National Hills Shop. Cent., Inc. v. Insurance Co. of North Am.

• Decision Date: 13 January 1970
• Docket Number: No. 1438.,1438.
• Citation: 308 F. Supp. 248
• Parties: NATIONAL HILLS SHOPPING CENTER, INC. v. INSURANCE COMPANY OF NORTH AMERICA, Defendant and Third-Party Plaintiff v. CECO CORPORATION, Third-Party Defendant and J. Hal STOCKTON and William Ed Clark, d/b/a J. C. Stockton & Son, Third-Party Defendants and Fourth-Party Plaintiffs v. Howell C. JONES, Jr., Fourth-Party Defendant and Stanford WOODHURST, Jr. and Gilbert O'Brien, Fourth-Party Defendants and Fifth-Party Plaintiffs v. James C. SMITH, Fifth-Party Defendant.
• Court: U.S. District Court — Southern District of Georgia

308 F. Supp. 248

NATIONAL HILLS SHOPPING CENTER, INC. v. INSURANCE COMPANY OF NORTH AMERICA, Defendant and Third-Party Plaintiff v. CECO CORPORATION, Third-Party Defendant and J. Hal STOCKTON and William Ed Clark, d/b/a J. C. Stockton & Son, Third-Party Defendants and Fourth-Party Plaintiffs v. Howell C. JONES, Jr., Fourth-Party Defendant and Stanford WOODHURST, Jr. and Gilbert O'Brien, Fourth-Party Defendants and Fifth-Party Plaintiffs v. James C. SMITH, Fifth-Party Defendant.

No. 1438.

United States District Court S. D. Georgia, Augusta Division.

January 13, 1970.

William C. Reed, Augusta, Ga., for Insurance Co. of North America.

John D. Capers, Augusta, Ga., for The Ceco Corporation.

W. Barry Williams, Augusta, Ga., for J. C. Stockton & Son.

LAWRENCE, Chief Judge.

ORDER

National Hills Shopping Center, Inc., sues Insurance Company of North America claiming that a building owned by it was damaged by a windstorm. The insurer, denying liability, asserts that the collapse of the roof was not caused by a windstorm but by defective supporting members placed in the building during construction.

Defendant filed a third-party complaint against J. C. Stockton & Son, plaintiff's general contractor in the construction of the building, and against Ceco Corporation which prefabricated the roofing joists. The insurer alleges that the joists were not in accordance with the plans and specifications. It claims that there was a breach of contract by the third-party defendants who knew or should have known of the defective materials. Claiming that it is subrogated under the policy and by law to the rights of National Hills Shopping Center, Inc., as to a recovery against third parties in connection with the loss, defendant seeks judgment against Stockton & Son and Ceco Corporation for such sums as may be adjudged against it in the suit on the policy.

The third-party action produced a chain reaction. Ceco was impleaded by Stockton & Son and the latter brought fourth-party complaints against the architects and against Conway Steel Construction Company which installed the steel joists. The architects brought a fifth-party complaint against Smith, the mechanical engineer. There are also cross-claims among the various impleaded parties.

Stockton & Son and Ceco Corporation have moved to dismiss the third-party action on various grounds including the contention that the suit on the policy and the action over against them are mutually exclusive. They argue that if a jury should find for the assured in the former case, the ineluctable result is that the proximate cause of the collapse of the roof was the windstorm and not defective construction.

Counsel for Insurance Company of North America contend that a jury finding that the efficient cause of the loss was by windstorm does not preclude the existence of a contributing factor such as negligent construction and that an insurer which is subrogated to the insured's contract rights against a third-party who is at fault may thereafter go against the latter and recover at least to the extent of its contribution to the insurance loss.

The matter of contributory causative factors in windstorm insurance cases frequently comes before the courts as a defense by insurers claiming same to be the cause of the loss as opposed to wind. In Travelers Indemnity Co. v. Wilkes County, 102 Ga.App. 362, 116 S.E.2d 314, the insurance company contended that the proximate cause of the damage was the weakening of a wall due to the effects of a recent roof fire. "In the absence of a specific provision in the policy to the contrary," said the Court, "it is generally sufficient, in order to recover upon a cyclone, tornado, or windstorm policy, to show that the cause designated therein was the efficient cause of the loss, although other causes contributed thereto." Quoting 29A Am.Jur. 445, "Insurance," § 1329 p. 445. The question in such cases is, was there a windstorm? "Then the question would arise as to whether the cause of the damage was the windstorm or a poorly erected ceiling, etc." General Insurance Co. of America v. Davis, 115 Ga.App. 804, at 811, 156 S.E.2d 112, 116; affirmed, Davis v. General Insurance Company of America, 223 Ga. 686, 157 S.E. 2d 270.

The gauge by which an insurer's liability is to be measured is whether the windstorm was the proximate, dominant and efficient cause of the loss. See, in addition to the Georgia cases, Roach-Strayhan-Holland, Post No. 20, American Legion Club, Inc. v. Continental Insurance Company of New York, 237 La. 973, 112 So.2d 680; North British & Mercantile Insurance Co. v. Sciandra, 256 Ala. 409, 54 So.2d 764, 27 A.L.R.2d 1047; Schaeffer v. Northern Assur. Co. (Mo. App.), 177 S.W.2d 688; Couch on Insurance 2d § 42: 336-338; 93 A.L.R.2d 136f., 171ff. Judge Ainsworth thus summarized the rule: "In order to recover under a windstorm policy, it is not necessary that the windstorm be the sole cause of the damage. That a structural defect in the building may have been a contributing factor is immaterial. If the damage would not have occurred in the absence of a windstorm, the loss is covered by the policy." Milan v. Providence Washington Insurance Company, D.C., 227 F.Supp. 251.

Only one decision has been brought to my attention in which a windstorm insurer has filed a third party complaint against a person whose fault is alleged to have contributed to the loss. In Concordia College Corp. v. Great American Insurance Company et al., 8 Cir., 14 F.R.D. 403, the impleaded third parties, an architect and a steel erector, were charged with breach of contract and negligence in connection with the framework of a building claimed to have been damaged by a windstorm. The Court permitted the third-party proceeding to proceed. However, the decision seems to have dealt only with the procedural aspects and the Court did not pass on the question of substantive law as to right over by the insurer in such cases.¹

Upon payment of a loss an insurer is subrogated to the rights of the assured. The right here is that of the insured to sue the general contractor and prefabricator on the theory of breach of warranty as to workmanlike performance and fitness for use of materials. The right of the insurer, being derivative, is neither greater nor less than the right of the assured.² In the main case the plaintiff claims that the proximate cause of the roof damage was windstorm. The insurer says that it was faulty construction of the roof. If the defendant prevails, there is no longer a third-party problem. But...