Teeples v. Tolson
| Decision Date | 22 May 1962 |
| Docket Number | Civ. No. 60-316. |
| Citation | 207 F. Supp. 212 |
| Parties | Karl D. TEEPLES and W. E. Thatcher, doing business as Teeples & Thatcher, Plaintiffs, v. W. TOLSON, for himself and representing other Underwriters at Lloyd's, London, Defendant. |
| Court | U.S. District Court — District of Oregon |
Veatch, Bauman & Lovett, Frank A. Bauman, Portland, Or., for plaintiff.
Mautz, Souther, Spaulding, Kinsey & Williamson, Kenneth E. Roberts, Portland, Or., for defendant.
Plaintiffs demand judgment against the defendant insurance company for the sum of $77,455.00 with interest and attorney fees. Plaintiffs are engaged in the general construction business in the state of Oregon. Defendant and associated underwriters are engaged in the insurance business and are authorized to carry on an insurance underwriting business in the state of Oregon.
On December 7, 1959, plaintiffs signed a contract to erect a department store building in the city of Portland and thereafter commenced the construction of such building. In January 1960 defendant, in consideration of payment of a premium, issued to plaintiffs a policy of insurance with a limit of $100,000.00, the defendant intending to insure plaintiffs during the course of the construction of said building under the terms and conditions set forth in the certificate of insurance, which certificate was in full force and effect at the time of the occurrence hereinafter mentioned.
During the course of construction a segment of the building collapsed due to defects in design and engineering in the joints of the concrete beams.
In May 1960, plaintiffs presented a claim to defendant for an amount in excess of the face of the policy and in June 1960, defendant paid to plaintiffs on said claim the estimated cost of repair of the units of the structure which actually collapsed and the repair of certain joints where damage was visible. After the initial collapse, plaintiffs, working with a representative of defendant, engaged the services of a new architect and engineer and he concluded that the initial design of said structure was wholly inadequate to support its weight and that a new and different design, reinforcing and changing the original, was absolutely necessary. The shoring mentioned was temporary in nature and for the time being prevented the collapse of the remainder of the joints in question. The shoring had to be removed in order to properly utilize the floor space and when removed, the joints would collapse unless reinforced.
The parties agree that the new architect is well qualified in this field. He arrived at the conclusion that the entire structure was under-designed and could not carry the weight load which would be required.
The language on the face of the policy would indicate that it was an all risk type.1 The language of the insuring clause is quite broad.2 However, there is an express limitation of liability in the policy.3 The exclusionary clause4 is quite limited in scope. The intention of the parties is declared in another portion of the policy.5 The expert, so engaged by plaintiffs, arrived at the conclusion that it was necessary to redesign the entire building. At the time of the partial collapse, the structure was in skeleton form only, but the cost of construction to that date far exceeded the face of the policy. The redesigned structure, which was eventually completed and on which damages are claimed under the policy, contained a great amount of material and labor over and above what would be required under the original plans and the cost of such would be greatly in excess of the cost to repair all of the beams and joints, those which collapsed and those which were shored up. The original claim of the plaintiffs was as follows:
(1) Repair Beams $ 58,140.00
(2) Costs incidental to collapse
and repair 8,618.00
(3) Electrical and pipe
changes arising hereunder 2,000.00
(4) Welding Expenses 2,065.00
(5) Bridging Expenses 6,526.00
(6) Column remodeling and
escalator framing 6,062.00
(7) Wall shearing (tentative
estimate) 8,395.00
(8) Tie Roof together 15,015.00
(9) Engineering fees 8,760.00
___________
Total $115,571.00
In the trial the estimated cost was increased by the expert to $140,000.00. However, as I look at the record, there was no breakdown in this last estimate on which a court could properly act. Damages must be proved with reasonable certainty. Parker v. Harris Pine Mills, Inc., 206 Or. 187, 205, 291 P.2d 709, 56 A.L.R.2d 382. The same rule applies to proof on the cost of repairs. The expert fixed the cost of repairing the collapsed and cracked joints at $22,795.00, which sum, less $250.00 ($22,545.00) has heretofore been paid by defendant to plaintiffs, without surrender of any rights.
It is the plaintiffs' contention that defendant is liable under the policy, not only for the actual cost of the repair of the collapsed portion of the building, but also for the added expense of labor, material and engineering expenses under the redesign prepared by said expert. In addition, plaintiffs contend that they are entitled to a reasonable attorney fee and interest from May 7, 1960, the date of the claim.
Defendant contends that plaintiffs were paid in full for the cost of repair of any damage which actually occurred at or about the time of the partial collapse.
In construing an insurance policy covering Oregon property, the law of the state of Oregon should apply. Prudential Insurance Co. of America v. Winn, 9 Cir., 1934, 71 F.2d 126; Northwestern Mutual Life Insurance Co. v. McCue, 223 U.S. 234, 32 S.Ct. 220, 56 L.Ed. 419; Colonial Coach Manufacturing Corp. v. Home Insurance Co., 7 Cir., 1958, 260 F.2d 532. The guiding principles of law are not seriously in dispute. The proper application of that law to the unique facts in the case is the problem before the court. Defendant concedes it is liable for actual damage that might have occurred in the partial collapse, even though such damage was caused by design defect. No quarrel is made with the rule that an insurance policy must be construed most strongly against the insurer, Employers' Liability Assur. Corporation, Ltd. of London, England v. Portland Electric Power Company, 9 Cir., 1926, 15 F.2d 976, or that any reasonable doubt as to the meaning of the language of the policy must be resolved against defendant. Roberts v. Union Insurance Society, 215 Or. 183, 332 P.2d 600. Defendant recognizes, as it must, that if the language of a policy is reasonably susceptible of two constructions, the one in favor of the insured must be adopted. Geo. B. Wallace Co. v. State Farm Mutual Insurance Co., 220 Or. 520, 349 P.2d 789.
The above statements must give way to the primary and inflexible rule that policies of insurance, like all other contracts, are to be construed so as to ascertain and declare the true intention of the parties. In applying this rule, the insurance policy must be read as a whole and the separate clauses construed together. All other rules of construction are secondary and are used only for the purpose of giving proper application to the primary rule. It is presumed that the parties intended each clause to accomplish some specific purpose and it is not proper to assume such clause is without meaning. I-L Logging Co. v. Manufacturers & Wholesalers Indemnity Exchange, 202 Or. 277, 317, 318, 273 P.2d 212, 275 P.2d 226.
When we turn to the insuring clause in the contract, we...
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