Title: Peerless Insurance Co. v. Wells

State: vermont

Issuer: Vermont Supreme Court

Document:

NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
as well as formal revision before publication in the Vermont Reports.
Readers are requested to notify the Reporter of Decisions, Vermont Supreme
Court, 111 State Street, Montpelier, Vermont 05602 of any errors in order
that corrections may be made before this opinion goes to press.


                                No. 89-349


Peerless Insurance Company                   Supreme Court

                                             On Appeal from
     v.                                      Washington Superior Court

Barbara J. Wells (Williams) and              May Term, 1990
Salvatore Alfano and Elaine Alfano


Matthew I. Katz, J.

Kiel & Boylan, Springfield, for plaintiff-appellee

Emily B. Tartter of Paterson & Walke, P.C., Montpelier, for defendants-
  appellants Alfanos


PRESENT:  Allen, C.J., Peck, Gibson, Dooley and Morse, JJ.


     ALLEN, C.J.   Defendants, the Alfanos, appeal from a declaratory
judgment determining that plaintiff is not obligated to pay damages to
defendant Wells under a general liability policy issued by plaintiff to the
Alfanos.  We affirm.
     The parties stipulated to the material facts, which disclose that in
July of 1984, defendant Wells entered into a contract with the Alfanos for
them to construct her home.  The home did not have a basement, but was to be
constructed on a concrete slab floor on grade.  The contract required the
contractors to provide for necessary fill and compaction, as well as the
construction of the slab.  The complaint by defendant Wells against the
Alfanos alleged that improper compaction of the fill caused the slab to
settle, resulting in extensive structural and cosmetic damage to the house.
     In its complaint for a declaratory judgment, plaintiff alleged that
the policy at issue did not afford protection for the damages claimed by
defendant Wells and sought a declaration that it had no obligation to defend
or pay any damages that might be awarded to her in the underlying action. (FN1)
The trial court concluded that the damages sought were not covered by the
policy issued by plaintiff because of certain exclusions from coverage con-
tained in the policy.  We agree.
     On appeal, the Alfanos contend that the exclusions, when read
together, create an ambiguity which must be construed in their favor and
which results in coverage for the damages sought from them.
     The policy provides that plaintiff "will pay on behalf of the insured
all sums which the insured shall become obligated to pay as damages because
. . . of property damage to which this insurance applies, caused by an
occurrence."  It further provides that:
         This insurance does not apply:

            (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 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 arising out of such products or any part of
         such products;

            (o)  to property damage 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;

            (p)  to damages claimed for the withdrawal,
         inspection, repair, replacement, or loss of use of the
         named insured's products or work completed by or for the
         named insured or any property of which such products or
         work form a part, if such products, work or property are
         withdrawn from the market or from use because of any
         known or suspected defect or deficiency therein.

(Emphasis added.)
     It is argued that exclusion (a) is in conflict with the other
exclusions and presents an ambiguity which must be resolved in favor of the
insureds. (FN2)
     Our rules for construction of insurance contracts are well settled, and
on the facts presented the following rules are applicable:  (1) "[i]nsurance
contracts must be interpreted according to their terms and the evident
intent of the parties, as gathered from the contract language," Sanders v.
St. Paul Mercury Ins. Co., 148 Vt. 496, 500,