Standard Pacific of the Carolinas, LLC v. Amerisure Insurance

UNPUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 11-1444

STANDARD PACIFIC OF THE CAROLINAS, LLC,

Plaintiff – Appellant,

v.

AMERISURE INSURANCE COMPANY,

Defendant – Appellee.

Appeal from the United States District Court for the District of
South Carolina, at Rock Hill. Joseph F. Anderson, Jr., District
Judge. (0:10-cv-01620-JFA)

Argued: September 19, 2012 Decided: December 19, 2012

Before NIEMEYER and DIAZ, Circuit Judges, and Max O. COGBURN,
Jr., United States District Judge for the Western District of
North Carolina, sitting by designation.

Reversed and remanded by unpublished per curiam opinion.

Payton Dwight Hoover, DEAN & GIBSON, Charlotte, North Carolina,
for Appellant. Tracy Lynn Eggleston, COZEN O'CONNOR, Charlotte,
North Carolina, for Appellee.

Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:

Standard Pacific of the Carolinas, LLC (“Standard Pacific”)

brought this action against Amerisure Insurance Company

(“Amerisure”), seeking a declaration of its rights to a defense

and indemnity under an “additional insured” endorsement in an

insurance policy. The district court granted summary judgment

to Amerisure on Standard Pacific’s claim, concluding that the

endorsement did not clearly require the insurer to provide “your

work” coverage. In our view, however, the district court read

the endorsement too narrowly. Rather, construing the policy in

favor of the insured, we hold that it provides coverage to

Standard Pacific. Accordingly, we reverse.

I.

A.

On June 21, 2008, Terry Shortt fell off his bicycle and

broke his back after encountering an allegedly deteriorated

section of an asphalt walking path in the common area of Ridge

Point Community in Rock Hill, South Carolina. Standard Pacific,

formerly known as Westfield Homes of the Carolinas, LLC, was the

developer of the Ridge Point Community project. Standard

Pacific hired Matthews Construction Company, Inc. (“Matthews”)

as the general contractor for the project pursuant to a “Land

Development-Construction Agreement” (the “Agreement”).

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Amerisure was Matthews’s insurer. Matthews completed its work

at the Ridge Point community in August 2004, about four years

before Shortt’s accident.

Shortt sued Standard Pacific, Matthews, and others in South

Carolina state court, alleging that they jointly and severally

breached their duty to exercise reasonable care in designing,

developing, constructing, managing, and maintaining the walking

path to prevent dangerous and hidden conditions. Standard

Pacific in turn filed a separate state suit in South Carolina

seeking, among other relief, the court’s declaration of the

relative rights and obligations of the parties under the terms

of an insurance policy issued by Amerisure to Matthews.

Amerisure subsequently removed the case to the United States

District Court for the District of South Carolina.

B.

Amerisure issued a Commercial General Liability Insurance

Policy to Matthews, effective from January 1, 2008, to January

1, 2009. The policy had a general aggregate limit of $2,000,000

and a “products-completed operations” aggregate limit of

$2,000,000. J.A. 112. The policy included a “Contractor’s

Blanket Additional Insured Endorsement.” J.A. 28. The

endorsement provided coverage under the policy to additional

parties whom Matthews was required to insure by “written contact

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or agreement.” The endorsement limited the coverage of such

additional parties to liability arising out of:

(a) Premises you own, rent, lease, or occupy, or
(b) Your ongoing operations performed for that
additional insured, unless the written contract or
agreement or the certificate of insurance requires
“your work” coverage (or wording to that same effect)
in which case the coverage provided shall extend to
“your work” for that additional insured.

Id. (emphasis added). The policy defined “your work” as “[w]ork

or operations by you or on your behalf” and “[m]aterials, parts

or equipment furnished in connection with such work or

operations.” J.A. 105.

The Agreement, which predated the insurance policy,

contained several provisions relevant to this appeal. First, it

required Matthews to furnish Standard Pacific with a certificate

from a licensed insurance company showing that (1) Matthews had

in effect a policy of general liability insurance providing

coverage at least equivalent to the 1986 Commercial General

Liability Insurance policy, 1 with at least “a $500,000.000

Products/Completed Operations Aggregate Limit,” J.A. 184, and

(2) Standard Pacific’s predecessor, Westfield Homes of North

Carolina, was an additional insured under the policy. Id.

1
The 1986 Commercial General Liability Insurance Policy is
a standard form insurance policy created by the Insurance
Services Organization.

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 Second, the Agreement required Matthews to:

“indemnify, defend and hold harmless [o]wner,
[c]onstruction [m]anager and the owner of the Site . .
. from and against any and all claims, loss, damage or
expense (including attorneys’ fees and other costs of
defense incurred by [o]wner in defending against any
claims or in enforcing this indemnity and defense
obligation) arising out of or in connection with the
performance of the [w]ork.”

Id.

C.

Standard Pacific moved for “Partial Judgment on the

Pleadings/Summary Judgment” regarding Amerisure’s insurance

coverage and duty to defend. J.A. 350-56. The district court

denied the motion and instead sua sponte granted summary

judgment to Amerisure. The court noted that, “the plain

language of the insurance policy allows for ‘your work’ coverage

for the additional insured only when a written agreement

requires it explicitly or with equivalent language.” J.A. 559.

The court reviewed the Agreement between Standard Pacific and

Matthews and concluded that “[n]owhere in the ‘Work,’

‘Protection of Work,’ or ‘Indemnity’ sections [of the Agreement]

does Matthews agree to provide the equivalent to ‘your work’

coverage.” J.A. 558. And to the extent that there was

ambiguity as to what type of coverage was required by the

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Agreement, the district court concluded that any ambiguity was

to be construed against Standard Pacific as the drafter. 2

Standard Pacific moved for reconsideration of the district

court’s order, which the court denied. After voluntarily

dismissing, without prejudice, its remaining claims, Standard

Pacific timely appealed.

II.

We review a grant or denial of summary judgment de novo,

applying the same standard applied by the district court.

Overstreet v. Kentucky Cent. Life Ins. Co., 950 F.2d 931, 938

(4th Cir. 1991).

We consider here whether the language of the Agreement is

sufficient to trigger coverage for Standard Pacific under the

additional insured endorsement contained in the Amerisure policy

issued to Matthews. Amerisure contends that the coverage

afforded Standard Pacific by the endorsement is limited to

Matthews’s ongoing operations because the Agreement does not

clearly require “your work” coverage. Standard Pacific responds

that the endorsement does not require the use of the term “your

2
The district court also held that the Agreement does not
violate South Carolina Code § 32-2-10, which declares
construction contracts that indemnify the promisee against
liability resulting from their own negligence void as against
public policy. That ruling has not been appealed.

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work” to provide the relevant coverage, but rather allows for

coverage if the Agreement includes “wording to that same

effect.” According to Standard Pacific, such wording is found

in several places in the Agreement. We agree with Standard

Pacific.

Under South Carolina law, “clauses of exclusion” in an

insurance policy are to be “narrowly interpreted,” while

“clauses of inclusion” are “to be broadly construed.” McPherson

v. Mich. Mut. Ins. Co., 426 S.E.2d 770, 771 (S.C. 1993). 3

Relatedly, where the words of an insurance policy are capable of

two reasonable interpretations, the court will adopt the

construction most favorable to the insured. Forner v. Butler,

460 S.E.2d 425, 427 (S.C. 1995). In this case, the endorsement

issued to Matthews by Amerisure requires that a contract with an

additional insured include the phrase “your work” or “wording to

that same effect” in order to invoke coverage for completed

operations. Thus, Standard Pacific is entitled to coverage if

the Agreement satisfies either one of these conditions.

Although it is certainly true, as the district court found,

that the Agreement does not explicitly refer to “your work”

3
The parties do not dispute that this diversity action is
governed by the law of South Carolina. Nor do they assert that
the appeal presents anything other than a question of law
regarding the scope of coverage under the policy.

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coverage, we conclude that it does include “wording to that same

effect” sufficient to trigger coverage. To begin with, the

“Liability Insurance” section of the Agreement requires a

minimum amount of “Products/Completed Operations” coverage,

which South Carolina law recognizes as encompassing coverage for

“bodily injury and property damages arising out of ‘your

product’ or ‘your work.’” Laidlaw Envtl. Servs. (TOC), Inc., v.

Aetna Cas. & Sur. Co. of Ill., 524 S.E.2d 847, 851 (S.C. 1999).

Moreover, the “Indemnity” section of the Agreement obligates

Matthews to indemnify and hold harmless Standard Pacific “from

and against any and all claims, loss, damage or expense . . .

arising out of or in connection with the performance of the Work

or any portion thereof.” J.A. 185 (emphasis added). Although

“arising out of” and “performance” are undefined in the

Agreement, the meaning of those terms given by other sources

supports the conclusion that the parties contemplated “your

work” coverage.

In that regard, the Supreme Court of South Carolina has

interpreted “arising out of” to mean “caused by” in the context

of an exclusionary clause in a general liability policy.

McPherson, 426 S.E.2d at 771. Additionally, “performance” is

commonly understood to mean “[t]he successful completion of a

contractual duty” and is also “termed full performance.”

Black’s Law Dictionary 1252 (9th ed. 2009). And although

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“performance” usually “result[s] in the performer’s release from

any past or future liability,” id., the parties here

specifically contracted for prospective indemnity for claims

arising out of the performance of Matthews’s work.

In sum, Matthews committed in the Agreement to extend “your

work” coverage to Standard Pacific, if not expressly then by

using “wording to that same effect” as contemplated by the

policy endorsement. We think this conclusion is both free from

doubt and consistent with a view of the policy most favorable to

the insured. McPherson, 426 S.E.2d at 771. The district court

therefore erred in granting summary judgment to Amerisure.

III.

For the foregoing reasons, we reverse the judgment of the

district court and remand with instructions that it enter

summary judgment for Standard Pacific.

REVERSED AND REMANDED

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