Millard Warehouse, Inc. v. Hartford Fire Ins. Co.

• Decision Date: 11 September 1979
• Docket Number: No. 42266,42266
• Citation: 283 N.W.2d 56,204 Neb. 518
• Parties: MILLARD WAREHOUSE, INC., a Nebraska Corporation, Appellee, v. HARTFORD FIRE INSURANCE COMPANY, Fireman's Fund Insurance Co., and theInsurance Company of The State of Pennsylvania, each a corporation, Appellants.
• Court: Nebraska Supreme Court

Page 56

283 N.W.2d 56

204 Neb. 518

MILLARD WAREHOUSE, INC., a Nebraska Corporation, Appellee, v. HARTFORD FIRE INSURANCE COMPANY, Fireman's Fund Insurance Co., and theInsurance Company of The State of Pennsylvania, each a corporation, Appellants.

No. 42266.

Supreme Court of Nebraska.

Sept. 11, 1979.

Syllabus by the Court

1. Pleadings: Insurance. An insurer's duty to defend an action against the insured must, in the first instance, be measured by the allegations of the petition against the insured.

2. Pleadings: Insurance: Words and Phrases. A petition alleging a nuisance does not, by itself, allege an accident.

3. Liability: Insurance: Words and Phrases. Under a liability policy issued by an insurance company to its insured obligating it to pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury or property damage "caused by an occurrence," and to defend any suit against the insured seeking damages on account of such bodily injury or property damage, and defining "occurrence" as meaning an "accident, including continuous or repeated exposure to conditions, which result in bodily injury or property damage neither expected nor intended from the standpoint of the insured," the insurance company is not obligated to defend its insured in an action brought against it by a third party based upon "nuisance" nor to pay any sums which the insured shall become legally obligated to pay by virtue of said action.

4. Liability: Insurance: Words and Phrases: Damages. Where acts are voluntary and intentional and the injury is the natural result of the act, the result was not caused by accident even though that result may have been unexpected, unforeseen, and unintended.

5. Liability: Intent: Words and Phrases: Tort. The lack of intent to do harm on the part of the actor does not by itself compel a conclusion that the result was caused by accident. The element of foreseeability cannot be ignored.

6. Liability: Tort: Words and Phrases. An effect which is the natural and probable consequence of an intentional act or of a course of action is not an accident.

7. Tort: Words and Phrases: Damages. One who takes a calculated risk by pursuing a course of action after being advised of the possibility of harm resulting therefrom may not claim that the resulting damage was accidental.

Pilcher, Howard & Dustin, Omaha, for appellant Hartford.

Ronald H. Stave of Law Offices of Emil F. Sodoro, P. C., Omaha, for appellant Fireman's Fund.

Cassem, Tierney, Adams, Gotch & Douglas, Omaha, for appellant Pennsylvania.

Marks, Clare, Hopkins & Rauth, Omaha, for appellee.

Heard before BOSLAUGH, McCOWN, BRODKEY and HASTINGS, JJ., and FAHRNBRUCH, District Judge.

PER CURIAM.

The defendants, Hartford Fire Insurance Company, Fireman's Fund Insurance Co., and The Insurance Company of The State of Pennsylvania, have appealed to this court from a decree entered by the District Court for Douglas County in an action brought by the plaintiff, Millard Warehouse, Inc., a Nebraska corporation, to obtain a declaratory judgment against the three defendants, requesting that the court construe the provisions of the several policies of insurance issued by the defendant companies to the plaintiff, and praying that the court order each of the defendants to defend the plaintiff in an action brought against it by Ralph E. Tetrick and his wife, Marilyn Tetrick, hereinafter referred to as "Tetricks;" and also that the court order the defendants to pay any judgment that may be rendered against it in that action within the defendants' policy limits.

In its decree entered after trial on June 20, 1978, the court found that the allegations of the petition for declaratory judgment were generally true; and that the defendants, Hartford Fire Insurance Company, hereinafter referred to as "Hartford," and Fireman's Fund Insurance Co., hereinafter referred to as "Fireman's Fund," were obligated under the terms and conditions of their respective insurance policies issued to the plaintiff to defend the plaintiff against the claims asserted by Tetricks in their action above referred to, and were also obligated under their policies to pay any judgment for damages awarded to Tetricks in said lawsuits, within the limits of the coverage thereunder. The court further found that the defendant, The Insurance Company of The State of Pennsylvania, hereinafter referred to as "Pennsylvania," was obligated to satisfy any judgment in favor of the Tetricks in excess of the policy limits of the insurance policies issued by the other two defendants, in any amounts within the limits of Pennsylvania's policy, and subject to a deduction for self-insured retention. In this decree, the court also found that the plaintiff was entitled to an allowance of attorney's fees and set the amount thereof, after a separate hearing for that purpose.

The record reveals that plaintiff, Millard Warehouse, Inc., is a corporation generally engaged in the warehouse business in Omaha, Nebraska. In the early 1960's, it bought a parcel of real estate which is now located on the outskirts of the city of Omaha, east of 132nd Street, and bordered on the south by the west branch of the Little Papillion Creek, hereinafter referred to as the "Creek." At the time the real estate was purchased, it was zoned "Industrial." Because of the fact that some of the property bordering the Creek was low-lying, the Omaha city council, in 1974, rezoned the property, including plaintiff's property, as "S-3" zoning, which is "flood plain" zoning. Under that zoning classification, all construction upon the property so zoned was forbidden unless the property level was raised above the 100-year flood level. The above change in zoning became effective on November 20, 1974. Prior to that date, however, the plaintiff had begun filling in its low-lying lots and had constructed a dirt pad adjacent to its existing warehouse, upon which it planned to build an additional warehouse. Pursuant to such plans, plaintiff removed dirt from its property adjacent to the creek banks to complete the fill and build the pad, widened the channel of the Creek, and graded the banks so as to improve the Creek's capacity during flood stages. After the completion of the pad and fill, and being aware that contentions were being made by certain government agencies that the plaintiff's project would be an obstruction in the Creek and would increase the possibility of upstream flooding, the plaintiff, in 1974, retained the services of one Wilbur F. Rogers, a professor at the University of Nebraska at Omaha, and an eminent hydrologist, to assist in the planning for the construction of the new warehouse upon the fill and pad, and to meet the objections of which plaintiff had been apprised. Dr. Rogers made engineering studies of the flood flows and backwater profiles which had been developed by the Nebraska Natural Resources Commission from previous studies by the U.S. Army Corps of Engineers. In his report, Dr. Rogers concluded that because of channel improvements made by the Millard Warehouse and other improvements made during the construction of the Millard Airport, the channel capacity of the west branch of the Creek had been increased, the effect of which was to lower the flood levels. He also pointed out that the Nebraska Natural Resources Commission's backwater profile shows that the expected flood level of the Millard Warehouse pad was actually 3 feet lower than expected flood levels above or below that point; and that the net effect of the work done by the Millard Warehouse actually reduces flood levels. He further concluded that the effects of the improved reach of the Millard Warehouse are transmitted upstream and result in even lower flood levels upstream. He stated that engineering facts clearly show that no adverse flood level effects result as a consequence of the Millard Warehouse construction. He concludes by stating: "I can foresee no adverse effects to property upstream or downstream as the result of the Millard Warehouse construction." Also in his report on the matter made to HUD/FIA in Kansas City, Missouri, dated June 4, 1976, Dr. Rogers in his conclusion stated: "Based upon all observed and calculated expected hydraulic conditions, there is almost no chance that the Millard Warehouse construction will adversely affect 100-year flood flows in the West Branch of the Papillion Creek." Dr. Rogers also concluded that the proposed 100-year flood level determined by the U.S. Army Corps of Engineers was much too high, and, in fact, would be considerably less than their projections.

Based upon the foregoing information, the plaintiff, in April 1975, filed an application before the Omaha city council to have its property rezoned from "flood plain" classification to "industrial." Objections to the requested rezoning were made to the Omaha city council by the Nebraska Natural Resources Commission, the Papio Natural Resources District, and the Omaha Airport Authority. The Omaha city council, after hearing, voted to grant the rezoning of plaintiff's property, but the mayor vetoed that action. However, in April 1976, the city council voted 5 to 2 to override the mayoral veto, and the plaintiff's property was thereupon rezoned to "Industrial," following which the plaintiff proceeded to construct his warehouse upon the pad.

A short time prior to that date, however, to wit, on February 6, 1976, Ralph E. Tetrick and Marilyn Tetrick obtained title to a piece of property located a short distance upstream from the plaintiff's property and on the opposite bank of the Creek, by virtue of foreclosing a mortgage thereon and the issuance of a sheriff's deed to the property following its sale upon foreclosure. On March 3, 1977, after the construction of the plaintiff's warehouse had been substantially completed, Tetricks filed their action against the Millard Warehouse in the District Court ...