Southeastern Color Lithographers, Inc. v. Graphic Arts Mut. Ins. Co.
| Decision Date | 21 October 1982 |
| Docket Number | No. 64764,64764 |
| Citation | 164 Ga.App. 70,296 S.E.2d 378 |
| Parties | SOUTHEASTERN COLOR LITHOGRAPHERS, INC. et al. v. GRAPHIC ARTS MUTUAL INSURANCE COMPANY. |
| Court | Georgia Court of Appeals |
David W. Griffeth, Leah J. Prewett, Athens, for appellants.
Gary B. Blasingame, Daniel C. Haygood, Martha Pearson, Athens, for appellee.
This declaratory judgment action was brought by the appellee insurance company to determine whether liability exists as to its policy with the appellant Southeastern Color Lithographers, Inc. Southeastern has been sued by the codefendant Starnes, whose complaint alleges that he entered into an oral contract of employment with that company at a fixed salary and share of profits; that in reliance thereon he and his wife resigned their respective employments in another state, had their house appraised for sale, and journeyed to Atlanta to look for housing before being informed that the job offer was rescinded and defendants had no intention of employing him. Southeastern denies there was an anticipatory breach of an oral employment contract.
At this point the insurer brought the present action, contending there is no coverage for the alleged breach of contract and that in any event the appellant failed to give it timely notice of the incident as required by the terms of the policy. It then filed a motion for summary judgment, which was granted by the trial court, and the insured appeals.
1. The liability insurance portion of the multi-peril policy in question agrees to pay all sums the insured shall become legally obligated to pay as damages to which the insurance applies, caused by an occurrence, and to defend any suit seeking damages on account of bodily injury or property damage, even if the allegations of the suit are groundless, false or fraudulent. "Occurrence" is defined as an accident which results in property damage neither expected nor intended from the standpoint of the insured. "Property damage" means "physical injury to or destruction of tangible property" caused by an occurrence (accident). Liability assumed by the insured under a contract or agreement is excluded from coverage except for an "incidental contract." Incidental contracts are defined by endorsement as including any contract or agreement relating to the conduct of the named insured's business.
The main issue for decision on summary judgment may, under these definitions, be stated as follows: Assuming that the insured and the plaintiff in the breach of contract action had entered into an employment agreement which was breached by the insured and which resulted in monetary loss to the plaintiff who expended certain sums in reliance on it, and assuming that the agreement related to the conduct of the insured's business, and that the loss was not intended or expected by the insured, is there coverage under the policy?
Since there is no contention that a bodily injury claim is involved, the action must be dependent on proof of an accidental occurrence resulting in property damage, meaning physical destruction, injury to or loss of use of tangible property. Unless there is such damage there is no claim which the insurer is legally bound to defend. While we are cited to no Georgia cases determining the question, the phrase "property damage" in liability insurance law has been the subject of construction in a variety of cases, all of which, under definitions substantially identical with the one here, have emphasized the tangible and physical nature of the property and the necessity for bringing it within physical three-dimensional limits. In Oyler v. State of Wyoming, 618 P.2d 1042, the court dismissed without comment, other than that it was not property damage, the claim of a husband and wife who alleged that he had been offered work in another city and in reliance thereon they both left their jobs, moved to the designated city, and waited there for several days before being told that the prospective employer denied he had ever offered the employment.
It has been held, among other things, that property damage in a liability insurance policy defined as stated herein does not include:
(a) Damages to reputation and business standing. Johnston v. Tally Ho, Inc., (Del.) 303 A.2d 677, 679, holding that "injury to or destruction of tangible property" means that having physical substance which can be felt or touched and is necessarily corporeal in nature.
(b) An item of damage for loss of wages due to accidental injury. Pittman v. Fowler, 191 So.2d 172(11), (La.) Loss of business profits. Liberty Mutual Ins. Co. v. Consolidated Milk Producers Ass'n., 354 F.Supp. 879, 882; Monroe County v. Travelers Ins. Co., 100...
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