United States Court of Appeals
For the First Circuit
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No. 00-2157
JAIME GUILLEMARD-NOBLE,
Plaintiff,
v.
CARLOS SANCHEZ-RODRIGUEZ, ET AL.,
Defendants.
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ANTILLES INSURANCE COMPANY,
Defendant, Appellee,
HORACIO CAMPOLIETO, ET AL.,
Defendants, Appellants.
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ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Juan M. Pérez-Giménez, U.S. District Judge]
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Before
Torruella, Selya and Lynch, Circuit Judges.
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Demetrio Fernandez and Melva A. Quintana on brief for appellants.
Herman W. Colberg on brief for appellee.
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September 27, 2001
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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
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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
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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.
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