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United States Fire Insurance Co. v. J.S.U.B., Inc.

SC05-1295 | SC06-779

>> GOOD MORNING.!!$$# SUPREME COURT, PLEASE BE
SEAT!!$$
SEATED.$$! -- THE NEXT CASE ON OUR
CALENDAR THIS MORNING IS
UNITED STATES FIRE --
LUMBERMENS INSURANCE, AND --
>> MAY IT FLEES COURT RONALD
CAMERON ON BEHALF OF U.S.
FIRE, THIS COURT, RECOGNIZED
IN LAMAR AND CTC, THAT THE
PURPOSE OF A9999LIABILITY POLICY
TO COVER THE BUILDER FOR
INJURY TO THE PAWNED THEIR
PROPERTY!!$$!!
PROPERTY, CAUSED BY DEFECTIVE
WORK.
A LIABILITY POLICY, DOES NOT
COVER BUSINESS RISKS, SUCH AS
THE COST TO REPAIR AND REPLACE
THE DEFECTIVE WORK.
THAT IS THE PURPOSE OF A
PERFORMANCE BOND OR A WARRANTY
POLICY BOTH OF WHICH ARE
READILY AVAILABLE TO
CONTRACTORS FOR PURCHASE.
--
>> I'M SORRY.
>> IN THIS INSTANCE, THE THE
JSUB CASE, THE THERE WAS A
COMPACTION PROBLEM, THAT WAS A
RESULT OF WORK OF A SAID
CONTRACTOR.
>> CORRECT.
>> ABSOLUTELY CORRECT JFD --
JUSTICE.
>> WAS THERE O HE --
>> THAT IS NOT IN THE RECORD,
BELOW.
>> OKAY.
AND SO, I THINK -- NORMALLY IN
THESE CONSTRUCTION SITUATIONS,
YOU WOULD HAVE THE PROBLEM IS
COMES UP, WHEN YOU WORK YOUR
WAY DOWN THE LADDER, AND THERE
IS NOT A FINANCIALLY
RESPONSIBLE DEFENDANT, IS NOT
THAT CORRECT?
>> I THINK -- MAYBE THAT IS
PART OF THE PROBLEM.
BUT I THINK THE OTHER PART OF
THE PROBLEM IS THAT UNI LIKE A
LIABILITY POLICY, A CONTRACTOR
IS PERSONALLY LIABLE FOR ANY
PAYMENTS MADE UNDER A
PERFORMANCE BOND.
AND SO YOU HAVE A SITUATION
THAT BY CONVERTING AS
LIABILITY POLICY INTO A BOND
WHICH IS ESSENTIALLY WHAT THE
SECOND DCA DID IN JSUB,
CONTRACTORS NOW WILL BE ABLE
TO SIMPLY TURN TO THEIR
LIABILITY INSURERS, TO CORRECT
THEIR OWN DEFECTIVE WORK,
WITHOUT ANY PERSONAL EXPOSURE.
>> IS NOT A BIG DIFFERENCE
BETWEEN LAMAR ISSUE AND THIS
CASE, JSUB LAMARSHWAS THE
CONTRACTOR, I -- LET'S, TAKE
ASIDE, THESE OVER RIDING WHAT
WE CALL PUBLIC POLICY REASONS,
AND ALSO, I THINK YOU WOULD
AGREE THERE IS A SPLIT IN THE
AROUND THE COUNTRY, ON THIS
ISSUE.
SO IT IS NOT LIKE IT IS SO
CLEAR-CUT!!$$!
CLEAR-CUT, THAT EVERYBODY IS
GOINGING ONE WAY, WHAT I WOULD
LIKE TO YOU DO IS EXPLAIN HOW
IN THE POLICY YOU COME TO THE
CONCLUSION BASED ON THE POLICY
LANGUAGE THAT THERE CANNOT
EVER BE COVERAGE FOR A
SUBCONTRACTOR DEFECTIVE WORK
THAT DAMAGES ANOTHER PART OF A
PROPERTY.
>> I WILL BE MORE THAN HAPPY
TO DO THAT JUSTICE PARENTE.
FIRST, JUST BECAUSE THERE IS A
SPLIT AROUND THE COUNTRY DOES
NOT NECESSARILY MEAN THERE IS
AMBIGUITY IN THE POLICY.
>> YOU ACKNOWLEDGE THERE IS A
SPLIT.
>> JUST AS THERE WAS A SPLIT,
WHEN THIS COURT DECIDED DIM
ILT ON SOUTHERN HE O ACCIDENT!!$$!!
ACCIDENTAL POLLUTION EX-CLUE$$!ION
COURTS WERE EQUALLY SPLIT THIS
COURT FOUND THE WORD SUDDEN
ACCIDENTAL WERE IN NO WAY
AMBIGUOUS!!$$!
AMBIGUOUS, RETURNING TO YOUR
QUESTION, JUSTICE PARENTE, WHY
THERE IS NO COVERAGE, UNDER
THIS POLICY AS FOUND IN THE
INSURING AGREEMENT, WHEN
SOMEONE BULTSDZ A BUILDING
THAT DOES NOT CONFORM TO THE
CONTRACT AND SPPD CONSEQUENCE
IS THAT DAMAGE WILL ARISE,
THAT EXPECTATION IS NOT AN
ACCIDENT, IT IS NOT AN
OCCURRENCE!!$$
OCCURRENCE.
>> SO YOU ARE SAYING, THAT --
BECAUSE IT IS IT IS THE ISSUE
IS WHETHER IT IS SXPD -- SPPD
OR INTENDED IS WHEN FITS
WITHIN THE DEFINITION --
>> RIGHT I THINK THAT IS WHY
YOU CAN LEAD LAMARSH, AND
CTCTOGETHER FOR THE -- THAT
ROULT!!$$!!
ROULT.
>> THE PROBLEM I HAVE WITH
THAT IS IT WOULD THEN SAY THAT
IT IS NOT AN ACCIDENT, IF THE
4th, 6TH CIRCUIT USE AND
ALLERGY WALL FALLS OUTWARD
DAMGZ AN AUTOMOBILE, IT IS
COVERED IF IT FALLS INWARD AND
DAMAGES THE FLOOR, IT IS NOT
COVERED YOU ARE SAYING IT
WOULDN'T BE SHOULDN'T BE COVER!!$$!!
COVERED IN EITHER CASE BECAUSE
IT IS NOT AN ACCIDENT.
>> NO, I'M NOT SAYING THAT AT
ALL YOUR HONOR WHEN YOU ARE
DEALING WITH WHAT AN
OCCURRENCE IS, IT IS THE
DEGREE OF FOR TO YOUITY THAT
MAKES A DIFFERENCE.
>> FOR THEITY.
>> WHAT YOU ARE SAYING IS A
BREACH OF CONTRACT -- IS NOT
COVERED WITHIN AN OCCURRENCE.
>> WHAT I'M SAYING IS THAT
DAMAGES WITHIN THE CONTRACT A
JUSTICE WELLES ARE NOT IN AN
OCCURRENCE THOSE DAMAGES ARE
EXPECTED THEREFORE NOT
ACCIDENTAL AND NOT AN
OCCURRENCE!!$$
OCCURRENCE, ANOTHER WAY OF
SAYING THAT, JUSTICE WELLS,
WHO I WOULD AGREE WITH YOUR
STATEMENT AS WELL, HOWEVER,
JUSTICE PARENTE WHEN YOU GET
TO DAMAGES OUTSIDE THE
CONTRACT, THOSE DAMAGES USUAL
VIRTUALLY UNLIMITED, AND THAT
IS THE PURPOSE OF A COMMERCIAL
GENERAL LIABILITY FOR A
LIABILITY POLICY TO PROTECT
THE PUBLIC, AND PROPERTY FROM
DAMAGED CAUSED BY DEFECTIVE
WORK AGAIN, WE ARE -- RETURNS
TO THE INSURING AGREEMENT
ITSELF, AND THAT IS WHY THE
ONE OF THE REASONS, WHY JSUB
WAS INCORRECTLY DECIDED
RETURNING TO ANOTHER QUESTION,
AND THAT IS WHAT IS CTC$$!STAMD
FOR WHAT DOES LAMAR STAND FOR
IN LAMARSH, THERE WAS ONLY
DAMAGE TO THE WORK ITSELF.
IN CTC, THERE WAS NO DAMAGE,
TO THE WORK ITSELF.
CTC INVOLVED A CLAIM, BY A
NEIGHBORING PROPERTY OWNER,
AND THAT THIS $$COURT'S DECISION
IN CTC WAS CORRECTLY DECIDED,
BECAUSE THERE WAS AN
OCCURRENCE IN KA-- THAT CASE
THERE WAS DAMAGE OUTSIDE THE C
THE NEIGHBORING PROPERTY OWNER
THAT WAS AN OCCURRENCE.
>> OF COURSE THE INSURANCE
COMPANY DIDN'T THINK SO AT THE
TIME THE CASE WAS ARGUED.
>> STATE FARM DID NOT THINK.
SO BUT, PEOPLE TAKE A --
POSITIONS!!$$!
POSITIONS, SOMETIMES, THOSE
POSITIONS ARE CORRECTED BY
THIS COURT, SOMETIMES THEY ARE
NOT.
BUT RETURNING TO THE DECISION,
THE COURT GOT IT RIGHT AND
SENT THE MESSAGE TO STATE FARM
AND THE OTHER CARRIERS IS THAT
WHEN THERE IS DAMAGE OUTSIDE
THE CONTRACT TO A THIRD PARTY,
IF YOU RETURN TO THIS COURT'S
DECISION IN CTC, AND THIS IS
WHERE MR. BOYLE AND I DISAGREE
MR. BOYLE IN THIS BRIEF SAYS,
THAT IN NO WAY SHAPE OR FORM,
WAS THE IDENTITY OF WHICH
PROPERTY WAS DAMDZ IMPORTANT
BUT WHEN THIS COURT RENDERS
HOLDING IN CTC WHAT IT SAYS,
IS THAT THERE WAS DAMAGE AND
A-- SURE DID NOT EXPECT OR
CAUSE HARM TO A THIRD PARTY.
-- I THINK THAT IS WHY AS YOU
TAKE THE BODY OF LAW, AND IN
TERMS OF LAMARSH, AND CTC, THE
RESULT IS DAMAGE TO YOUR WORK,
BUSINESS RISK, EXPECTED NOT AN
ACCIDENT, NOT AN OCCURRENCE.
ON THE OTHER HAND WHEN YOU GO
OUTSIDE THE CONTRACT, THAT IS
SOMETHING ONCE AGAIN THAT IS
SOMETHING THAT IS
UNPREDICTABLE AND THAT IS THE
PURPOSE AND WHY YOU HAVE
COMMERCIAL GENERAL LIABILITY
POLICIES!!$$!!
POLICIES.
AND THAT IS WHY WHEN JUSTICE P$$!
PARI!!$$
PARIECH NTE ASKED WHERE IN
POLICY IS JUSTIFICATION FOR
THE BUSINESS RISK RIGHT THERE
SMACK-DAB IN THE INSURING
AGREEMENT.
>> SEEMS LIKE WOULD IT BE SO
EASY TO EXPLAIN THIS, IN CLEAR
LANGUAGE, WITHOUT HAVING TO
RESORT TO OCCURRENCE TO SAY
THE BREACH OF CONTRACT -- ARE
NOT WITHIN ANYTHING THAT GIVES
RISE TO A BREACH OF CONTRACT
IT IS NOT WITHIN THE POLICY --
MY CONCERN IS IS THAT IF
OCCURRENCES IN ANY WAY
AMBIGUOUS AND THEN YOU GO AND
LOOK AT THE EXCLUSION, YOU
THEN HAVE THE EXCEPTION TO
EXCLUSION FOR THE
SUBCONTRACTOR AND WE IN BOTH
OF THESE CASES UNI LIKE,
LAMARSH, WE'VE GOT A
SUBCONTRACTOR.
>> RIGHT AND IF I COULD JUST
EXPLAIN, THE SUBCONTRACTOR, MY
TIME IS KIND OF UP I WILL
YIELD THE FLOOR TO MISS
POWERS.
IS THAT WHAT IS CLEAR IN
LAMARSHWHAT IT -- IS CLEAR AN
EXCLUSION IN A POLICY CANNOT
BE READ TO BROADEN COVERAGE
BUT TO ADDRESS YOUR QUESTION,
AND ONE RAISED BY MR. BOYLE IN
THE BRIEF, IS WERE WELL, GIVE
SOME PURPOSE TO THE
SUBCONTRACTOR EXCEPTION, AND
THERE IS.
AND HERE IS THE EXAMPLE, WHICH
COULD HAVE AND HAVE A IN THIS
CASE BECAUSE UNDISPUTED IN THE
RECORD, THAT JSUB WAS THE
BUILDER OF TRACK HOMES, EACH
ONE OF THE HOMES, WAS YOUR
WORK MEANING THE WORK OF JSUB.
IF IT HOME NUMBER ONE, THEY
HAD NEGLIGENTLY OR CONTRACT!!$$!!
CONTRACTUALLY BREACHED THEIR
CONTRACT, SO THERE WAS A GAS
LINE THAT WAS IMPROPERLY IN
PLACE, AND THEN YOU HAVE A
HUGE EXPLOSION, DAMAGING NOT
ONLY THAT HOME, BUT THE OTHER
FOUR HOMES THAT JSUB BUILT,
THOSE OTHER FOUR HOMES ALL
WOULD HAVE BEEN YOUR WORK,
OKAY, HOME BUILT HAD GASOLINE
THE FOUR OTHER HOMES, ALL
WOULD HAVE BEEN -- YOUR WORK,
BUT FOR THE SUBCONTRACTOR
EXCEPT!!$$!
EXCEPTION, THERE WOULD HAVE
BEEN NO COVERAGE NOT ONLY FOR
THE ONE HOME BUT THE OTHER
FOUR, BUT BECAUSE --.
>>.
>> I'M SORRY YOU ARE SAYING IF
A GAS EXPLOSION DAMAGED
ANOTHER HOME WHETHER DONE BY
SUBCONTRACTOR OR CONTRACTOR
WOULD WAS BY THE CONTRACTOR,
IT WOULDN'T WOULD BE
EX-EXCLUDEDED FROM THE POLICY?
>> THAT IS FOR THE BUT FOR THE
SUBCONTRACTOR EXA COLLUSION IF
I UNDERSTOOD YOUR QUESTION YOU
WANTED ME TO GO TO THE
EXCLUSION AND SAY WELL, WE
HAVE THE EXCLUSION THAT HAS
THE SUBCONTRACTOR EXCEPTION,
AND WHAT THAT SUBCONTRACTOR
EXCEPTION DOES, IS ONCE YOU
HAVE DAMAGE OUTSIDE THE
CONTRACT!!$$!!
CONTRACT, AND IN MY HINT!!$$
HINTHETICAL THAT IS THE DAMAGE
TO -- HYPOTHETICAL DAMAGE TO
FOUR HOMELAND SECURITY NOW,
YOU HAVE OCCURRENCE OUTSIDE
CONTRACT IN XEPD.
-- UNEXPECTED BUT FOR THE
SUBCONTRACTOR EXCEPTION, ALL
FIVE HOMES WOULD BE YOUR WORK,
SO WHAT THE SUBCONTRACTOR
EXCEPTION DOES, IT NOW GIVES
COVERAGE, FOR THOSE OTHER FOUR
HOMES!!$$!!
HOMES, BECAUSE THOSER FOUR
HOMES WORK WAS DONE EITHER BY
SUBCONTRACTOR!!$$
SUBCONTRACTORS, OR THERE WAS
DAMAGE TO WORK DONE BY
SUBCONTRACTORS!!$$!!
SUBCONTRACTORS, AND THAT IS
THE PURPOSE OF THE
SUBCONTRACTOR EXCEPTION TO THE
EXCLUSION!!$$!
EXCLUSION, AND WHY THE
LINCHPIN IN MR. BOYLE'S
ARGUMENT THAT ARGUED THE
POLICY SOMEHOW RENDERS THAT
CLAUSE SURPLUSAGE IS SIMPLY
FALLS!!$$!!
FALLS.$$! -- FALSE.,,,,
.
>> MAY IT WILL PLEASE THE
COURT.
DENISE POWERS ON BEHALF OF
AUTO OWNERS INSURANCE COMPANY.
WE REQUEST THIS COURT ANSWER
WITH A RESOUNDING NO THE
QUESTION PRESENTED BY THE 11th
CIRCUIT, THE ONLY DAMAGED
PROPERTY WAS THE GE DEFECTIVE
YIMS -- INSTALLATION OF
WINDOWS WHICH WERE -- WHICH
WERE DAMAGED AND DEFECTIVE --
AB AAB!!$$!!INITIO.
>> WOULDN'T THAT BE ISSUE
WHETHER PROPERTY DAMAGE OR NOT
BECAUSE I THINK MY VIEW I'M
NOT SURE ABOUT THIS BUT I
READY ALL THESE CASES ALL OVER
THE COUNTRY YOU'VE GOT THE 5th
DISASTER -- 5th DISTRICT
PANELING INSTALLED PAN HE
THINK WRONG PAN EDGED REPLACED
THE PAN HE THINK THAT IS
CLEARLY NOT -- TO ME, A
SITUATION WHERE THE SOIL GIVES
IS THE PROBLEM AND THEN THE
HOUSE, WHICH WAS FINE TO BEGIN
WITH, STARTS TO DEVELOP
STRUCTURAL -- IS DIFFERENT
THAN IT MAY BE IN YOUR CASE,
THAT THE IF THE WINDOWS WERE
DEFECTIVE FROM THE OUTSET,
THERE MAY NOT BE ANY PROPERTY
DAMAGE.
BUT THAT DOESN'T MEAN THERE IS
NOT INITIALLY THE OCCURRENCE,
SO YOU DO -- AND I REALIZE YOU
HAVE GOT TO ARGUE FOR YOUR
CLIENT AS WELL AS THE GREATER!!$$
GREATER -- YOU DO SEE WAY
PROPERTY DAMAGE MAY BE REALLY
WHAT IS IMPLICATED THAT IS THE
DEFINITION OF WHETHER IT IS
PROPERTY DAMAGE OR NOT, IN
MANY OF THESE CASES, AS
OPPOSED TO THE OCCURRENCE
ISSUE?
>> I AGREE, YOUR HONORER I
THINK WHAT IS VERY IMPORTANT
IS THE FACT THAT -- THE
CREATION!!$$!!
CREATION, OF DEFECTIVE WORK,
IS NOT AN OCCURRENCE, IT
DOESN'T DAMAGE ANYTHING, BUT
YOU HAVE TO --
>> -- AINITIO, IF THE SOIL
IS -- FALSELY COMPACTED TESTED
THE WORKS WHEN HOUSE GOT BUILT
EVERYTHING WAS FINE WITH THE
HOUSE IS NOT THAT DIFFERENT,
THAN A WINDOW GETS INSTALLED,
AND THEY NEVER -- THAT --
INSTAILT WRONG TO BEGIN WITH,
IS THERE --
>> THERE MAY BE FACTUAL
DIFFERENCES!!$$!!
DIFFERENCES, YOUR HONOR BASED
ON THE RECORD, IN THE JACOB
CASE MR. -- I'M NOT FAMILIAR
WITH ALL THE INTRICACIES OF
THE -- OF THE STATTUAL RECORD
OTHER -- FACTUAL RECORD OTHER
THAN IN THE OPINION OF THE
SECOND DISTRICT.
BUT, THERE IS NO, THERE IS NO
DAMAGE IN THE WINDOW CASE TO
ANYTHING OTHER THAN THE REPAIR
AND THE REPAYSMENT OF THE
WINDOW.
THE OCCURRENCE OCCURS, WHEN
THERE IS OTHER PROPERTY
DAMAGE.
HERE WE PAY FOR THE PROPERTY
DAMAGE TO THE HOMEOWNERS,
PERSONAL PROPERTY, SOME OF HIS
-- ART, AND OTHER -- ITEMS,
DAMAGED BY THE WORK AND THAT
IS THE OCCURRENCE.
>> THERE WAS LEAKAGE CAUSED BY
THE DEFECTIVE INSTALLATION OF
THE WINDOW IS THAT RIGHT.
>> THAT DAMAGED THE PROPERTY,
OF THE HOMEOWNER BECAUSE IT
OCCURRED AFTER HE -- AFTER HE
MOVED IN.
BUT THIS IS SOLELY FOR THE
REPAIR AND THE REPLACEMENT OF
THE WINDOWS, WHICH WERE DEFECT!!$$!
DEFECTIVELY INSTALLED, AB!!$$!!INITIO,
BAD FROM DAY ONE.
>> NOT OCCURRENCE NOT PROPERTY
DAMAGE --
>> IT IS NOT EITHER, YOUR
HONOR LOOKING AT THE INSURING
AGREEMENT, BECAUSE YOU HAVE TO
HAVE PROPERTY DAMAGE CAUSED BY
AN OCCURRENCE, NOT PROPERTY
DAMAGE THAT OCCURS, OR DEFECT!!$$!
DEFECTIVE WORK THAT OCCURS,
AND I THINK THAT IS THE
DISTINCTION I THINK THAT IS
WHY, I AGREE WITH MR. -- THAT
THIS CASE IS EVEN THE AUTO
OWNERS CASE CONSISTENT WITH
THIS COURT -- COURT IN
CTCBECAUSE THE OCCURRENCE WAS
THE DAMAGE TO THE NEIGHBORS$$'S
PROPERTY.
THE CTC CASE WASN'T -- TAKES
THE HOUSE THAT HAS BEEN
IMPROPERLY LOCATED, REBUILD IT
PROPER!!$$!
PROPERLY, NO.
YOU HAVE DAMAGED YOUR
NEIGHBOR.
THAT NEIGHBOR WAS ENTITLED TO
DAMAGES!!$$
DAMAGES, OUTSIDE THE CONTRACT,
OUTSIDE THE WORK OF THE
CONTRACTOR.
WHAT WE ARE BEING WHAT THE
CARRIER UNDER INTERPRETATION
OF JSUB IS BEING ASKED TO DO
IS TO PAY TO REDO THE IMPROPER
-- IMPROPER WORK, AND IT IS
NOT CORRECT TO TAKE AND START
AT THE BOTTOM.
>> SO YOU ARE MAKING A
DISTINCTION HERE AS I
UNDERSTAND IT, BETWEEN THE
PROPERTY, THAT WAS ACTUALLY
INSTALLED!!$$!
INSTALLED, AND THE ENTIRE
HOUSE, IF IT WAS DAMAGE TO THE
HOUSE ITSELF, YOU SAY YOU
WOULD COVER IT BUT NOT TO THE
TELL YOU -- THE ACTUAL IN THIS
CASE WINDOW.
>> NO, THAT IS NOT WHAT I
SAID, JUSTICE KWINZ WHAT I
SAID IN THIS CASE, IN THE
POSEY WINDOW CASE, THE DAMAGE
WAS NOT TO THE REMAINDER OF
THE HOUSE THE DAMAGES THAT WE
DID --
>> I THOUGHT YOU SAID THERE
WAS SOME DAMAGE, TO THE HOUSE,
FROM WATER THAT HAD SEENED IN
AND THAT HE SEEPED IN.
>> TO MR. PEREZ' PROPERTY.
THE ONLY CLAIM PRESENTED HERE
IS THE REREPAIR AND
REPLACEMENT OF THE WINDOW.
ANY DAMAGE, FOR WHICH MR. --
THE HOMEOWNERS SUSTAINED, I
BELIEVE IT WAS SOME RUGS, OR I
KNOW THERE WAS PERSONAL
PROPERTY DAMAGE IN A CLOSET.
THOSE WERE PAID.
WHAT IS BEFORE THIS COURT WHEN
IS BEFORE U.S. DISTRICT COURT
ARE THE DAMAGES TO REPAIR AND
REPLACE THE WINDOWS, PERIOD.
WE ARE NOT DEALING WITH
DAMAGES TO ANY OTHER PART OF
THE STRUCTURE, OF THE HOME.
BUT THAT IS THE --
>> IN OTHER WORDS, WHAT YOU
ARE -- IN MY TERMS, I WOULD
SAY YOUR ARGUMENT IS THIS --
THIS GENERAL HALL LIABILITY
POLICY WAS NOT A WARRANTY --
>> CORRECT, IT WAS NOT A
WARRANTY!!$$!!
WARRANTY, IT WAS NOT A
PERFORMANCE BOND.
AND FURTHER ANSWER YOUR
QUESTION JUSTICE, WHAT THE
GENERAL CONTRACTOR IS SELLING,
IS A PRODUCT IN THE WINDOW
CASE IT WAS ONE HOME.
>> I KNOW YOU WERE ALSO
INVOLVED IN THE HANOVER.
>> YES YOUR HONOR.
>> AND DISCUSS WITH US HOW
HANOVER AND THIS CASE FIT
TOGETHER SO IF THEY ARE THERE
YOUR HONOR, IT WAS IT WAS A
BUILDING OF CONDOMINIUM
BUILDING SO IT WAS MULTIPLE
BUILDINGS AND THERE THE ONLY
DAMAGES SOUGHT IN THE HANOVER
CASE WERE FOR REPAIR AND
REPLACEMENT!!$$!!
REPLACEMENT.
AND THOSE ARE THE OPERATIVE
WORDS!!$$!!
WORDS, ALTHOUGH THERE WAS A
PHRASE THAT THE WINDOWS
ALLOWED WATER INTRUSION THERE,
WAS NO CLAIM FOR SUCH DAMAGES.
THE DAMAGES WERE TO REPAIR AND
REDO IT WAS COMPLETED
OPERATIONS COVERAGE, TO REDO
THE OCCUPIED CONDOMINIUMS THE
UNDERLYING CASE HAD BEEN THE
CONDOMINIUMS!!$$!
CONDOMINIUMS, THE HOMEOWNERS
WARRANTY COMPANY SETTLED THEN
BROUGHT THE CASE AGAINST THE
GENERAL CONTRACTORS, CGPOLICY
AND THERE WERE SUBCONTRACTORS
INVOLVED.
THAT IS THE PROCEDURAL FACTUAL
EVOLUTION OF THE HANOVER CASE!!$$
CASE --
>> -- HE WILL GENERAL
LIABILITY POLICY DID NOT
PROVIDE COVERAGE.
>> DID NOT, BECAUSE -- AND THE
SIMPLE MATTER THAT IT YOU ARE
DOING IS HAVING QUOTE WATER
INSTRUION IF THAT -- INTRUSION
IF THAT DOESN'T DAMAGE
ANYTHING ELSE, IF THAT IS ALL!!$$!
ALL --
>> ANYTHING ELSE, IF THE IT IS
A WALL THAT THE WATER
INTRUSION HAS DAMAGED AND YOU
NEED TO REPLACE THE WALL.
THEN, THAT IS NOT COVERED.
>> THAT IS NOT COVERED THAT IS
NOT COVERED, BECAUSE THAT IS
-- THAT IS THE ENTIRE HOME,
THAT IS THE ENTIRE PRODUCT.
>> THE WALLPAPER THAT THE
HOMEOWNER PLACED ON THAT WALL
IS COVERED.
>> AND THAT IS.
>> -- THE PROPERTY, AS BUILT
BY THE BUILDER AS OPPOSED TO
OTHER PROPERTY THAT IS NOT
BUILT BY THE BUILDER.
>> CORRECT, THAT IS WHY YOU
WILL READ ABOUT PANELING,
WALLPAPER, AND -- CURTAINS,
AND RUGS, THANK YOU YOUR HNOR.
>> YOU HAVE USED YOUR TIME
OCAKE THANK YOU MR. BOYLE YOU
ARE FIRST UP.
>> MAY IT PLEASE THE COURT MY
NAME IS MARK BOIL I'M THE
ATTORNEY FOR FIRST IF HOME
BUILDERS!!$$!!
BUILDERS, WE ARE HERE TODAY,
ON AN INSURANCE CONTRACT, CASE
AND I DON'T WANT TO LOSE SIGHT
OF THAT.
IF YOU INTERPRET THIS POLICY
CONSISTENT WITH THISCOURT$$'S
RULES OF CONSTRUCTION,
PARTICULARLY THIS $$COURT'S
DECISION IN CTC --
>> DON'T WE HAVE TO TAKE INTO
CONSIDERATION THE REAL WORLD
OF HOW THESE ALL THE FUNCTION
OUT THERE.
AND THAT WHAT WE ARE DEALING
WITH IS A CONTRACTOR AND A
CONTRACT TO COP STRUCK --
CONSTRUCT SOMEBODY SOMETHING
AND A SUBCONTRACTOR?
AND THAT THE FINANCIAL
RESPONSIBILITY OF THE -- OF
THESE PEOPLE IN ORDER TO LIVE
UP TO THEIR CONTRACTS IN THE
EVENT THAT THERE IS A BREECH
OF THEM, IS COVERED BY A
SHURLT BOND -- SURE$$!ITY BOND
CORRECT.
>> SURE$$!ITY BONDS NOT COMMON IN
RESIDENTIAL CONSTRUCTION LIKE
THIS BUT AS PRACTICAL MATTER
YOUR HONOR THE ANSWER IS, NOT
WHICH -- WHICH TYPE OF
INSURING AGREEMENT A SURE$$!ITY
BOND OR A POLICY SHOULD COVER
A LOSS, THE QUESTION IS WHAT
DO THE WORDS OF THE POLICY
SAY.
>> GO BACK TO WERE A JUSTICE
-- JUSTICE WELLES IS SAYING A
REAL WORLD OPERATING IN
ANOTHER COVERAGE HE IS
REFERRING TO OR IT COULD BE IN
THE NATURE OF COMPLETED
OPERATIONS COVERAGE, ONE OR
THE OTHER IS NOT IT.
THAT IS THE RUB THAT YOU GET
INTO YOU CAN'T CONSTRUE THESE
TERMS SO IN SUCH A MANNER SO
THAT YOU TURN A LIABILITY
POLICY INTO A WARRANTY
PERFORMANCE BOND, OR THE OTHER
COVERAGE THAT YOU HAVEN'T
PURCHASED THAT IS THE
COMPLETED OPERATION, WHAT IS
THE DIFFERENCE THEN BETWEEN
COMPLETED OPERATIONS, AND
LIABILITY POLICY THESE DAYS IS
THERE NO DIFFERENCE?
>> THERE IS A DIFFERENCE,
JUDGE.
THERE IS A VERY CLASSIC
EXAMPLE!!$$
EXAMPLE, FOUND IN THE JSUB!!$$
JSUBCASE, THAT SILVERMAN WHO
WROTE THE OPINION ALSO WROTE
THE DECISION IN AUTO OWNERS
VERSUS MARVIN A CASE CITED BY
THEY MY OPPONENTS IN THAT
CASE, THERE WAS SOME DAMAGE TO
THE WORK, AND THE COURT HELD
THAT THE BECAUSE THE INSURED
CONTRACTOR HADN'T PURCHASED
COMPLETED OPERATIONS COVERAGE,
THAT THEY DIDN'T HAVE COVERAGE
FOR THAT LOSS.
AND THE CONTEXT OF THE LOSS
THE WE ARE HERE ABOUT TODAY IT
IS UNDISPUTED MY CLIENT,
BOUGHT COMPLETED 079
ASPIRATIONS HAZARD COVERAGE
PAID A PREMIUM FOR IT.
AND TO GO BACK TO A QUESTION
THAT COUNSEL ANSWERED WE KNOW
WHAT THE SUBCONTRACTOR EXCEPT!!$$!
EXCEPTION TO EXCLUSION L,
YOUR --
>> MAKE SURE I UNDERSTAND
THIS, YOUR -- WE ARE HERE
TALKING ABOUT A COMPLETED
OPERATIONS POLICY?
>> MY CLIENT HAS -- COMPLETED
OPERATION HAZARD COVERAGE, ON
THEIR GENERAL LIABILITY
POLICY.
>> RIGHT, IT IS IN THE POLICY.
>> DID THEY PAY ON THAT
COVERAGE?
>> NO, JUDGE.
THE ONLY THING SO IF WHAT?
I'M JUST -- TOTAL LOSS THEN
YOU BOUGHT BOTH COVERAGE DZ
HERE TALKING ABOUT WHAT IS
TRADITIONALLY!!$$
TRADITIONALLY, A COMPLETED
OPERATIONS COVERAGE BUT WE ARE
HERE TALKING ABOUT A CJ.L.
POLICY.
>> MY CLIENT HAS A CJLE POLICY
WITH -- HE OPERATION HAZARD
PURCHASED WITH THE POLICY
THERE IS A SEPARATE LIMIT OF
INSURANCE, LISTED FOR THE
PRODUCT COMPLETED OPERATION
HAZARD!!$$!
HAZARD.
>> HAS THAT COVERAGE.
>> SO THEY PAID THAT DID THEY
PAY THAT LOSS?
UNDER THAT -- NUMBER, THEY
HAVEN'T PAID DOLLAR ONE.
>> THEY HAVEN'T EVEN THEY
HAVEN'T EVENT PAID FOR THE
WALLPAPER!!$$!
WALLPAPER.
>> LET JUST MAKE SURE.
>> --
>> BUT THEY HAVEN'T I HADDOI
THEY HAVEN'T PAID.
>> THE ISSUE IN YOUR CASE SO
WE UNDERSTAND THERE IS NO
QUESTION AND THEY HAVE AGREED
THEY WOULD PAY FOR THE OTHER
PROPERTY.
BUT THEY ARE CONTESTING IS THE
COST TO REPAIR THE STRUCTURE
OF THE HOUSE.
AND THERE IS NO QUESTION I
THOUGHT THAT -- THAT THIS
POLICY HAD A PRODUCTS
COMPLETED OPERATION HAZARD --
RIDER IN COVERAGE, AND THAT
WAS THAT IS WHAT YOU ARE
SEEKING YOUR COVERAGE UNDER.
>> THAT IS CORRECT.
>> OKAY.
>> NOW, TO BE CLEAR --
>> THE COURT TALKED ABOUT THE
PROPERTY DAMAGE, ELEMENT I
WANT TO MAKE CLEAR WHAT THIS
CASE IS NOT ABOUT THIS CASE IS
NOT ABOUT REPAIR OR
REPLACEMENT OF MY CLIENT$$'S
WORK.
OR EVEN REPAIR OR REPLACEMENT
OF THE ERRANT SUBCONTRACTOR'S
WORK IT IS UNDISPUTED THE
FACTS ARE STIPULATED, MY
CLIENT!!$$!
CLIENT'S SOIL SUBCONTRACTOR
MAY BE SUBCONTRACTORS MORE
THAN ONE -- -- COMPLETED THEIR
WORK THAT DAMAGED -- OTHERWISE
CORRECTLY PERFORMED WORK OF
OTHER SUBCONTRACTORS, DURING
THE PRODUCTS COMPLETED
OPERATION HAZARD PERIOD.
INCLUDING DRYWALL, THE
FOUNDATION, SOME CASES THE
CABINETS THE WALLS.
>> IF THIS HAD BEEN WORK DONE
WITHOUT THE CONTRACTOR --
SUBCONTRACTOR, WOULD THE
EXCLUSION APPLY?
>> YES.
>> SO IT IS ONLY THE BECAUSE
OF THE EXCEPTION TO THE
EXCLUSION!!$$!
EXCLUSION, FOR SUBCONTRACTOR
WORK AND THAT OF COURSE, WAS
MY VIEW DISTINGUISHES LAMARSH,
WHICH WAS DIFFERENT POLICY,
AND WAS THE CONTRACTOR ITSELF.
>> I AGREE WITH EVERYTHING THE
COURT SAID, I WANT TO MAKE ONE
THING CLEAR ABOUT THIS
SUBCONTRACTOR EXCEPTION,
COUNSEL GAVE HYPOTHETICAL
ABOUT THE PIPE.
WE DON'T HAVE TO GUESS WHAT
THE SUBCONTRACTOR EXCLUSION
MEANT.
IF YOU LOOK AT THE BRIEF THAT
WAS FILED BY POOL AND KENT IN
THIS CASE THEY ATTACHED,
INSURANCE SERVICES
ORGANIZATIONS CIRCULAR, WHICH
WAS DESIGNED TO TELL THE
INSURANCE INDUSTRY, HOW TO
INTERPRET BOTH BROAD FORM
ENDORSEMENT 1979 -- 1976
CIRCULAR!!$$!!
CIRCULAR, AND THE 86 CIRCULAR
WHICH TOLD THE ENTIRE
INSURANCE INDUSTRY HOW TO
INTERPRET THE NEW POLICY, AND
IT SAYS, RESPECTFULLY THAT I'M
RIGHT.
THIS IS WHAT WAS INTENDED BY
THIS VFL.
-- VESSEL.
SO WE DON'T HAVE TO GUS
COUNCIL SAYS WE DON'T NEED TO
GET INTO WHAT THE INSURANCE
INDUSTRY WANTED TO DO, BECAUSE
YOU DIDN'T DO THAT IN -- WELL
THE DIFFERENCE IN DIMMIT AND
THIS CASES IN DIMMIT THE COURT
FOUND THE CERTAINLY "SUDDEN"
UNAMBIGUOUS JUSTICE P$$ARIENTE
HAS WRITTEN THE OPINION THAT
MAKES THE LAWSUIT OF THIS
COURT, OCCURRENCE IS AMBIGUOUS
CAN BE CONSTRUED MORE THAN ONE
WAY WHEN TRYING TO HARMONIZE
THE WHOLE POLICY WE NEED TO
LOOK AT THE TERM OCCURRENCE
THE EXCLUSIONS EXCEPTION GIVE
THEM ALL MEANING.
>> ON THAT, YOU DO -- THE
FIFTH DISTRICT CASE I REFERRED
TO WHERE THEY WERE SEEKING TO
REPLACE THE PANELING, YOU DO
SEE THAT AS BEING STILL
EXCLUDED UNDER YOUR
INTERPRETATION OF THE POLICY?
>> I DON'T THINK IT IS
EXCLUDED BUT THAT CASE DOESN'T
GET THROUGH THE COVERAGE
BECAUSE IT IS NOT PROPERTY
DAMAGE.
>> THAT IS, I GUESS, THAT IS
-- SO IN OTHER WORDS AND, I
GUESS, THIS IS UP TO POSEY,
THE ISSUE THAT I HAVE OF
POTENTIAL PROBLEM WITH --
WITHIN POSEY IS WHETHER THERE
WAS ACTUAL PROPERTY DAMAGE, IN
POSEY!!$$!!
POSEY, YOU DON'T -- I THINK
YOUR SITUATION IS DIFFERENT,
BECAUSE, AGAIN, YOU HAVE GOT
CLEAR SOIL, THAT SUBCONTRACTOR
AND THEN A HOUSE THAT WAS --
AT LEAST ALLEGEDLY WASSU FEIN
WHEN IT WAS BUILT UNTIL -- WAS
FINE WHEN BUILT -- UNTIL THE
-- THAT IS YOUR CLAIM.
>> THE COURT MAKES AN
IMPORTANT POINT, THAT SHOWS
THE TERM PROPERTY DAMAGE IS
REALLY IMPORTANT IN THESE
CASES!!$$!!
CASES, THAT WEST ORANGE CASE
THE FIFTH DISTRICT CASE HAD TO
REPLACE CEDAR SIDING FAVORITE
EXAMPLE A SIMILAR LIKE -- CASE
LIKE THAT FROM WASHINGTON
SUPREME COURT IF THERE IS NO
PHYSICAL DAMAGE TO TANGIBLE
PROPERTY OR LOSS OF USE, YOU
NEVER MAKE IT THROUGH YOU THE
COVERAGE GROONT -- GRANT.
SO MANY ASPECTS OF FAULTY WORK!!$$
WORKMAN!!$$
WORKMANSHIP, WILL NOT BE COVER!!$$!!
COVERED NOT AS A RESULT OF
SOME GENERIC PLATITUDE, BUT
BECAUSE THE OPERATIONAL A
DEFINITIONAL TERMS IN THE
POLICY DON'T ALLOW FOR
COVERAGE OF THAT --
>> WHAT ABOUT THE MAIN
ARGUMENT, THAT HE MADE HAVE
HERE, THAT IT IS NEVER CAN BE
AN OCCURRENCE, BECAUSE IF IT
IS IN IF IT IS CONTRACTUAL
DAMAGES!!$$
DAMAGES, IT HAS TO GET
CONTEMPLATED!!$$!
CONTEMPLATED, PLEASE GIVE THE
BEST COUNTER!!$$!! TO THAT ARGUMENT
THAT IS A MATTER OF LAW BREACH
OF CONTRACT CANNOT BE AN
OCCURRENCE, WHICH IS WHAT
SOUTH CAROLINA SUPREME COURT
AND OTHER COURTS HAVE HELD,
DIFFERENTLY THAN THE WISCONSIN
SUPREME COURT, AND COULD YOU,
ADDRESS THAT.
>> I WASN'T TO SAY A FEW
THINGS ABOUT THAT THEY TALKED
ABOUT THE ECONOMIC LOSS
DOCTRINE IN -- IF THEY WERE
RIGHT ON THAT, EVERY STATE,
THAT ADOPTED THE ECONOMIC LOSS
DOCTRINE, WOULD EFFECTIVELY
PUNISH THEIR IN HE INSURANCE,
BY DISALLOWING COVERAGE IF
THEIR VESSEL IS CORRECT, IF
THERE WAS NO ECONOMIC LOSS
DOCTRINE IN FLORIDA MY CLIENT
WOULD HAVE BEEN SUED IN TORT,P
FOR THESE ACTIONS, AND THEN,
THERE WOULD BE -- ON THE WOULD
HAVE A REMEDY UNDER THEIR
INSURANCE POLICY IF COUNSEL IS
RIGHT, THE REAL ANSWER TO THE
QUESTION THAT IS THE INSURING
AGREEMENT, MAKES ABSOLUTELY NO
REFERENCE TO THE TYPE OR FORM
OF ACTION AGAINST THE INSURED
IT OM USES AS THE TERM
"LEGALLY OBLIGATED", CERTAINLY!!$$!
CERTAINLY --
>> THAT IS WHAT -- LAMARSH, AS
I UNDERSTAND LAMARSH, WAS
TALKING ABOUT THE FACT THAT
YOU CAN NOT PERFORM UNDER A
CONTRACT, GET PAID NAB -- IN
ACCORD APS WITH THE CONTRACT,
AND IN ACCORDANCE WITH THE
CONTRACT THEN COME BACK MAKE
AN INSURANCE CLAIM, ON THE
BASIS THAT YOU DIDN'T PERFORM.
UNDER THE CONTRACT.
NOW, IF THERE IS SOME HAZARD,
THAT CAUSES DAMAGE, AFTERWARDS!!$$
AFTERWARDS, THAT IS SEPARATE
AND APART FROM YOUR
PERFORMANCE UNDER THE
CONTRACT, THAT IS THE WHERE
THE COMPLETED OPERATIONS COMES
IN.
BUT -- IT -- BUT I -- THINK
LAMARSHFOR MY UNDERSTANDING
THAT IS THE REASON ALL THESE
DISTRICT COURTS HELD AGAINST
YOUR POSITION.
AND NOW IS NOT THAT RIGHT?
>> ACTUALLY, I THINK THE
SECOND IS -- YOU SAY ALL THESE
DISTRICT COURTS, THERE IS LOTS
OF DIFFERENT CASES IN THE
FACTS MATTER, I WANT TO YOU
KNOW WE DON'T HAVE TIME TO
TALK ABOUT EVERY SINGLE FACT
PATTERN BUT IF YOU LOOK AT THE
WAY IF YOU LOOK AT LAMARSH, I
THINK IMENT IS VERY CLEAR AN
EXCLUSION CASE, JUSTICE KWINZ
WAS ON PANEL A CASE HARDAWAY,
IN THE SECOND DISTRICT IF YOU
LOOK AT ALL CASES IN THE
SECOND DISTRICT THEY RECOGNIZE!!$$!
RECOGNIZED THAT LAMARSIS
EXCLUSION CASE THE EXCLUSIONS
CHANGED SUBSTANTIALLY
PURPOSEFULLY CHANGES AS HAZARD
REFERENCE BY CHIEF JFD LEWIS
ALL THESE WERE DESIGNED INTEND!!$$!
INTENDED TO ALLOW COVERAGE FOR
A VERY LIMITED FACT PATTERN
KEEP IN MIND WHAT THE FACT
PAET EARN -- PAT ON THES BE
UNINTENDED, UNEXPECTED,
PHYSICAL DAMAGE TO TANGIBLE
PROPERTY OR LOSS OF USE, IT
HAS TO FIRST, THIS COURT
HASN'T SOLVED THE TRIGGER
ISSUE THE DAMAGE HAS TO HAPPEN
OR HAS TO MANIFEST ITSELF,
AFTER OPERATIONS ARE COMPLETE.
THAT HAS TO BE A
SUBCONTRACTOR'S FAULT --
>> BECAUSE THE CONCERN, I
THINK THAT I WAS -- WOULD
DEFINITELY HIS IT IS NOT PUNCH
LIST COVERAGE WHICH IS -- IF
YOU LOOK AT ONE OF THE THIRD
DISTRICT CASES YOU LOOK AT THE
IN THE FOOTNOTE, WHAT THEY
LIST IS AS FAR AS WHAT WAS
BEING SOUGHT, YOU HAVE A LOT
OF THE SITUATIONS WHERE DAMAGE
THAT HASN'T OCCURRED, BUT, A
FEE THAT SOMEHOW THE WINDOW
WAS IMPROPERLY PUT IN, OR YOU
KNOW, SOMETHING IS NOT RIGHT,
IN THE HOUSE.
THAT THERE IS NO OTHER DAMAGE
TO THE HOUSE.
>> AND I WANT TO GO BACK TO
JUSTICE WELLS' QUESTION.
>> YOU DO AGREE THAT THE WAY
THAT THOSE PUNCH LISTS, TYPE
OF SITUATIONS WOULD NOT BE
COVER!!$$!!
COVERED?
>> IF THERE IS NO PROPERTY
DAMAGE YOU ARE NOT GOING GELT
THROUGH THE INSURING AGREEMENT
AND AS TO MANY IF NOT MOST
CONSTRUCTION DEFECTS,
PARTICULARLY ALL THE ONES THAT
OCCUR BEFORE ALTERATIONS ARE
COMPLETE EXCLUSIONS ARE GOING
TO BE THERE, AND BAR COVERAGE
FOR MOST ASPECTS OF QUOTE
FAULTY WORKMANSHIP OR DEFECT!!$$!
DEFECTIVE CONSTRUCTION JUSTICE
WELLS I DIDN'T FINISH
ANSWERING YOUR QUESTION ABOUT
LAMARSH, AND I WANT TO COULD
IT.
>> YOU ARE REC CORRECT AS TO
THE REASONS WE HAVE EXCLUSION
IN LAMARSH, AS TO THE REASONS
WE STILL HAVE SOME BUSINESS
RISK EX-CLUIONS, EXCLUSIONS
THE INSURANCE INDUSTRY IS
CONCERNED ABOUT THOSE CONSIDER!!$$!!
CONSIDERATIONS THAT YOU
REFERENCE WE DON'T WANT TO
TURN THIS INTO A WARRANTY
POLICY, THE PROBLEM IS, FOR
THEM!!$$
THEM, THEY PURPOSEFULLY
CHANGED THE POLICY TO PROVIDE
THIS LIMITED EXCEPTION TO THE
BUSINESS RISKS.
ANDP I RESPECTFULLY SUMMIT
WOULD IT BE IMPROPER FOR THIS
COURT TO GIVE THIS BUSINESS
RISK CONCEPT LIFE APART FROM
IT'S -- ITS APPEARANCE IN THE
POLICY.
>> TRADITIONALLY WE HAVE FELT
IN THIS STATE THAT YOU DON'T
CREATE COVERAGE BY THE
EXCLUSION!!$$!
EXCLUSION.
AND THAT IS WHERE LAS TIER
CAME IN.
LASITER CAME IN, SO THE REAL
QUESTION SEEMS TO ME, HAS GOT
TO PINPOINT HERE AS TO WHETHER
AN OCCURRENCE INCLUDES A
BREACH OF CONTRACT.
THAT IS THAT THAT IS WHAT THE
WISCONSIN COURT SPLIT ON
ALTHOUGH KIND OF HARD FOR ME
TO TELL HOW MANY JUDGES VOTED
IN THE MAJORITY IN WISCONSIN,
AND THAT IS WHERE SOUTH
CAROLINA WENT THE OTHER WAY.
>> THE COURT HAS PINPOINTED
WHERE THE -- ACROSS THE COUNT
IT IS ABOUT THE TERM
OCCURRENCE.
>> LET ME ASK YOU ALSO, THE
QUESTION, I MEAN, YOU CAN TURN
THIS CASE ANY WHICH WAY, BUT
IT DOESN'T MENTION THE BUILD!!$$!!$$
BUILDER'S RISK COVERAGE IN THE
OPINION.
>> YOU ASKED ME ABOUT THE --
OPERATION --.
>> THAT IS WHAT I'M TALKING
ABOUT, DOES IT?
>> MY JSUB?
>> RIGHT.
THE JSUB CASE.
>> I BELIEVE THE OPINION DOES
REFERENCE THE FACT THERE IS
PRODUCTS COMPLETED OPERATION.
>> I DON'T THINK IT DOES I
JUST READ IT AGAIN THAT IS
WHAT I THINK CAUSING CONFUSION
AS TO WHERE THESE THINGS ARE
GOING BECAUSE I THINK THERE
MUST BE RELATIONSHIP TO THEM,
AND THERE IS GOING BE UNDER
ONE O ARE THE OTHER, THE
COVERAGE, IN A POLICY.
>> LET ME BE CLEAR, JUDGE THE
RECORD.
>> OKAY.
>> NOT IN DISPUTE THERE IS
PRODUCTS COMPLETED OPERATION
HAZARD KM FOR MY CLIENT IF YOU
LOOK IN JSUB OPINION THERE IS
REFERENCE TO THE FACT
EXISTENCE OF PRODUCTS
COMPLETED OPERATION HAZARD A
DISTINCTION BETWEEN, THE CASE
THAT IT WAS DECIDING, AND THE
OLDER LAMARSH.
>> IN THE DEFINITION, UNDER --
LESSON 16.
>> ON PAGE --
>>!!$$!!
>>.
>> JSUB?
>> OF JSUB.
>> THEY DISCUSS THE BROAD
COVERAGE --
>> COMPLETED OPERATIONS.
>> THEY DISCUSS DOES THE --
DOES IT NOT DISCUSS THE TERMS
OF THE GCL POLICY UNDER
DEFINITIONS THEY LIST?
.
>> -- UNDER, COVERAGE 8,!!$$!!EIGHT,
BODILY INJURY PROPERTY DAMAGE
LIABILITY DISCUSSED AS I READ
IT.
ISN'T IT?
>> I DON'T HAVE THE OPINION IN
FRONT OF ME RIGHT NOW.
>> IS THAT YOU GROW HE THAT
THAT IS NOT BUILDERS COMPLETED
OPERATIONS COVERAGE.
>> I AGREE THERE ARE DIFFERENT
-- BUT I'M.
>> WHAT IT IS YOUR --
>> WHAT IS THE TRIAL COURT
RELY ON?
IN SO IF TRIAL COURT DIDN'T --
DIDN'T RULE MY FAVOR SO THEY
DIDN'T GET TO COMPLETED
OPERATIONS QUESTION.
THE TRIAL COURT, FELT LIKE IN
LETTER RULING FELT HE WAS
BOUND BY LASITER AND
HOMEOWNERS WARRANTY.
OBVIOUSLY!!$$!
OBVIOUSLY, HE FELT LIKE HE
COULDN'T!!$$!!
COULDN'T.
>> YOU ARE CORRECT, THAT IS
WHERE -- JUDGE SILVERMAN CAME
DOWN DISTINGUISHED WHAT HE WAS
DEALING WITH HERE IN AND DEALT
WITH IN HIS PRIOR OPINION.
>> I'M DOWN TO MY LAST EIGHT
SECONDS, I THINK JUDGE SILVER!!$$!
SILVERMAN'S DECISION IN THE
SECOND DISTRICT GIVES MEANING
AND EFFECT TO EVERY KILOMETER
OF THE POLICY -- COMPONENT THE
PIN SHOULD BE APPROVED AND
AFFIRMED!!$$!!
AFFIRMED.
>> MAY IT PLEASE THE COURT, MY
NAME IS ED, I REPRESENT
APPEARLY POSEY WINDOW COMPANY
ASSIGNEE OF THE INSURED.
>> YOU HAVE GOT A WRITTEN
ASSIGNMENT?
YES, MA'AM.
>> OKAY, THE NEXT CASE WILL
INVOLVE THE ATTORNEYS FEES WE
GET!!$$!
GET.
>> -- ASSIGNMENT STANDING IN
THE SHOES OF THE INSURED THE
INSURED GENERAL
CONTRACTOR,ISSUE HERE IS WHEN
OR NOT, PRODUCT COMPLETED OFF
HAZARD -- THIS CONTRACT OF
PURCHASE WE HAVE AMPLE RECORD
EVIDENCE IN THE FILE, THAT
THERE WAS AN EXTRA PREMIUM
PAID FOR THE -- COMPLETED --
HAZARD!!$$!
HAZARD, AND MR. CHIEF JUSTICE
LEWIS ONE TIME WE HAVE HISTORY
IN OUR RECORD AS WELL, YOU HAD
TO BUY A SEPARATE POLICY --
BEFORE COMPLETE --
>> YOU DIDN'T HAVE IT BECAUSE
OF THE BROORD FORM OF YOUR
WORKS EXCLUSION THAT WAS IN
THE GENERAL LIABILITY POLICY
WAS THAT BROAD FORM OF
EXCLUSION!!$$!
EXCLUSION, THAT THIS COURT
APPLIED IN LAMARSH, IN 1980.
EXCLUSION OIFRMENT, IN THAT
POLICY -- OH, EXTREMELY BROAD
ANYTHING ARISING OUT OF THE
AWARD OF -- INSURED BARRED SIX
YEARS LATER I -- ISO COMBINED
WASN'T SEPARATE -- COMBINED
INTO THE POLICY, AND
SUBCONTRACTOR EXCEPTION.
>> IN OTHER WORDS, IT JUST
BECAUSE I -- AND THAT ACTUALLY
CONFUSE IMMEDIATE AS KEEP IT
ON READING THIS POLICY, BUT, A
SEPARATE THERE IS A SEPARATE
PREMIUM AND A SEPARATE YOU HAD
A ONE MILLION DOLLAR LIMIT
AGGREGATE LIMIT FOR PRODUCT
COMPLETED OPERATION.
>> YES, MA'AM.
>> LIMIT BUT IT IS NOT -- IT
IS NOT A SEPARATE COVERAGE, IT
IS ACTUALLY, PUT INTO THE
DEFINITION SECTION.
>> THAT IS CORRECT, THAT IS
WHERE THE CONFUSION ARISES YOU
HAVE TO LOOK AT THE AT THE
TELL YOU COVERAGE IN THE DECK,
YOU HAVE TO GO FROM THERE, TO
THE BASE COVERAGE FOR
LIABILITY INSURED FOR
OCCURRENCE OF PROPERTY DAMAGE
AND BY THE WAY PARTS WAS NEVER
AN ISSUE IN THEIR -- IN OUR
CASE, MR. SCOT NORRIS HOUSE
COUNCIL -- COUNSEL CONCEDED IN
PRETRIAL DEPOSITIONS THERE WAS
AN OCCURRENCE OF PROPERTY
DAMAGE AS ALLEGED BY MY CLIENT
THEN POSEY WINDOW --
>> YOU KNOW I KNOW OF YOU SAID
THAT I WOULD LIKE YOU TO
ADDRESS MY PARTICULAR CONCERN,
AND IN YOUR SITUATION, WHICH
IS THAT IS PROPERTY DAMAGE HAS
TO BE DAMAGED TO OTHER
TANGIBLE PROPERTY, IF THE
WINDOWS!!$$
WINDOWS, WERE -- INSTALLED OUT!!$$!
OUTSET ALL YOU ARE DOING IS
REPLACING WINDOWS A OPPOSED TO
WHAT I SEE AS WINDOWS LEAK AND
CAUSED DAMAGE TO THE STRUCTURE
EVEN IF A STRUCTURE I SEE THAT
AS BEING PROPERTY DAMAGE, OR
WALLPAPER, THEN EVERYONE
AGREES WITH THAT -- A RUG, BUT
WHEN THE TELL YOU DEFECTIVE
THING BEING REPLACED,HOW IS
THAT PROPERTY DAMAGE?
>> WELL, HERE THE WINDOWS WERE
NOT THE PRODUCT OR THE WORK
THAT A SUBCONTRACTOR THEY WERE
THE PROPERTY OF THE OWNER OF
THE HOME MR. PEREZ BOUGHT THE
WINDOWS DIRECTLY, FROM A
DISTRIBUTOR!!$$!!
DISTRIBUTOR, ASKED -- BRIAN
SCOTT BUILDERS THE
SUBCONTRACTOR TO INSTALL THOSE
WINDOWS!!$$
WINDOWS, NOW, THE WINDOWS, AND
THE INTERIOR OF THE HOME WHOLE
HOUSE IS THE WORK OF THE
INSURED GENERAL CONTRACTOR,
AND THAT IS WHERE WE GET BACK
TO THE LANGUAGE OF THE POLICY
IN THAT --
>> SO NOW, SO I AND I DON'T
KNOW IF MUST BE IN THE RECORD,
TO SAY SO THAT THE WINDOWS
WERE NOT WERE THE OWNERS
OWNERS WINDOWS IF THEY WERE
THE OWNERS WINDOWS RATHER THAN
CONTRACTOR'S WINDOWS WOULDN'T
THEY BE COVERED UNDER WHAT
THEY HAVE EVEN TALKED ABOUT
WHICH IS THE $$OWNER'S
WALLPAPER, I SEE SOME NO --
SOMETHING FROM MISS HOWARD
BUT, STILL, DOES THAT ALLOW
FOR THE -- IF DEFECTIVELY
INSTALLED IN OUR -- NOW YOU
ARE GOING TO REINSTALL THEM,
WHY SHOULD THE HOW IS IT
PROPERTY DAMAGE TO SAY THAT WE
INSTALLING THEM IS COVERED
UNDER THE POLICY?
>> WELL, THE WINDOWS,
THEMSELVES, ARE SOME OF THEM
NOT ALL OF THEM, THE WINDOWS
THEMSELVES WERE DAMAGED BY THE
SAME WATER INTRUSION THAT MAY
HAVE DAMAGED THE RUGS OR THE
CURTAINS!!$$!!
CURTAINS, THE WALLPAPER A.
>> SENT TO THE WINDOWS HAD TO
BE REPLACED WHEN WINDOWS WERE
REPLACED!!$$!!
REPLACED, THE VERY FINE, I
GUESS, IT WAS MARSHALIZED,
MARBELIZED!!$$
MARBELIZED --
>> AS PETE PROPERTY DAMAGE
COVER THE COST OF PUTTING BACK
IN WINDOWS THAT WERE DEFECT!!$$!
DEFECTIVELY INSTALLED?
I DON'T SEE HOW THAT IS PART
OF THE PROPERTY DAMAGE.
>> MAYBE IF THE WINDOWS WERE
SEPARATE FROM THE YOU KNOW,
WERE NEVER DEFECTIVE THE
WINDOWS WEREN'T DEEFFECTIVE
JUST THE INSTALLATION SEEMS TO
ME THAT THAT IS -- STILL
HAVING PROBLEMS SEEING HOW
THAT IS PROPERTY DAMAGE.
>> WELL, THE DEFINITION OF
PROPERTY DAMAGE, IN OUR POLICY
HAS TWO COMPONENTS, TANGIBLE OUR
POLICY HAS TWO COMPONENTS.
TANGIBLE INJURY TO, PROPERTY.
PHYSICAL INJURY TO TANGIBLE
PROPERTY AND LOSS OF USE OF
UNDAMAGED PROPERTY.
IF, THE PROPERTY IS
DEFECTIVE, I SAY THERE'S
LOSS OF USE OF THAT PROPERTY,
THAT THE HOMEOWNER COULD
HAVE SUED FOR.
BUT HERE WE HAVE DAMAGE TO
THE WORK, TO THE PROPERTY OF
THE HOMEOWNER AND TO THE
WORK OF THE GENERAL
CONTRACTOR.
THAT BRINGS ME TO THE POINT
I WANT TO MAKE.
I GUESS I'M OUT OF TIME.
MY PROFESSOR IN HIGH SCHOOL
WAS A, RETIRED COLONEL OF
THE ARMY WHO HAD SERVED WITH
GENERAL GEORGE PATTON IN THE
WAR.
HE SAID ONE THINGS I WANT
YOU STUDENTS TO DO IS RTP AS
HE CALLED IT.
READ THE PROBLEM.
I THINK HERE THE TASK FOR
THE COURT IS READ ALL POLICY
UNDER CONSTRUCTION PLAIN
LANGUAGE AMBIGUITY!!IES THIS
COURT ADOPTED, FIAD.
PC, AND THE EXECUTION AT
ISSUE HERE SAYS WE WILL
EXCLUDE PROPERTY DAMAGE YOUR
WORK, THE WORK IS THE
INSURED OF THE GENERAL
CONTRACTOR ARISING OUT OF IT
OR ANY PART OF IT INCLUDING
IN THE PART THAT IS -- THAT
IS THE KPOPGS TO THE
EXCLUSION.
THIS EXCLUSION DOES NOT
APPLY, IF THE DAMAGED WORK,
NEGLIGENTLY INSTALLED
WINDOWS, BY THE
SUBCONTRACTOR, OR, IN THE
WORD OR, IS IN THIS CLAUSE,
OR THE WORK OUT OF WHICH THE
DAMAGE ARISES IS PERFORMED
ON YOUR BEHALF BY THE
SUBCONTRACTOR.
ALL OF THE FEDERAL JUDGES
WHO CONSIDERED THAT CLAUSE
SAID THE PLAIN LANGUAGE
COVERS THIS LOSS.
OUR EIGHT-PERSON JURY AGREED
WITH THEM.
AWARDED DAMAGES INCLUDING
PUNITIVES.
WE THINK THIS COURT SHOULD
ALSO AGREE WITH THAT PLAIN
LANG WAGE.
>> THANK YOU VERY MUCH.
MR. KAMMER YOU WILL PRESENT
THE REBUT CALL.
YOU WERE SHORTENED A LITTLE
BIT.
YOU GAVE IT BACK.
>> THANK YOU VERY MUCH.
IN ORDER FOR COVERAGE UNDER
LIABILITY POLICY TWO THINGS
MUST OCCUR.
ONE THERE MUST BE OCCURRENCE
AS JUSTICE PARRY ENTTAE
SAID.
THERE MUST BE.
PROPERTY DAMAGE.
THERE IS NO OCCURRENCE HERE
BECAUSE WHEN YOU BUILD A
HOUSE AND YOU USE DEFECTIVE
SOIL AND EXPECTED
CONSEQUENCE OF THAT
DEFECTIVE SOIL IS THAT THE
HOUSE WILL SETTLE, AND CAUSE
DAMAGE TO THE STRUCTURE,
ITSELF.
>> MY PROBLEM WITH THAT IS
THE SAME EXPECTATION, I
THINK, IS THAT, IF IT'S
GOING TO SETTLE, IT'S ALSO
GOING TO DAMAGE PROPERTY OF
THE OTHER PERSON.
NEVER SAY THAT WASN'T AN
OCCURRENCE YOU'RE PAYING ON
THAT.
>> AND, I AGREE, YOUR HONOR,
IF THERE WAS DAMAGE OUTSIDE
THE CONTRACT, WHICH THERE
WAS IN J.S.U.B. AS MR. BOYLE
INDICATED WE'VE AGREED TO
PAY FOR THAT.
>> I GUESS WHAT YOU'RE
SAYING IS THAT YOU WOULD SAY
THAT AS A MATTER OF LAW,
THAT, ANY DAMAGE WITHIN A
CONTRACT HAS TO BE
FORESEEABLE AND THAT'S
NOT -- WHERE IS THAT IN THE
POLICY?
>> THAT IS FOUND IN THE
DEFINITION OF OCCURRENCE,
JUDGE PARRY ENTTAE.
THERE MUST BE ACCIDENT,
SOMETHING UNEXPECTED AND
UNINTEND.
>> PLAIN HOW ALL THE CHANGES,
WHAT ABOUT ALL THE CHANGES
ABOUT IN 1986?
>> IN 1986, THIS IS CONCEDED
BY BOTH SIDES, THE ONLY,
CHANGE TO THE DEFINITION OF
OCCURRENCE IS IT TOOK OUT
THE -- OCCURRENCE FROM
UNEXPECTED AND MOVED THAT
INTO, INSURING AGREEMENT
MOVED THAT INTO AN
EXCLUSION.
>> I'M TALKING ABOUT THE
ADDITION OF, PCOH COVERAGE
INTO THE GENERAL LIABILITY
POLICIES?
>> THAT GOES ALL THE WAY
BACK TO 1973, YOUR HONOR,
WHEN BEFORE THE 1986
REVISIONS YOU NEEDED TO HAVE
PCOH COVERAGE AND THAT WAS
HOW, THE SUBCONTRACTOR
EXCLUSION GOT INTO THE
POLICY.
WHAT IS IMPORTANT, WHAT
MR. BOYLE SAYS TO YOU, LAMAR
IS NOTHING MORE THAN
EXCLUSION CASE.
IT STANDS FOR SOMETHING MORE
THAN EXCLUSION BECAUSE IT
SAYS TO THIS COURT WHAT THE
PURPOSE AFTER LIABILITY
POLICY.
>> WHAT HE IS SAYING.
LA MARS HAD PROPERTY DAMAGE
WORK PERFORMED BY OR ON
BEHALF OF THE NAMED INSURED
WAS ARISING OUT OF THE WORK
WAS EXCLUSION O.
IT CLEARLY FELL INTO
EXCLUSION O.
THAT WAS -- THEY QUOTED
QUIDO.
>> THE NICE THING ABOUT Q
WIDO.
IT ALSO SAYS LET'S LOOK AT
POLICIES THAT WERE ALSO, HAD
PCOH COVERAGE IN THEM AND
IT'S FOOTNOTE 6 OF THE WIDO
DECISION I SEE MY TIME IS UP
GO BACK TO THE THAT CASE
WHICH SUPREME COURT ADOPTED
IN LAMARSH.
SAID EVEN IN THOSE POLICIES
THAT PCOH COVERAGE I'M
TALKING ABOUT WIDO THERE IS
STILL NO COVERAGE.
WHAT CHIEF JUSTICE LEWIS
SAYS THERE IS DIFFERENCE
BETWEEN A COMMERCIAL GENERAL
LIABILITY POLICY AND A
PERFORMANCE BOND.
THE COMMERCIAL GENERAL
LIABILITY POLICY COVERS
DAMAGE CAUSED TO PEOPLE AND
PROPERTY BY DEFECTIVE WORK.
IT HAS NOT, FOR 40 YEARS IN
THIS STATE, COVERED DAMAGE
TO THE WORK ITSELF.
IF YOU HE BREACH A CONTRACT,
THAT IS SIMPLY, NOT AN
OCCURRENCE, BECAUSE THAT
PLACES ENTIRELY IN THE HANDS
OF THE POLICYHOLDER, WHETHER
THERE'S COVERAGE OR NOT.
AND IF YOU LOOK AT OUR BRIEF
YOU WILL SEE, THAT, THAT
SIMPLY IS UNACCEPTABLE,
MORAL HAZARD.
FOR THAT REASON WE
RESPECTFULLY SUGGEST THIS
COURT SHOULD OVERTURN
J.S.U.B..
THANK YOU VERY MUCH.
>> THANK YOU.
BOTH FOR YOUR PRESENTATION
THIS IS MORNING.
YOU USED UP ALL YOUR -- SHE
HAS NO MORE TIME CORRECT,
MARSHALL?
YOU USEDDED UP ALL THE TIME.
SO --
>> WE --
>> THAT WAS MY
UNDERSTANDING.
SO WE THANK BOTH OF YOU.
TAKE THE CASE UPPED
ADVISEMENT.
THANK YOU BOTH FOR EXCELLENT
PRESENTATIONS.