No. 8 6 - 4 4 7
IN THE SUPREME COURT OF THE STATE OF MONTANA
1987
TAYLOR-McDONNELL CONSTRUCTION
COMPANY,
Plaintiff and Appellant,
-vs-
COMMERCIAL UNION INSURANCE COMPANIES;
and POWELL COUNTY MUSEUM AND ARTS
FOUNDATION,
Eefendants and Respondents.
APPEAL FROM: District Court of the Third Judicial District,
In and for the County of Powell,
The Honorable Robert Boyd, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Poore, Roth & Robinson; Gary L. Walton, Butte, Montana
For Respondent:
Henningson & Purcell; Mark Vucurovich, (commercial
Union), Butte, Montana
Towe, Ball, Enright & Mackey; Thomas Towe, (Powell
County Museum), Billings, Montana
Submitted on Briefs: Aug. 6, 1 9 8 7
Decided: October 30, 1987
Filed: OGT 30 1987
Clerk
Mr. Justice William E. Hunt, Sr., delivered the Opinion of
the Court.
This appeal arises from an insurance policy dispute in
Powell County, Montana. Commercial Union Insurance Co.
(Commercial Union), refused to cover faulty workmanship done
by appellant pursuant to an exclusion contained in
appellant's Comprehensive General Liability (CGL) insurance
policy. Appellant, Taylor-McDonnell, appeals from the
judgment of the District Court granting defendants' motion
for summary judgment.
We affirm.
The following issues are addressed on appeal:
1. Whether the District Court erred in determining that
the insurance policy was not ambiguous as a matter of law.
2. Whether the District Court erred in determining that
the insurance policy did not provide coverage for all claims
brought by Powell County Museum and Arts Foundation.
Defendant, Powell County Museum and Arts Foundation
(Museum), entered into a contract with Taylor-McDonnell for
the construction of a roof on a building intended to be used
as a museum. The museum was intended to house a collection
of antique cars. When, in approximately two years, the roof
began to leak, the museum filed an action against
Taylor-McDonnell seeking damages for poor workmanship and
materials, negligence, and breach of contract and guarantee.
The specific damages pertinent to this appeal contained
in the museum's complaint are as follows:
d. Cost of materials for temporary roof crack, repair
and flashing repair--$2,933.69.
e. Labor and patching roof cracks--$937.50.
f. Cost of replacing roof on antique car
museum--$5,600.00.
g. Cost of replacing roof on old prison
theatre--$13,390.00.
h. Interest on money borrowed to replace roof (12%
percent x $5,600.00)--$3,835.62 + 12% percent from May
1, 1984.
Shortly after the complaint was filed a claims
supervisor for Commercial Union, appellants insurer, wrote to
McDonnell of Taylor-McDonnell to explain the contractors'
coverage with respect to the museum's complaint. The
insurance agent asserted that Taylor-McDonnell's CGL
insurance policy did not cover the damages alleged in
sections d-h of the museum's complaint pursuant to the
policy's following provisions:
1. COVERAGE A - BODILY INJURY
COVERAGE B - PROPERTY DAMAGE LIABILITY
The company will pay on behalf of the insured
all sums which the insured shall become
obligated to pay as damages because of:
COVERAGE A - Bodily injury; or
COVERAGE B - Property Damage
To which this insurance applies caused by an
occurrence, and the company shall have the
right and duty to defend any suit against the
insured seeking damages on account of such
bodily injury or property damage, even if any
of the allegations of the suit are groundless,
false or fraudulent, and may make such
investigation and settlement of any claim or
suit as it deems expedient, that the Company
shall not be obligated to pay any claim or
judgment or to defend any suit after the
applicable limit of the Company's liability
has been exhausted by payment of judgment or
settlements.
EXCLUSIONS:
This insurance does not apply:
(n) to property damage to the named
insured ' s products arising out of such
products or any part of such products:
(01 to property damage to work performed by
or on behalf of the named insured arising out
of the work or any -
-
portion thereof, or out of
materials, parts or equipment furnished in
connection therewith:
Appellant had also purchased a broad form property
damage policy which provided the Taylor-McDonnell Company
with broader coverage than the CGL policy. However, this
policy contained the following exclusion:
( z ) With respect to the completed operations
hazard and with respect to any classification
stated above as "including completed operations",
to property damage to work performed by the
named insured arising out of the work or any
portion thereof, or out of materials, parts or
equipment furnished in connection therewith.
Upon hearing Commercial Union's motion for summary
judgment, the District Court ruled that as a matter of law,
summary judgment should be entered in favor of Commercial
Union. From this judgment, Taylor-McDonnell appeals.
Issue #l. Did the District Court err in determining
that the insurance policy was not ambiguous as a matter of
law?
Appellant argues that when read as a whole, the
insurance policy at issue is ambiguous per se and
consequently coverage should extend to all claims made
against Taylor-McDonnell by the museum.
"An ambiguous provision in an insurance policy is
construed against the insurance company." Bauer Ranch v.
Mountain W. Farm Bur. Mut. Ins. (Mont. 1985), 695 P . 2 d 1301,
1309, 42 St.Rep. 255, 257. Strict construction in favor of
the insured applies particularly to exclusionary clauses.
Lindell v. Ruthford (1979), 183 Mont. 135, 140, 598 P.2d 616,
618. However, where an exclusionary clause is not ambiguous,
it must be enforced unless against public policy. Brown v.
United Pacific Ins. (Mont. 1986), 711 P.2d 1105, 1107-
Whether or not a clause is ambiguous is a question of law for
the court to resolve. See Baybutt Construction Corp. v.
Commercial Union Ins. Co. (Me. 1983), 455 A.2d 914, 920- The
District Court found that the exclusionary clauses at issue
were not ambiguous, and granted summary judgment in favor of
Commercial Union. We agree.
Appellants rely upon Commercial Union Ins. Co. v. Gollan
(N.H. 1978), 394 A.2d 839 and Baybutt, 455 A.2d 914, in
support of their contentions. In Gollan and Baybutt the New
Hampshire and Maine Supreme Courts interpreted insurance
contracts, with provisions very similar to those in the case
at bar, as amgibuous.
The Gollan Court found the exlusions, when read as a
whole, to be irreconcilable with each other. Consequently,
the Gollan Court held Commercial Union liable for coverage of
all of that plaintiff's claims.
The exclusion upon which the Gollan Court based its
decision is substantially identical to exclusion (a)
contained in Taylor-McDonnell's insurance policy.
Exclusion (a) reads :
(a) To liability assumed by the insured under any
contract or asreement except an incidental
contract: - - exclusion - - apply to a
but this does not
warranty of fitness or quality of a named insurrd's
products or a warranty --performed & or on
that work
behalf of t h named insured will be - - -
Te done in a
workmanlike manner; (Emphasis added.)
The Gollan Court read the exception to exclusion (a) as
applicable to subsequent exclusions, including (n) and (0)
(cited previously), and thereby found ambiguity. We disagree
with this analysis and affirm the District Court's reliance
upon Stillwater Condominium Ass. v. American Home Assurance
Co. (D. Mont. 1981), 508 F.Supp. 1075, in finding no
ambiguity as to Taylor-McDonnellls policy.
The exclusions at issue in Stillwater are identical to
the present exclusions. Both the plaintiff in Stillwater and
Taylor-McDonnell make the same argument with respect to
exclusion (a) and the creation of an ambiguous contract. In
Stillwater, the U. S. District Court in Butte acknowledged
that in the absence of exclusions such as (n) and (01,
exclusion (a) by itself would require coverage of all
plaintiffs' claims. However, the Stillwater court, relying
upon Weedo v. Stone-E-Brick, Inc. (N.J. 1979), 405 A.2d 788
and Haugan v. Home Indemnity Co. (S.D. 1972), 197 N.W.2d 18,
held that these exclusions are unambiguous in eliminating
coverage for repair or replacement of the insured's own
faulty work. 508 F.Supp. at 1078-79.
The Stillwater decision specifically disagrees with the
Gollan analysis concerning exclusion (a) granting coverage in
spite of subsequent exclusions.
The court will not glean the exclusions and apply
exceptions where application is not meant or proper
just to create an "ambiguity1' ... " [Almbiguity"
results only from a forced construction of the
policy language.
508 F.Supp. at 1080.
Appellant contends that where justices cannot agree and
jurisdictions differ as to meaning, intent or effect of
language, the contract must be ambiguous per se. See e.g.
State Farm Mutual Automobile Ins. Cots. v. Queen (Mont.
1984), 685 P.2d 935; and Federal Insurance Co. v. P.A.T.
Homes, Inc. (Ariz. 1976), 547 P.2d 1050. We disagree with
appellant's argument but agree with the majority of
jurisdictions which hold that this standard language found in
the majority of comprehensive general liability coverage
policies is unambiguous and all-inclusive. See Weedo, 405
Our review of twenty years' worth of judicial
treatment of the "business risk" exclusion
demonstrates that, if nothing else, the
underwriting policy sought to be articulated by
clauses "n" and "o" ha.s been widely recognized as a
valid limitation upon standard, readily-available
liability insurance coverage. Indeed, several
courts have remarked in ruling upon the impact of
these clauses that the terms used to convey the
"business risk" exclusions are straight-forward and
without ambiguity. (Citations omitted.)
- at 794.
Id. Exclusion (z) contained in Taylor-McDonnellls
broader coverage policy effects the same limitations as
exclusions (n) and (0).
Issue #2. Whether the District Court erred in
determining that the insurance policy did not provide
coverage for all claims brought by Powell County Museum and
Arts Foundation.
In light of the foregoing discussion and determination
that this policy is unambiguous, we hold that the District
Court did not err in granting summary judgment to Commercial
Union with respect to those claims made by the museum which
are excluded from coverage by unambiguous policy language.
Affirmed on all issues.