Prahm v. Rupp Const. Co.

• Decision Date: 23 March 1979
• Docket Number: 49108.,No. 48863,48863
• Citation: 277 NW 2d 389
• Parties: Larry PRAHM and Roger Prahm, d.b.a. Prahm Brothers Bridge Company, Respondents, v. RUPP CONSTRUCTION COMPANY, defendant and third party plaintiff, Respondent, v. GREAT AMERICAN INSURANCE COMPANY, third party defendant, Appellant.
• Court: Minnesota Supreme Court

277 N.W.2d 389 (1979)

Larry PRAHM and Roger Prahm, d.b.a. Prahm Brothers Bridge Company, Respondents, v. RUPP CONSTRUCTION COMPANY, defendant and third party plaintiff, Respondent, v. GREAT AMERICAN INSURANCE COMPANY, third party defendant, Appellant.

Nos. 48863, 49108.

Supreme Court of Minnesota.

March 23, 1979.

Bundgaard & Jacobson, Minneapolis, for appellant.

Gislason, Dosland, Malecki, Gislason & Halvorson, New Ulm, for Prahm.

Paul M. Malone, Slayton, for Rupp Const. Co. Heard before SHERAN, C. J., ROGOSHESKE and WAHL, JJ., and considered and decided by the court en banc.

WAHL, Justice.

Plaintiffs Larry and Roger Prahm, d.b.a. Prahm Brothers Bridge Company, sued Rupp Construction Company (Rupp) for property damage to their backhoe while it was being transported by a tractor and trailer owned and operated by Rupp. Rupp tendered defense of the suit to its insurer, Great American Insurance Company (Great American), and impleaded the insurer after Great American denied coverage and refused to defend. Great American appeals from the judgment of the Murray County District Court granting Rupp's motion for summary judgment on the issues of coverage and the duty to defend. We affirm.

In June 1975, plaintiffs, who are engaged in bridge and culvert construction, contacted Rupp who agreed to furnish a tractor, trailer and driver to move a 60,000-pound backhoe from Tracy, Minnesota to Round Lake, Minnesota. The parties did not have a written contract, but Rupp had transported equipment for plaintiffs in the past. Rupp's driver, Wolfswinkle, arrived at Tracy about 5:00 p. m. on June 5, 1975. Larry Prahm loaded the backhoe onto the trailer, and he and Wolfswinkle secured it with chains. Prahm advised Wolfswinkle of their destination and the route to follow. He then followed Wolfswinkle. Two miles outside Currie, Minnesota Prahm passed Wolfswinkle and proceeded into town to get a pickup truck. He planned to lead Wolfswinkle the rest of the way to Round Lake, Minnesota. The accident occurred one mile north of Currie after Prahm passed Wolfswinkle.

At the time of the accident Rupp had a policy of insurance with Great American which insured him for general bodily injury and property damage. The Broad Form Property Damage Endorsement of the policy excluded:

"A. (y) ... property damage... (1) to property ... entrusted to the insured for storage or safe-keeping... or (2)(d) to that particular part of any property, not on the premises owned or rented to the insured, (i) upon which operations are being performed by or on behalf of the insured..."

When Rupp requested Great American to defend and indemnify under the policy, Great American claimed the damage was excluded by these provisions.

The trial court granted Rupp's motion and denied Great American's motion for summary judgment because the action brought against Rupp could involve facts which could bring its liability within the coverage provided by Great American.¹

The sole issue on appeal is whether Great American is obligated to defend the suit against Rupp. The obligation to defend is contractual in nature and is determined by the allegations of the complaint and the indemnity coverage of the policy. If any part of a cause of action is arguably within the scope of coverage, the insurer must defend. Any ambiguity is resolved in favor of the insured, and the burden is on the insurer to prove that the claim clearly falls outside the coverage afforded by the policy. If the claim is not clearly outside coverage, the insurer has a duty to defend. Bituminous Casualty Corp. v. Bartlett, 307 Minn. 72, 240 N.W.2d 310 (1976).

In the present case Great American is obligated to defend the suit against Rupp unless the damage to the backhoe clearly falls within an exclusion to the policy. Great American contends that the policy excludes coverage under the Broad Form Property Damage Endorsement, part (1), because the backhoe was entrusted to Rupp for storage or safekeeping. The facts available to us on the present record can be interpreted in two ways — either plaintiffs hired Rupp to transport the backhoe, or Rupp leased the equipment (including the driver) necessary to transport it. It is not clear whether plaintiffs had entrusted the backhoe to Rupp. Even if they did, it was for the purpose of transporting the backhoe, not for storage or safekeeping. Thus, the present case is not clearly within this exclusion.

Great American also contends that the damage is excluded under part A. (y)(2) of the Property Damage Endorsement because the backhoe was property upon which operations were being performed by...