Guillemard-Noble v. Sanchez-Rodriguez

United States Court of Appeals
For the First Circuit
____________________

No. 00-2157

JAIME GUILLEMARD-NOBLE,

Plaintiff,

v.

CARLOS SANCHEZ-RODRIGUEZ, ET AL.,

Defendants.

____________________

ANTILLES INSURANCE COMPANY,

Defendant, Appellee,

HORACIO CAMPOLIETO, ET AL.,

Defendants, Appellants.

____________________

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Juan M. Pérez-Giménez, U.S. District Judge]

____________________

Before

Torruella, Selya and Lynch, Circuit Judges.

____________________
Demetrio Fernandez and Melva A. Quintana on brief for appellants.

Herman W. Colberg on brief for appellee.

____________________

September 27, 2001
____________________

-2-
 LYNCH, Circuit Judge. This is an insurance coverage dispute,

governed by Puerto Rican law, under a Comprehensive General Liability

policy. Antilles Insurance Company denied coverage to a claim asserted

by its insureds, C.B. Import Transamerica Corporation and Horacio

Campolieto. The insureds owned other property, on which they began

construction of a new building, apart from their principal place of

business. An automobile accident occurred in connection with

construction-related excavation at this other property and the insureds

were held liable to the injured party. Under their CGL policy, the

insureds sought to recover from Antilles a sum equal to their

obligations to the accident victim. Antilles denied the claim for a

variety of reasons, most of which amounted to the proposition that the

CGL policy's coverage did not extend to the property on which the

automobile accident occurred.

The district court denied Antilles's motion for summary

judgment, finding there was a material dispute of fact as to the extent

of coverage. After an evidentiary hearing, the district court decided

the coverage issue against the insureds, who appeal.

The insureds concede they represented in their "Common Policy

Declarations," as they stood on the date of the accident, that their

only business was "Automobile Accessories Parts Distributor" and that

"all premises" owned, rented, or occupied by them were at the Edificio

Manuel del Valle and Centro Industrial Corujo. No notice was given to

-3-
the insurer until after the accident, by Endorsement No. 13, that the

premises on which the accident occurred had been acquired by the

insureds after the initial date of the CGL policy. The premises on

which there was construction were intended to be used for a business

other than the automobile parts business. When the premises were added

post-accident by Endorsement No. 13, the insureds paid an additional

premium.

The insureds' theory is that premises not described by the

insureds in their declarations nonetheless are within the coverage of

the CGL policy because a CGL policy "provides coverage automatically

for any new premises or hazards which develop during the policy

period." A citation given by the insureds to support this assertion is

P. Gordis and E. Chlanda, Property and Casualty Insurance 445 (27th ed.

1982). Gordis and Chlanda say "[t]he insured is not required to give

any notice of such new hazards" and state that a CGL policy will "cover

automatically any other property . . . ." While it is arguable this

commentary supports the insureds' proposition, an authoritative

precedent under Puerto Rican law defeats coverage. Stokes v. Serrano-

Lecaroz, 98 TSPR 49 (1998), held that a country club's CGL policy did

not cover risks arising out of its marina operation because the marina

was a different business, not mentioned anywhere in the insured's CGL

policy, and the declarations page described the country club business.

The district court made factual findings, after hearing

-4-
testimony from the parties, that the reasonable understanding of the

CGL coverage was that it did not extend to an undescribed premises not

associated with the business described on the declarations page. The

district court also made factual determinations, including a

determination that the insureds' argument that an audit by the insurer

would have picked up the additional premises was simply incorrect. The

district court also reasoned that there would have been an adjustment

in premiums if additional premises or a new business were added. We

cannot say those factual findings were clearly erroneous. We have

considered the insureds' additional arguments; they are without merit.

Affirmed. Costs to appellee.

-5-