Hartford Cas. Ins. Co. v. Public Library

Decision Date25 January 2007
Docket NumberNo. 82A01-0510-CV-478.,82A01-0510-CV-478.
Citation860 N.E.2d 636
PartiesThe HARTFORD CASUALTY INSURANCE COMPANY, Appellant-Defendant, v. EVANSVILLE VANDERBURGH, PUBLIC LIBRARY, Appellee-Plaintiff.
CourtIndiana Appellate Court

Thomas H. Bryan, Fine & Hatfield, Evansville, IN, Attorney for Appellant.

Steve Barber, Jeff Shoulders, Barber & Shoulders, LLP, Evansville, IN, Stanley C. Fickle, Barnes & Thornburg LLP, Indianapolis, IN, Attorneys for Appellee.

OPINION

MATHIAS, Judge.1

The Evansville Vanderburgh Public Library ("the Library") filed a complaint in the Vanderburgh Superior Court against Hartford Casualty Insurance Company ("Hartford") alleging breach of contract and seeking a declaratory judgment that Hartford must indemnify the Library for damage to one of its buildings. The parties filed cross-motions for summary judgment. The trial court entered summary judgment for the Library after finding that there is coverage for the Library's losses under the Hartford all-risk policy. Hartford appeals and argues that coverage for the Library's loss is excluded under the General Exclusion, Workmanship Exclusion, and Earth Movement Exclusions2 set forth in the policy. Concluding that as a matter of law, the Library's losses are excluded under the policy's General Exclusion, we reverse and remand for proceedings consistent with this opinion.

Facts and Procedural History

In 2000, the Library acquired a historic building listed on the National Registry of Historic Buildings ("the 805 Building") with the intent to integrate the building into the new Central Library. The Library also acquired an old convention center located on the property adjacent to the 805 Building. The convention center was demolished and an underground parking garage was to be built on that site. Excavation for the garage included installing an earth-work retention system, one purpose of which was to protect the 805 Building during the excavation. Industrial Contractors, Inc. was hired to perform the excavation work for the underground parking garage.

On February 28, 2002, Industrial Contractors began to install sheet piling for the excavation retention system using a high-frequency, variable moment vibratory hammer. The sheet piling was installed along the west and south edges of the 805 Building. The southwest corner of the 805 Building was damaged during the installation of the sheet pilings. After discovering the damage, Industrial Contractors proceeded to install additional sheet piling with an impact hammer as recommended by the project engineer. When Industrial Contractors excavated the dirt behind the sheet wall, the building suffered additional damage. After a preliminary investigation, the Library concluded that the design and use of the pile driving hammer and cantilevered earth retention system caused or contributed to the damage to the 805 Building. Appellant's App. p. 1255. Eventually, the Library determined that the 805 Building was a total loss requiring demolition.

William Konicki, the civil engineer retained by the Library to evaluate the collapse of the 805 Building, concluded:

In my professional engineering opinion, the initial damage to the 805 Building ensued from the high frequency variable-moment pile driving hammer causing an acceleration of the loose sand stratum below the building foundations. Loose sand deposits, even dry sand deposits, are extremely susceptible to densification by vibration, when the vibrations produce accelerations above a critical value. Empirical data as well as experience show that the acceleration levels needed to produce densification and subsequent settlement of loose sands is extremely low and even the lower accelerations expected from the hammer selected by the contractor are sufficient to produce significant settlement in this deposit. Without the mechanical vibration produced by the pile-driving hammer, the loose sand deposit below the existing building foundation would not settle naturally to produce the measured movement.

In my professional engineering opinion, the second increment of damage to the 805 Building ensued from the horizontal displacement of the cantilevered sheeting away from the [805] Building and toward the excavation. The horizontal movement of the sheeting is a maximum at the top and typically decreases toward the bottom of excavation. The horizontal movement of the sheet piling away from the [805] Building creates a triangular shaped void behind the sheeting, this movement allows the retained soils below the building foundations to move into this new space. As the soil fills the newly created void behind the deflected sheet piling it causes a decrease in elevations of the ground surface behind the sheeting and the soils surface below the building foundations, settling the building. Without the horizontal movement of the sheeting piling, due to the excavation of the new Central Library basement in front of the sheeting, the soil below the existing [805] Building foundations would not have naturally settled the additional amount recorded.

Appellant's App. pp. 183-84.

On April 29, 2002, the Library submitted a notice of claim to Hartford. Hartford denied coverage of the Library's claim. Thereafter, the Library filed a complaint against Hartford in the Vanderburgh Superior Court alleging breach of contract and seeking a declaratory judgment that Hartford must indemnify the Library for the damage to the 805 Building.

The Library and Hartford filed cross-motions for summary judgment. In its motion, the Library argued that the damage to the 805 Building falls under the insurance policy's grant of insurance coverage, i.e. the Library sustained a "loss caused by direct physical loss or damage to Covered Property within the policy period[.]" Appellant's App. p. 272. The Library also asserted that the General Exclusion does not bar coverage because its losses are covered under the policy's Ensuing Loss Coverage provision, which is an exception to the General Exclusion. Therefore, the Library argued that replacement cost of the 805 Building is covered under the policy. In its motion, Hartford argued that under the plain language of the General Exclusion, the Library did not have coverage for construction projects and the resulting damage that occurred to the 805 Building.

In ruling on the parties' cross-motions for summary judgment, the trial court found that the exclusions in the all-risk Hartford policy do not apply to the Library's loss. Specifically, the trial court concluded that the "General Exclusion would only encompass the cost to rectify the faulty pile-driving operations adjacent to the 805 Building. The exclusion does not encompass the damage to the 805 Building which resulted from these operations." Appellant's App. p. 11. Moreover, the court determined that "the Library's loss here is covered as an ensuing loss from the defective pile-driving operations on property adjacent to the 805 Building." Id. at 14. Accordingly, the trial court entered summary judgment for the Library and declared, "there is coverage for the Library's losses under the Hartford all-risk policy." Hartford now appeals.

Standard of Review

When reviewing a grant or denial of summary judgment our well-settled standard of review is the same as it is for the trial court: whether there is a genuine issue of material fact, and whether the moving party is entitled to judgment as a matter of law. Summary judgment should be granted only if the evidence sanctioned by Indiana Trial Rule 56(C) shows that there is no genuine issue of material fact and the moving party deserves judgment as a matter of law. All evidence must be construed in favor of the opposing party, and all doubts as to the existence of a material issue must be resolved against the moving party.

Monroe Guar. Ins. Co. v. Magwerks Corp., 829 N.E.2d 968, 973 (Ind.2005) (internal citations omitted).

"Generally, the interpretation of an insurance policy presents a question of law and is thus appropriate for summary judgment." Morris v. Econ. Fire & Cas. Co., 848 N.E.2d 663, 665-66 (Ind.2006). "A contract for insurance `is subject to the same rules of interpretation as are other contracts.'" Id. at 666 (quoting USA Life One Ins. Co. of Ind. v. Nuckolls, 682 N.E.2d 534, 537-38 (Ind.1997)). "If the language in the insurance policy is clear and unambiguous, then it should be given its plain and ordinary meaning, but if the language is ambiguous, the insurance contract should be strictly construed against the insurance company." Id.

"This is especially true where the policy language in question concerns an exclusion clause." When an insurance company fails to clearly exclude "that which the insured attempted to protect against, we must construe the ambiguous policy to further the policy's basic purpose of indemnity." A policy is ambiguous only if it is "susceptible to more than one interpretation and reasonably intelligent persons would differ as to its meaning."

Matteson v. Citizens Ins. Co. of Am., 844 N.E.2d 188, 192 (Ind.Ct.App.2006) (quoting Nuckolls, 682 N.E.2d at 538).

Discussion and Decision

Under the Hartford all-risk policy a "Covered Cause of Loss" means "loss caused by direct physical loss or damage to Covered Property within the policy period stated on the Common Policy Declarations . . . [u]nless the loss is excluded in the General Exclusion or the Specific Exclusions[.]" Appellant's App. p. 272. The General Exclusion provides in pertinent part:

We will not pay for loss or damage caused by, resulting from, or arising out of any acts, errors, or omissions by you or others in any of the following activities, regardless of any other cause or event that contributes concurrently, or in any sequence to the loss or damage:

1. Planning, zoning, developing, surveying, testing or siting property;

* * *

3. Any of the following performed to or for any part of land, buildings, roads, water or gas mains, sewers,...

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