Case Title: Ricci v. New Hampshire Ins. Co.

Citation: 

Docket Number: 85-234

State: wyoming

Court: Wyoming Supreme Court

Date: 1986-07-03T00:00:00Z

Document:
Ricci v. New Hampshire Ins. Co.1986 WY 145721 P.2d 1081Case Number: 85-234, 85-235Decided: 07/03/1986Supreme Court of Wyoming
 
 
Raymond M. RICCI, 
Bernadette Ricci, Phillip W. Patrick, Diana Patrick, Donnie R. Haney, Sandra 
Haney, Nona Gail Anderson, Leo R. Hendricks and Betty L. Hendricks, Appellants 
(Defendants and Third-Party Plaintiffs),

Heritage Homes, Inc., 
Steve Beilgard, Dale Knife, Reginald Haakinsonn, Jean Haakinsonn, Jacob Kaufman, 
Elva Kaufman, Jodie Nixon, Aase Nixon, (Defendants and Third-Party 
Plaintiffs),

v.

NEW HAMPSHIRE INSURANCE 
COMPANY, a New Hampshire corporation, Appellee 
(Plaintiff),

St. Paul Fire and Marine 
Insurance Company, Appellee (Third Party Defendant).

Heritage Homes, Inc., 
Steve Beilgard, Appellants (Defendants and Third-Party 
Plaintiffs),

Raymond M. RICCI, 
Bernadette Ricci, Phillip W. Patrick, Diana Patrick, Donnie R. Haney, Sandra 
Haney, Nona Gail Anderson, Leo R. Hendricks and Betty L. Hendricks, Dale Knife, 
Reginald Haakinsonn, Jean Haakinsonn, Jacob Kaufman, Elva Kaufman, Jodie Nixon, 
Aase Nixon, (Defendants and Third-Party Plaintiffs),

v.

NEW HAMPSHIRE INSURANCE 
COMPANY, a New Hampshire corporation, Appellee (Plaintiff), St. Paul Fire and 
Marine Insurance Company, Appellee (Third-Party 
Defendant).

Appeal from DistrictCourtofCampbellCounty, Terrence L. O'Brien, 
J.

Clay B. Jenkins 
and H.W. Rasmussen, Badley & Rasmussen, P.C., Sheridan, for appellants 
Ricci.

Leslie W. 
Hawkey, Jr., Gillette, for appellants 
Heritage Homes, Inc., and Beilgard.

Robert W. 
Connor, Jr., Sheridan, and William L. Senter and Mark C. Overturf, Greengard 
& Senter, Denver, Colo., for 
appellee New Hampshire Ins. Co.

Robert W. Brown, 
Lonabaugh & Riggs, Sheridan, for 
appellee St. Paul Fire and Marine Ins. Co.

Before THOMAS, C.J. and CARDINE and MACY, JJ.; 
GUTHRIE, J., Retired, and RAPER, J., Retired.

THOMAS, Chief 
Justice.

[¶1.]     The main question which 
we must resolve in this case is whether the exclusions from the coverage of 
general liability insurance policies were articulated with sufficient clarity to 
permit the trial court to enter a summary judgment in favor of the insurance 
carriers. There are collateral issues relating to the extension of coverage, in 
the case of one policy, beyond the terms of the written policy by virtue of 
representations of the selling agent and whether such a theory of coverage was 
waived by the failure to assert it in the district court. The district court 
held that coverage was excluded as a matter of law, and it granted a summary 
judgment in favor of New Hampshire Insurance Company declaring the rights and 
liabilities of the parties under its policy. It then dismissed the claim against 
St. Paul Fire and Marine Insurance Company. We affirm the judgment of the 
district court.

[¶2.]     The parties have 
suggested different statements of the issues for our consideration. Heritage 
Homes, Inc., and Steve Beilgard, the principal in the corporation (the insured), 
state the issues in this way:

"I. Factual issues exist 
and the court erred in granting the summary judgment motion of 
appellees.

"II. Appellees' printed 
policies are confusing and ambiguous, and should be construed in favor of the 
insured."

[¶3.]     Homes, Inc., set forth 
the issues in this way:

"I. The insurance 
policies are `occurrence' policies and provide coverage for the appellant's 
damages.

"II. The insurance 
policies are ambiguous, and should be construed in favor of the 
insured.

"III. A factual issue 
precludes summary judgment."

As appellee, New 
Hampshire Insurance Company suggests these issues:

"I. Whether New Hampshire 
Insurance Company's comprehensive general liability insurance policy purchased 
by Heritage Homes, Inc. excludes coverage for damages to the houses built by 
Heritage Homes, Inc.

"II. Whether appellants 
may rest on their pleadings to create a question of fact sufficient to defeat a 
motion for summary judgment in favor of New Hampshire Insurance 
Company."

The appellee, 
St. Paul Fire and Marine Insurance Company, urges the following 
issues:

"1. Whether the damages 
suffered by the appellant homeowners which occurred prior to the effective date 
of the St. Paul 
policies are covered by the policies of the St. Paul Fire and Marine Insurance 
Company?

"2. Whether the St. Paul 
Fire and Marine Insurance Company policies provide coverage for the damages 
suffered by the appellant homeowners when the policies specifically exclude 
coverage for property damage to the named insured's products arising out of such 
products or any part of such products and for 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?

"3. Whether 
representations of the selling agent extend coverage beyond the terms of the 
written policy?

"4. Whether appellants 
may raise on appeal theories or arguments which were expressly disavowed by 
appellants at the trial level or were not even presented?"

[¶4.]     Beginning sometime 
prior to 1978, Heritage Homes, Inc., constructed houses in a subdivision of 
Gillette. The individuals other than Steve Beilgard who are named as parties all 
purchased homes from Heritage Homes, Inc., during the period from July, 1977, 
through June, 1978. In the spring and early summer of 1978, the homeowners 
discovered water seepage in the basements of their respective homes. That 
seepage continued up until the time of trial of their action against Heritage 
Homes, Inc., and Beilgard which was premised upon theories of negligence and 
breach of warranty. The several homeowners were awarded damages for the 
diminution in value of their respective homes, and the judgments in their favor 
aggregated $146,768.25. These judgments were entered on June 8, 1983, and they 
were affirmed by this court in Anderson v. 
Bauer, Wyo., 681 P.2d 1316 
(1984).

[¶5.]     Heritage Homes, Inc., 
obtained general liability insurance first from New 
Hampshire and later from St. Paul. The New Hampshire coverage was in effect from 
March 3, 1976, until June of 1978. The St. Paul coverage began on June 27, 1978, and 
continued until June 27, 1981. In addition, on March 30, 1981, Heritage Homes, 
Inc., purchased from St. 
Paul a "Comprehensive General Liability Broadening 
Endorsement."

[¶6.]     The St. Paul policy in effect 
from June 27, 1978, to June 27, 1981, provided coverage in this 
language:

"The Company will pay on 
behalf of the Insured all sums which the Insured shall become legally obligated 
to pay as damages because of * * * property damage to which this insurance 
applies, caused by an occurrence, * * *."

That policy went 
on to provide with respect to exclusions from coverage:

"(a) to liability assumed 
by the Insured under any contract or agreement except an incidental contract; 
but this exclusion does not apply to a warranty of fitness or quality of the 
Named Insured's products or a warranty that work performed by or on behalf of 
the Named Insured will be done in a workmanlike manner.

* * * * * 
*

"(m) to property damage 
to the Named Insured's products arising out of such products or any part of such 
products; "(n) 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;"

* * * * * 
*

The pertinent 
language in the St. 
Paul "Comprehensive General Liability Broadening 
Endorsement" which was purchased on March 30, 1981, reads:

"A. The exclusion 
relating to * * * work performed by or on behalf of the Named Insured arising 
out of work or any portion thereof, or out of materials, parts or equipment 
furnished in connection therewith, [is] replaced by the following 
exclusions:

* * * * * 
*

"(2) with respect to the 
completed operations hazard and with respect to any classification stated in the 
Declarations 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."

[¶7.]     The New Hampshire 
Comprehensive Liability Insurance Policy, which was in effect from 1976 to 1978, 
is not a part of the record, but New 
Hampshire admitted that the policy provided for 
exclusions from coverage in the following language:

"(a) to liability assumed 
by the Insured under any contract or agreement except an incidental contract; 
but this exclusion does not apply to a warranty of fitness or quality of the 
Named Insured's products or a warranty that work performed by or on behalf of 
the Named Insured will be done in a workmanlike manner;

* * * * * 
*

"(n) to property damage 
to the Named Insured's products or any part of such 
products;

"(1) 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."

[¶8.]     When the homeowners 
discovered in 1984 that Heritage Homes, Inc., and Beilgard were judgment-proof, 
the homeowners served garnishee notices and summonses on New Hampshire and St. Paul. On July 6, 1984, St. Paul answered the 
garnishee notices and summonses. Instead of answering, New Hampshire filed a 
declaratory judgment action in United States District Court on June 7, 1984, in 
which it sought a declaration that it was not liable under its policy for the 
judgments obtained against Heritage Homes, Inc., and Beilgard, and affirmative 
relief was sought in the form of an injunction against the garnishment 
proceedings. The defendants in the declaratory judgment action were Heritage 
Homes, Inc., Beilgard, and all of the homeowners who had proceeded with the 
garnishee notices and summonses. On July 26, 1984, the garnishee notices and 
summonses were withdrawn, and the case in United States District Court then was 
transferred to the District Court of Campbell County, Wyoming. After the case 
was transferred to the state court Heritage Homes, Inc., and Beilgard filed a 
third-party complaint against St. Paul and a 
counterclaim against New 
Hampshire.

[¶9.]     All of the parties then 
moved for summary judgment. After a hearing on the motions the district court 
concluded that the damages represented by the judgments entered against Heritage 
Homes, Inc., and Beilgard were excluded from coverage under the insurance 
policies. The district court then entered its order granting summary judgment to 
New Hampshire and dismissing with prejudice the 
third-party complaint against St. Paul and the 
counterclaim against New 
Hampshire. It is from that order granting summary 
judgment that this appeal is taken.

[¶10.]  In their briefs and arguments the 
appellants contend that a reading of the three exclusions in the New Hampshire and St. Paul insurance policies results in a 
conclusion that those policies are ambiguous. They invoke then the proposition 
that because the policies are ambiguous they must be construed against the 
insurance companies which are the drafters of the respective policies. The 
appellants also argue that even if these exclusions are not ambiguous, the 
general endorsement by St. 
Paul, which was added to its policy in March, 1981, when 
read with the other three exclusions, results in an ambiguity. The appellants 
vigorously urge that because the asserted ambiguity creates a question of fact 
with respect to the intent of the parties to the insurance policies it was 
inappropriate for the district court to grant summary judgment. We are satisfied 
that the case is resolved by a determination of whether the two insurance 
policies in question excluded coverage for the claims represented by the 
homeowners' judgments against Heritage Homes, Inc., and Steve Beilgard. If the 
policies did exclude coverage then there is no inhibition against the grant of 
summary judgment by the district court in this case.

[¶11.]  Our usual rule is that the interpretation 
of a contract is a question for the court to resolve as a matter of law. This 
rule pertains if the language in the contract is plain and unequivocal. Kost v. 
First National Bank of Greybull, Wyo., 684 P.2d 819 (1984); Hursh Agency, Inc. 
v. Wigwam Homes, Inc., Wyo., 664 P.2d 27 (1983); Worthington v. State, Wyo., 598 P.2d 796 (1979); and Shepard v. Top Hat Land and Cattle Company, Wyo., 560 P.2d 730 (1977). In those instances in which the language of the contract is clear 
and unambiguous the intention of the parties is to be derived from the contract 
itself. Cheyenne Mining and Uranium Company v. Federal Resources Corporation, 
Wyo., 694 P.2d 65 (1985); Tate v. Mountain States Telephone and Telegraph 
Company, Wyo., 647 P.2d 58 (1982); Sunburst Exploration, Inc. v. Jensen, Wyo., 
635 P.2d 822 (1981); and Amoco Production Company v. Stauffer Chemical Company 
of Wyoming, Wyo., 612 P.2d 463 (1980). These rules extend to insurance policies 
which are contracts; an unambiguous contract requires no interpretation; and 
issues with respect to its construction are appropriate for determination upon a 
motion for summary judgment. Moewes v. Farmer's Insurance Group, Wyo., 641 P.2d 740 
(1982).

[¶12.]  The language of the policies in this case 
is not ambiguous. The first exclusion in subparagraph (a) addresses liability 
assumed by the insured under any contract or agreement but there is excepted 
from that exclusion any warranty of fitness or quality of the insured's products 
or a warranty that work performed by or on behalf of the insured will be done in 
a workmanlike manner. If that were the only language in these policies the 
contentions of these appellants would be far more persuasive. These policies go 
on, however, to provide separately for exclusions of property damage to the 
insured's products arising out of the products or any part of the products and, 
in addition, to property damage to work performed by or on behalf of the insured 
arising out of the work or any portion thereof, or out of materials, parts, or 
equipment furnished in connection therewith. This policy language plainly 
excludes those events which gave rise to the claims for damages by the 
homeowners against Heritage Homes, Inc., and Steve Beilgard. "Ambiguity * * * is 
not generated by subsequent disagreement of the parties concerning its [the 
contract's] meaning." Marcam Mortgage Corporation v. Black, Wyo., 686 P.2d 575 (1984); Sunburst Exploration, Inc. v. 
Jensen, supra; and Amoco Production Company v. Stauffer Chemical Company of 
Wyoming, 
supra. These insurance policies are not subject to being construed against the 
insurance companies as drafters because that rule is only to be invoked if the 
insurance policies are ambiguous. Cline v. Safeco Insurance Companies, 
Wyo., 614 P.2d 1335 (1980). See also, Kost v. First National Bank of Greybull, 
supra.

[¶13.]  In Engine Service, Inc. v. Reliance 
Insurance Company, Wyo., 487 P.2d 474, 475 (1971), we considered 
an exclusion from policy coverage which provided:

"(m) 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 * * *."

In that case we 
resolved the narrow issue, which also is present in this case, of whether 
because of the language of the exclusion the policy provided no coverage for 
damage to an engine which resulted from the insured's own negligence in 
rebuilding it. We held that the exclusion applied to such an occurrence, and the 
damage was not covered. In the opinion we quoted with approval from Vobill 
Homes, Inc. v. Hartford Accident and Indemnity Company, 179 So. 2d 496 (La. App. 
1965), in which the exclusionary clause provided that there would be no coverage 
for "injury to * * * any * * * products * * * sold, * * * or premises alienated 
by the named insured, or work completed by or for the named insured, out of 
which the accident arises * * *." We there recognized that the Louisiana court's 
determination that this exclusion unambiguously provided no coverage for the 
enumerated property damage was in line with the general rule that such 
exclusions provide for no coverage for the insured's own defective work or 
defective product. Engine Service, Inc. v. Reliance Insurance Company, supra, 
487 P.2d  at 475.

[¶14.]  In Cline v. Safeco Insurance Companies, 
supra, 614 P.2d  at 1337, this court considered language of an exclusion similar 
to the one in this case. The policy in that instance provided that coverage did 
not apply to:

"(d) property damage: * * 
* (7) 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."

In Cline v. 
Safeco Insurance Companies, supra, the insured conceded that the effect of the 
holding of this court in Engine Service, Inc. v. Reliance Insurance Company, 
supra, was that the language in the Cline policy excluded coverage for damages 
encompassed by a judgment awarding damages to third parties against the plumbing 
company for negligent work. Cline v. Safeco Insurance Companies, supra, 614 P.2d  
at 1335. The court also concluded that such a clause was not unconscionable. 
Id., 614 P.2d  
at 1338.

[¶15.]  The language of the insurance policies in 
this instance is plain and unequivocal. We previously have held that such 
clauses exclude coverage for the insured's own negligent work. The language of 
these policies also excludes coverage for any breach of warranty with respect to 
such work. Those were the theories asserted by the homeowners in their action 
against Heritage Homes, Inc. and Beilgard, and the district court correctly 
determined that summary judgment could be entered in favor of the insurance 
companies in this instance because policy coverage did not extend to liability 
of Heritage Homes, Inc., and Beilgard for the claims represented by the 
judgments in favor of the homeowners. Consistently with prior decisions the 
policy language provides for no coverage for the damages which were adjudicated 
in favor of the homeowners.

[¶16.]  We turn to the counterclaim of the 
appellants that St. 
Paul is estopped from arguing that its 1981 policy 
endorsement did not extend the coverage which the appellants claim. An affidavit 
by Steve Beilgard was submitted which recites that when he purchased the 1981 
rider the selling agent informed him that his coverage now was complete 
excepting only acts of God, acts of war, nuclear disaster and chemical spills. 
The appellants insist that the uncontroverted allegations in Beilgard's 
affidavit demonstrate that St. 
Paul either waived any right to contend that the claimed 
coverage was not extended or is estopped from asserting that the coverage was 
not extended. At the least the appellants insist the affidavit structures a 
genuine question of material fact which would preclude summary judgment in this 
instance. The contention of the appellants in this regard is foreclosed for two 
reasons.

[¶17.]  In State Farm Mutual Automobile Insurance 
Company v. Petsch, 261 F.2d 331 (10th Cir. 1958), the United States Court of 
Appeals for the Tenth Circuit stated that the law in Wyoming is that coverage 
cannot be extended by waiver or estoppel. This same principle was approved by 
this court in Sowers v. Iowa Home Mutual Casualty Insurance Company, Wyo., 359 P.2d 488 (1961). See also Tadday v. National Aviation Underwriters, Wyo., 660 P.2d 1148 
(1983). This court held in Sowers v. Iowa Home Mutual Casualty Insurance 
Company, supra, that no evidence in the record supported a finding that the 
agent represented that the policy would have broader coverage than the normal 
automobile 500-mile radius restriction. This court also recognized the general 
rule that waiver and estoppel cannot extend coverage of a policy or bring within 
its purview risks which specifically are excluded.

[¶18.]  Recognizing this to be the rule, then 
Beilgard's affidavit does not structure a genuine issue of material fact. We 
have defined a material fact as one which has some legal significance to the 
dispute at hand and one upon which the outcome of the litigation may depend. 
Johnson v. Soulis, 
Wyo., 542 P.2d 867 (1975). Because 
the representations of the selling agent for St. Paul could not as a matter of 
law extend the coverage of the policy by waiver or estoppel the factual 
statements in Beilgard's affidavit do not set forth facts which are material to 
the resolution of this controversy. Beilgard's affidavit did not inhibit the 
right of the district court in this instance to dismiss the third-party 
complaint against St. 
Paul even though a factual question may have been 
structured by Beilgard's affidavit.

[¶19.]  Furthermore, the record discloses that 
these appellants did not assert waiver or estoppel in the trial court. At the 
hearing on the motion the trial court expressed concern with respect to 
Beilgard's affidavit purportedly addressing waiver or estoppel. The judge asked 
St. Paul's 
attorney:

"THE COURT: Okay. Before 
you start, I notice that there's an affidavit in the file from Mr. Beilgard 
which would apparently claim some sort of unrepresentation or misrepresentation 
of policy limits with respect to both of these policies. "How does that affect 
your motion for summary judgment?

"MR. BROWN: Your Honor, I 
believe the motion states - or the affidavit states - that there was no - not 
that there was misrepresentation as to policy limits but as to 
coverage.

"The affidavit basically 
states that it was Mr. Beilgard's understanding that there - that the policies 
covered him for everything, I believe is the gist of the affidavit. And we have 
addressed that issue in our brief and will address it briefly in the oral 
arguments today.

"THE COURT: You think 
that those facts - I notice that you've not filed any counter-affidavits, so I 
take it that you accept those - his statements - as true and say that they're 
not material facts -

"MR. BROWN: Yes, that's 
correct, Your Honor.

"THE COURT: - to any of 
the issues.

"MR. BROWN: It may be 
that those things were said to Mr. Beilgard on that occasion. We believe that we 
are still entitled to summary judgment as a matter of law, and we'll have a 
brief argument for that proposition."

[¶20.]  At a later point the attorney for the 
appellants explained:

"MR. HAWKEY: I'd like to 
make a couple preparatory statements that perhaps can clarify some of the issues 
before the Court at this time.

"First of all, it's our 
understanding that the matter before the Court is upon the complaint for 
declaratory relief which was filed by the New Hampshire Company. And it's also 
our understanding that we're here to discuss a legal determination by the Court 
which is limited to the issue of whether or not coverage should have been 
provided pursuant to the language contained herein.

"The affidavit which was 
prepared by my office and executed by Mr. Beilgard is not attempting to say that 
there are facts material to this case which need to be heard. As a matter of 
fact, the contrary is true. The affidavit was merely prepared to put some form 
and substance to the expectation of the insured when he purchased the policy 
that is before the Court. And the affidavit does go to the language that's 
contained in the policy which was consistent with the representations made by 
the agent, and that's the only reason for the affidavit.

"And we would, of course, 
since there are no opposing affidavits, ask that the Court consider those facts 
as before the Court and undisputed for purposes of this 
hearing."

When the trial 
court specifically asked whether waiver and estoppel were being argued based on 
Beilgard's affidavit the following occurred:

"THE COURT: Okay. You're 
not arguing waiver or estoppel or any of those things with respect to that, 
then?

"MR. HAWKEY: No, Your 
Honor. As I tried to say at the outset, we are here for the limited purpose of 
having a decision made on the declaratory relief sought by New Hampshire's company 
as to whether or not, pursuant to the legal conclusions drawn from this 
document, there should have been coverage. * * *"

[¶21.]  Ordinarily new issues cannot be raised on 
an appeal. Pine Creek Canal No. 1 v. Stadler, Wyo., 
685 P.2d 13 (1984). The exception to this general rule is that the issue may be 
raised if the agency or the lower court did not have subject matter jurisdiction 
with respect to that issue. Laramie Printing 
Trustees v. Krueger, 
Wyo., 437 P.2d 856 (1968). Absent 
this exception it is well established that "[a] new theory cannot be asserted on 
appeal." Weber v. Johnston Fuel Liners, Inc., Wyo., 519 P.2d 972, 978 (1974), appeal after 
remand, 540 P.2d 535 (1975), and cases cited therein. The same rule is 
articulated in Appeal of Williams, Wyo., 626 P.2d 564, 571, cert. denied by 
Williams v. Public Service Commission of Wyoming, 454 U.S. 896, 102 S. Ct. 394, 
70 L. Ed. 2d 211 (1981), as follows:

"As a general rule, 
parties are bound by the theories they advanced below. Further, under the 
doctrine of invited error, if a party induces action by a court or an agency, he 
will not be heard on appeal to argue error based upon that action." (Citations 
omitted.)

On the basis of 
this rule the appellants cannot be heard with respect to the issue of coverage 
by waiver or estoppel which they eschewed in the district court. Even if there 
were substantive merit in their position they would be 
foreclosed.

[¶22.]  On the clear language of the policy 
provisions the district court properly granted the summary judgment and 
dismissed the third-party complaint and the counterclaim. There is no basis for 
finding coverage on the part of St. 
Paul upon the claim of waiver and estoppel. The judgment 
of the district court is affirmed.