Title: City of Burlington v. National Union Mutual Fire Insurance Co.

State: vermont

Issuer: Vermont Supreme Court

Document:

CITY_OF_BURLNGTON_V_NATL_UNION_FIRE_INS.94-381; 163 Vt 124; 655 A.2d 719

[Filed 30-Dec-1994]

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, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
order that corrections may be made before this opinion goes to press. 


                           No. 94-381


City of Burlington                        Supreme Court

                                          On Appeal from
     v.                                    Chittenden Superior Court

National Union Fire                       November Term, 1994
Insurance Company


Matthew I. Katz, J.

John L. Franco of McNeil, Leddy & Sheahan, Burlington, for
 plaintiff-appellant 

Aaron Eaton and Joseph H. Badgewick of Ryan Smith & Carbine, Ltd., Rutland,
 for defendant-appellee 

      
PRESENT:  Gibson, Dooley, Morse and Johnson, JJ., and Peck, J. (Ret.),
          Specially Assigned 


     DOOLEY, J.   This appeal concerns whether National Union Fire Insurance
Co. (NUFI) owes its insured, City of Burlington, reimbursement for
Burlington's expenses in investigating, defending and settling a suit
initiated against it in the Caledonia Superior Court, entitled Moffatt v.
City of Burlington.  Because NUFI declined to defend, Burlington provided its
own defense and eventually settled the Moffatt case before trial.  Burlington
then brought a declaratory judgment action seeking a determination that NUFI
breached its duty to defend under the policies it issued to Burlington, and,
consequently, that NUFI must indemnify Burlington for its defense and
settlement costs.  The trial court granted NUFI's motion for summary
judgment, and Burlington appeals.  Because the claims alleged in the Moffatt
complaint are not possibly covered by Burlington's policy with NUFI, we
affirm. 

     The issue on appeal is whether the allegations in the Moffatt complaint,
sounding in breach of contract and related torts, triggered NUFI's duty to
defend Burlington under the provisions of the occurrence-based liability
insurance policies that NUFI issued to Burlington. 

 

The Moffatt suit contained five counts against the City of Burlington.  All
of the counts arose out of the operation of an electric generation plant
owned by the Burlington Electric Department. The plant was fueled by wood
chips supplied by plaintiffs, and plaintiffs alleged that Burlington refused
to purchase the volume of wood chips called for in their contract.   Count I
alleged that Burlington breached its contract with plaintiffs.  Count II
alleged that Burlington knew its refusal to accept the quantity of wood chips
contracted for was causing the plaintiffs devastating financial hardship, and
had the character of a willful and wanton or fraudulent tort of insult and
oppression.  Count III alleged breach of duty of good faith and fair dealing
under the wood chip contract.  Count IV alleged economic duress in the
administration of the wood chip contract, and Count V alleged deceit,
claiming that Burlington failed to disclose correct information and
misrepresented material facts.  The plaintiffs claimed bodily injuries
including severe emotional distress, as well as economic losses, and asked
for an award of direct, consequential, and punitive damages. 

     Burlington's liability insurance policies provided in relevant part that
NUFI: 

          will pay on behalf of the insured all sums which the insured
          shall become legally obligated to pay as damages because of
               A. bodily injury or 
               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
          . . . . 

(Emphasis added.)  Coverage is triggered by an "occurrence," defined in the
policies as "an accident, including continuous or repeated exposure to
conditions, which results in bodily injury or property damage neither
expected nor intended from the standpoint of the insured."  On NUFI's motion
for summary judgment, the trial court concluded that all five of the Moffatt
counts were variations on a claim of breach of contract, and were in no way
covered under Burlington's policy with NUFI. 

     The requirements for summary judgment are familiar.  Summary judgment is
appropriate 

 

where there is no genuine issue of material fact and the moving party is
entitled to judgment as a matter of law, after giving the benefit of all
reasonable doubts and inferences to the nonmoving party.  See State v.
Delaney, 157 Vt. 247, 252, 598 A.2d 138, 141 (1991); V.R.C.P. 56(c). The
standard on review by this Court is the same as the standard to be applied by
the trial court in ruling on the motion.  See Cavanaugh v. Abbott
Laboratories, 145 Vt. 516, 520,