house. (The CGL insurance policy was effective from February 7, 1985, to February 7, 1986.) On June 17, 1985, Shaw Builders sold the house to the Clarks and, in conjunction therewith, provided James E. Clark with the following express warranty: "STRUCTURAL WARRANTY ... The undersigned seller [Shaw Builders] hereby warrants to James E. Clark that the dwelling located on the captioned property is structurally sound and in conformity with the VA/FHA published minimum property standards. Should the said James E. Clark notify seller, in writing, within one year of the date hereof as to any non-conformity with said standards then said seller shall be bound to correct any such non-conformity. This structural warranty shall be binding on the warrantor for one year from the date hereof and is limited to the structural integrety [sic] of the improvements only."

Shortly after the Clarks purchased the house, they complained to Shaw Builders of certain defects in the house and complained that they were not given full information concerning the prior defects in the house. In this regard, the Clarks sent Shaw Builders the following letter, in pertinent part, dated August 7, 1985: "It has come to our attention now that we were not informed by you ... of all the problems the house had before we purchased it. We were told by our realtor there had only been a water problem, a pipe had broken and now had been repaired. We were not told that part of the house had actually shifted because of the foundation sinking, until after we had purchased the house. The house is not level, the front of the house slopes downward. The kitchen and utility room floors are very bad, they are uneven and floor joists are appearing in several places on the floor. The refrigerator is actually slipping towards the front of the house and the microwave oven also slopes. We expect the floors levelled [sic] and corrected in accordance with your warranty given with the purchase of the house. Would you please contact us regarding these problems." There was no resolution of this claim and the Clarks brought an action against Shaw Builders in a three-count complaint.

Count 1 of the complaint is based on breach of the express warranty given to James E. Clark by Shaw Builders. Count 2 is based on fraud, in that Shaw Builders willfully and knowingly concealed structural defects in the house, thereby fraudulently inducing the Clarks to purchase the house; and, Count 3 is based on negligent construction and design of the house.

Shaw Builders demanded State Automobile to defend it in the action brought by the Clarks and to pay damages that may be recovered by the Clarks against Shaw Builders. In response, State Automobile denied liability under the CGL insurance policy and filed this declaratory judgment action. Subsequently, State Automobile moved for summary judgment and, after a hearing, the trial court entered, in pertinent part, the following order: "The subject policy contains the following exclusions to coverage: This insurance does not apply ... (n) to property damage to the named insured's products arising out of such products or any part of such products; (o) to property damage to work performed by or on behalf of the named insured arising out of the work or any portion thereof, ... The language of these exclusions is clear and unambiguous. The comprehensive general liability policy is not intended to insure against defective workmanship causing damage to the work product itself.... As to the Clarks' claim for fraudulent misrepresentation, the subject policy provides coverage only for an 'occurrence,' which is defined as 'an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured.' The Georgia Courts have uniformly held that intentional or non-accidental damages are not covered under such a provision. Georgia Farm Bureau Mutual v. Meriwether, 169 Ga.App. 363, 312 S.E.2d 823 (1983); Thrift-Mart, Inc. v. Commercial Union Assurance Cos., 154 Ga.App. 344, 268 S.E.2d 397 (1980). Based on the foregoing findings of fact and conclusions of law, IT IS HEREBY ORDERED that the Motion of [State Automobile] for summary judgment is hereby granted, and that a declaratory judgment of no coverage is granted in favor of [State Automobile.] ..." It is from this order that Shaw Builders appeals. Held:

1. In its first enumeration of error Shaw Builders contends the trial court erred in granting summary judgment to State Automobile as "[a] genuine issue of material fact exists as to the extent of coverage for foundation work ..." because the record shows that an agent for State Automobile " 'advised Shaw Builders that the policy contained coverage for certain types of damage arising from foundation work ...' "

Where an insurance policy is unambiguous, parol evidence as to what was said by parties at the time application for the policy was taken is inadmissible to vary or alter the terms of the policy. Fowler v. Liberty Nat. Life Ins. Co., 73 Ga.App. 765, 770-771(4) 38 S.E.2d 60 (1946) In the case sub judice, subsections (n) and (o) of the section entitled "Exclusions" in the CGL insurance policy, as set forth in the trial court's order, clearly and unambiguously exclude coverage for property damage resulting from the insured's negligently constructed work product. See Weedo v. Stone-E-Brick, Inc., 81 N.J. 233, 245, 405 A.2d 788 (1979). Consequently, the trial court did not err in granting summary judgment in favor of State Automobile with regard to Count 3 of the Clarks' complaint.

2. Shaw Builders contends in its second enumeration of error that the trial court erred in granting summary judgment to State Automobile finding that exclusions (n) and (o) of the CGL policy applied with regard to the Clarks' claim for breach of warranty because the CGL policy provides specific coverage for the insured's work product where the insured has given an express warranty of the quality of the work performed and the product produced therefrom. In support of this contention, Shaw Builders points to exclusion "(a)" of the policy, which provides: "This insurance does not apply ... 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." (Emphasis supplied.)

Notwithstanding the language of exclusion (a), State Automobile argues that exclusions (n) and (o) "preclude coverage for claims arising out of the 'structural...