Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-89-03265/USCOURTS-ca10-89-03265-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 

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UNITED STATES COURT .OF APPEALS 

TENTH CIRCUIT FEB 16 1990 

ROBERT L. HOECKER 

COMMERCIAL UNION Clerk INSURANCE COMPANY, 

v. 

Plaintiff-Counterclaim DefendantAppellee, 

JOHN MASSMAN CONTRACTING CO., 

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Defendant-Counterclaimant-Appellant.} 

ORDER AND JUDGMENT* 

No. 89-3265 

(D.C. No. 87-2364-0} 

(D. Kansas} 

Before TACHA, BALDOCK and BRORBY, Circuit Judges. 

After examining the briefs and the appellate record, this 

three-judge panel has determined unanimously that oral argument 

would not be of material assistance in the determination of this 

appeal. See Fed. R. App. P. 34(a}: 10th Cir. R. 34.1.9. The 

cause is therefore ordered submitted without oral argument. 

John Massman Contracting Company (Massman} was sued by 

Commercial Union Insurance Company (Commercial} for insurance 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

Appellate Case: 89-3265 Document: 01019964410 Date Filed: 02/16/1990 Page: 1 
premiums due Commercial under three insurance policies. Massman 

counterclaimed under a fourth policy issued by Commerc i a l for 

monies expended by Massman in defending and settling two prior 

lawsuits wherein Commercial had denied coverage. Both parties 

moved for summary judgment and the District Court entered judgment 

for Commercial. Massman appeals only that portion of the decision 

relating to coverage under the fourth policy. 

The facts are relatively simple and undisputed. Commercial 

issued to Massman a policy of comprehensive general liability with 

a broad form liability endorsement. Thereafter Massman was sued 

by a contractor who alleged damages were due as a direct result of 

Massman's failure to comply with the owner's plans and 

specifications. (Memorandum and Order at 1.) Massman tendered 

the defense of this suit to Commercial who refused the offer. 

The District Court first determined the law of Missouri 

applies. Massman does not appeal this determination while 

Commercial, although not appealing the determination, argues in 

its brief that Kansas law applies. We find it unnecessary to 

answer Appellee's issue. 

The District Court set forth the language in the exclusions 

contained in the policies and held there was no coverage. 1 

1 The language of exclusion is lengthy 

forth herein as it is set forth in the 

Court and there is no dispute between the 

language. 

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and will not be set 

decision of the District 

parties as to the policy 

Appellate Case: 89-3265 Document: 01019964410 Date Filed: 02/16/1990 Page: 2 
Massman does not find fault with this determination but contends 

that one of the paragraphs of exclusion creates coverage. 

Massman relies upon the following exclusion: 

"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 a warranty 

that work performed by or on behalf of the named insured 

will be done in a workmanlike manner." 

Memorandum and Order aMassman argues that this coverage cannot be 

done away with by a later contradictory exclusion. (Appellant's 

Brief at 10.) Stated somewhat differently, Massman argues that 

the effect of the above quoted exclusion is to create coverage and 

the remaining exclusionary language contained in the policies may 

not take this coverage away from Massman. In making this argument 

Massman relies heavily upon McRaven v. F-Stop Photo Labs, Inc., 

660 S.W.2d 459 (Mo. App. 1983), and the cases cited therein. 

In McRaven, the defendant agreed to make photographic prints 

from slides furnished by plaintiffs. Plaintiffs alleged that 

defendant breached its warranty to produce in the prints the color 

and quality contained in the slides. The language contained in 

the policy exclusion was very similar to that contained in 

exclusion (a) above. The court found that the exclusion contained 

an exclusion to an exclusion and therefore the policy covered and 

applied to the insured's warranties. However, it should be noted 

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Appellate Case: 89-3265 Document: 01019964410 Date Filed: 02/16/1990 Page: 3 
that McRaven did not consider the exclusion in the context of the 

instant case, where the exclusions within the policy disallow 

coverage for damage to the work or product of the insured. 

The district court relied upon the case of Taylor-MorelySimon, Inc. v. Michigan Mut. Ins. Co., 645 F. Supp. 596, 601 (E.D. 

Mo. 1986), aff'd 822 F.2d 1093 (8th Cir. 1987) and quoted 

therefrom with approval as follows: 

The McRaven court determined that two exclusionary 

provisions did not preclude coverage and the exception 

regarding warranties, similar to the one here, allowed 

coverage of a claim that the insured violated a warranty 

that services would be performed in a workmanlike 

manner. The Court however, finds that this exclusionary 

provision does not create coverage where, as here, the 

policy contains other exclusions clearly precluding 

coverage. See Helfeldt v. Robinson, 290 S.E.2d 896, 901 

(W.D. Va. -r98l)(construing West Virginia law). More 

importantly, McRaven contradicts an earlier, wellreasoned appellate court opinion finding that an 

insurance policy's exclusionary provision does not 

"endow coverage" but only limits the insurer's 

obligation. Teter, supra, 575 S.W.2d at 784. The Court 

is not persuaded, moreover, that the exception to 

exclusion (a) may reasonably be applied to other 

exclusionary provisions since by its terms the exception 

is limited to exclusion (a). See Biebel Bros. [Inc. v. 

U.S. Fidelity & Guaranty co.'], 522 F.2d [1207,) 1212 

[8th Cir. 1975)]. Therefore, exclusion (a) does not 

provide coverage for the liability at issue here. 

To bolster its conclusion the district court quoted numerous other 

cases that have also declined to hold that an exception to an 

exclusion may be used to endow coverage. 

We agree with the decision of the district court. In our 

judgment, the Missouri courts would hold under the facts of this 

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Appellate Case: 89-3265 Document: 01019964410 Date Filed: 02/16/1990 Page: 4 
case that Massman is not entitled to coverage under the policy. 

McRaven is distinguished from the facts of this case and was 

correctly distinguishable by the district court. 

The decision of the district court is AFFIRMED for 

substantially the same reasons set forth in its Memorandum and 

Order dated May 31, 1989. The mandate shall issue forthwith. 

Entered for the Court: 

WADE BRORBY 

United States Circuit Judge 

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Appellate Case: 89-3265 Document: 01019964410 Date Filed: 02/16/1990 Page: 5