Travelers Ins. Co. v. C. J. Gayfer's & Co., Inc.

• Decision Date: 16 January 1979
• Docket Number: No. KK-353,KK-353
• Citation: 366 So.2d 1199
• Parties: TRAVELERS INSURANCE COMPANY, Appellant, v. C. J. GAYFER'S AND CO., INC., et al., Appellees.
• Court: Florida District Court of Appeals

Page 1199

366 So.2d 1199

TRAVELERS INSURANCE COMPANY, Appellant, v. C. J. GAYFER'S AND CO., INC., et al., Appellees.

No. KK-353.

District Court of Appeal of Florida, First District.

Jan. 16, 1979.

K. Jeffrey Reynolds of Beggs & Lane, Pensacola, for appellant.

Charles A. Schuster of Fisher, Bell, Hahn, Winn & Ptomey, and James M. Wilson, Pensacola, for appellees.

SMITH, Judge.

An interlocutory appeal from a partial final summary judgment on a question of liability insurance coverage. Travelers issued a policy of liability insurance to a plumbing contractor. While the policy was in effect the contractor installed a roof drainage system in the attic of Gayfer's Pensacola store. After the policy expired, a joint in the drainage system failed, discharging rain water into the store. Gayfer's filed suit against the contractor under various theories of negligence and implied warranty to recover for property damaged by the leakage and for loss of use of undamaged property left idle when the store was closed for a day following the drainage system failure. Gayfer's joined Travelers as the contractor's liability insurer.

The policy Travelers issued to the contractor is similar to other widely used forms of contractor's public liability insurance contracts. See 1 Long, The Law of Liability Insurance, Section 10.02 et seq. (1966). The insured may purchase liability coverage for a wide range of situations and activities, specified in the body of the policy and referred to as "hazards." Each requires payment of a separate premium. These include: "Premises Operations", "Elevators", "Independent Contractors", "Completed Operations", and "Products." For the coverages selected, the policy recites that:

"Travelers will pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as damages because of bodily injury or property damage to which this section applies, caused by an occurrence . . . ."

The face of Travelers' policy shows that the plumbing contractor purchased "Premises Operations" and "Completed Operations" coverages. The "Premises Operations" option affords the contractor coverage for liability arising out of his ongoing business operations. "Completed Operations", on the other hand, provides coverage for liability arising out of completed or abandoned operations. Completed operations liability insurance for a contractor is the counterpart of products liability insurance for a manufacturer. The need for such insurance arose as courts increasingly recognized a contractor's tort liability for injury or damage caused by the contractor's negligence in performing a job, but occurring after the work has been completed. See Long, Supra, at Section 11-07; New Amsterdam Casualty Co. v. Addison, 169 So.2d 877 (Fla. 2d DCA 1964); Nielson v. Travelers Indemnity Co., 174 F.Supp. 648 (N.D.Iowa 1959), affirmed, 277 F.2d 455 (8th Cir. 1959). The parties here agree that the drainage system was a completed operation of the contractor and that Gayfer's damages are covered, if at all, under the policy's completed operations coverage.

The parties also agree that the Travelers policy expired, by its own terms, about three months before the drainage system failed. The issue here, as before the trial court, is whether the completed operations coverage described in the Travelers policy is ambiguous and should be construed to obligate Travelers to indemnify the contractor for property damage which occurred after the policy expired. Both Travelers and Gayfer's filed motions for summary judgment in the trial court. Travelers urged that the policy clearly informs the insured that covered property damage must occur while the policy is in force. Gayfer's argued that although the policy is intended to be read as Travelers described, it is ambiguous, and an insured could reasonably conclude that completed operations coverage applies to damage occurring at any time after an operation is completed, regardless of whether the policy has expired. The trial court, without explanation, denied Travelers' motion and granted Gayfer's motion, thus holding that Travelers is obligated to indemnify the insured contractor, to the limits provided in the insurance contract, for any liability to Gayfer's. We reverse.

A contract of insurance prepared and phrased by the insurer will be construed liberally in favor of the insured and strictly against the insurer. Where two interpretations may fairly be made, the one allowing the greater coverage will prevail. New Amsterdam Cas. Co. v. Addison, supra, at 881. But we recognize also that insurance contracts are complex instruments and that "ambiguity is not invariably present when analysis is necessary to interpret the policy." Blue Shield of Florida, Inc. v. Woodlief, 359 So.2d 883 (Fla. 1st DCA 1978). Gayfer's urges that the policy is ambiguous in two respects: first, because the only notice that covered property damage must occur during the policy period is found in the...