Title: Mid-Continent Casualty Company v. Advantage Medical Electronics, LLC

State: alabama

Issuer: Alabama Supreme Court

Document:

Rel: 11/06/2015
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
0649), of any typographical or other errors, in order that corrections may be made before
the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2015-2016
____________________
1140908
____________________
Mid-Continent Casualty Company
v.
Advantage Medical Electronics, LLC
Appeal from Mobile Circuit Court
(CV-13-900646)
MAIN, Justice.
Mid-Continent Casualty Company ("Mid-Continent") appeals
from a judgment of the Mobile Circuit Court declaring that it
has a duty to defend its named insured, Advantage Medical
1140908
Electronics, LLC ("Advantage"), in a pending legal action
against Advantage.  We affirm.
I.  Facts and Procedural History
Advantage is a Mobile, Alabama, based company that
services and sells MRI and CT scanners, types of medical-
imaging devices.  In December 2011, Advantage was hired by KEI
Medical Imaging Services, LLC ("KEI"), to pick up and
transport a used CT scanner machine that KEI had recently
purchased from a leasing company.  The CT scanner was located
at a doctor's office in Aiken, South Carolina.  Advantage was
hired to inspect the machine, to confirm that it was
operational, and then to de-install the machine and transport
it to KEI's facility in Texas.
On December 12, 2011, Advantage's owner, William Dixon,
and another worker, Michael Crummey, traveled to South
Carolina in a box van Advantage had rented for the purpose of
transporting the CT scanner from South Carolina to Texas. 
After inspecting the CT scanner, Dixon and Crummey worked to
de-install and disassemble the scanner and to prepare it to be
moved.  The main component of the CT scanner was a 4,500-pound
2
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section known as the "gantry."   In order to move the gantry,
1
Advantage used a specialized dolly system, which 
required 
that
castor wheels be bolted to each corner of the gantry.  The
special dollies were provided to Advantage by KEI, who had
leased them for use in moving the CT scanner.
Once the CT scanner was disassembled, Dixon and Crummey 
moved the CT scanner, including the gantry, outside the
building so that it could be loaded into the box van.  Because
there was no loading dock at the location, Advantage planned
to use a roll-back flat-top tow truck to load the gantry into
the box van.  Crummey telephoned local wrecker services in an
effort to find someone to assist in loading the gantry into
the box van.  He spoke with Eddie Willing of Eddie's Towing
Company, who stated that he had had previous experience
loading medical equipment.  Willing agreed to move the gantry
for $100.
When Willing arrived, he backed his tow truck up to the
gantry and lowered the roll-back wrecker bed to the ground
The CT scanner in this case consisted of several
1
components, including the gantry, a patient couch, a power
conditioner, a host-computer console, an image-reconstruction
computer console, and a contrast injector.  The gantry is the
central component of the CT scanner, housing X-ray and data-
collection equipment.   
3
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near the gantry.  Willing then attached a winch cable to the
gantry, engaged the winch, and pulled the gantry onto the back
of the wrecker bed.  Willing raised the wrecker bed, secured
the gantry using tie-down chains, and drove the truck across
the parking lot to the box van.   Willing backed the tow truck
up to the back of the box van and lowered the bed so it met
the rear of the box van.  Willing released the winch, and the
gantry began to roll toward the box van.  As the front two
wheels of the gantry entered the rear of the box van, Dixon,
who was standing in the rear of the box van waiting to receive
the gantry, heard a "big snap."  At that moment the gantry
suddenly shifted to one side, struck the side of the box van,
and fell off the side of the tow truck.  The damage to the
gantry was significant and rendered the CT 
scanner 
inoperable. 
Dixon and Willing both testified that a bolt holding part of
the dolly system to the gantry had snapped, causing the gantry
to shift and to fall from the tow truck.
The loss was initially paid by KEI's insurer, Mid-Century
Insurance Company.  
Mid-Century notified Advantage that it 
had
determined that the damage to the CT scanner was the result of
Advantage's negligence, and it demanded that Advantage
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reimburse it for the amount paid on the claim -- $180,000. 
Advantage notified its commercial general-liability ("CGL")
insurer, 
Mid-Continent, 
of 
the 
claim, 
and 
Mid-Continent 
denied
coverage for the loss.   Advantage's policy is a standard form
2
CGL policy that requires Mid-Continent to "pay those sums that
the insured becomes legally obligated to pay as damages
because 
of 
... 
'property 
damage' 
... 
caused 
by 
an
'occurrence'" and to defend Advantage from any 
lawsuit 
seeking
such damages.   In its letter denying Advantage's claim, Mid-
3
Continent cited several policy exclusions as the basis for 
denying 
coverage, 
namely, 
the 
contractual-liability 
exclusion;
the "auto" exclusion; the exclusion for personal property in
Mid-Continent also denied coverage for the loss under a
2
commercial automobile policy it had issued to Advantage.  That
policy, however, is not at issue in this appeal.
The basic insuring agreement of the CGL policy provides
3
in pertinent part:
"We will pay those sums that the insured becomes
legally obligated to pay as damages because of
'bodily injury' or 'property damage' to which this
insurance applies.  We will have the right and duty
to defend the insured against any 'suit' seeking
those damages.  However, we will have no duty to
defend the insured against any 'suit' seeking
damages for 'bodily injury' or 'property damage' to
which this insurance does not apply. ..."
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Advantage's "care, custody, or control"; and the "your work"
exclusion.
On March 20, 2013, Advantage commenced this action
against Mid-Continent in the Mobile Circuit Court.   Advantage
4
sought a judgment declaring that Mid-Continent owed a duty
under the CGL policy Mid-Continent had issued to Advantage to
defend Advantage in any action seeking damages for the loss of
the CT scanner and to indemnify Advantage for any legal
liability it incurred as a result of the loss.   Advantage
5
also asserted a breach-of-contract claim against Mid-
Continent. 
On November 13, 2014, during the pendency of this action,
Mid-Century, as KEI's subrogee, sued Advantage in the Court of
Common Pleas for Aiken County, South Carolina ("the South
Carolina litigation").  The complaint filed in the South
Mid-Continent is the only defendant to the action.  The
4
action was removed to the United States District Court for the
Southern District of Alabama on February 5, 2014.  The
district court remanded the case to the Mobile Circuit Court
on May 5, 2014.
Advantage's action also seeks a declaration that Mid-
5
Continent owes a duty to defend and to indemnify Advantage
under the commercial automobile policy issued to Advantage. 
As noted supra, note 2, that policy is not at issue in this
appeal.
6
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Carolina litigation set forth a single count of negligence
against Advantage, alleging that the CT scanner was damaged as
a result of Advantage's failure to use reasonable care in
moving the scanner.  The complaint set forth the following
factual allegations:
"6.
During the moving process, the Scanner was
mounted on four dollies, one on each
corner.
"7.
On December 12, 2011, [Advantage] began to
load the Scanner into a box truck for
transporting.
"8.
In order to load the Scanner onto the box
truck, a tilting roll-back truck was used
as an inclined plane to raise the Scanner
up to the level of the rear door of the box
truck.
"9.
While the Scanner was being loaded from the
roll-back into the box truck, [Advantage]
lost control of the Scanner and one of the
dollies struck the side of the roll-back.
"10.
When the subject dolly struck the side of
the roll-back, the screw connecting the
dolly to the Scanner broke, causing the
Scanner to become unbalanced.
"11.
In its unbalanced state, the Scanner fell
off of the roll-back and struck the ground,
causing severe damage to the Scanner. ..."
On July 12, 2014, Advantage filed a motion for a partial
summary judgment in the Mobile Circuit Court action, 
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requesting a summary judgment in its favor on its claim that
Mid-Continent owed a duty to defend Advantage in the South
Carolina litigation.  Mid-Continent filed a cross-motion for
a summary judgment, arguing that, based on the various policy
exclusions cited in its letter denying coverage, it had no
duty to defend or to indemnify Advantage.   In support of
6
their respective summary-judgment motions, the parties
submitted narrative statements of undisputed facts and
evidentiary 
materials, 
including, 
once 
filed, 
the 
complaint 
in
the South Carolina litigation and the depositions of Dixon,
KEI's corporate representative, and Willing.  
On February 11, 2015, the circuit court granted
Advantage's motion for a summary judgment and denied Mid-
Continent's motion.  The circuit court held 
that Mid-Continent
owed Advantage a duty to defend it in the South Carolina
litigation under the CGL policy.  On April 13, 2015, the
circuit 
court 
entered 
its 
summary-judgment 
order 
and 
certified
The summary-judgment motions were filed before the
6
commencement of the South Carolina litigation.  Thus, Mid-
Continent initially asserted that Advantage's claims were
premature and not ripe for adjudication.  Following the
commencement of the South Carolina litigation, Mid-Continent
amended its summary-judgment motion to argue that the facts
asserted in the complaint in the South Carolina litigation did
not allege a covered occurrence.
8
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it under Rule 54(b), Ala. R. Civ. P., as a final judgment.  
7
Mid-Continent filed this appeal.
II. Standard of Review
"This Court's review of a summary judgment is de
novo. Williams v. State Farm Mut. Auto. Ins. Co.,
886 So. 2d 72, 74 (Ala. 2003).  We apply the same
standard of review as the trial court applied. 
Specifically, we must determine whether the movant
has made a prima facie showing that no genuine issue
of material fact exists and that the movant is
entitled to a judgment as a matter of law.  Rule
56(c), Ala. R. Civ. P.; Blue Cross & Blue Shield of
Alabama v. Hodurski, 899 So. 2d 949, 952-53 (Ala.
2004).  In making such a determination, we must
review the evidence in the light most favorable to
the nonmovant.  Wilson v. Brown, 496 So. 2d 756, 758
(Ala. 1986).  Once the movant makes a prima facie
showing that there is no genuine issue of material
fact, the burden then shifts to the nonmovant to
produce 'substantial evidence' as to the existence
of a genuine issue of material fact.  Bass v.
SouthTrust Bank of Baldwin County, 538 So. 2d 794,
797-98 (Ala. 1989); Ala. Code 1975, § 12-21-12. 
'[S]ubstantial evidence is evidence of such weight
and quality that fair-minded persons in the exercise
of impartial judgment can reasonably infer the
existence of the fact sought to be proved.'  West v.
Founders Life Assur. Co. of Fla., 547 So. 2d 870,
871 (Ala. 1989)."
We agree with those decisions from other jurisdictions
7
that find a ruling as to a duty to defend under an insurance
policy is appropriate for Rule 54(b) certification, despite
pending claims concerning the duty to indemnify under the same
policy.  See Still up in the Air?  Appealability of Decisions
on the Duty to Defend, 26 No. 8 Ins. Litig. Rep 281 (May 14,
2004) (collecting state and federal court decisions).
9
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Dow v. Alabama Democratic Party, 897 So. 2d 1035, 1038-39
(Ala. 2004).
III.  Analysis
An insurance company has two general duties under a
policy of insurance: a duty to defend and a duty to indemnify. 
The duty to defend is broader than the duty to indemnify. 
This appeal concerns only Mid-Continent's alleged duty to
defend Advantage in the South Carolina litigation. 
"'It is well settled "that [an] insurer's duty
to  defend is more extensive than its duty to
[indemnify]." United States Fid. & Guar. Co. v.
Armstrong, 479 So. 2d 1164, 1168 (Ala. 1985)
(citations omitted). Whether an insurance company
owes its insured a duty to provide a defense in
proceedings instituted against the insured is
determined primarily by the allegations contained in
the complaint. Id. at 1168. If the allegations of
the injured party's complaint show an accident or an
occurrence within the coverage of the policy, then
the insurer is obligated to defend, regardless of
the ultimate liability of the insured. Ladner & Co.
v. Southern Guar. Ins. Co., 347 So. 2d 100, 102
(Ala. 1977)(citing Goldberg v. Lumber Mut. Cas. Ins.
Co., 297 N.Y. 148, 77 N.E.2d 131 (1948)). However,
"[t]his Court ... has rejected the argument that the
insurer's obligation to defend must be determined
solely from the facts alleged in the complaint in
the action against the insured." Ladner, 347 So. 2d
at 103. In Pacific Indemnity Co. v. Run-A-Ford Co.,
276 Ala. 311, 161 So. 2d 789 (1964), this Court
explained:
"'"We are of [the] opinion that in deciding
whether a complaint alleges such injury,
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the court is not limited to the bare
allegations of the complaint in the action
against [the] insured but may look to facts
which may be proved by admissible evidence 
...."
"'276 Ala. at 318, 161 So. 2d at 795; see Ladner,
347 So. 2d at 103 (quoting this language). "[I]f
there is any uncertainty as to whether the complaint
alleges facts that would invoke the duty to defend,
the insurer must investigate the facts surrounding
the incident that gave rise to the complaint in
order to determine whether it has a duty to defend
the insured." Blackburn v. Fidelity & Deposit Co. of
Maryland, 667 So. 2d 661, 668 (Ala. 1995)(citing
United States Fid. & Guar. Co. v. Armstrong, 479 So.
2d 1164 (Ala. 1985)) (other citations omitted).'"
Hartford Cas. Ins. Co. v. Merchants & Farmers Bank, 928 So. 2d
1006, 1009-10 (Ala. 2005) (quoting Acceptance Ins. Co. v.
Brown, 832 So. 2d 1, 14 (Ala. 2001)).
In the present appeal, it is undisputed that Advantage,
the named insured under the Mid-Continent CGL policy, is a
defendant in a "'suit' seeking damages for ... 'property
damage'" caused by an "occurrence."  The question is whether
the incident falls within one or more of the coverage
exclusions in the policy so as to relieve Mid-Continent of its
duty to defend Advantage. 
Policy exclusions are to be narrowly interpreted, and,
when an ambiguity exists in the language of an exclusion,
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"'"the exclusion will be construed so as to limit the
exclusion to the narrowest application reasonable under the
wording."'" Porterfield v. Audubon Indem. Co., 856 So. 2d 789,
806 (Ala. 2002) (quoting Carpet Installation & Supplies of
Glenco v. Alfa Mut. Ins. Co., 628 So. 2d 560, 562 (Ala. 1993),
quoting in turn St. Paul Mercury Ins. Co. v. Chilton-Shelby
Mental Health Ctr., 595 So. 2d 1375, 1377 (Ala. 1992)).  See
also American States Ins. Co. v. Martin, 662 So. 2d 245, 247
(Ala. 1995) ("Exclusions are to be interpreted as narrowly as
possible, so as to provide maximum coverage for the insured,
and are to be construed most strongly against the insurance
company that drafted and issued the policy.").  Here, Mid-
Continent contends that four exclusions in the CGL policy
separately apply to relieve it of its duty to defend Advantage
in the South Carolina litigation: The "auto" exclusion; the
"care, custody, or control" exclusion; the "your work"
exclusion; and the contractual-liability exclusion.  Mid-
Continent also relies on the "no-action" clause in the policy. 
We discuss each in turn.
A.  The "auto" exclusion
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First, Mid-Continent contends that coverage is excluded
under the "auto" exclusion in the policy, which provides, in
pertinent part:
"This insurance does not apply to: 
"....  
"'Bodily injury' or 'property damage' arising out of
the ownership, maintenance, use or entrustment to
others of any ... 'auto' ... owned or operated by or
rented or loaned to any insured.  Use includes
operation and 'loading or unloading.'"
The purpose of the auto exclusion in the CGL policy is to
proscribe coverage for liability that should more properly
fall under an automobile-liability policy.  In this regard,
loading and unloading of an automobile or other vehicle are
generally considered "use" of the "auto," with one important
exception.  The policy defines "loading or unloading" as
follows:
"'Loading or unloading' means the handling of
property:
"a.
After it is moved from the place where it is
accepted for movement into or onto an aircraft,
watercraft or 'auto';
"b.
While it is in or on an aircraft, watercraft or
'auto'; or
13
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"c.
While it is being moved from an aircraft,
watercraft or 'auto' to the place where it is
finally delivered;
"but 'loading or unloading' does not include the
movement of property by means of a mechanical
device, other than a hand truck, that is not
attached to the ... 'auto.'" 
(Emphasis added.)
Mid-Continent argues that because the accident occurred
while the gantry was being loaded into the box van (or
unloaded from the tow truck), the property damage arose out of
the "use" of an "auto."  Thus, it contends, the auto exclusion
bars coverage under the CGL policy.
In the present case the CT scanner was damaged as the
gantry was being loaded into a box van by means of a tow
truck.  Although the tow truck is an "auto" as defined by the
policy,  it is undisputed that the tow truck was not "owned,
8
or operated by, or rented or loaned to" Advantage.  Thus, the
The policy defines "auto" as:
8
"a.
A land motor vehicle, trailer or semitrailer
designed for travel on public roads, including
any attached machinery or equipment; or
"b.
Any other land vehicle that is subject to a
compulsory or financial responsibility law or
other motor vehicle insurance law in the state
where it is licensed or principally garaged."
14
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unloading of the tow truck provides no basis for the
application of the auto exclusion.  
The box van, however, is an "auto" "operated by or
rented" to Advantage.  The policy provides that the "use" of
an "auto" includes "loading or unloading."  Here, there is no
question that the CT scanner was being "loaded" into the box
van, as that word is commonly used.  Significantly, however,
the definition in the policy of "loading and unloading"
contains an exception:  "'loading or unloading' does not
include the movement of property by means of a mechanical
device, other than a hand truck, that is not attached to the
... 'auto.'" Here, there is no dispute that the gantry portion
of the CT scanner was being lowered into the box van by a tow
truck -– a mechanical device.  Thus, this incident falls
within the exception to the definition in the policy of
"loading and unloading."  The CT scanner was not being "loaded
or unloaded" as that term is defined by the CGL policy. 
Therefore, the accident did not arise out the "use" of the box
van, and the auto exclusion is inapplicable.  See Elk Run Coal
Co. v. Canopius U.S. Ins., Inc., 235 W. Va. 513, 775 S.E.2d 65
(2015) (holding that a front-end loader being used to load
15
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coal onto a truck constituted a "mechanical device" under a
CGL policy and that, therefore, the auto exclusion was not
applicable); Continental Ins. Co. v. American Motorist Ins.
Co., 247 Ga. App. 331, 542 S.E.2d 607 (2000) (determining that
the auto exclusion in a CGL policy did not apply when the
accident occurred while the insured's vehicle was being
unloaded by means of a "pallet jack").
B.   The care, custody, or control exclusion
Next, Mid-Continent contends that it has no duty to
defend Advantage because, it says, coverage is excluded under
the "care, custody, or control" exclusion, which provides:
"This insurance does not apply to:
"....
"j.  Damage To Property
"'Property damage' to:
"....
"(4) Personal property in the care, custody or
control of the insured ...."
The general intent of this exclusion is to avoid coverage
under a CGL policy that should be covered separately under
property insurance.  See 7A John Alan Appleman, Insurance Law
& Practice § 4493.03 (1979).  This Court interpreted a "care,
16
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custody or control" exclusion in the seminal case Fidelity &
Casualty Co. of New York v. Landers, 283 Ala. 697, 220 So. 2d
884 (1969).  In that case, we held that, in order to fall
within the exclusion, the insured must be exercising
possessory control of the property:
"An overwhelming majority of cases support the view,
either expressly or by implication, that the [care,
custody or control exclusion] clause in the policy
considered should be construed as referring to
possessory handling of property as distinguished
from proprietary control.  See citations in 62
A.L.R.2d, p. 1245.  The issue here is whether or not
[the insured] was in possessory control of the
[property].  If in possessory control, [the insured]
was not covered by the policy."
283 Ala. at 699, 220 So. 2d at 887.  Further, "[i]t is the
exclusive possession of the property at the time damage occurs
that is decisive of whether the exclusion is operative." 
Insurance Law & Practice § 4493.03.  Finally, we have stated
that whether the care, custody, or control exclusion applies
must be determined on a case-by-case basis:
"'We are of the opinion that what constitutes
"care, custody or control" or "exercising physical
control" depends not only upon whether the property
is realty or personalty, but as well upon many other
facts, such as the location, size, shape and other
characteristics of the property, what the insured is
doing to it and how, and the interest in and
relation of the insured and others to it.  Whether
the property is realty or personalty, and the
17
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precise legal relationship of the insured and others
to it, may be material in a given situation; but
when they are, they are merely facts (more or less
important, depending upon the circumstances) to be
taken in conjunction with all the facts, in
determining whether there is exclusion. ...'"
283 Ala. at 699, 220 So. 2d at 887 (quoting Michigan Mut.
Liab. Co. v. Mattox, 173 So. 2d 754, 757 (Fla. Dist. Ct. App.
1965), quoting in turn Elcar Mobile Homes, Inc. v. D.K.
Baxter, Inc., 66 N.J. Super. 478, 169 A.2d 509 (1961)).
In the present case Mid-Continent urges us to look no
further than the complaint in the South Carolina litigation to
confirm the application of the care, custody, or control
exclusion.  Mid-Continent points to the allegations of the
complaint asserting that Advantage "lost control" and failed
to "maintain proper control" of the CT scanner.  Although
those allegations certainly imply that Advantage was in some
type of control over the scanner, those allegations are not
dispositive as to the application of the "care, custody, or
control" exclusion for at least two reasons.  First, the
complaint does not allege that Advantage exercised the type of
exclusive possessory control required to make the exclusion
applicable. Second, we are not limited to the bare allegations
of the underlying complaint in determining whether an insurer
18
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has a duty to defend.  See Hartford, 928 So. 2d at 1010.  An
insurer should not be able to evade its obligation to defend
by ignoring the facts and relying on incorrect or incomplete
allegations in the complaint.  Thus, contrary to Mid-
Continent's arguments, our analysis must consider the
undisputed evidence of Willing's involvement in the incident.
Although not set out in the factual allegations of the 
complaint in the South Carolina litigation, it is undisputed
that the accident occurred while Willing's tow truck was
lowering the gantry by means of a winch into Advantage's box
van.  Willing was hired, at least in part, because he had
experience loading and unloading medical equipment like the CT
scanner.  Upon his arrival, Willing lowered the wrecker bed to
the ground near the gantry, attached his winch cable, and then
winched the gantry onto the wrecker bed.  He then raised the
bed and secured the gantry with tie-down chains.  He next
drove across the parking lot, backed the tow truck up to the
box van, and lowered the wrecker bed until it was aligned with
the back of the box van.  Willing then removed the tie downs
and, using a control panel on his tow truck, began to release
the winch cable.  The gantry fell from the wrecker as Willing
19
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was lowering it into the box van.  Thus, at the time of the
accident, Willing, who was lowering the gantry from his tow
truck by means of a winch he was operating, was exercising
some control over the gantry.
Under the peculiar facts of this case, we cannot say that
the circuit court erred in finding that the care, custody, or
control exclusion did not preclude Mid-Continent's duty to
defend.  Mid-Continent has failed to cite any authority
tending to establish that, under the facts of this case,
Advantage was in exclusive possessory control of the CT
scanner at the time of the accident.  Our research has
revealed several analogous cases in which courts have found
the party in Willing's position to be the party exercising
care, custody, or control over the equipment being loaded or
unloaded.  See Appicelli Sales & Serv., Inc. v. Citizens Mut.
Ins. Co., 40 Mich. App. 287, 199 N.W.2d 242 (1972) (holding
that the company using a wrecker winch to unload a cherry
picker from a flatbed trailer had care, custody, or control of
cherry picker during unloading process, when cherry 
picker 
was
damaged); Torrington Co. v. Aetna Cas. & Surety Co., 264 S.C.
636, 216 S.E.2d 547 (1975) (holding that heavy equipment that
20
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was dropped during unloading was under care, custody, or
control of company operating the crane used to unload the
equipment).  Accordingly, under the facts and 
arguments before
us, we do not find that the circuit court erred in failing to
apply the "care, custody, or control" exclusion.
C. The "your work" exclusion
Next, Mid-Continent asserts that it has no duty to defend
Advantage in the South Carolina litigation because, it says,
coverage is excluded under the "your work" exclusion.  That
exclusion –- exclusion j(6) under the policy -– precludes
coverage for:
"'Property damage' to:
"....
"(6)
That particular part of any property
that must be restored, repaired or
replaced because 'your work' was
incorrectly performed on it."
The "your work" exclusion is one of the common business-risk
exclusions 
found 
in 
liability-insurance 
policies. 
 
The 
purpose
of the "your work" exclusion is to prevent coverage for the
insured's own faulty workmanship, a normal risk associated
with operating a business.  See 9A Lee R. Russ et al., Couch
on Insurance § 129:17.  The exclusion is intended to prevent
21
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liability insurance from becoming a performance bond for the
insured's work.
Here, Mid-Continent argues that because Advantage was
engaged to transport the CT scanner, its attempt to load the
gantry into the box van was a part of its "work."  The policy
defines "your work," in pertinent part, as "[w]ork or
operations performed by you or on your behalf."  Although the
gantry was being loaded by Willing, it is undisputed that this
work was being done on Advantage's behalf.  Thus, we agree
with Mid-Continent that the loading of the gantry qualified as
"your work" under the policy.
Advantage, however, argues that the evidence before the
circuit court indicated that Advantage's work was not
"incorrectly performed" on the CT scanner.   To the contrary,
Advantage argues, the accident was the result of the sudden
and unexpected failure of a bolt that attached one of the
dollies to the gantry.  Advantage therefore contends that,
notwithstanding the allegations of the complaint in the South
Carolina litigation, the accident in this case did not occur
because Advantage was incorrectly performing its work on the
CT scanner, but because a bolt supplied by a third party
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unexpectedly failed.  Thus, it contends, the exclusion should
not apply.
The "your work" exclusion applies to property that is
damaged because the insured's work "was incorrectly performed
on it."  (Emphasis added.)  We confess that, under the facts
of this case, there is some ambiguity in the phrase "work ...
incorrectly performed on it" and whether the 
transportation of
an item constitutes work "on it."  There is some authority for
the proposition that it does not.  In Essex Insurance Co. v.
Inland Marine Sales, LLC, 387 F. Supp. 2d 978 (W.D. Ark.
2005), the insured's agent was removing a houseboat from the
water with a trailer so that the engine of the boat could be
inspected.  While it was being moved, the boat fell from the
trailer and was damaged.  In that case, the court concluded
that the "your work" exclusion did not apply because the
damage to the houseboat occurred "while [the insured] was
moving the boat rather than actually repairing it or servicing
its parts."  387 F. Supp. 2d at 983.  Furthermore, in
Cincinnati Insurance Co. v. Federal Insurance Co., 166 F.
Supp. 2d 1172 (E.D. Mich. 2001), the court held that the
exclusion did not apply when the evidence showed that the 
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machine part fell, not because of the insured's incorrectly
performing work on the machine, but because a brake 
mistakenly became disengaged.
In response to Advantage's argument, Mid-Continent cites
no authority to suggest that an accident occurring during the
movement of property constitutes work "incorrectly performed
on" the property for the purpose of the j(6) exclusion. 
Instead, Mid-Continent merely argues that there remain
questions of fact as to the cause of the accident and
challenges the admissibility of the extrinsic testimony
concerning the sudden shearing of the dolly bolt.  We fail to
understand Mid-Continent's contentions in this regard,
particularly in light of Mid-Continent's own "statement of
undisputed facts" submitted to the circuit court, 
which 
stated
that "the two hex bolts on one of the dollies sheared off
making the gantry unbalanced ... [and b]ecause of its
instability, the CT scanner fell off the rollback truck."  Nor
did Mid-Continent argue in its summary-judgment filings that
there were any material questions of fact precluding summary
judgment as to this issue.
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Further, we note that exclusion j(6) does not exclude
coverage for all property damage caused by an insured's faulty
workmanship.  Rather, the meaning of exclusion j(6) is plain
that property damage is excluded from coverage under that
provision only as to the "particular part[s]" of the property
that were themselves the subject of the defective work.  In
interpreting this exclusion, the United States Court of
Appeals for the Fifth Circuit has stated:
"[E]xclusion j(6) bars coverage only for property
damage to parts of a property that were themselves
the subject of defective work by the insured; the
exclusion does not bar coverage for damage to parts
of a property that were the subject of only
nondefective work by the insured and were damaged as
a result of defective work by the insured on other
parts of the property."
Mid-Continent Cas. Co. v. JHP Dev., Inc., 557 F.3d 207, 215
(5th Cir. 2009).  This statement is consistent with our prior
interpretations of similar faulty-workmanship exclusions. 
See, e.g., Berry v. South Carolina Ins. Co., 495 So. 2d 511
(Ala. 1985); United States Fid. & Guar. Co. v. Bonitz
Insulation Co. of Alabama, 424 So. 2d 569, 573 (Ala. 1982).  
Here, we are faced with undisputed evidence that only one
constituent part of the CT Scanner –- the gantry –- was being
moved at the time of the accident.  The allegations of the
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complaint in the South Carolina litigation, however, allege
physical damage to the entire CT Scanner.  Thus, even if mere
movement of the property constitutes work on the CT scanner,
to the extent parts of the scanner other than the gantry were
damaged, exclusion j(6) would not exclude coverage as to those
other parts, and Mid-Continent would be required to defend.
Based on the arguments and facts before us on appeal, and
the requirement that exclusionary provisions be narrowly
interpreted, we cannot say the circuit court erred in refusing
to find that exclusion j(6) precluded Mid-Continent's duty to
defend Advantage in the South Carolina litigation.
D.  Contractual-liability exclusion
Next, Mid-Continent contends that coverage is excluded
under the contractual-liability exclusion.  That exclusion
provides, in part:  "This insurance does not apply to
...'Bodily injury' or 'property damage' for which the insured
is obligated to pay damages by reason of the assumption of
liability in a contract or agreement."  
Mid-Continent 
contends
that because Advantage was retained by KEI to move the
scanner, the accident arose out of a 
contractual 
relationship. 
Thus, it argues, the contractual-liability exclusion applies. 
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The complaint in the South Carolina litigation, 
however, 
makes
no claim that any contractual obligations were breached or
that Advantage is liable based on a contractual assumption of
liability.  Rather, the complaint asserts a single count of
negligence, in which it contends that Advantage failed to
exercise reasonable care in transporting the CT scanner. 
Accordingly, the contractual-liability exclusion does not
apply.  See Townsend Ford, Inc. v. Auto-Owners Ins. Co., 656
So. 2d 360, 364 (Ala. 1995) (noting that the contractual-
liability exclusion relieves an insurer from defending claims
against its insured involving indemnity contract liability);
United States Fid. & Guar. Co. v. National Tank & Mach. Works,
Inc., 402 So. 2d 925, 927 (Ala. 1981) ("Those allegations do
not depend upon any 'liability assumed by the Insured under
any contract' but upon an alleged breach of duty implied by
law; hence [the contractual-liability] exclusion does not
apply.").
E.  No-action clause
Finally, Mid-Continent argues that the trial court erred
in entering a summary judgment in favor of Advantage because,
it argues, Advantage's declaratory-judgment action is barred
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by the "no-action" clause in the policy until a final judgment
has been entered against Advantage.  The no-action clause
provides:
"3.
Legal Action Against Us
"No person or organization has a right under
this Coverage Part:
"a.
To join us as a party or otherwise bring us
into a 'suit' asking for damages from an
insured; or
"b.
To sue us on this Coverage Part unless all
of its terms have been fully complied with.
"A person or organization may sue us to recover
on an agreed settlement or on a final judgment
against an insured; but we will not be liable
for damages that are not payable under the
terms of this Coverage Part or that are in
excess of the applicable limit of insurance.
..."
This provision is intended to prevent direct actions against
an insurer for liability owed by the insured until there is a
final judgment or settlement against the insured.  Mid-
Continent argues that Advantage must first suffer a final
judgment in the South Carolina litigation before it can obtain
a judgment declaring that Mid-Continent has a duty to defend
in the South Carolina litigation.  We find this construction
untenable and simply not supported by the policy language or
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the authority cited on appeal.  See Eureka Fed. Sav. & Loan
Ass'n v. American Cas. Co. of Reading, Pa., 873 F.2d 229, 232-
33 (9th Cir. 1989) (no-action clause does not bar insured's
declaratory-judgment action).
IV.  Conclusion
This case concerns Mid-Continent's duty to defend
Advantage in the South Carolina litigation.  Based upon both
the allegations in the complaint and the undisputed facts, the
Mobile Circuit Court concluded that the policy exclusions did
not allow Mid-Continent to evade its obligation to provide a
defense under the CGL policy it had issued to Advantage, and
it entered a final judgment in favor of Advantage.  For the
reasons set forth above, the judgment of the circuit court is
affirmed.
AFFIRMED
Moore, C.J., and Stuart, Bolin, Parker, Wise, and Bryan,
JJ., concur.  
Murdock and Shaw, JJ., dissent.
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MURDOCK, Justice (dissenting).
I believe the Court has misunderstood and misapplied both
the "care, custody, or control" exclusion and the "your work"
exclusion in the underlying policy.  I therefore respectfully
dissent.
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