S. L. Rowland Const. Co. v. St. Paul Fire & Marine Ins. Co.
| Decision Date | 08 December 1967 |
| Docket Number | No. 38903,38903 |
| Citation | 72 Wn.2d 682,434 P.2d 725 |
| Court | Washington Supreme Court |
| Parties | S. L. ROWLAND CONSTRUCTION CO., Respondent, v. ST. PAUL FIRE AND MARINE INSURANCE CO., Appellant. |
Davies, Pearson, Anderson & Pearson, Vincent L. Gadbow, Tacoma, for appellant.
Johnson & Dixon, Brooks K. Johnson, Tacoma, for respondent.
Respondent, a building contractor, who was engaged in the development of an area near Tacoma known as 'Robin Hood Estates,' on June 19, 1961, sold a completed house located in that area to the Reverend John G. Kuethe and his wife. October 7, 1962, the house was substantially damaged by fire. Mr. Kuethe commenced suit against respondent, alleging in his amended complaint that wooden floor joists or headers, had been placed in contact with, or in close proximity to, the firebox of an upstairs fireplace in such a manner that they were caused to ignite when the fireplace was used. Mr. Kuethe sought damages totaling $19,048.21, which amount included $13,351.52 depreciation to the house, $159.32 representing the cost of a tarpaulin he was forced to place over the roof $300 representing damages to his lawn and shrubs caused by fire-fighting equipment, $3,960.50 for damages done to personal property in the house, $677.07 representing the cost to him of moving and storage, and $600 which was the cost of temporary lodging for himself and his family.
Respondent tendered defense of this action to appellant, his insurer. Appellant accepted the defense, but did so under a reservation of right to later deny coverage and liability. On the date set for trial, counsel stipulated orally, in open court, that a settlement had been reached. Judgment was thereafter entered against respondent in the amount of $2,700 for damages to 'personal property,' and $9,800 for damage to 'real property.' Appellant paid the $2,700, but refused to pay the balance, contending that the damage to real property was not covered by respondent's policy.
Respondent paid the remaining $9,800 plus accrued judgment interest, and thereafter commenced the present action against appellant, seeking reimbursement of the sum mentioned, less $250 deductible, contending that the loss was covered by and insured under his policy.
The cause was heard by the trial court on February 18, 1966, sitting without a jury. No witnesses were called by either party, and no oral testimony was presented at the trial. The record before this court consists entirely of colloquy between court and counsel, certain exhibits, the transcript, and a 'stipulation and supplement to statement of facts.'
Following the hearing on the issues, the trial court entered written findings of fact and conclusions of law and judgment for respondent in the amount sought. This appeal followed.
Appellant makes three assignments of error, but essentially they turn on the validity of its argument that the policy involved is unambiguous and that the loss involved is not covered under the policy. We, therefore, turn first to a consideration of the policy.
The insurance policy, issued by appellant, is described on its face as a comprehensive general and automobile policy. It consists of form DC15409, usually referred to as Declarations, form J15409, which is the printed policy form, and various endorsements which are not material to the questions presented here.
The Declarations form indicates that respondent was insured as a 'dwelling contractor.' Under item 3 of the Declarations, it is indicated that respondent paid a premium of $1,835.27 for coverage of $100,000 each for 'Coverage D,' 1 this limit applying to five specified matters, including 'aggregate products.'
Aggregate products is further defined on page 6 of the printed contract form, under (4)(b), in the section entitled 'Conditions,' as follows:
4. Limits of Liability
(b) Aggregate Products--Coverages B and D
The limit of bodily injury liability and property damage liability stated in the Declarations as 'aggregate products' are respectively the total limits of the Company's Liability for all damages arising out of the products and completed operations hazards as defined in Condition 3. All damages arising out of (a) one lot of goods or products manufactured, sold, handled or distributed by the Insured or by another trading under his name, or (b) a job or project completed by the Insured shall be considered as arising out of one occurrence or accident. (Italics ours.)
On page 5 of the printed form, under the heading 'Conditions,' in paragraph 3(b), it is provided that:
(b) As used in Coverage B and D,
(1) 'products hazard' shall mean the Liability for damages arising out of the handling or use of or the existence of any condition in goods or products manufactured, sold, handled or distributed
by the Named Insured or by others trading under his name, if the accident or occurrence takes place:
provided such goods or products shall be deemed to include any container thereof, other than a vehicle, but shall not include any vending machine or any property, other than such container, rented to or located for use of others but not sold.
(2) 'completed operations hazard' shall mean the liability for damages caused by the Insured's operations, if the accident or occurrence takes place:
provided operations shall not be deemed imcomplete because improperly or defectively performed or because further operations may be required pursuant to an agreement; provided further, the following shall not be deemed to be 'operations' within the meaning of this paragraph:
(i) pick--up or delivery, except from or onto a railroad car,
(ii) the maintenance of vehicles owned or used by or in behalf of the Named Insured and
(iii) the existence of tools, uninstalled equipment and abandoned or unused materials. (Italics ours.)
Item 4 on the Declarations page is denominated 'Optional Exclusions,' and provides that If an 'X' is inserted in the box opposite any one of the optional exclusions then such exclusions as set forth in the policy shall apply to insurance afforded.
Among the four 'Optional Exclusions' listed thereafter is 'Products and Completed Operations Hazard Exclusion.' No 'X' is inserted in the box opposite such optional exclusion, and we, therefore, conclude that this exclusion does not apply to the policy, i.e. the coverage contemplated thereunder was purchased by respondent, the insured.
On page 4 of the printed form, under the heading 'Optional Exclusions,' we find:
(1) Products Hazard and Completed Operations Hazard Exclusion.
Under Coverages B and D to the products hazard and completed operations hazard as defined in Condition 3(b).
Thus, this optional exclusion appears to refer to the precise matters included under 'aggregate products,' discussed supra. The definitions set forth in Condition 3(b) are set forth in connection therewith.
Appellant contends that, notwithstanding the coverage apparently provided by the 'aggregate products' and 'Products Hazard and Completed Operations Hazard' provisions, exclusion (h)(4) is applicable Exclusion (h)(4) provides that:
This policy does not apply:
(h) under Coverage D, to injury or destruction of:
(4) any goods, products, or containers thereof manufactured, sold, handled or distributed by the Insured, or work completed by or for the Insured, Out of which the accident arises, nor to costs of repair or replacement thereof. (Italics ours.)
Liberty Bldg. Co. v. Royal Indem. Co., 177 Cal.App.2d 583, 587, 2 Cal.Rptr. 329, 331 (1960); Cal.App., 346 P.2d 444, 447 (1959), cited by appellant in its brief, contains an explanation of such an exclusion:
This Exclusion means that if the insured becomes liable to replace or repair any 'goods or products' or 'premises alienated' or 'work completed' after the same has caused an accident because of a defective condition, the cost of such replacement or repair is not recoverable under the policy. However, if the accident also caused damage to some Other property or caused personal injury, the insured's liability for such damage or injury becomes a liability of the insurer under the policy, and is...
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