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Home Insurance Co. v. Doe

321 So. 2d 24, 1975 La. App. LEXIS 4268, 1976 A.M.C. 382
Louisiana Court of Appeal·Decided October 8, 1975·No. No. 5175·Published·Cited by 2 cases

Opinion

CULPEPPER, Judge.

Home Insurance Company filed this suit alleging that it was the property damage insurance carrier on the vessel M/VJ.C., which sank as a result of a collision with the M/V Texas. Under its policy, Home Insurance Company paid $9,700 to the owner of the M/VJ.C. and took a subro-gation. It then filed the present suit against defendant, Dooley Engine Service, Inc., alleging that the cause of the collision was the failure of the reverse gear of the engine and/or clutch of the M/VJ.C., which had been negligently installed and/or overhauled by Dooley.

Dooley filed a third party demand against its liability insurer, Employers Commercial Union Companies, demanding that it defend this suit and indemnify Dooley under the terms of its policy. The third party defendant, Employers, filed an answer refusing to provide a defense and denying coverage on the grounds that its policy issued to Dooley excluded “completed operations”.

Prior to a trial on the merits, a settlement was reached between Home Insurance Company and Dooley, and the principal demand was dismissed without any decision of the issues of liability or coverage under Employers’ policy. The third party plaintiff, Dooley, then proceeded to trial against Employers seeking attorney’s fees incurred by Dooley in defending the suit.

After a hearing on the merits, the district judge first decided that Employers had a duty to defend Dooley on the principal demand, and he awarded judgment for attorney’s fees expended by Dooley in the sum of $3,078.18. However, after granting a rehearing, the district judge recalled his previous decision and held that Employers did not owe Dooley a duty to defend. Dooley appealed.

The sole issue on appeal is whether Employers owed a duty to defend Dooley on the principal demand. In the recent case of Mut. v. Newark Insurance Company, 289 So.2d 237 (La.App. 1st Cir. 1974), writs refused, the rule as to an in[26] surer’s duty to defend under its policy is succinctly stated as follows:

It is well settled that an insurer’s duty to defend its insured is broader than coverage. It is also well established that the duty to defend depends upon the allegations of plaintiff’s petition, and that the insurer must defend unless the allegations unambiguously exclude coverage. The applicable test in such instances is if, assuming plaintiff’s allegations to be true, there is both coverage under the policy and “liability to plaintiff, the insurer is obliged to defend regardless of the outcome of the litigation. American Home Assurance Company v. Czarniecki, 255 La. 251, 230 So.2d 253; Spiers v. Lane, La.App., 278 So.2d 549.”

The petition of Home Insurance Company in the principal demand alleges that the collision between the M/VJ.C. and the M/V Texas occurred on March 18, 1971 as a result of the failure of the engine and/or clutch of the M/VJ.C. to operate in the reverse position. The petition also alleges that the clutch failed due to improper installation and/or overhaul by the defendant, Dooley Engine Service, Inc. in February of 1971, approximately one month prior to the collision. Under these allegations, the work was performed by Dooley and the vessel was returned to the owner and put back in operation about a month before the collision occurred.

It was stipulated that at the time of the accident on March 18, 1971 there was in force and effect the policy of insurance issued by Employers Commercial Union Companies to Dooley Engine Service, Inc. This is a “Manufacturer’s And Contractor’s Liability Insurance” policy. The coverages are those for which specific premium charges are made. The basic coverage provided is for “Premises — Operations” which premises and operations are set forth in the policy as follows:

From the above LIABILITY SCHEDULE it is apparent that Dooley paid for liability coverage on two separate and distinct kinds of hazards, (1) premises and (2) operations. The premises hazard covers liability arising out of the use of premises. The premises covered are: (1) “BUILDINGS OR PREMISES— BANKS, MERCANTILE, MANUFACTURING OR OFFICE, NOT OCCUPIED BY THE INSURED”; and (2) “ADDITIONAL PRIVATE RESIDENCE — CODE 0770”. The second type of hazard covered is “Operations”, which is described as “MILLWRIGHT WORK N.O.C. — ERECTIONS OF REPAIR OF MACHINERY OR EQUIPMENT”. Such “operations” conducted by the in[27] sured are covered, subjected to the other provisions and exclusions of the policy, regardless of whether these operations are conducted on the insured premises or elsewhere.

In the present case, we are not concerned with any liability arising out of the premises hazard. We are concerned here only with a liability arising out of the operations hazard, i. e., Dooley’s repair of the engine or clutch of the boat.

The printed form used for “Manufacturer’s and Contractor’s Liability Insurance” provides certain exclusions as follows :

“Exclusions
This insurance does not apply:
* * * * %
(m) to bodily injury or property damage included within the completed operations hazard or the products hazard;” (Emphasis supplied)

The “completed operations” hazard which is excluded is defined in the policy under “Definitions” as follows:

"completed operations hazard” includes bodily injury and property damage arising out of operations or reliance upon a representation or warranty made at any time with respect thereto, but only if the bodily Injury or property damage occurs after such operations have been completed or abandoned and occurs away from premises owned by or rented to the named insured. "Operations” include materials, parts or equipment furnished in connection therewith. Operations shall be deemed completed at the earliest of the following times:
(1) when all operations to be performed by or on behalf of the named insured under the contract have been completed,
(2) when all operations to be performed by or on behalf of the named insured at the site of the operations have been completed, or
(3) when the portion of the work out of which the injury or damage arises has been put to its intended use by any person or organization other than another contractor or subcontractor engaged in performing operations for a principal as a part of the same project.

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Home Insurance Co. v. Doe, 321 So. 2d 24, 1975 La. App. LEXIS 4268, 1976 A.M.C. 382 (La. Ct. App. 1975).

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