Stroup Sheet Metal Works, Inc. v. Aetna Cas. & Sur. Co., 20367

• Decision Date: 24 February 1977
• Docket Number: No. 20367,20367
• Citation: 268 S.C. 203,232 S.E.2d 885
• Court: South Carolina Supreme Court
• Parties: STROUP SHEET METAL WORKS, INC., Respondent, v. The AETNA CASUALTY & SURETY COMPANY, Appellant.

Page 885

232 S.E.2d 885

268 S.C. 203

STROUP SHEET METAL WORKS, INC., Respondent, v. The AETNA CASUALTY & SURETY COMPANY, Appellant.

No. 20367.

Supreme Court of South Carolina.

Feb. 24, 1977.

Love, Thornton, Arnold & Thomason, Greenville, for appellant.

Watkins, Vandiver, Kirven, Long & Gable, Anderson, for respondent.

LITTLEJOHN, Justice:

During the period of October 1, 1971 to October 1, 1972, defendant Aetna Casualty and Surety Company (Aetna) had in effect its comprehensive liability insurance policy issued in favor of plaintiff Stroup Sheet Metal Works, Inc. (Stroup).

This action was commenced in March, 1975, by Stroup against Aetna, to collect losses, sustained by Stroup, growing out of a contract to supply a roof for the Iva Elementary School during the term of the policy.

The complaint alleges that on October 24, 1972, a suit (the first suit) was instituted by Taylor Construction Company, Inc. (Taylor,) against two of its subcontractors, Bonitz Insulation Company of South Carolina (Bonitz) and Stroup, alleging that certain defects and damages caused by Bonitz and Stroup to a roof deck installed by Bonitz at the school resulted in damages to Taylor in the amount of $83,000.00.

Stroup alleges in this action against Aetna that under the terms of its insurance contract the damages as alleged by Taylor against Stroup fell within and were insured against under its policy of insurance. The complaint alleges that Stroup notified Aetna of the first suit and made demand on Aetna to afford coverage and defend the action; that Aetna denied coverage and refused to enter a defense on behalf of Stroup, in breach of the insuring contract, necessitating that Stroup retain its own attorneys to defend the action. Stroup also alleges that prior to trial of the first suit a compromise settlement was agreed upon, resulting in the payment by Stroup to Taylor, by way of an offset, in the amount of $10,862.00. The prayer for relief asks judgment for this amount plus interest and attorney fees.

Aetna answered:

(1) Setting up a general denial, and

(2) Alleging that the policy did not provide coverage for the losses and damages sought by Taylor against Stroup in the first action, and

(3) Alleging that in any event the care, custody and control exclusion and other exclusions in the policy relieved it of liability to pay.

It was also the contention of Aetna in its answer that the settlement between Stroup and Taylor was not reasonable or effected in good faith.

The relevant policy provisions and exclusions are as follows:

'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, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such . . . property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, . . .'

The policy defines occurrence as follows:

"Occurrence' means an accident, including injuries exposure to conditions, which results, during the policy period, in bodily injury or property damage neither expected nor intended from the stand-point of the insured;'

The exclusionary provisions include the following:

'EXCLUSIONS

This insurance does not apply:

(i) to property damage to

(2) property used by the insured, or

(3) property in the care, custody or control of the insured or as to which the insured is for any purpose exercising physical control;

(l) to property damage to the named insured's products arising out of such products or any part of such products;

(m) 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;'

The facts out of which the controversy arises are as follows:

Taylor was the general contractor engaged to construct the Iva school building. Taylor subcontracted the roofing job to Bonitz and to Stroup. The roof was to be of the flat built-up type.

Under the contract Bonitz provided the roof deck. The roof deck consisted of a plyboard type material installed in 32 by 48 panels, onto which was poured liquid gypsum which hardened into a substance similar to concrete.

It was the job of Stroup to supply the roof, which was built by first nailing a layer of felt to the gypsum and then applying, alternately, layers of tar and layers of felt. Gravel was imbedded into the top layer of tar.

After the deck and roof had been installed, the architect's inspection, in May or early June, revealed that numerous panels in the roof deck had ruptured such that approximately 80% Of the deck and roof had to be torn out and rebuilt.

As indicated in its letter to Stroup, dated June 20, 1972, Taylor admitted that:

'It has been mutually agreed that there are defects in the roof deck Which are not the responsibility of Stroup Sheet Metal Works Inc. These defects are where the gypsum deck is laminated or poured in layers which do not properly bond. Where this condition exists it is agreed that Stroup Sheet Metal Work is not liable for the repairs.'

(Emphasis added.)

Notwithstanding this admission that Stroup was not at fault, and notwithstanding the fact that it gave Stroup a contract to repair the defective roof, Taylor, on October 24, 1972, filed a complaint against both Bonitz and Stroup for damages for the cost of repairing the roof. The complaint in that suit will not be reproduced verbatim, but relevant portions are quoted for the purpose of showing the gravamen and nature of the action as it relates to the insurance coverage. It is alleged:

'I (T)hat this action Arises from a contract to be wholly or partially performed in South Carolina.

'VI That the defectiveness of the roof deck Was the result of the mismanagement, improper supervision and poor workmanship of the Defendants in constructing the roof deck and in pouring and finishing the roof.

'VII That the Plaintiff (Taylor), pursuant to its contract with the owner (School), was obligated to correct all work rejected by the architect as defective and to bear all cost of correcting such rejected work.

'VIII That the cost to the Plaintiff to have the roof deck rebuilt was Eighty three Thousand and 00/100 ($83,000.00) Dollars; and that Such cost was occasioned solely by the improper workmanship of the Defendants.' (Emphasis added.)

There can be no doubt but that this action was one for breach of contract for faulty workmanship. Negligence was not alleged and the complaint may not be characterized as sounding in torts. No occurrence (or accident) as defined in the policy was alleged.

This original complaint was served upon Aetna. Aetna refused to defend.

Tereafter, on December 6, 1972, an amended complaint was served upon Stroup, but a copy was never delivered to Aetna.

The amended complaint was the same as the original complaint except the paragraph VI, quoted hereinabove from the first complaint, was amended to read as follows:

'That the defectiveness of the roof deck was the result of the mismanagement, improper supervision and poor workmanship of the defendants in the following particulars:

'As to the Defendant Bonitz Insulation Company of South...