Shepard Marine Const. Co. v. Maryland Cas. Co.

• Decision Date: 10 December 1976
• Docket Number: Docket No. 26842
• Citation: Shepard Marine Const. Co. v. Maryland Cas. Co., 73 Mich.App. 62, 250 N.W.2d 541 (Mich. App. 1976)
• Parties: SHEPARD MARINE CONSTRUCTION COMPANY, a Michigan Corporation, Plaintiff-Appellee, v. MARYLAND CASUALTY COMPANY, Defendant-Appellant.
• Court: Court of Appeal of Michigan

Page 541

250 N.W.2d 541

73 Mich.App. 62

SHEPARD MARINE CONSTRUCTION COMPANY, a Michigan Corporation Plaintiff-Appellee, v. MARYLAND CASUALTY COMPANY, Defendant-Appellant.

Docket No. 26842.

Court of Appeals of Michigan.

Dec. 10, 1976.

Released for Publication Feb. 28, 1977.

Davidson, Gotshall, Kohl, Nelson, Secrest, Wardle & Lynch by George H. Gotshall, Detroit, for defendant-appellant.

Coburn, Leidel & Cannon by Robert L. Coburn, Mount Clemens, for plaintiff-appellee.

Before WALSH, P.J., and R. B. BURNS and BIVINS, ^* JJ.

R. B. BURNS, Judge.

Defendant-insurer appeals from a judgment establishing its duty to defend plaintiff in a negligence action and to pay for damages recovered by a third party in the prior action.

The prior suit arose when plaintiff, just having completed a seawall and a boat well along a canal in Harrison Township, was attempting to turn a barge-crane, used for the construction, so that the barge could be towed away down the canal. To turn the barge, the crane crew would repeatedly 'cast' the crane bucket into the canal and then maneuver the floating construction platform. During one of these casts, the bucket ruptured a Harrison Township water main submerged under the canal.

When Harrison Township sued plaintiff for damages, defendant refused to defend on the grounds that the accident fell within the insurance policy's underground property damage hazard exclusion. During pendency of that suit, plaintiff filed this declaratory judgment action.

The negligence suit resulted in a bench judgment for Harrison Township for $9,170.63 for damages, interests and costs. The declaratory judgment action resulted in an award for plaintiff of $9,170.63 as compensation for the judgment in the prior suit, $4,284.10 as recompense for attorney's fees incurred in the defense and appeal of the suit by Harrison Township, and $1,722.50 for attorney's fees resulting from the prosecution of the declaratory judgment by plaintiff.

Defendant's first claim on appeal is that the trial judge erred in holding defendant liable for coverage under the policy's completed operations provision, which was not limited by the underground property damage exclusion relied on by defendant in refusing to take up the defense of the prior suit. In a stipulation of facts, the parties agreed that the crane bucket ruptured the water main 'upon the completion of construction'. Since insurance policies drafted by the insurer are to be construed in favor of the insured to uphold coverage, Francis v. Scheper, 326 Mich. 441, 40 N.W.2d 214 (1949); Arrigo's Fleet Service, Inc. v. Aetna Life & Casualty Co., 54 Mich.App. 482, 221 N.W.2d 206 (1974), Lv. den., 392 Mich. 812 (1974), we feel that the trial judge did not err in finding liability under the completed operations coverage. Although the trial judge in his opinion stated incorrectly that he was bound on the question of completion of construction by the findings of fact in the prior action, any error in this regard was dissolved by the stipulation of facts of the parties in this action.

Next, defendant argues that, even if the facts indicate that operations were completed, the defendant's duty to defend was governed by the pleadings of Harrison Township, which alleged that the accident occurred during construction, I.e., prior to the completion of operations. Cases which seem to hold that the duty to defend depends on the allegations, E.g., Space Conditioning, Inc. v. Insurance Company of North America, 294 F.Supp. 1290 (E.D.Mich., 1968), Aff'd, 419 F.2d 836 (C.A.6, 1970), are essentially upholding another general principle, that the duty to defend encompasses even frivolous and...