Oxner v. Montgomery
| Decision Date | 01 August 2001 |
| Docket Number | No. 34, No. 766-CW., No. 727-CW |
| Citation | 794 So.2d 86 |
| Parties | Jim Henry OXNER, et ux., Plaintiffs-Respondents, v. Leroy Alvin MONTGOMERY, et al., Defendants-Applicants. |
| Court | Court of Appeal of Louisiana — District of US |
Sessions, Fishman & Nathan, by Glen E. Mercer, New Orleans, Counsel for Maryland Casualty Company.
Barham & Warner by Richard G. Barham, Shreveport, Counsel for Ohio Casualty Insurance Company.
Rountree, Cox, Guin & Achee by Gordon E. Rountree, New Orleans, Counsel for Jim Henry Oxner & Deborah Cole Oxner.
Eskridge E. Smith, Jr., Linda S. Blackman, Bossier City, Counsel for Leroy Alvin Mongtomery & Janet Sojka Montgomery.
Before GASKINS, CARAWAY and PEATROSS, JJ.
Maryland Casualty Company and Ohio Casualty Insurance Company applied to this court for supervisory review of a trial court ruling denying their motions for summary judgment on the issue of insurance coverage to the defendants, Leroy Alvin Montgomery and Janet Sojka Montgomery. This matter arises from the sale of an allegedly defective house to the plaintiffs, Jim Henry Oxner and Deborah Cole Oxner. Certiorari was granted by this court and the matter was docketed for decision. For the following reasons, we reverse.
In late 1994 and early 1995, the Montgomerys built a house in Shreveport, Louisiana. They were the general contractors on the project and had commercial/comprehensive general liability (CGL) insurance with Maryland Casualty Company (Maryland) from June 20, 1994 until June 20, 1995, and with Ohio Casualty Insurance Company (Ohio) from June 14, 1995 and thereafter. After completion, the Montgomerys moved into the house and lived there until they sold it to the Oxners on February 24, 1997. Prior to the sale, the Oxners noted numerous items about the house that required repair, including more than 100 cracked tiles in the den, day room and kitchen. The Oxners contended that the Montgomerys agreed to repair these items. Following the sale, the Oxners noted numerous other problems including a cracked slab, cracks in the sheetrock walls, leaking windows, patio doors that did not fit, an unstable foundation, a cracked kitchen cabinet door and loose siding. The plaintiffs contended that these problems were covered by the New Home Warranty Act of La. R.S. 9:3141, et seq., and that the Montgomerys failed to remedy the problems after being given notice.
The Oxners filed suit against the Montgomerys on February 19, 1998, claiming that the old problems were not fixed and that the defendants failed to address the new problems. The Oxners contended that these problems were caused by an unstable foundation. They alleged that the Montgomerys failed to consult an engineer and failed to adequately test and stabilize the soil prior to pouring the slab. They sought to recover the cost of repairs, attorney fees and court costs, or in the alternative, rescission of the sale or a reduction in the price. Their petition was subsequently supplemented and amended to add Maryland and Ohio. They asserted that Maryland had in effect a policy of CGL insurance to Janet Montgomery d/b/a Montgomery and Associates during the construction of the house and Ohio issued a CGL insurance policy to the Montgomerys from June 14, 1995 and thereafter.
On August 7, 2000, Maryland filed a motion for summary and declaratory judgment, denying coverage. The company claimed that there was no "occurrence" as defined under the terms of the policy, no property damage during the policy period and, that if there was, because the Montgomerys lived in the house prior to selling it, the "premises alienated" exclusion bars coverage of the plaintiffs' claims. On September 21, 2000, Ohio filed a motion for summary judgment, noting that it provided a policy of CGL insurance to the defendants from June 14, 1995 and thereafter. The company asserts that there is also a "premises alienated" clause in their contract of insurance that excludes coverage of the plaintiffs' claims.
The Oxners filed an opposition to the motions for summary judgment. In support of their opposition, the plaintiffs submitted the report of an engineer stating that the house had foundation problems caused by its construction on highly plastic clay soil that was not stabilized. The plaintiffs asserted that a construction defect is an occurrence for purposes of insurance coverage. Because the faulty foundation was constructed during the period of Maryland's policy, the plaintiffs contend the policy provides coverage. They also asserted that there is a disputed issue of fact about when problems from the foundation began and therefore, summary judgment was not appropriate.
Regarding the "premises alienated" clauses, the plaintiffs contended that a grant of summary judgment in favor of the insurance companies is not appropriate. The Oxners urge that this conflict, at the least, renders the policy provisions ambiguous.
On November 7, 2000, the trial court filed a "judgment with reasons," denying the insurance companies' motions for summary judgment. The trial court discussed the "premises alienated" clause in both policies and found that there was no dispute that the Montgomerys occupied the house for more than one year and then sold it to the plaintiffs. However, the policies also contained "completed operations" clauses covering all bodily injury or property damage "occurring away from premises you own or rent and arising out of your product or your work." The court found the portions of the policy covering completed operations to be ambiguous, requiring the policy to be interpreted in a light favoring coverage.
The court addressed Maryland's argument that the definition of an occurrence did not include the liability of a contractor based upon improper construction or faulty repair work. The court opined that the Maryland policy contains a "work-product exclusion," but the exception provides that it does not apply to property damage included in the products-completed operations hazard provision. The court found that it would be dishonest to exclude coverage while collecting a separate premium for this coverage.
The court also found that whether there has been an "occurrence" under the terms of the policy is a factual issue not properly decided on a motion for summary judgment. The court further determined that, in addition to claims of improper construction or faulty repair work, the plaintiffs have asserted a claim in redhibition, that the cracked slab is the result of continuous or repeated exposure to conditions, and this claim is clearly defined as an "occurrence."
Maryland filed writ application No. 34,727-CW and Ohio filed No. 34,766-CW with this court. Because the trial court decision appears to be in conflict with several decisions of this court and because this court has not previously addressed the "premises alienated" exclusion, on January 25, 2001, the writ applications were granted and the matters docketed for decision. This court consolidated the applications on March 8, 2001.
Summary judgment procedure is designed to secure the just, speedy, and in-expensive determination of every action, except those disallowed by law; the procedure is favored and must be construed to accomplish those ends. La. C.C.P. art. 966 A(2); Crocker v. Roach, 33,507 (La. App.2d Cir.8/23/00), 766 So.2d 672,writ denied,2000-2684 (La.11/17/00), 774 So.2d 983. After adequate discovery or after a case is set for trial, a motion which shows that there is no genuine issue as to material fact and that the mover is entitled to judgment as a matter of law shall be granted. La. C.C.P. art. 966 C(1); Crocker v. Roach, supra. The burden of proof is still with the mover. La. C.C.P. art. 966 C(2).
If the moving party points out an absence of factual support for one or more elements essential to the adverse party's claim, action or defense, the nonmoving party must produce factual support sufficient to establish that he will be able to satisfy his evidentiary burden at trial; failure to do so results in no genuine issue of material fact and the proper granting of summary judgment. Smith v. General Motors Corporation, 31,258 (La.App.2d Cir.12/9/98), 722 So.2d 348; Crocker v. Roach, supra.
Appellate review of summary judgment is de novo, utilizing the same criteria that guide the trial court's grant of the judgment. Magnon v. Collins, 98-2822 (La.7/7/99), 739 So.2d 191.
The scheme governing comprehensive general liability policies is set forth in McKenzie & Johnson, Insurance Law and Practice, § 183 at p. 362 in 15 La. Civil Law Treatise (2d Ed.1996):
It was introduced as a replacement for schedule liability policies which provided coverage for specific hazards under separate insuring agreements. The CGL policy provides coverage under a broad insuring agreement with certain specific risks excluded. Under the standard policy form, the CGL policy protects against the premises, operations, products, completed operations and independent contractors hazards, but coverage for a specific hazard may be excluded by endorsement. Likewise, additional coverages may be provided by endorsement.
An insurance policy is an agreement between the insured and the insurer and should be interpreted by using ordinary contract principles. The parties' intent, as reflected by the words of the policy, determines the extent of coverage. Words and phrases used in a policy are to be construed using their plain, ordinary and generally prevailing meaning, unless the words have acquired a technical meaning. La. C.C. art.2047; Crocker v. Roach, supra. Insurance companies have the right to limit coverage in any manner they desire, so long as the limitations do not conflict with statutory provisions or public policy. Reynolds v. Select Properties, Ltd., 93-1480 (La.4/11/94), 634 So.2d 1180.
Any doubt or ambiguity in an insurance policy must be construed in...
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