Olszak v. Peerless Ins. Co.

• Decision Date: 20 August 1979
• Docket Number: No. 79-060,79-060
• Parties: Ronald OLSZAK v. PEERLESS INSURANCE COMPANY.
• Court: New Hampshire Supreme Court

Page 711

406 A.2d 711

119 N.H. 686

Ronald OLSZAK v. PEERLESS INSURANCE COMPANY.

No. 79-060.

Supreme Court of New Hampshire.

Aug. 20, 1979.

Moulton, Smith & Samaha, Littleton (Stephen U. Samaha, Littleton, orally), for plaintiff.

Hinkley & Donovan, Lancaster (Walter D. Hinkley, Lancaster, orally), for defendant.

BOIS, Justice.

This is a petition for declaratory judgment to determine coverage under an insurance policy. RSA 491:22. After a hearing, Johnson, J., ruled in favor of the plaintiff and reserved and transferred the defendant's exceptions.

In the summer of 1976, the plaintiff started a construction business which primarily involved excavation work. Prior to beginning his business, the plaintiff owned several pieces of equipment which were covered by a basic liability policy obtained from his regular agent, Jerry Filteau d.b.a. Bristol Real Estate and Insurance Agency (Filteau). He testified that when he started his new venture, he contacted Filteau "(t)o get another type of coverage for myself being self employed, so I went down and I had him get a liability insurance." Peerless, at Filteau's request, issued a General Liability-Automobile Policy countersigned by Jerry Filteau as its authorized representative. In the fall of the same year, he entered into an "as required" snowplowing/sanding contract with International Packings Corporation. The evidence is clear, however, that he plowed and sanded areas specified by International only on a "when called" basis.

On February 6, 1977, the plaintiff sanded a certain designated area. He next returned to the premises on February 11, 1977, when he received a service call. Meanwhile on February 9, 1977, one Patricia A. Martin allegedly slipped and fell in the corporation parking lot.

In March of 1978, suit was brought against the plaintiff by Mrs. Martin and her husband. The writ alleged that the plaintiff was under a contractual duty to keep the parking area clear of ice and snow and in a safe condition; that the plaintiff breached that duty, and that Mrs. Martin's injuries were proximately caused by the plaintiff's negligence.

The defendant, Peerless Insurance Company (Peerless) denied coverage, alleging (1) that snowplowing was not a risk covered by the policy; and (2) that the tort action arose out of a "completed operation" which is excluded from the coverage. At oral argument, Peerless withdrew its contention regarding snowplowing coverage, and the only question before us concerns the "completed operations" clause.

The policy in the present case is nearly identical to the one at issue in Atwood v. Hartford Accident & Indemnity Co., 116 N.H. 636, 365 A.2d 744 (1976). As did the policy in Atwood, this policy consists of a cover jacket and several pages of definitions and conditions. A one-page endorsement attached to the policy is entitled "Manufacturer's and Contractor's Liability Insurance Coverage Part."

It provides on one side of the sheet the limits of liability for bodily injury and property damage liability. It also contains other information such as the description of hazards, premium bases, rates, and advance premium, and lists other endorsements that are attached to the policy. Plaintiff's operations are described merely as excavation, but Peerless has conceded, for purposes of this appeal, that snowplowing operations are also covered. We note that a reasonable person reading this page would expect that the policy would cover the claim being made against Olszak. See e. g., Atwood v. Hartford Accident & Indemnity Co., 116 N.H. 636, 365 A.2d 744 (1976).

The back of the page is the troublesome one. It is entitled "Coverage for premises and for the named insured's operations in progress." The remainder of the page is divided into two columns of print. The top of the left-hand column is headed:

Coverage A Bodily Injury Liability

Coverage B Property Damage Liability

Directly beneath is a sentence, over one hundred twenty-nine words in length which begins: "The company will 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 to which this insurance applies. . . ." An extensive list of exclusions follows.

Peerless relies on exclusion (P), which reads as follows: "(This insurance does not apply) to bodily injury or property damage included within the completed operations hazard or the products hazard. . . ." The completed operations hazard is defined elsewhere. This exclusion clause is buried amidst sixteen others.

In Atwood, we held that "(n)either the quoted heading nor the quoted exclusion clause constitutes fair notice to the insured that the policy does not cover the risks defined on the completed operations hazard, which the front page would lead him to believe was covered." Id. at 639, 365 A.2d at 747. We reaffirm the vitality of the "reasonable expectations rule." E. g., New Hampshire Insurance Co. v. Schofield, 119 N.H. ---, 406 A.2d 715 (1979); Hanover Insurance Co. v. Grondin, 119 N.H. ---, 402 A.2d 174 (1979); Storms v. United States Fidelity and Guaranty Co., 118 N.H. 427, 430, 388 A.2d 578, 579-80 (1978); Magulas v. Traveler Insurance Co., 114 N.H. 704, 706, 327 A.2d 608, 609 (1974).

Peerless contends, nevertheless, that the present case is distinguishable from Atwood, because in Atwood there was no indication of dual agency, and because the insurer's agent in Atwood had not discussed with the insured the fact that the insured would not be covered once he left his job, and further because it had never occurred to the agent that the insured was not covered by the policy. In the present case, all parties agree that Filteau was acting as agent for both the plaintiff and the company. Filteau testified that the plaintiff was a sophisticated and discriminating buyer who understood the general insurance discussed with him. Although Filteau could not remember specifically discussing the completed operations exclusion, he was of the opinion that the plaintiff had been told and knew what was covered by the policy. The court found that "Agent Filteau . . . was of the opinion that plaintiff did not have completed operations coverage." The court further noted, however, that Filteau was not an impartial witness in view of his relationship with Peerless and in view of the fact that he was a defendant in a suit brought by the plaintiff. The gist of the plaintiff's testimony was that he relied upon his agent to obtain a policy containing the necessary coverage, and...