Houston Bldg. Service, Inc. v. American General Fire and Cas. Co.
| Decision Date | 23 August 1990 |
| Docket Number | No. 01-89-01213-CV,01-89-01213-CV |
| Citation | 799 S.W.2d 308 |
| Parties | HOUSTON BUILDING SERVICE, INC., Appellant, v. AMERICAN GENERAL FIRE AND CASUALTY COMPANY, Appellee. (1st Dist.) |
| Court | Texas Court of Appeals |
Rayborn C. Johnson, Jr., Houston, for appellant.
Janet Giessel Townsley, Houston, for appellee.
Before O'CONNOR, SAM BASS and DUNN, JJ.
This is an appeal from a summary judgment. We affirm.
Houston Building Service, Inc. (HBS) provides janitorial services to commercial buildings. In May 1988, HBS employees negligently applied linseed oil to wooden doors and door frames while cleaning a building in Houston. After the application of the oil, the occupant of the premises complained that the linseed oil caused discoloration in the doors and frames, and that the doors were "sticky." The owner of the premises asked HBS to pay for the damage.
HBS made a claim under its commercial liability insurance policy, issued by American General Fire and Casualty Company (American General). American General refused to pay the claim, contending that the policy did not cover that type of property damage. HBS paid approximately $28,500 to the owner of the premises to repair the damage.
HBS sued American General on the policy. In its answer, American General quoted the exclusionary provisions in the insurance policy, and denied that it was liable. American General moved for summary judgment, and HBS filed a response.
On appeal, HBS brings only one point of error. HBS contends the trial court erred in granting the motion for summary judgment because there was a material fact issue concerning American General's obligation to pay the claim under the policy.
I. Standard of review
To be entitled to a summary judgment, the movant must establish, as a matter of law, that no genuine issues of material fact exist. Swilley v. Hughes, 488 S.W.2d 64, 67 (Tex.1972); Lumpkin v. H & C Communications, Inc., 755 S.W.2d 538, 539 (Tex.App.--Houston [1st Dist.] 1988, writ denied). A summary judgment that disposes of the entire case is proper only if, as a matter of law, HBS could not succeed upon any of the theories pleaded. Lumpkin, 755 S.W.2d at 539. In deciding whether there is a disputed fact issue, which is material and precludes summary judgment, we consider the evidence that favors the non-movant as true, we indulge every reasonable inference in favor of the non-movant, and we resolve any doubts in the non-movant's favor. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985).
The limited issue in this case is whether the policy clearly excluded coverage of property damage caused by HBS's employees.
II. Exclusion 2.j. (6)
Under the "commercial general liability coverage form" of the insurance policy, there are numerous exclusions to property damage liability, including section 2.j. (6), which states:
2. Exclusions. This insurance does not apply to:
j. "Property damage" to:
(6) That particular part of any property that must be restored, repaired or replaced because "your work" was incorrectly performed on it.
Paragraph (6) of this exclusion does not apply to "property damage" included in the "products-completed operations hazard."
The definitions in section V explain the exclusion in 2.j. (6):
11. a. "Products-completed operations hazard" includes all ... "property damage" occurring away from premises you own or rent and arising out of "your product" or "your work" except:
(1) Products that are still in your physical possession; or
(2) Work that has not yet been completed or abandoned.
12. "Property damage" means:
a. Physical injury to tangible property, including all resulting loss of use of that property; or
b. Loss of use of tangible property that is not physically injured.
15. "Your work" means:
a. Work or operations performed by you or on your behalf; and b. Materials, parts or equipment furnished in connection which such work or operations.
"Your work" includes warranties or representations made at any time with respect to the fitness, quality, durability or performance of any of the items included in a. or b. above. (Emphasis added)
Texas case law supports American General's assertion that provisions such as section 2.j. (6) exclude coverage for damage to the insured's work or product, as a result of faulty workmanship. See Gar-Tex Constr. Co. v. Employers Casualty Co., 771 S.W.2d 639, 642 (Tex.App.--Dallas 1989, writ denied) (); Dorchester Dev. Corp. v. Safeco Ins. Co., 737 S.W.2d 380, 382 (Tex.App.--Dallas 1987, no writ) (policy did not cover damages to the building caused by faulty workmanship of the insured).
In Dorchester, the Dallas Court of Appeals clearly stated that there is absolutely no coverage for faulty workmanship. 737 S.W.2d at 382. The policy in Dorchester applied only if the defective work caused damage to other work of the insured which was not defective. Id. In Dorchester, as in this case, the insured did not contract for indemnification for property damage caused by its own defective workmanship. Id.
The exclusion provision in Gar-Tex was exactly the same as that in Dorchester. The holding of the court was also the same, and summary judgment was affirmed. 771 S.W.2d at 645.
HBS contends that the "products-completed operations hazard" exception to provision 2.j. (6) makes this case distinguishable. If the exception applies, then HBS is correct. But, American General asserts that the exception does not apply.
The "products-completed operations hazard" exception applies when the property damage arises out of the insured's work, on premises that the insured does not own or lease. The facts of this case show that the damage occurred at a place not owned or leased by HBS. But, the exception clearly states that it does not apply if the work has not yet been completed or abandoned. The policy states:
"Your work" will be deemed completed at the earliest of the following times:
(1) When all of the work called for in your contract has been completed.
(2) When all of the work to be done at the site has been completed if your contract calls for work at more than one site.
(3) When that part of the work done at a job site has been put to its intended use by any person or organization other than another contractor or subcontractor working on the same project.
HBS was working on the premises where the damage occurred because it had a cleaning contract with the company that managed the building. The cleaning contract was attached as summary judgment evidence to HBS's response. Under the contract, HBS was to provide daily janitorial services for the building. The terms of the contract stated that it would be "in effect for one year from the effective date." The property damage occurred about three months after the contract was executed.
Because the agreement was an ongoing service contract, American General contends the "work" was not complete at the time of the damage, and the exception does not apply. HBS asserts that the contract required polishing of "vertical surfaces and wood paneling" annually, and that when it finished polishing the doors with linseed oil, its work was "completed." The above requirements clearly state, however, that all of the work under the contract must be...
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