### IN THE COURT OF APPEALS OF TENNESSEE AT JACKSON April 30, 2001 Sessi

on ROY ANDERSON CORPORATION v. WESTCHESTER FIRE

INSURANCE COMPANY, ET AL 

### . Direct Appeal from the Circuit Court for Shelby County No. 96515 T.D. Robert A. Lanier, Judge

No. W2000-01489-COA-R3-CV - Filed July 26, 2001
Roy Anderson Corporation secured builders risk insurance from Westchester Fire I nsurance Company and Continental Insurance Company to co ver construction of a federal corr ect ion al f aci lit y. As a result of defective workmanship by the masonry subcontractor , Roy An derson Corporation sustained losses when it had to repair completed, non-defective work of other trades damaged by the masonry subcontractor. R

oy Anderson

filed a notice of

claim ba sed upon these dam

ages to Westchester

Fire Insurance Company and Continental I nsurance Company approximately two years after discovering the defective work. The insurance companies filed a motion forsummary judgment, claiming that they wer e prejudiced by

untimely notic

e; that the defec

tive workmanship exclusions in the policies applied thereby excluding Roy Anderson Corporation’s claim for loss; and that the policies’ con

tractual limi

tat ion periods precluded the claim. The trial court granted summary judgment on the firs t two ground s. We affirm the gr ant o f summary judgment on the ground that the defective workmanship exclusions applied. Tenn. R. App. P. 3 Appe al as of Right; Judgme

nt of the Circuit Cour

t Affirmed; and Remanded D AVID R. F ARMER , J., deliver ed the opi nion of the

court, in w

hich W. F RANK C RAWFORD , P.J., W.S., and J OE G. R ILEY , S P . J., joined. Michael I. Less a

nd Christopher M.

Caputo, Memphis, Tennessee, for the appellant, Roy Anderson Corporation. Kenneth R. S hut tle wor th a nd R obe rt A . Ta lle y, Memphis, Tennessee, for the appellees, Westchester Fire Insu ranc e Co mpa ny an d Co nti nen tal Insu ranc e Co mpa ny.-2- OPINION In September

of 1994, Roy Anderson Corporation (Anderson) contracted with the Federal Bureauof Prisons to constr uct a federal corre

ctional facility

in Forrest

City, Arkansas (the project). As a condition to this contract, Anderson was required to procure builders risk insur ance. In November

of 1994, Anderson secured builders risk insurance under written by Westchester Fire Insurance Company (Wes tches ter) and Continental Insurance Company (Continental), with ea ch carrier equally sharing the risk. Anderson awarded themasonry subc ontract to Mathis

Masonry, Inc. (Mathis) and required Mathis to provide all labor, services, and materi als necessar y to perform all masonry work on the project. B y March 1 4, 1995, Anderson discovered that Mathis’ masonry work was defective, defi cient, and failed to comply with the project plans and specifications. Specifically , M athis ’ defective workresulted in damage to the non-defective work of other subcontractors, including damage to the roof, drainage, electrical, water, and ventilation duct lines. Mathis abandoned the project in March of 1996, and

as a result

of its defective work, Anderson had to repair or replace the damage to the pr

oject. Anderson substantially

completed the masonry work on the project in July of 1996, and the entire project was substa

ntially compl

eted in September of 1996 . In July of 1997, Anderson filed its notice of claim to We stchester and Con

tinental, demandi

ng reim bu rsement for the e

conomic losses Anderson sustained as a result of Mathis’ defective work. Westch ester and Cont inental denied Anderson’s claim in June of 1998 based upon lack of coverage as prov ided in the policie s, Anderson’s failure to timely no tify th em of the claim as required by the policies, and Anderson’s failure to comply

with additional poli

cy provision

s relating to its du

ties in the event of

loss. Anderson filed a

declaratory

action against

Westchest er and Cont inental se eking coverage under the builders risk policies for damage to completed, non-de f ective work on the

project. W estchester

and Continental filed a motion for summary judgment and argued that they were entitle d to a judgment as a matter of law based upon untimely notice, lack of coverage based upon de fective workmanship

exclusions to the polic

ies, and the polici

es’ contractual suit l

imitation provisions

. The trial court granted

the defendants’ motion for summary judgment, finding that coverage for

the loss incurred by Anderson was

excluded by both policies in that the policies do not cover losses resulting from faulty, inadequate or defective materials or workmanship. Fur ther, the c ourt found that Anderson’s notice of a claim was late and that the late

notice resulted in prejudice to Westchester and Continental. This appeal followed. Anderson has presented

the following issu

es, as we perceive them, for this Court’s review: 1. Whether the trial c ourt erred in gr

anting summary

judgment. 2. Whether

the trial court er

red in finding that Mathis’ defective masonry work was not accident

al.-3-

3. Whether

the trial court erred in finding that the po licies’ defective workmanship exclusions were applicable. This appeal is from a grant of summary judgment in favor of the defendants,

Westchester and Continental. Summar y ju dgment is appropriate if no genuine issues of material fact exist and the movant proves it is entitled to ajudgment as a matter of law. See Tenn. R. Civ. P. 56.03. On appeal, we must take the strongest view of the evidence i n fa vor of the nonmovin g party, a llowing all reasonable

inferences in its favor and discarding all countervailing evidence. See Shadrick v. Coker , 963 S.W.2d 726, 731 (Tenn. 199 8) (cit ing Byrd v. Hall, 847 S.W.2d 208, 210-11 (Tenn. 1993)). Since our review concerns questions of law, we review the record de novo with no presumption of correctness

of the judgment below. See Tenn. R. App. P. 13(d); Bain v. Wells , 936 S.W.2d 618, 622 (Tenn. 1997). Policy Exclusions Anderson’s complaint filed against Westchester and Con tinenta l sought recovery for the completed, non-defective work of other trades which was

damaged as a r

esult of Mathis’ de

fectively performed

work. (TR, Me

mo in Opposition to Motion for Summary Judgment, p.11). The Westchester

policy provi

ded that Westchest

er will pay f

or loss to covered property from any of the covered causes of loss, with “covered property” me aning the insured’s property or the property of others for w hich the in sured was li able, incl uding:

a. Materials, supplies, mac hinery, equipment or fixtures which will become a permanent

part of the building, structure or project at the project site . . .; and b. Temporary buildings or structures at the project site . . . . However, the Westchester policy included a defective workma nship exclusion which provided: We will not pay for a “loss” caused by or resulting from any of the following. But if “loss” by a Covered Cause of Loss results, we will pay for that resulting “loss”.

a. Faulty, inadequate or defective materials or workmanship. The Continental policy

provided that Contin

ental will p ay fo r “direct phy sical ‘loss’” to covered property c

aused by or

resulting from a

ny covere d cause of loss, with covere d property bein g:

a. Property which will or has become a permanent part of the projec t . . . b. Temporary structures . . . at the job site . . . . The Continental policy also contained an exclusion whereby Continental provided that it would not pay for:-4-

a “loss” caused

by or resulting from any of the following. But if “loss” by a Covered Cause of Loss results, we will pay for that resulting “loss”.

. . . .
c. Faulty, inadequate or defective: 1. Planning, zoning, dev elopment , surveying , siting; 2. Design, specifications, workmanship, repair, construction, renova tion, remodelin g, grading , compaction; 3. Materials

used in rep ai r, construction, renovation or remodeling; or 4. Maintenance; of part or all of any property wherever located. In explaining what was covered and what was ex cluded by the defe ctive workmanship exclusions in the policies, Michael J. Koski of Westcheste r provided this exam

ple in his deposition: “A house is constructed with a faulty roof. A rainstorm happens. Interior water damage. The faulty roof is not covered. The covered cause of loss, interior rain damage, would be cove red[.]” Based upon the defective workmanship exclusions and the above testimony, the trial court found the fo llowing: [T]he language of this policy indicates to me that it’s clearly of what

I think is called a casualty po

licy and this

is borne out by the expressed exclusions which are that they don’t pay for things that resul

t from things that a

re not, as the cov

erage clause

says, accidental injur

y, which this

is not. I don ’t t hin k th ere’ s an y amb igui ty in thi s po lic y w ith def inites to these Courts interpreting other policies and for that reason,

I think the exclu

sion does apply and that there’s no coverage. As contract interpretation is a question of law, see Aetna Life In s. Co. v. Bidwell , 241 S.W.2d 595 (Tenn. 1951), and because we agree with the court’s determination, we find that the tria l court did not err in granting Westchester’s and Continental’s motion for summary judgment on the ground that the polici es’ defective workmanship exclusions applied which resulted in a lack of-5-

coverage for the loss claimed by Anderson. Thus, we affirm the grant of summ

ary judgme

nt on this ground.Based upon our foregoing conclusions, we find that the remaining issues are pr etermitted. Conclusion For th e a forementioned r

easons, we affi

rm the trial court

’s grant of summa

ry judgmen

t in favor of Westchester and Continental on the ground that the defective workmanship exclusions were applicable

to the instant matte

r thereby e

xcluding from cove

rage Anderso

n’s claim of loss. T

he costs of this appeal are taxed to the appellant, Roy Anderson Corporation, and its surety, for w hich exe cut ion may i ssu e if nece ssa ry.

___________________________________ DAVID R. FARMER, JUDGE