Transamerica Ins. Co. v. Gage Plumbing and Heating Co., 429-69.

• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)
• Writing for the Court: LEWIS, PICKETT and HICKEY, Circuit
• Citation: 433 F.2d 1051
• Parties: TRANSAMERICA INSURANCE COMPANY, a corporation, Plaintiff-Appellant, v. GAGE PLUMBING AND HEATING CO., Inc., a corporation, Defendant-Appellee.
• Docket Number: No. 429-69.,429-69.
• Decision Date: 06 November 1970

433 F.2d 1051 (1970)

TRANSAMERICA INSURANCE COMPANY, a corporation, Plaintiff-Appellant,
v.
GAGE PLUMBING AND HEATING CO., Inc., a corporation, Defendant-Appellee.

No. 429-69.

United States Court of Appeals, Tenth Circuit.

November 6, 1970.

433 F.2d 1052

Charles W. Harris and Windell G. Snow, Wichita, Kan., (Howard G. Engleman, Salina, Kan., with them on the brief), for plaintiff-appellant.

Evart Mills, McPherson, Kan., (James P. Mize, Salina, Kan., with him on the brief), for defendant-appellee.

Before LEWIS, PICKETT and HICKEY,^* Circuit Judges.

PICKETT, Circuit Judge.

Transamerica Insurance Company (Transamerica, appellant), having paid a claim for fire loss on a policy covering a building under construction, brought this action against Gage Plumbing and Heating Co., Inc. (Gage, appellee), a subcontractor on the job, alleging that the fire was caused by the negligence of Gage's employees, and that Gage was therefore liable to Transamerica as a subrogee of the insured. The trial court sustained Gage's motion for summary judgment, holding that Gage was a coinsured under the policy terms and that the doctrine of subrogation was not available to the insurer.

The material facts are not in dispute. Harbin Construction, Inc. (Harbin) was the prime contractor for the construction

433 F.2d 1053

of a three building motel complex at Salina, Kansas. It purchased from Transamerica a standard fire insurance policy in the amount of $450,000 with the "Uniform Standard Builders' Risk Completed Value Form 17C" attached. Harbin and the motel owner were the only insureds named in the policy. Gage's subcontract was for the installation of the plumbing, heating, air conditioning, and ventilating work in the motel. Gage, relying upon the owner's policy, carried no "Builders' Risk Insurance." During the course of construction, a fire destroyed one of the buildings which contained supplies and tools furnished and used by Gage in its work on all the buildings. For the purpose of computing the amount of the fire loss, Gage furnished to Harbin an estimate of his loss totaling $60,922.23. The insurance company objected to the inclusion in this total of the value of the tools and some other items. Later, at a meeting between Harbin, Gage, and representatives of Transamerica, Gage agreed that its estimate, which included value of tools, be reduced to $57,067.32. This amount was included in the proof of loss submitted by the insureds and paid by Transamerica. In the negotiations for the settlement of the total fire loss of $147,133.93, Transamerica allowed for the loss of Gage's materials on the premises valued at $12,560.36. Payment for the total loss, including the aforesaid $12,560.36, was made to the insureds, who then paid Gage

The parties agreed that the principal question is whether Gage was an insured and that the determination is to be from the provisions of paragraph 2 of the "Uniform Standard Builders' Risk Completed Value Form, No. 17C(2-62)," which reads as follows:

"This policy also covers temporary structures, materials, equipment and supplies of all kinds incident to the construction of said building or structure and, when not otherwise covered by insurance, builders\' machinery, tools and equipment owned by the Insured or similar property of others for which the Insured is legally liable, all forming a part of or contained in said building or structure, temporary structures, or on vehicles, or in the open; only while on the premises described or within 100 feet thereof."

Transamerica construes the provision to limit the policy coverage to property owned by the insured and to other specified property for which the insureds are "legally liable." Gage contends that the policy, without limitation, specifically covers all materials, equipment and supplies "of all kinds incident to the construction" of the building or structure, and also covers, if not otherwise insured, the "builders' machinery, tools and equipment owned by the Insured or similar property of others for which the Insured is legally liable." In other words, Gage says that the term, "legally liable," refers to or modifies only that portion of the sentence providing for coverage of "builders' machinery, tools and equipment of others," and does not restrict the general coverage.¹ In reaching its conclusion, the trial court followed the interpretation given similar policy provisions in the case of Louisiana Fire Insurance Co. v. Royal Indemnity Co., 38 So.2d 807, 809 (La.App.1949), where it was said:

"It is true that the indorsement does not provide specifically that the named materials, etc. need not be the property of the named insured.

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