United States Fidelity & Guaranty Co. v. American Insurance

Dissenting Opinion

Sullivan, J.

This appeal is taken pursuant to TR. 54 (B) from a declaratory judgment entered upon a counterclaim as that judgment is interpreted by USF&G. The appellant’s construction of that judgment — a construction which is adverse to USF&G’s financial interest — is not in my view a correct construction. The judgment does not declare, as my colleagues *11imply, that USF&G is liable for all damage to the structure if it be determined that the initial spalling which caused some damage, occurred during its policy period; nor does it declare, as assumed by USF&G, that USF&G is liable for any damage occasioned by spalling which was not discovered during the policy period of USF&G. (There is a difference between discovery of damage to the structure and discovery of spalling which causes damage.)

In attacking the declaratory judgment, appellant USF&G summarizes its argument as follows:

“Therefore, the coverage provided by the USF&G policy is limited to damage from bricks which spall during the policy period and does not extend to damage from bricks upon the same structure or other structures which spall outside of the policy period.”

I read the declaratory judgment rendered to be not inconsistent with USF&G’s somewhat convoluted appellate position. I therefore question whether USF&G has been aggrieved by the judgment.

Judge Buchanan’s opinion herein acknowledges that an insurer’s liability is fixed at the time damage to the structure is suffered from the spalling bricks. Yet it ignores that rule by fixing liability as of the time initial spalling occurs if such spalling is sufficient to give notice of possible future damage. I am unable to accept that resolution of the problem.

To be sure, that resolution is one which is easily applied and it does, as noted by Judge Buchanan, avoid claims against more than one insurer. But legal principles are not created nor do they exist merely because they are easily applied. If the contracting parties did not agree to insure against damage caused by bricks which spall beyond a particular policy period, we may not impose such liability. In my view, the result reached by my brothers does precisely that.

Each insurer before this court is liable only for that damage occasioned by products defects, i.e., spalling, discovered during its policy period. The extent of damage is not neces*12sarily directly proportionate to the number of bricks which spall. It is conceivable that a structure will be diminished more in value by the first 10 bricks which spall, than such value will be further diminished by subsequent spalling of any like number of bricks. Additionally, the extent of diminution in value may well depend upon the location of the bricks which spall.

In short, the liability as agreed to by the three insurers here, is tied to damage suffered not to damage which has not yet occurred. If apportionment of the total damage must be made between or among various insurers and if that apportionment is difficult — so be it! That is what their respective policy contracts require.

Paragraph 4 of the judgment does not reflect adversely upon the construction which I place upon the judgment as a whole. That paragraph is apparently read by my colleagues to provide coverage for future damage caused after the insurer’s policy period if some or any damage was caused or likely to be caused during the policy period. The paragraph does not so provide. It states merely that a particular insurer is liable for damage which is first discovered during the policy period but which damage extends into another policy period. The effect of paragraph 4 of the judgment is, in my view, to protect the insurer at the time the total and final damage to the structure becomes fixed. Damage occasioned by bricks which spall during one policy period is recoverable as against that insurer and cannot be attributed to the insurer in whose policy period the final and culminating appearance of damage is discovered.

In essence then, I construe the judgment to fix liability as argued by USF&G and find such judgment in keeping with the insurance provisions before the trial court. Accordingly, I would dismiss the appeal upon the ground that appellant USF&G has not been aggrieved by the decision below.

Even were I to subscribe to a possible reasonable construction of the judgment as it is interpreted by the parties *13and by Judge Buchanan’s opinion, I would be unable to concur in affirmance. Under such circumstance the judgment could not be held to fulfill the purpose of the Indiana Declaratory Judgment Act, as set forth in Ind. Ann. Stat. § 34-4-10-12 (Burns Code Ed. 1973) :

“. . . to afford relief from uncertainty and insecurity with respect to rights, status and other legal relations. . . .”

A judgment susceptible to more than one reasonable interpretation does not in my view afford relief from uncertainty. The judgment does not, as is its purpose, make the rights of the parties “clearly apparent”. See Brindley v. Meara (1935), 209 Ind. 144, 198 N.E. 301.

Thus even if my construction of the judgment is not the only reasonable construction which might be placed upon it, such construction, if at all reasonable, makes it improper to affirm. At bare minimum we should reverse and remand for entry of a judgment which affords “relief from uncertainty” and which makes the rights of the parties “clearly apparent”. Such disposition would not be inappropriate here since the complaint in the basic action by Adams Clay Products against American Insurance Company and Employers Commercial Union Insurance Company is still pending before the trial court.

Note. — Reported at 345 N.E.2d 267.