IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI
NO. 2016-CA-01282-COA
PREMIER ENTERTAINMENT BILOX I , LLC D/B/A HARD ROCK HOTEL & CASINO APPELLANT

v. P.T.E. SYSTEMS INTERNATIONAL, LLC APPELLEE
DATE OF JUDGMENT: 08/29/2016 TRIAL JUDGE: HON. ROGER T. CLARK COURT FROM W HICH APPEALED: HARRISON COUNTY CIRCUIT COURT, SECOND JUDICIAL DISTRICT ATTORNEYS FOR APPELLANT: JAMES JOSEPH CRONGEYER JR. MICHAEL W . ULMER ATTORNEY FOR APPELLEE: THOMAS LYNN CARPENTER JR. NATURE OF THE CASE: CIVIL - CONTRACT DISPOSITION: REVERSED AND REMANDED - 09/12/2017 MOTION FOR REHEARING FILED: MANDATE ISSUED: BEFORE LEE, C.J., BARNES AND WESTBROOKS, JJ. BARNES, J., FOR THE COURT: ¶1. Af ter several post-tension cables f ailed during construction of the Hard Rock Hotel
and Casino, the general contractor, Roy Anderson Co r p o r a t i o n ( A n d e r s o n ) , s u

b m itted a claim
f or costs associated with the cable f ailure to the insura n c e c o mpany f o r Prem ier
Entertainm ent Biloxi LLC d/b/a/ Hard Rock Hotel & Casino ( Prem i er). H avi n g f a i l e d to
receive r e i mb u r s e m ent, Anderson f iled an action f

or breach of contract against Prem ier in
Harrison C ounty C ircuit C ourt, S econd Judicial District. The action alleged that Prem ier was contractually required to purchas e a n d ma i ntain a builder’s “all-risk” insurance and was liable f or costs not covered by i nsurance. Anderson sought over a m illion dollars in dam agesand costs attributable to the cable f ailure. Prem ier denied liabili t y , a n d f i led a third-party
action against P.T.E. Sy stem s I nternational, LLC (PTE), the cable supplier, asserting claim s
of com m on-law indem nity , breach of im plied warranty of m erchantability , breach of im plied
warranty o f

f itness, products liability , and breach of express warranty . PTE f iled a m otion

to dism iss, which the circuit court granted, concluding t here existed n o “im plied contractual
indem nity ” against PTE f o r A nderson’s claim s. On appeal, we f i n d t h e c o u rt erred in granting PTE’s m otion to dism iss.

FACTS AND PROCEDURAL HISTORY ¶2. Prem ier and Anderson entered into a c ontract, which provided t hat m aterials f or the
Hard Rock construction project would be p u r c h a s e d under an “owner direct purchase

program ” that exem

p t ed Prem i er f

ro m a 3

. 5% contractor’s tax. 1 Although P rem ier purchased
the construction m a terials, Anderson selected, utilized, and i nstalle d the m aterials. Under
the general p rovisions of

the contract, Prem ier agreed to purchase and m aintain a builder’s
“all-risk” insurance policy and to be liable f o r losses “not f

ully com p ensated by insurance.” “Section 11.3.1 - Property Insurance” provided:
The Owner shall purchase and m aintain, in a com pany or com

panies lawf

ully authorized to do business in th e j u r i s d iction in which the Project is located, pro p e r t y insurance written on a builder’s risk “all-risk” or equivalent policy f orm in t he am ount of the initial Contract Sum , plus value of sub s e quent Contract Modif

i cations a n d c o s t of m aterials supplied o r installed by others,

1 F in an c i n g f

o r m aterials w as p ro v id e d b y th e M ississip p i D ev elo p m en t F in an ce C o rp o ratio n In d u strial D ev elo p m en t R ev en u e B o n d s, w h i ch is cu sto m ary w h e n a p r o j e ct w o u l d h av e “sig n if

ican t eco n o m ic im

p act.”
2com prising total v alue f

or the entire P roject at the site on a replacem e nt costs basis without o ptional d eductibles.

. . . It is understood and agreed that O wner is bearing a ll risk of l oss to the property f or which Owner has an insurable or f inancial intere s t during construction, and i n the event of a loss during construction[ ,] O wner agrees to look solely to the p roceeds of t h e B u i l d e r’s Risk Insura n ce which Owner has agreed to f urnish.

. . . I f Contractor is dam aged by the f

ailure or neglect of Owner t o purchase or m aintain insurance as described above, without so notif y ing Contractor in wr i t i n g , then O wner shall bear all reasonable costs properly attributable thereto.
As regards any loss or dam age which i s of a ty pe covered b y insurance actually obtained by t he Owner o r w hich would have b een covered by i n s u r a nce t hat the Owner could have but f ailed to o btain, the Owner s hall be liable to the Contractor to the extent such loss is not f u lly com pens a t e d b y insurance, whether as a result of policy deductibles, exclusions, lapse o f coverage, gaps in coverage, coverage lim its, inadequacy o f coverage, or other reason whi c h causes the loss to be uninsured, in whole or in part. ¶3. During c o n s t ruction in 2013, at least eighteen PTE 270 KSI post-tensioned cables
f ailed below the rated and specif ied s trength of the cables, resulting i n r epair costs of $1,629,977. 2 Anderson notif ied Prem ier of the cable-breaking incidents on August 23, 2013,
and later provided a statem ent of p roperty loss and dam ages. On January 30, 2015, A nderson

sent Prem ier a letter asserting a claim on the builder’s risk insurance f o r “losses and dam ages related to the Broken Post Tension Cables[ .]” On February 27, 2015, Anderson subm itted

a claim to Integro I nsurance Brokers, requesting reim bursem ent o f $1,629,977 f or the “direct

2 A cco rd in g to P rem ier, th e cab l es “w ere rated f o r an d su p p o sed to w i th stan d u p to 8 0 % o f 2 7 0 ,0 0 0 p o u n d s p e r sq u are in ch o f lo ad w h en stretch ed o r elo n g ated .” T h e cab les “f ailed d u rin g o r af

ter stressin g at lo ad s a t o r b elo w 8 0 % ( 3 3 ,0 0 0 ) o f th e 4 1 ,3 0 0 b reak i n g stren g th .” T h e co sts attrib u t ed to th e cab le f ailu re in c lu d ed : ( 1 ) co sts to rep air th e cab les; (2 ) d am ag es in cu r

red b y d elay s cau sed b y cab l es b reak in g ; ( 3 ) ex ten d ed g en eral co n d itio n s; (4 ) clean -u p co s ts; (5 ) in crease in p u n c h -list w o rk ; an d (6 ) ad d i tio n al p ain ti n g an d w o rk co sts. 3phy sical loss and dam age to property ” as a r e s u l t of the f a iled post-tension cables. 3 The
insurance adjuster, Vericlaim , investigated th e c l a i m and, in a report d ated Novem ber 10, 2015, a cknowledged Anderson was a nam ed insured under the b uilder’s risk p olicy , but also
noted that “the adjustm ent team ha[ d] y et to establish whether signif icant delay

/im pact claim

was incurred by the Insured a s a result of this e vent.” P rem ier was listed a s the “Insured” in
the letter. The report f

urther stated: “At this stage, w e are keeping an open m ind as to whether subrogation will be a f actor in the adjustm ent of the claim .” ¶4. On Novem

ber 23, 2015, Anderson s ued P rem ier f o r the breach of contract, claim ing
that under the contract’s general conditions Prem ier was r esponsible f o r the costs a ssociated
with the cable breakage b ecause it was required “ e ither (A) to obtain ‘all risk’ builder’s risk
i n s urance or (B) to be l iable to [ Anderson] f o r any loss not f

ully com pensated b y s u c h
insurance.” 4 The com

plaint alleged Prem ier had breached its c ontract u a l o b l igations as it “ha[ d] neither ( a) produced insurance coverage f o r the property loss suf

f ered by [ Anderson,] nor (b) com

p ensated [ Anderson] f

or its property

loss.” ¶5. In i ts answer, P rem i er denied there was a breach of contract s ince it had obtained the required “all-risk” insurance and counterclaim ed that Anderson was re s p o n s ible f or all
workm anship and m aterials under the term s of the contract, entitling Prem ier to “ i ndem nity
f or [ A nderson’s] c laim ” arising f rom the cable work. O n March 2 2, 2 016, Prem ier f iled an

3 T h e claim

n o ted th at th e cau se o f

th e cab le f

ailu re w as “u n d eterm in ed .”

4 A n d erso n also alleg ed o th er claim s n o t relev an t to th e ap p eal in th is case.
4“Unopposed Motion f o r Leave to File T hird-P a r t y C o mp laint” under Mississippi Rule of
Civil Procedure 14 and, on M arch 31, 2016, Prem ier f iled a third-party com

plaint against PTE, t he cable supplier, alleging claim s of com m on-law indem nity , breach o f im plied
warranty of m erchantability , breach of im plied warranty of f

itness, p r o d u c t s l iability , and
breach of express warranty

. Prem ier a rgued that its liability was “entirely d erivative of the
conduct of

PTE[ .]” ¶6. PTE f

iled a m otion to d ism iss unde r M i ssissippi R ules of Civil Procedure 12(b)(6) and 14, contending that because A nderson’s claim against Prem ier concerns its f ailure to act, i.e., “procure insurance to address this risk,” the action again s t P T E s h ould be d ism issed “f or
im p roper third party

practice.” The circuit court granted PTE’s m otion and entered a f inal judgm ent of

dism issal in its f

a vor, concluding: [ Anderson] has alleged a breach o f c ontract by [ Prem ier]. The a lleged breach is the f ailure to obtain adequate “all risk” builders insurance.

. . . W hether the insurance purchased covers this loss is not t he q uestion. W ho was “negligent” is not the question. The question is whether the f a c t that [ Anderson] has not been com pensated f

or the loss is a b r e a ch of the contract between it and [ Prem ier].

. . . [ A nderson] is not suing [ Prem ier] f or the f ailure of the cables, but f or f ailing to insure the project.

. . . The sim ple breach of contract i s not a t ort and while the contract m ay im pose the contractual duty to in d e mn i f y o n a p arty , the contract does not give rise t o an action f or i m p lied indem nity under the f a cts presented here.
On appeal, Prem ier subm i ts that the circuit court erred in g ranted PTE’s m otion to dism iss.
DISCUSSION Whether the circuit court erred in granting PTE’s m o tion to dism iss.
A. Standard of Review

5¶7. The circuit j udge granted PTE’s m otion to dism iss u nder the Rule 12(b)(6) standard,

noting that a 12(b)(6) m otion “ t e s ts the legal s uf f iciency of the com

plaint” and, a ssum ing
Prem ier’s allegations are true, requires a d eterm i nation “whether there is any set of f acts pled
tha t w o u l d entitle the plaintif f t o relief .” A c ircuit court’s grant or denial of a m otion to
dism iss is reviewed de novo. Breeden v. Buchanan , 164 So. 3d 1057, 1060 (¶13) (Miss. Ct. App. 2015) (citing Ralph W alker I nc. v. Gallagher , 926 So. 2d 890, 893 (¶3) ( Miss. 2006)).
This Court is “not r equired to def er to the trial court’s j udgm ent o r ruling.” I d

. ( q uoting Gallagher , 926 S o
. 2 d a t 8 93 (¶4)). For this Court to af f irm a grant of a Rule 12(b)(6)

m otion to dism iss, it m

ust be such that “no s et of f a cts w ould entitle [ the opposing party ] to
relief

. ” Lowe v
. L owndes Cty. B ldg. Inspection Dept. , 760 So. 2d 711, 7 12 (¶6) ( Miss. 2000). 5 Prem ier claim s PTE f ailed to “m eet this very

high standard.” ¶8. Counsel f

or PTE argued at the m otion hearing that it “ f iled [ the m otion] under Rule 12(b)(6 ) b e c a u s e t h at’s the p r ocedural key to g et the Court to discuss and to deal with the
Rule 1 4 issue[

. ]” PTE argues on a ppeal, however, t hat t he “appropriate standard of review
would a rise under Rule 14,” stating that it “is n ot whether Prem ier can assert a s et of f acts entitling them to r elief [ but]

. . . w hether the [ circuit] court abuse d i t s discretion in

5 “A R u le 1 2 (b )(6 ) m o tio n to d i sm iss f o r f ailu r e t o state a claim tests th e leg al su f f icien cy o f th e co m

p lain t.” B reed en , 1 6 4 S o
. 3 d at 1 1 6 0

- 6 1 ( ¶ 1 3 ) ( q u o t in g R o se v. T u llo s, 9 9 4 S o
. 2 d 7 3 4 , 7 3 7 (¶1 1 ) (M iss. 2 0 0 8 )). “T h e alleg atio n s in th e co m p lain t m u st b e t a k e n a s tru e, an d t h e m o tio n sh o u ld n o t b e g ran ted u n l ess it ap p ears b e y o n d reaso n ab le d o u b t th at th e p lain tif

f w ill b e u n a

b le to p ro v e a n y s et o f f

acts in su p p o rt o f h er claim .” Id

. at 1 1 6 1 (q u o tin g S ta te v. B a yer C o rp ., 3 2 S o . 3 d 4 9 6 , 5 0 2 (¶2 1 ) (M iss. 2 0 1 0 )).

6determ ining whether Prem ier’s allegations of com m on-law indem nity a nd warranty claim s

m eet the requirem ents im posed under R

ule 14 f or valid third p arty claim s.” 6 Regardless of
whether we review this appeal u n d e r t h e s t r icter de n ovo standard of Rule 12(b)(6) as
Prem ier asserts, or the abuse-of -discretion s tandard argued by PTE, we f ind the circuit
court’s dism issal of

Prem ier’s third-party

com plaint was error.
B. Analysis of Premier’s Claims ¶9. Prem ier contends that i ts “indem nity claim and also s eparate warranty claim s, along
with other claim s against P TE f or the f ailed c a bles,

. . . . are p roper third party claim s under Rule 14,” which provides:
Af ter com m encem ent of the action and upon being so authorized by the court in which t he action is p e nding on m otion and f o r good cause shown, a def ending party m a y cau s e a sum m ons and c om plaint to be served upon a person not a party to the action who i s or m ay be liable t o [

it] for all or a part of the plaintiff’s claim [ .]” M.R.C.P. 14(a) (em

phasis added). The advisory -com m ittee note to Rule 14 explains:
I t i s e s sential that the third-party claim be f or som e f o rm of derivati v e o r secondary liability of the third-party d ef endant to the third-party plaintif f

. Im pleader is not a v a ilable f or the assertion of an independent action b y the

6 R u le 1 4 p ro v id es th at “[ a] n y p arty m ay m o v e t o strik e th e th ird -p arty claim , o r f o r its sev eran ce o r sep arate trial.” Wh ile P T E co u ld h a v e f i l e d a m o tio n to strik e P rem ier’s th ird -p a r ty co m p l ain t, o r f

o r its sev eran ce o r a sep a r ate t r i a l u n d e r R u le 1 4 (a), it w as n o t im p ro p er f o r P T E t o m o v e f

o r d i sm issal u n d er R u l e 1 2 (b )(6 ). A s n o ted in C h a rles A lan Wrig h t, A rth u r R

. M iller & M ary K ay K an e, 6 F ed e r a l P ra c tice a n d P ro ced u re : § 1 4 6 0 , p
. 5 4 3

- 4 4 ( 3 d ed

. 2 0 1 0 ), “n o t o n ly is th e th ird -p arty p lain tif f ’ s claim su b

j ect to d ism issal d irectly u n d er R u le 1 4 ( a), b u t it a lso m a y b e ch a llen g ed

b y t h e im p lea d ed p a r ty o n o n e o

f th e g r o u n d

s set fo rth in R u le 1 2 o r b y a m o tio n f o r su m m ary j u d g m en t u n d er R u le 5 6 .” (E m p h asis ad d ed )

. 7def

endant against a t h i r d party , even if the claim arose out of the sam e transaction or occurrence as the m ain claim

. . . . The r equirem e nt t hat the thirdparty claim be f

or derivative or secondary l iability m ay be m e t by , f or exam ple,
on allegation of a right of indemnity ( contractual o r otherwise ) , c ontribution, subrogation, or warranty

. The rules do not, however, create any s uch rights. It m erely provides a pr o c e d u r e f o r expedited consideration of these rights where they

are available under substantive law. (Em phasis added).

i. Common-Law Indemnity Claim ¶10. Prem ier asserts that PTE “m ay be l i a b l e ” f or “all or part o f [ t he] plaintif f ’s claim s against” i t; thus, it has a “ textbook com m on l aw i ndem nity ” claim

. A claim f or com m on-law
indem nity has “[ t]wo critical prerequisites[ :]

. . . (1) [ t]he dam ages which the claim ant seeks

to shif t are im posed upon h im as a result of som e legal obligation to the injured person; and (2) it m ust appear that the claim ant did not actively or af f irm a t ively participate in the wrong.”
J .B. Hunt Transp. I

nc. v. Forrest Gen. Hosp. , 34 So. 3d 1 171, 1173-74 (¶11) (Miss. 2010) (quotin g H

o m e Ins. Co. v. Atlas Tank Mfg. Co., 230 S o. 2d 549, 551 (Miss.1970)). In
Celotex Corporation v. Becknell C onstruction Inc , 325 So. 2d 566 (Miss. 1976), B ecknell,
the general contractor, was f ound liable f

or dam ages that arose af ter a s u b contractor,
Cam pbell Roof

ing, installed a new roof a t an airport using m aterials s u p p lied by Celotex.
Id

. a t 567. Becknell f

iled a third-party action against Cam pbe l l a n d Celotex, and the trial

court a warded a judgm ent in f avor of Becknell. Id

. at 566. T he Mississippi Suprem e Court
af f irm ed the judgm ent, concluding:
Becknell was required to pay m oney because of the def ective workm anship of Cam p bell a nd def

ective m aterials f

u rnished C am

pell by Celotex. B ecknell’s

8liability a rose because it was a prim e contractor a nd w arranted all m a terials

and workm anship. Becknell paid the A irport Authority t he cost of placing a new r oof on the buildings and, in all f airness, this expense should be b orne by Cam p bell and Celotex. W e theref ore hold that Becknell is entitled to recover on the theory

of indem nity

. Id . at 568. ¶11. In Bush v. City of Laurel , 215 S o. 2d 2 56, 257 (Miss. 1968), which was cited by the

court in Becknell , the City o f Laurel was sued by a wom an who had f allen into a d itch. The

p l a i n t i f f o btained a verdict against the city , and the city ’s l iability was based on a “non-delegable duty to m a intain its s treets a nd s i dewalks in a reasonably saf e condition.”
Id. at 257. The city

then sued Bush (the construction com pany ) f or indem nity

. On appeal,
the sup r e me court upheld the city ’s right of i ndem nity even though it was sued i n tort and
was f ound liable in the underly i ng action:
An obligatio n t o indem n if y m ay arise f

rom a contractual relation, f r om an im p lied c ontractual r e l ation or out of liability im posed by law. W hen one person is required to pay m oney which another person in all f airness should pay , then the f

orm er m ay recover indem nity f r om the later i n the a mo u nt he paid, provided he has not conducted him self in a wrongf ul m anner so as to bar his recovery

. . . .The r

ule is

. . . : “[ I]n Mississippi, as generally elsewhere, a right of indem nity arises in f avor of o ne not actively at f ault against an active wrongdoer.”
Id. at 259-60 (internal citations om itted) ( quoting St. Louis-San Francisco Ry. Co. v. United
States , 187 F.2d 925, 927 (5th Cir. 1951)). ¶12. Here, the circuit court concluded: “Any ri g h t o f r e c o v ery f or any loss or dam ages [ Prem i er] m ight have against PTE arises f rom either a com

pletely separate contract, the sale
of the m aterial, the products liability s t a t u t e, or warranties im plied by law or p rovided by

9contract or statute. [ Prem ier] has no indem nity claim against PTE.” U n d e r t h e t e r ms of

Prem ier’s contract with Anderson, we disagree. W hat the circuit court (and to som e extent,
the parties) di s r e g a r d i s that section 11.3.1 of the contract’s General Conditions did not provide that Prem i er e ither provide the required i nsurance or assum e liability f or any loss not
covered by insurance; rather, Prem ier was contractually required t o provide the “all-risk”
insurance and “be liable to the Contractor to the extent s uch loss is not f ully com pensated by insurance[ .]” Theref

ore, this is not an “either/or” situation, but a “both/and” sit u a tion. If
Anderson had m erely brought suit to enf orce the f irst part of section 11.3.1 ( the requirem ent

to purchase the insurance), w e would f ind no error in t he court’s holding. B ut the contract’s general c onditions i m

posed a l egal obligation on Prem ier not only to “ purchase or m aintain” builder’s “all-risk” insurance, but also to com pensate Anderson f

o r any loss attributable to
the f ailure to obtain the insurance and any loss not covered by the builder ’ s insurance

. W e
f ind this distinction im

portant – Prem ier’s l iability is broadened by this language; in ef f ect,
Prem ier has agreed to serve as a secondary insurer. ¶13. Thus, we f

ind the claim f

or com m on-law indem nity is not an independe n t c a u s e of
action and is a p r o p e r third-party claim under Rule 1 4. As Prem i er n otes in its brief , if
Anderson is s uccessf

ul in its suit against Prem ier, “and it is judicially determ ined that [ Prem i er] has contractual liability f or the dam a ges a ssociated with the P TE c able breaks, [ Prem i er] will h a v e to p a y [ Anderson] signif i cant dam ages under legal com pulsion.” 7

7 We ex p ress n o o p in io n as to w h eth er P rem ier is liab l e to A n d erso n
. 1 0Moreover, Prem ier “did not actively or af f irm atively participate in the wrong.” There is no allegation that Prem ier was negligent or at f ault f or the loss. ¶14. W e hold that the circuit court’s f inding – that there i s n o b a s i s f o r com m on law
indem nity f

o r Prem i er’s f

ailure to p erf

orm u nder the term s o f the contract between A nderson
and Prem ier – was in error.

ii. W arranty Claims ¶15. A s w e h a v e a l r e ady noted, the com m ents to Rule 14 expressly state t h a t “ [ t ] h e requirem ent that t he third-party claim be f or derivative o r s econdary liability m ay be m et by

. . . allegation of a right o f indem nity (contractual or otherwise), contribution, s u brogation,

or w arranty .” ( Em

phasis added). P rem ier also asserted claim s of breach o f im plied warranty
of m erchantability , breach of im plied warranty o f f

itness, a nd breach o f express w a r r anty

. The c ircuit court determ i ned “any loss or d am ages [ P rem ier] m ight have against PTE arise[ ]
f rom either a com

pletely separate contract, the s a le of m aterial, the products liability statute,
or warranties im

plied by law[ .]” ¶16. Our suprem e court has held:
The p urpose of Rule 14, according to the com m ents, is to avoid t he p roblem of circuitous or d

uplicative actions, which occur when a def endant , held liable in the first action, is required to bring a s econd action against another party he alleges is d

erivatively o r secondarily liable to him f o r a l l o r part of the judgment

. Im

pleader, u nder the Federal Rules, s hould only b e used, where the third party ’s liability is in som e way derivative of the outcom e of the m ain claim

. It is clear that i m

pleader under Rule 14 requires that the liability of the third party

be dependent upon the outcom e of the m ain claim

. W eyerhaeuser Co. v. W

ells , 593 So. 2d 1010, 1013 (Miss. 1992) (em phasis added) (citations

1 1and quotations om itted). The “ m a in claim ” concerns Prem ier’s contractual obligation with

Anderson not only t o provide “all-risk insurance,” but to c over any loss or dam age not “f ully

com pensated” by the insurance policy and, theref ore, is potentially liable f

o r the loss suf

f ered by A nde r s o n d u e t o the allegedly def ective m aterial supplied by PTE. 8 Prem ier’s claim against PTE arose “ out of the sam e tran s a c t i on or o ccurrence” as Anderson’s suit against
Prem ier, a nd any breach o f warran t y by PTE caused the loss in this instance. W e f ind
whether Prem ier i s entitled to any relief on its claim s is “derivative of t he ou t c om e” of
Anderson’s claim

. ¶17. Prem ier’s product-liability claim s were also properly brought a s an a d ditional claim

. See M.R.C.P. 14 cm t. ( “Once a third-party claim i s properly asserted, h owever, the thirdparty plaintif

f m ay assert whatever additional claim s the third-party plaintif f has against the third-party

def endant under Rule 18(a).”) ¶18. Accordi n g l y , w e r e v e r s e t h e c i r c u i t c o u r t ’ s dism issal of Prem ier’s third-party

com plaint and rem and f

or f u rther proceedings. ¶19. REVERSED AND REMANDED. LEE, C.J., IRVING A ND GRIFFIS, P.JJ., ISHEE, CARLTON, GREENLEE AND WESTBROOKS, JJ., CONCUR. F AIR AND WILSON, JJ., NOT PARTICIPATING.

8 U n d er th e co n tract term s , u n co m p en sated lo sses m ay

in clu d e “p o licy

d ed u ctib les, ex clu sio n s, lap se o f

co v erag e, g ap s in co v e rag e , co v erag e lim its, in ad e q u acy o f co v erag e, o r o th er reaso n w h i ch cau ses th e lo ss to b e u n in su red , in w h o l e o r in p art.”
1 2