Webster County v. Brackenrich & Assoc.

• Decision Date: 30 June 2005
• Docket Number: No. 31861.,31861.
• Citation: 617 S.E.2d 851
• Court: West Virginia Supreme Court
• Parties: WEBSTER COUNTY SOLID WASTE AUTHORITY, Plaintiff Below, Appellant, v. BRACKENRICH & ASSOCIATES, INC., a West Virginia Corporation; Kanawha Stone Company, Inc., a West Virginia Corporation; Nationwide Mutual Fire Insurance Company, an Ohio Corporation; Nationwide Mutual Insurance Company, an Ohio Corporation, Defendants Below, Appellees. Webster County Solid Waste Authority, Plaintiff Below, Appellee, v. Brackenrich & Associates, Inc., a West Virginia Corporation; Nationwide Mutual Fire Insurance Company, an Ohio Corporation; Nationwide Mutual Insurance Company, an Ohio Corporation, Defendants Below, Appellees, Kanawha Stone Company, Inc., a West Virginia Corporation, Defendant Below, Appellant.

617 S.E.2d 851

WEBSTER COUNTY SOLID WASTE AUTHORITY, Plaintiff Below, Appellant, v.BRACKENRICH & ASSOCIATES, INC., a West Virginia Corporation; Kanawha Stone Company, Inc., a West Virginia Corporation; Nationwide Mutual Fire Insurance Company, an Ohio Corporation; Nationwide Mutual Insurance Company, an Ohio Corporation, Defendants Below, Appellees.

Webster County Solid Waste Authority, Plaintiff Below, Appellee, v.Brackenrich & Associates, Inc., a West Virginia Corporation; Nationwide Mutual Fire Insurance Company, an Ohio Corporation; Nationwide Mutual Insurance Company, an Ohio Corporation, Defendants Below, Appellees,Kanawha Stone Company, Inc., a West Virginia Corporation, Defendant Below, Appellant.

No. 31861.

Supreme Court of Appeals of West Virginia.

Submitted: May 24, 2005.

Filed: June 30, 2005.

COPYRIGHT MATERIAL OMITTED

Marvin W. Masters, R. Christopher Anderson, David L. White, Masters & Taylor, Charleston, for Webster County Solid Waste Authority.

Bernard R. Mauser, Sutton, for Brackenrich & Associates.

Michelle Roman Fox, Martin & Seibert, Charleston, for Nationwide Mutual Insurance Company.

Kenneth E. Webb, Jr., Bowles Rice McDavid Graff & Love, Charleston, for Kanawha Stone Company, Inc.

Chief Justice ALBRIGHTdelivered the Opinion of the Court.

ALBRIGHT, Chief Justice.

AppellantsWebster County Solid Waste Authority(the "Authority") and Kanawha Stone Company, Inc.("Kanawha Stone") appeal from adverse decisions¹ issued by the Circuit Court of Webster County in connection with a declaratory judgment ruling sought by AppelleeNationwide Mutual Fire Insurance Company("Nationwide") to determine whether there was insurance coverage available under a commercial general liability policy.The Nationwide policy at issue was purchased by AppelleeBrackenrich & Associates, Inc.("Brackenrich"), an engineering firm hired by the Authority to design and supervise the construction of certain upgrades to the Webster County landfill.When the landfill failed to work as designed, the Authority brought suit against both Brackenrich and the contractor, Kanawha Stone, wherein it asserted causes of action grounded in contract, implied and express warranties, negligence, and nuisance.After examining the coverage afforded by the commercial general liability policy, the circuit court determined that the requisite "occurrence" necessary to trigger coverage under the policy was nonexistent and ruled there was no available coverage in connection with the allegations asserted in the complaint filed by the Authority or in the counterclaim filed by Kanawha Stone.Upon our review of the record before us, we reach the same decision as the circuit court and, accordingly, affirm.

I.Factual and Procedural Background

On February 27, 1995, the Authority entered into a contract with Brackenrich to design an upgrade to the Webster County landfill.Pursuant to this "Agreement for Engineering Services"(the "Agreement"), Brackenrich agreed to furnish various services, which included the design of increased disposal cell capacity for solid waste disposal and the addition of a constructed wetland system to treat leachate from the landfill waste disposal cells before its discharge into the environment.Under the Agreement, Brackenrich was expressly charged with the responsibility of inspecting and supervising the construction.Kanawha Stone was hired by the Authority to perform the construction work on the landfill.²

Based on its assertion that the wetlands never worked properly,³ the Authority filed a complaint in the circuit court against both Brackenrich and Kanawha Stone through which it alleged defects in design, construction, supervision, and inspection of the landfill.In answering the complaint filed against it, Kanawha Stone filed a counterclaim against the Authority for breach of contract in connection with the Authority's failure to pay for the services Kanawha Stone rendered in repairing the landfill.During the discovery phase of this action, the Authority's counsel learned that Brackenrich had a commercial general liability policy in effect during the relevant construction phase of the landfill.When the Authority was granted leave to involve Brackenrich's commercial general liability carrier, Nationwide, in the defective landfill case,⁴ Nationwide responded to the third amended complaint by seeking a declaratory judgment from the trial court on the issue of whether the coverage provided by the commercial general liability policy extended to the allegations asserted in the complaint by the Authority against Brackenrich.

By order dated December 22, 2003, the circuit court ruled that there was no coverage under the commercial general liability policy based on the fact that the allegations of faulty workmanship asserted against Brackenrich in the complaint do not constitute an "occurrence," as defined by the Nationwide policy.Through this appeal, the Authority seeks a reversal of that ruling.Kanawha Stone separately appealed from a denial of coverage ruling in connection with its assertion of a counterclaim against the Authority.By order dated September 8, 2004, this Court accepted the appeals from both the Authority and Kanawha Stone, consolidating the matters for purposes of argument, consideration, and decision.

II.Standard of Review

Our review of declaratory judgment rulings is plenary, as we announced in syllabus point three of Cox v. Amick:"A circuit court's entry of a declaratory judgment is reviewed de novo."195 W.Va. 608, 466 S.E.2d 459(1995).And, as we explained in Payne v. Weston,195 W.Va. 502, 466 S.E.2d 161(1995), "the interpretation of an insurance contract. . . is a legal determination which, like the court's summary judgment, is reviewed de novo on appeal."Id. at 506-07, 466 S.E.2d at 165-66.With these standards in mind, we proceed to determine whether the circuit court committed error in determining that there was no insurance coverage available under the commercial general insurance policy issued by Nationwide.

III.Discussion

In arguing that the circuit court reached the wrong conclusion with regard to the availability of insurance proceeds, the Authority contends there are two ways to analyze the Nationwide policy to find the necessary coverage.The first approach requires a finding of ambiguity with regard to the provision of "products-completed operations hazard" coverage and a consequent determination that coverage must be provided based on such ambiguity.⁵The second theory upon which the Authority asserts coverage involves interpreting the professional liability exclusion in a manner to conclude that the allegations of negligence asserted in the complaint do not pertain to the professional services that Brackenrich was specifically hired to provide.⁶We will separately address these two assignments of error.

A.Policy Ambiguity

The Authority argued below that coverage was available under the "products-completed operations hazard" provision of the policy.That policy language provides as follows:

14.a. "Products-completed operations hazard" includes all "bodily injury" and "property damage" occurring away from premises you own or rent and arising out of "your product" or "your work" except:

(1) Products that are still in your physical possession; or

(2) Work that has not yet been completed or abandoned.

. . . .

c. This hazard does not include "bodily injury" or "property damage" arising out of:

(1) The transportation of property, unless the injury or damage arises out of a condition in or on a vehicle created by the "loading or unloading" of it;

(2) The existence of tools, uninstalled equipment or abandoned or unused materials; or

(3)Products or operations for which the classification in this Coverage Part or in our manual of rules includes products or completed operations.(emphasis supplied)

The circuit court rejected the Authority's argument for coverage under the "products-completed operations hazard" provision by reasoning that this policy language cannot be invoked until there is first shown to have been an occurrence under the policy by which coverage is triggered.SeeCorder v. William W. Smith Excavating Co.,210 W.Va. 110, 556 S.E.2d 77(2001)("Before any coverage can be found to exist under the `products-completed operations hazard,' or any other portion of the commercial general liability policy, an `occurrence' within the policy definition of that term must be determined to have occurred.").Id. at 114, 556 S.E.2d at 81(footnote omitted).The term "occurrence" is defined under the Nationwide policy at issue as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions."

In determining whether there was an occurrence within the meaning of the policy, the trial court looked to this Court's decision in Corder where we addressed the availability of coverage under a commercial general liability policy for loss of use caused by a sewer line failure.Although the trial court in Corder ruled that the faulty workmanship nature of damages asserted in the complaint took the claims outside the coverage typically provided by a commercial general liability policy, we found the record deficient on appeal as to the cause of the sewer pipe's failure.Id. at 117, 556 S.E.2d at 84.Consequently, we found it necessary to remand for the purpose of determining "whether a separate act or event or happening occurred at some point in time that led to the failure of the pipe or whether the pipe's alleged failure is tied to the original acts of repair performed by. . . [the contractor]."Ibid.

Our discussion in Corder concerning the nature of the risks that commercial general liability policies are intended to cover has specific import to this case:

"The products hazard and completed operations provisions are not intended to cover damage to the insured's products or work project out of which an accident arises....