Ricci v. New Hampshire Ins. Co.

• Decision Date: 03 July 1986
• Docket Number: 85-235,Nos. 85-234,s. 85-234
• Parties: Raymond M. RICCI, Bernadette Ricci, Phillip W. Patrick, Diana Patrick, Donnie R. Haney, Sandra Haney, Nona Gail Anderson, Leo R. Hendricks and Betty L. Hendricks, Appellants (Defendants and Third-Party Plaintiffs), Heritage Homes, Inc., Steve Beilgard, Dale Knife, Reginald Haakinsonn, Jean Haakinsonn, Jacob Kaufman, Elva Kaufman, Jodie Nixon, Aase Nixon, (Defendants and Third-Party Plaintiffs), v. NEW HAMPSHIRE INSURANCE COMPANY, a New Hampshire corporation, Appellee (Plaintiff), St. Paul Fire and Marine Insurance Company, Appellee (Third Party Defendant). Heritage Homes, Inc., Steve Beilgard, Appellants (Defendants and Third-Party Plaintiffs), Raymond M. RICCI, Bernadette Ricci, Phillip W. Patrick, Diana Patrick, Donnie R. Haney, Sandra Haney, Nona Gail Anderson, Leo R. Hendricks and Betty L. Hendricks, Dale Knife, Reginald Haakinsonn, Jean Haakinsonn, Jacob Kaufman, Elva Kaufman, Jodie Nixon, Aase Nixon, (Defendants and Third-Party Plaintiffs), v. NEW HAMPSHIRE INSURANCE COMPANY, a New Hampshire corporation, Appellee (Plaintiff), St. Paul Fire and Marine Insurance Company, Appellee (Third-Party Defendant).
• Court: Wyoming Supreme Court

Page 1081

721 P.2d 1081

Raymond M. RICCI, Bernadette Ricci, Phillip W. Patrick, Diana Patrick, Donnie R. Haney, Sandra Haney, Nona Gail Anderson, Leo R. Hendricks and Betty L. Hendricks, Appellants (Defendants and Third-Party Plaintiffs), Heritage Homes, Inc., Steve Beilgard, Dale Knife, Reginald Haakinsonn, Jean Haakinsonn, Jacob Kaufman, Elva Kaufman, Jodie Nixon, Aase Nixon, (Defendants and Third-Party Plaintiffs), v. NEW HAMPSHIRE INSURANCE COMPANY, a New Hampshire corporation, Appellee (Plaintiff),

St. Paul Fire and Marine Insurance Company, Appellee (Third Party Defendant).

Heritage Homes, Inc., Steve Beilgard, Appellants (Defendants and Third-Party Plaintiffs), Raymond M. RICCI, Bernadette Ricci, Phillip W. Patrick, Diana Patrick, Donnie R. Haney, Sandra Haney, Nona Gail Anderson, Leo R. Hendricks and Betty L. Hendricks, Dale Knife, Reginald Haakinsonn, Jean Haakinsonn, Jacob Kaufman, Elva Kaufman, Jodie Nixon, Aase Nixon, (Defendants and Third-Party Plaintiffs), v. NEW HAMPSHIRE INSURANCE COMPANY, a New Hampshire corporation, Appellee (Plaintiff),

St. Paul Fire and Marine Insurance Company, Appellee (Third-Party Defendant).

Nos. 85-234, 85-235.

Supreme Court of Wyoming.

July 3, 1986.

Clay B. Jenkins and H.W. Rasmussen, Badley & Rasmussen, P.C., Sheridan, for appellants Ricci.

Leslie W. Hawkey, Jr., Gillette, for appellants Heritage Homes, Inc., and Beilgard.

Robert W. Connor, Jr., Sheridan, and William L. Senter and Mark C. Overturf, Greengard & Senter, Denver, Colo., for appellee New Hampshire Ins. Co.

Robert W. Brown, Lonabaugh & Riggs, Sheridan, for appellee St. Paul Fire and Marine Ins. Co.

Before THOMAS, C.J. and CARDINE and MACY, JJ.; GUTHRIE, J., Retired, and RAPER, J., Retired.

THOMAS, Chief Justice.

The main question which we must resolve in this case is whether the exclusions from the coverage of general liability insurance policies were articulated with sufficient clarity to permit the trial court to enter a summary judgment in favor of the insurance carriers. There are collateral issues relating to the extension of coverage, in the case of one policy, beyond the terms of the written policy by virtue of representations of the selling agent and whether such a theory of coverage was waived by the failure to assert it in the district court. The district court held that coverage was excluded as a matter of law, and it granted a summary judgment in favor of New Hampshire Insurance Company declaring the rights and liabilities of the parties under its policy. It then dismissed the claim against St. Paul Fire and Marine Insurance Company. We affirm the judgment of the district court.

The parties have suggested different statements of the issues for our consideration. Heritage Homes, Inc., and Steve Beilgard, the principal in the corporation (the insured), state the issues in this way:

"I. Factual issues exist and the court erred in granting the summary judgment motion of appellees.

"II. Appellees' printed policies are confusing and ambiguous, and should be construed in favor of the insured."

The appellants (the third-party beneficiaries) who are owners of homes purchased from Heritage Homes, Inc., set forth the issues in this way:

"I. The insurance policies are 'occurrence' policies and provide coverage for the appellant's damages.

"II. The insurance policies are ambiguous, and should be construed in favor of the insured.

"III. A factual issue precludes summary judgment."

As appellee, New Hampshire Insurance Company suggests these issues:

"I. Whether New Hampshire Insurance Company's comprehensive general liability insurance policy purchased by Heritage Homes, Inc. excludes coverage for damages to the houses built by Heritage Homes, Inc.

"II. Whether appellants may rest on their pleadings to create a question of fact sufficient to defeat a motion for summary judgment in favor of New Hampshire Insurance Company."

The appellee, St. Paul Fire and Marine Insurance Company, urges the following issues:

"1. Whether the damages suffered by the appellant homeowners which occurred prior to the effective date of the St. Paul policies are covered by the policies of the St. Paul Fire and Marine Insurance Company?

"2. Whether the St. Paul Fire and Marine Insurance Company policies provide coverage for the damages suffered by the appellant homeowners when the policies specifically exclude coverage for property damage to the named insured's products arising out of such products or any part of such products and for property damage to work performed by or on behalf of the named insured arising out of the work or any portion thereof, or out of materials, parts or equipment furnished in connection therewith?

"3. Whether representations of the selling agent extend coverage beyond the terms of the written policy?

"4. Whether appellants may raise on appeal theories or arguments which were expressly disavowed by appellants at the trial level or were not even presented?"

Beginning sometime prior to 1978, Heritage Homes, Inc., constructed houses in a subdivision of Gillette. The individuals other than Steve Beilgard who are named as parties all purchased homes from Heritage Homes, Inc., during the period from July, 1977, through June, 1978. In the spring and early summer of 1978, the homeowners discovered water seepage in the basements of their respective homes. That seepage continued up until the time of trial of their action against Heritage Homes, Inc., and Beilgard which was premised upon theories of negligence and breach of warranty. The several homeowners were awarded damages for the diminution in value of their respective homes, and the judgments in their favor aggregated $146,768.25. These judgments were entered on June 8, 1983, and they were affirmed by this court in Anderson v. Bauer, Wyo., 681 P.2d 1316 (1984).

Heritage Homes, Inc., obtained general liability insurance first from New Hampshire and later from St. Paul. The New Hampshire coverage was in effect from March 3, 1976, until June of 1978. The St. Paul coverage began on June 27, 1978, and continued until June 27, 1981. In addition, on March 30, 1981, Heritage Homes, Inc., purchased from St. Paul a "Comprehensive General Liability Broadening Endorsement."

The St. Paul policy in effect from June 27, 1978, to June 27, 1981, provided coverage in this language:

"The Company will pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as damages because of * * * property damage to which this insurance applies, caused by an occurrence, * * *."

That policy went on to provide with respect to exclusions from coverage:

"(a) to liability assumed by the Insured under any contract or agreement except an incidental contract; but this exclusion does not apply to a warranty of fitness or quality of the Named Insured's products or a warranty that work performed by or on behalf of the Named Insured will be done in a workmanlike manner.

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"(m) to property damage to the Named Insured's products arising out of such products or any part of such products;

"(n) to property damage to work performed by or on behalf of the Named Insured arising out of the work or any portion thereof, or out of materials, parts or equipment furnished in connection therewith;"

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The pertinent language in the St. Paul "Comprehensive General Liability Broadening Endorsement" which was purchased on March 30, 1981, reads:

"A. The exclusion relating to * * * work performed by or on behalf of the Named Insured arising out of work or any portion thereof, or out of materials, parts or equipment furnished in connection therewith, [is] replaced by the following exclusions:

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"(2) with respect to the completed operations hazard and with respect to any classification stated in the Declarations as 'including completed operations', to property damage to work performed by the Named Insured arising out of the work or any portion thereof, or out of materials, parts or equipment furnished in connection therewith."

The New Hampshire Comprehensive Liability Insurance Policy, which was in effect from 1976 to 1978, is not a part of the record, but New Hampshire admitted that the policy provided for exclusions from coverage in the following language:

"(a) to liability assumed by the Insured under any contract or agreement except an incidental contract; but this exclusion does not apply to a warranty of fitness or quality of the Named Insured's products or a warranty that work performed by or on behalf of the Named Insured will be done in a workmanlike manner;

* * *

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"(n) to property damage to the Named Insured's products or any part of such products;

"(1) to property damage to work performed by or on behalf of the Named Insured arising out of the work or any portion thereof, or out of materials, parts or equipment furnished in connection therewith."

When the homeowners discovered in 1984 that Heritage Homes, Inc., and Beilgard were judgment-proof, the homeowners served garnishee notices and summonses on New Hampshire and St. Paul. On July 6, 1984, St. Paul answered the garnishee notices and summonses. Instead of answering, New Hampshire filed a declaratory judgment action in United States District Court on June 7, 1984, in which it sought a declaration that it was not liable under its policy for the judgments obtained against Heritage Homes, Inc., and Beilgard, and affirmative relief was sought in the form of an injunction against the garnishment proceedings. The defendants in the declaratory judgment action were Heritage Homes, Inc., Beilgard, and all of the homeowners who had proceeded with the garnishee notices and summonses. On July 26, 1984, the garnishee notices and summonses were withdrawn, and the case in United States District Court then was transferred to the District Court of Campbell County, Wyoming. After the case was transferred to the state court Heritage Homes, Inc., and Beilgard filed a third-party...