Haugen v. Auto-Owners Ins. Co. of Lansing, Mich.

• Decision Date: 22 October 1971
• Docket Number: No. 8732,AUTO-OWNERS,8732
• Citation: 191 N.W.2d 274
• Parties: Treadwell HAUGEN, Plaintiff and Appellant, v.INSURANCE COMPANY OF LANSING, MICHIGAN, Defendant and Respondent. Civ.
• Court: North Dakota Supreme Court

Page 274

191 N.W.2d 274

Treadwell HAUGEN, Plaintiff and Appellant, v. AUTO-OWNERS INSURANCE COMPANY OF LANSING, MICHIGAN,

Defendant and Respondent.

Civ. No. 8732.

Supreme Court of North Dakota.

Oct. 22, 1971.

Syllabus by the Court

1. Any ambiguity, if any exists, in an insurance policy must be construed in favor of the insured.

2. Any ambiguity that may have resulted from the insurance company's failure to include with the 'PRODUCTS LIABILITY' exclusion under 'DESCRIPTION OF HAZARDS' any reference to a 'COMPLETED OPERATIONS' exclusion was cleared up by the 'PRODUCTS AND COMPLETED OPERATIONS HAZARDS EXCLUSION ENDORSEMENT' which specifically states that it is agreed that the policy does not apply to the 'PRODUCTS HAZARD OR COMPLETED OPERATIONS HAZARD as defined therein.'

3. As the 'COMPLETED OPERATIONS HAZARD's is defined in Section III 'S' of the insurance policy in the instant case as relating only to bodily injury or property damage which occurs after operations have been completed or abandoned, and as the separate endorsement states that the policy does not apply to a completed operations hazard, there is no coverage in the instant case, the installation of the furnace having been completed months prior to the occurrence of the facts which give rise to the complaint herein.

4. An insurance policy is held to mean what a reasonable person in the position of the insured would think it meant.

5. An insurance policy is to be interpreted as a whole so as to give effect to all of the provisions of the policy if reasonably practicable.

6. When there is conflict between the provisions of an insurance policy form proper and the endorsement attached thereto, the provisions of the latter prevail.

Lanier, Knox & Olson, Fargo, for plaintiff and appellant.

Wattam, Vogel, Vogel & Peterson, Fargo, for defendant and respondent.

ERICKSTAD, Judge.

The plaintiff Treadwell Haugen appeals from the trial court's judgment of January 14, 1971, dismissing his complaint against Auto-Owners Insurance Company of Lansing, Michigan. He demands a trial de novo in this court.

In his complaint, Haugen asserts that Auto-Owners Insurance Company, whom wel shall hereinafter refer to as the Company, is a liability insurance company incorporated under the laws of the State of Michigan; that he purchased, paid premiums for, and was at all times material to this action duly covered and protected by a policy of liability insurance with the Company; that on the 19th of November, 1969, he was served with a summons and complaint in an action brought by Walter Otterson, asking damages in the sum of $900 plus costs, alleging negligence on the part of Haugen in the installation of a furnace; that thereafter Haugen notified the Company of the suit and it refused to defend the same, necessitating that Haugen employ his own attorney and defend the suit; that Haugen through his own attorney has negotiated a settlement for the sum of $300, and that under the terms of the policy of insurance he cannot settle said lawsuit without jeopardizing his coverage under the policy; and that an actual controversy exists between Haugen and the Company. He prays that the court determine whether the Company is obligated to defend him and to extend coverage to him for the damages arising out of the matter set forth in the complaint.

The Company, by answer, asserts that coverage for products liability was excluded; and that causes of action arising out of completed installations were also excluded. It admits that an actual controversy exists between Haugen and itself and asks that its obligations under the insurance policy be determined.

The pertinent stipulated facts are that between September 11, 1968, and September 11, 1969, certain of Haugen's business operations were insured under a policy of insurance issued by the Company; that in the fall of 1967, Otterson bought an oilburning furnace from Haugen and hired him to install the furnace together with the necessary fuel tank and connecting pipes in the basement of the Otterson home; that thereafter Haugen did plan and make the installation of the furnace, fuel tank, and connecting pipes in the Otterson home, completing the installation by the end of 1967; that on April 8, 1969, while the fuel tank in the Otterson home was being loaded with fuel oil, the piping installed by Haugen separated at one of the joints and the fuel oil ran into the basement of the Otterson home; that Otterson subsequently brought a lawsuit against Haugen alleging that the furnace and the equipment had been improperly and defectively installed in that Haugen had used plastic piping and had failed to properly seal the pipe connections; that the Company did not assume the defense of this suit against Haugen, on the ground that the loss involved was not covered by the insuring agreements of the policy issued to Haugen; that thereafter Haugen through his attorney negotiated a settlement of the lawsuit against him for the sum of $300; and that the only issue of fact and law to be decided in the declaratory judgment acton is whether the policy issued by the Company to Haugen covers Otterson's claim.

That part of the insurance policy entitled 'DECLARATIONS' includes a 'DESCRIPTION OF HAZARDS' which contains five categories described as follows: '1. Premises--Operations 2. Elevators 3. Products--Completed Operations 4. Contractual--Contracts as defined in the policy, other contracts not covered unless described herein 5. Protective'.

The trial court found from that part of the policy which contains the breakdown of the premiums for the various coverages that no premium was paid for category 3 coverage.

That part of the policy which lists the premium rates under the column 'DESCRIPTION OF HAZARDS' contains the following reference: '3--PRODUCT LIABILITY EXCLUDED'.

The trial court concluded that by a specific endorsement attached to the policy, 'PRODUCTS AND COMPLETED OPERATIONS HAZARDS' were specifically excluded.

The endorsement reads:

'PRODUCTS AND COMPLETED OPERATIONS HAZARDS EXCLUSION

ENDORSEMENT

'It is agreed that the policy does not apply to the Products Hazard or Completed Operations Hazard as defined therein.'

The 'PRODUCTS HAZARD' is defined in the policy under Section III 'R', as follows:

'(S)hall mean goods or products manufactured, sold, handled or distributed by the named insured or by others trading under his name, including reliance upon a representation or warranty made at any time with respect thereto, but only if the bodily injury or property damage occurs after possession of such goods or products has been relinquished to others by the named insured or by others trading under his name and if such bodily injury or property damage occurs away from premises owned, rented or controlled by the named insured provided, such goods or products shall be deemed to include any container thereof, other than a vehicle, but shall not include any vending machine or any property, other than such container, rented to or located for use of others but not sold.'

The 'COMPLETED OPERATIONS HAZARD' is defined in the policy under Section III 'S', as follows:

'(S)hall mean operations including 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' include materials, parts or equipment furnished in connection therewith. 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,

After discussing alleged ambiguities in the policy, the court found that the terms of the policy were not ambiguous and accordingly dismissed Haugen's complaint with prejudice.

In this appeal, Haugen contends that the trial court erred in finding that the Company's liability for coverage on the loss in question was plainly and unambiguously excluded.

He asserts that the policy contains the following ambiguities:

'AMBIGUITY ONE. Under Description of Hazards Subdivision 3, 'Products--Completed Operations', as shown in the policy declaration and on the additional schedule, only product liability is excluded and no specific exclusion of completed operations has been inserted by the defendant insurer. We submit that, if the defendant had intended to exclude completed operations under this declaration, it was incumbent upon the insurer to do so. The apparent meaning of this provision must be that completed operations are not excluded. Whatever the meaning or intent of the draftsman, the ambiguity must be resolved against the insurer.

'AMBIGUITY TWO. The Explosion and Collapse Hazards Exclusion Endorsement is written to explicitly provide that that exclusion does not apply to completed or abandoned operations within the meaning of the completed operations hazard. Consequently, the insured could expect coverage for explosion or collapse liability even though his work be completed, and such would be a reasonable construction if...