FI RST DI VI SI ON DOYLE, C. J.

, PHI PPS, P. J, and BOGGS, J.

N O T IC E : M otions for r e c ons i de r a tion m us t be ph y sic a l ly r e ce iv ed i n our c le r k ’s offic e w ithin te n da y s of the da te of de c is ion to be de e m ed tim e ly file d.

http://w w w .ga a ppe a ls .us /r ule s /

Jul y 6, 2015



# I n th e Co u r t o f

A p p eals o f

G eo r g ia

A1 5 A0 14 5

. A UTO OW

N ERS INSURANCE COM PANY v

. GAY
CONSTRUCTION COM PANY. DO-0 0 7

D O Y LE , Ch ief J ud g e.

Gay Co n s t ru ct i on Co m

p an y (“ GCC”), a g en eral co n tract o r, fi l ed s u i t ag ai n s t

Au t o Own ers In s u ran ce Co m p an y t o reco v er d i rect l y as an ad d it i on al i ns u red u n d er

t h e co m m erci al li ab i l i ty (“ CGL”) p o l i cy is s u ed b y Au t o Own ers t o Dai -Co l e

W at erp ro o fi n g Co m

pan y , In c. (“ Dai -Co l e”), GCC’ s s u b co n t ract o r o n a p ro ject

.

Sp eci fi cal l y , GCC s o u g h t t o reco v er fro m Au t o Own ers fo r co st s as s o ci at ed wi th

al l eg ed l y fau l t y wo rk m an sh i p b y Dai -Co l e. Au t o Own ers fi l ed a m o t i o n fo r s u m m ary

ju d g m en t

, an d th e t ri al co u rt d en i ed t h e m o t i o n

. Au t o Own ers fi l ed an ap pl i cat i o n fo r

i n t erl o cu t o ry rev i ew, w h ich t hi s Co urt g ran ted

. Fo r t h e reas o ns th at fo l l o w, we

rev ers e.To p rev ai l at s u m m ary ju d gm en t u n d er OCGA § 9 -1 1 -5 6

, th e

m o v i n g part y m

u s t d em o n s trat e t h at t h ere i s n o g en u i n e i ss u e o f m at eri al

fact an d t h at th e u n di s pu t ed fact s , v i ewed i n t h e l i g h t m o s t fav orab l e t o

t h e n o n m o v i n g p art y , w arran t ju d g m e n t as a m at t er o f l aw. O n ap peal

f r o m t h e g ran t o f s u m

m ary ju d g m en t t h is Co u rt co n d u ct s a d e n o v o

rev i ew o f t he ev i d en ce t o d et erm i n e w h et h er t here i s a g en u i n e i s s u e o f

m at eri al fact an d wh et h er t h e u nd i sp u t ed fact s , v i ewed i n t h e l i g h t m o s t

fav o rab le to t h e n on m o v i n g p art y , w arran t ju d g m en t as a m at t er o f law. 1

So v i ewed

, t h e reco rd s h ows t hat GCC was th e g en eral co n t ract o r o n a p ro ject

i n v o l v i n g t h e reco n s tru ct i o n o f a s wi m m in g po o l a n d as s o ci at ed b ui l d i n gs fo r t h e

Pi ed m on t Park Co n s erv an cy

. As p art o f t h is p ro ject

, GCC was t as ked wi th

co n st ru ct i n g a terrace ab ov e a n ewl y co n st ru ct ed res t ro o m an d o th er areas

. GCC s u b

co n tract ed t h e p ou ri n g o f co n cret e fo r t h e t errace fl o or t o Gu n by Co n s t ru ct i o n , an d

i t su b co n t ract ed wi t h Dai -Co l e t o i n s t al l a wat erp ro o fi n g m em b ran e an d a d rai n ag e

m at t o p rev en t l eak ag e i n t o t h e res t ro o m s un d er t h e t errace. In earl y 2 0 0 9, G u n by

p o u red t h e co n cret e b o t t o m s l a b fo r t h e t errace, an d Dai -Co l e, o r i t s o wn

s u b co n t ract o r, i n s t al l ed th e wat erp ro o fi n g m em b ran e an d d rai nag e m at

. A cert i fi cat e

o f o ccu p an cy

was i ss u ed i n M ay

2 0 0 9

.

1 (Ci t a t i o n an d p u n ct u at i o n om i t t ed

. ) Ho m e Bu i l d er s As sn

. o f S a va n n a h v. Ch a t ha m Co u n ty , 2 7 6 Ga. 2 4 3 , 2 4 5 (1 ) (5 7 7 SE2 d 5 6 4 ) (2 0 0 3 ).

2In m i d -2 0 0 9

, Pi ed m o n t Park offi ci al s co m p lai n ed t h at wat er was l eak i n g i n to

t h e s p ace b el o w t h e t errace d u ri n g a n d a ft er h eav y rai n. GCC i n v es t i g at ed an d

d et erm i n ed t hat t he leak w a s c a u s e d by an al l eg ed l y i m p ro p er ap p l icat i o n o f t h e

wat erp ro o fi n g m em

b ran e. Aft er u n s u cces s fu l at tem pt s t o h av e Dai -Co le rep ai r t h e

m em b ran e, GCC p erfo rm ed t he wo rk it s el f. To acco m p l i s h t h e rep ai r, GCC rem o v ed

t h e t errace’ s t o p co n cret e s l ab an d d rai nag e m at

, rep ai r ed an d rep l aced t h e

wat erp ro o fi n g m em

b ran e, rep l aced t h e t o p co n cret e s l ab

, an d rep ai red t he un d ers i d e

o f t h e s l ab

. GCC al s o rep ai n t ed t h e u nd ers i d e o f t he s l ab t o co ver wat er s t ai n s an d

rep l aced a l i g h t fi x t u re t h at was d am ag ed as a res u l t o f t he wat er i n fi l t rat i o n

. In al l

,

GCC s p en t m o re t h an $ 1 26

, 0 0 0 t o acco m p l i sh t h es e rep ai rs

.

As r e q u i red b y GCC an d t h e Pi ed m o n t Park Co n s erv an cy , Dai -Co l e h ad

o b t ai n e d a C G L p o l i cy fro m Au t o Own ers

. Th e p ol i cy p ro v i d es t h at t h e t erm

“ ‘ i n s u red ’ m ean s an y pers o n o r o rg an i zat i o n q u al i fy i n g as s u ch u n d er Sect io n II, W h o

Is An In s u red ,” wh i ch p ro v i d es :

A pers o n or o rg an i zat i o n i s an Ad d i t i o n al In s u red o nl y wi t h res p ect t o

l i ab i l i t y ari si n g o u t o f “ y o u r wo rk ” fo r t hat Ad di t i o n al In s ured b y o r fo r

y o u : ( 1 ) [i ] f req u i red i n a wri t t en co n t ract o r ag reem en t ; o r (2 ) [i ] f

req u ired b y an o ral c o n t ract o r ag reem en t o n l y i f a Cert i fi cat e o f

3In s u ra n c e w as i s s u ed p ri o r t o t h e l o s s i n di cat i n g th at t h e pers o n o r

o rg an i zat i o n was an A dd i t i o n al In s u red

. 2

Th e t erm s “ ‘ y o u ’ an d ‘ y ou r’ refer t o t h e Nam ed In s u red s h o wn i n t h e Decl arat i o n s .”

Th e p o l i cy al s o co n t em

pl at es , ho wev er, th at “ o t h er p ers o n s an d org an i zat i o n s ” m ay

“ q u al i fy [] as a Nam ed In s u red u n d er t h i s p o l i cy .”

As i n t he s tan d ard CGL p o l i cy , Au t o Own ers ag r e ed to “ p ay t h o s e s u m s t h at

t h e i n s u red b eco m es l eg al l y o b l i g at ed t o p ay

as d am ag es b ecau s e o f ‘ b o d i l y i n ju ry ’

o r ‘ p ro p ert y d am ag e’ t o wh i ch t h i s i n s u r a n c e ap p l i es .” Th e p o l i cy p ro v id es t h at

“ [t ] h i s i n s u ran ce ap p l i es t o ‘ b o d i l y i n ju ry ’ an d ‘ p ro p ert y d am ag e’ o n ly i f . . . [s u ch ]

i s cau s ed b y an ‘ o ccu rren ce’ t h at t ak es p l ace i n t h e ‘ co v erag e t erri t o ry

. ’ ” Th e p o l i cy

d efi n es “ p ro pert y d am ag e” as “ [p ] h y s i cal i n ju ry t o tan g i b l e p ro p ert y ” o r “ [l ] o s s o f u s e

o f t an g i bl e p ro p ert y th at i s n o t p h y s i cal l y i n ju red .” “ Occu rren ce” i s d efi n e d a s “ an

acci den t

, i n cl u d in g co n t i n u ou s o r rep eat ed ex p os u re t o s u bs t an t i al l y t h e s am e g en eral

h arm fu l co n d i t i on s .” 3

2 Th e t ri al co u rt as s u m ed an d t h e p art i es as s u m e fo r p u rp o s es o f t h i s ap p eal t h at GCC i s an ad d i t io n al i ns u red u n d er t h e t erm s o f t h e p o l icy

.

3 “ A cci d en t ” i s n o t d efi ned i n t h e p ol i cy

.

4Th e p ol i cy co n t ai n s m u l t i p l e bu s in es s ri sk ex cl u s io n s

. On e ex cl u d es “ l o s s o r

d am ag e cau s ed by

. . . [f] au l t y , i n ad eq u at e[,] o r defect i v e

. . . [d ] es i g n , s p eci fi cat i o n s ,

wo rk m an s h i p , rep ai r, co n s t ru ct i o n , [o r] ren o v at i o n

. . . .” An o th er p ro v i si o n ex cl u d es

“ Dam ag e t o Yo u r W o rk ”
– t h at i s , “ ‘ [p ] ro p ert y d am ag e’ t o ‘ y o u r wo rk ’ ari s in g o u t o f

i t o r an y p art o f i t an d i n cl u d ed wi t h i n t h e p ro du c t s

- c o m p l et ed o perat io n s h azard .”

Si m i l arl y , t h e p o l i cy ex cl u d es “ ‘ [p ] ro p ert y d am ag e’ t o ‘ im pa ir e d pr ope r

ty ’ o r pro p ert y

t h at h as n o t b e e n p h y si cal l y i n ju red ari s i n g o u t of

. . . [a] d efect

, d efi ci en cy ,

i n ad eq u acy [,] or d an g ero u s co n d i t io n i n ‘ y o u r p ro d uct ’ o r ‘ y o u r wo rk .’ ”

Bel i ev i ng i t s el f to b e an ad d i t i o n al i n s u red u n d er Dai -Co l e’ s p o l i cy , GCC fi l ed

a fi rs t-p art y cl ai m , s eek i n g rei m b u rs em en t fo r t h e co st s o f rep ai ri n g an d rep l aci n g t h e

d efect i ve t errace. Aft er Au t o O wn ers u l t i m at el y d en ied GCC’ s cl ai m , G CC fi l ed t h i s

l aws u i t ag ai n s t Au t o Own ers , cl a im i n g b reach o f co n t ract an d s eek i n g rei m b u rs em en t

o f t h e m o n ies s p en t rep ai r i n g th e fau l t y wat erp ro o fi n g, as wel l as at t o rn ey fees an d

b ad fai t h d am ag es p u rs u an t t o OCGA § 3 3 -4 -6

. 4 Au t o Own ers m o v ed fo r s u m m ary

ju d g m e n t

. Th e t ri al co u rt d en i ed i t s m o t i o n , co n cl u d i ng t h at G CC’ s cl ai m was fo r

p ro p ert y dam ag e an d t herefo re co v ered b y th e p o l i cy

. T h e co u rt al s o d et erm i n ed t h at

4 GCC al s o n am ed Dai -Co l e as a d efen d an t i n t h e l aws u i t

, b u t t h o s e cl ai m s are

n o t at i s su e o n ap p eal

.

5t h e cl ai m d i d n o t f a l l u n der t h e p o l i cy ’ s b u s in es s ri s k ex cl u s io n s

. In d o i n g s o , t h e

c o u r t i n t erp ret ed th e b u s i n es s ri s k ex cl u s i on s t o en co m pas s o n l y t h e wo rk

t h at w a s

t as k ed t o Dai -Co l e an d ex p res s l y reject ed A u t o Own ers ’ s arg u m en t t h at t h e

ex cl u s i o n s ap p l y t o al l t he wo rk t h at was ch arg ed t o GCC. Th e t ri al co u rt cert i fi ed i t s

o rd er fo r i m

m ed i at e rev iew, an d t h i s Co u rt g ran t ed Au t o Own ers ’ s a p p l i c at i o n fo r

i n t erl o cu t o ry

ap p eal

.

1

. Au t o Own ers arg u es t h at t h e tri al co urt erred b y d en y in g i ts m o t i o n f o r

s u m m ary ju d g m en t o n t h e g ro u n d s t h at (a) GCC’ s cl ai m s fai l ed t o s eek d am ag es

res u l ti n g fro m “ p ro p ert y d am ag e” as d efi n ed by t h e p o l i cy , an d (b ) th e d am ag es

s o u g ht by G C C in i t s fi rs t -p art y cl ai m are ex cl u d ed b y t h e b u s i n es s ri s k ex cl u s i on s

co n tai n ed i n t h e co n t ract

.

In Geo rg i a,

[t ] h e c o n st ru ct i on o f co n t ract s i n v o l v es t h ree s t ep s

. At l eas t i n i ti al l y ,

co n s t ru ct io n is a m at t er of l aw fo r t h e co u rt

. F i r s t

, t h e t ri al co u rt m u s t

d eci de wh et h er t h e l an gu ag e i s cl ear an d u n am b i g u o us

. If i t i s , t h e co u rt

s i m p l y en fo rces t h e co n t ract acco rd i n g to i t s cl ear t erm s ; t h e co n tract

al o n e i s l o o k ed t o fo r i t s m ean i n g

. Nex t, i f th e co n t ract i s am b i g u o us i n

s o m e res p ect

, t h e co u rt m u s t ap p l y t h e ru l es o f co nt ract co n s tru ct io n t o

res o lv e t h e am

b i g u it y

. Fi n al ly

, i f t h e am b i g u i t y rem ai n s aft er ap p l y i n g

6t h e ru les o f co n s t ru ct i o n, t h e i s s u e o f wh at t h e am b ig u o u s l an g u ag e

m ean s an d wh at t h e p art i es i n t en d ed m u s t b e res o l v ed b y

a ju ry

. 5

Here, GCC fi l ed a fi rs t -p art y cl ai m s eek i n g rei m b u rs em en t o f co st s as s o ci at ed

s o l el y wi t h t h e rep ai r an d co rrect i o n o f fau lt y wo rk m an s hi p b y D ai -Co l e; th ere was

n o cl ai m fo r d am ag e t o n o n d efect iv e pro p ert y n o t co v ered b y

GCC’ s o r Dai -Co l e’ s

s co p e o f wo rk

. 6 Th is cl ai m i s b arred b y th e b u si ne s s r i s k ex cl u s i o n s i n t h e Au t o

Own ers p o l i cy

.

Gen eral ly

, “ b u s i n es s ri s k ex cl us i o n s o f a CGL p o li cy

. . . ex cl u d e l i ab i l i t i es fo r

t h e rep ai r o r co rrect i o n o f d efect i v e wo rk fro m t h e s co p e o f co v erag e.” 7

Geo rg i a co u rt s h av e cl earl y d e f i n e d t h e ri s k s t h at b us i n es s -ri s k

ex cl us io n s are in t en d ed t o rem ov e fro m co v erag e[,]

. . . t yp i cal l y

ex am i n [i n g ] t h e fo ll o w i ng fact s o f each cas e wh en rev i ewi n g b u s i n es s

ri sk ex cl u s i o n s : Fi rs t

, th e t y p e an d ex ten t o f co n s t ru ct i o n wo rk t h at th e

co n t ract o r i s p erfo rm i n g at t h e t i m e o f t h e acci d en t an d

, s eco n d

, th e

ex t en t t hat t h e d a m a g es res u l t i n g fro m th e co n t ract o r’ s acci d en t m ay

5 S c h wa r t z v. Ha r r i s W

a s t e M g mt

. Gr o u

p , 2 37 Ga. Ap p

. 6 5 6

, 66 0 (2 ) ( 5 1 6
SE2 d 3 7 1) (1 9 9 9).

6 GCC di d h av e t o rep ai n t an d rep ai r li gh t i n g cau s ed b y Dai -Co l e’ s f a u l t y

wo rk m an s h i p , b u t s u ch rep ai rs cam e wi t h i n GCC’ s s c o p e o f wo rk fo r t h e en t i re
p ro ject

.

7 (Pu n ct uat i o n o m i t t ed .) Ta yl o r Mo r r i s o n S

vcs
., In c. v. HDI-Ger li n g Amer i ca In s . Co

. , 2 9 3 Ga. 4 5 6 , 4 6 1 -4 6 2 (1 ) (7 4 6 SE2 d 5 8 7 ) (2 0 13 ).

7ex ceed t h e co n tract o r’ s co n t ract u al d u t ies

. In s h o rt

, t h e co u rt as k s i t s el f,

“ W i l l t h e p ay m en t o f i n s u ran ce p ro ceed s effect i v el y cau s e an i n su ran ce

co m p an y t o g u aran t ee t h e co nt ract o r’ s wo rk ? ” If t h e an s wer i s y es , th e

b u s i n es s -ri s k ex cl u s i on s ap p l y an d t he cl ai m i s den i ed

. Ho wev er, i f th e

c o u rt fi n d s t h at t h e p ay m en t of pro ceed s res u lt s fro m a n eg li g en t act

cau s in g d am ag e ab ov e an d b ey o n d t h e ori g i n al co n t ract u al o b li g at i o n s

o r t o o t her p ro pert y , t h e b u s i n es s -ri s k ex cl u s i o n s d o n o t ap p l y

. . . . 8

Bu s i nes s ri s k excl u si o n s a r e d es i g ned t o excl u d

e co ver ag e f

o r d ef ect i ve

wo r kma ns h i p b y t h e in su r ed b u i l d

er ca u si ng d

a ma g e t o t h e co n s tru ct i o n

p r o j e c t i t s e l f

. Th ere are t w o k i n d s o f ri s k s th at are i n cu rred b y a

co n t r a c t o r

. Th e fi rs t is t h e b u s i n es s ri sk b o rn e by t h e co n t ract or t o

rep l ace o r rep ai r d efect i v e wo rk t o m ak e t h e b ui l d i n g p ro ject co n fo rm

t o t h e ag reed co n t ract u al req u i rem en ts

. Th i s t y p e o f ri s k i s n o t co vered

b y t h e [CGL] p o l i cy , an d t h e b u s i n es s ri s k ex cl us i o n s i n t h e p o l i cy m ak e

t h i s cl ear. Th e s eco n d i s t h e ri s k t h at t h e d e f ect i v e o r fau l t y

wo rk m an s h i p w il l cau se i n ju ry t o p eo pl e o r d am ag e t o o t h er p ro pert y.

Becau s e o f t h e p o t en t i al ly li m i t l es s l i ab i l i t y as s oci at ed wi t h th i s ri s k

, i t

i s t h e t y pe fo r w h i ch co m

m erci a l g en eral li ab i l i ty co v erag e i s

co n t em p l at ed

. Th e ri s k i n t en d ed to b e i n su red i s t h e p o ss i b i l i t y t h at th e

wo rk o f t h e in su red

, on ce rel in q u is h ed or co m p l et ed

, wi l l cau s e b o di l y

8 (Pu n ct u at i o n o m i t ted .) Tr a n s p

. In s

. Co

. v. Pi ed

mo n t Co n st r

. Gr o up
, LLC

, 3 0 1 Ga. Ap p . 1 7 , 1 9 (1 ) (6 8 6 SE2 d 8 2 4 ) (2 0 0 9 ).

8i n

ju ry o r d am ag e t o p ro p ert y o th er t h an to t h e co m pl et ed wo rk i ts el f, an d

fo r wh i ch t h e i n s u red m ay b e fo u n d l i ab l e. 9

Here, t h e cl ai m as s ert ed b y GCC in v ol v ed o n l y co rrect i on s t o an d res u l t i n g

rep ai rs fo r fau l t y wo rk m an sh i p , wh i ch i s p reci s el y t h e ty p e o f cl ai m g en eral l y b arred

b y b u s i nes s ri s k ex cl u s io n s

. Th e o n l y q u es ti o n , t h erefo re, i s wh et h er t h e b us i n es s ri s k

ex cl u s i o n s co n t ai n ed i n Dai -Co l e’ s Au t o Own e rs p ol i cy ap pl i ed to GCC’ s cl ai m in

t h i s cas e.

As i n m an y CGL p o l i ci es , t h e b u s i n es s r i s k ex cl us i o n s h ere b arred co v erag e

fo r p ro p ert y d am ag e t o “ y ou r wo rk .” In p rev io u s cas es , t h i s Co u rt h as l o o ked t o t h e

g en eral co n t ract or’ s s co pe of wo rk wh en d et erm i n i n g w h et h er cert ai n ex cl u s i o n s in

a CGL p o l i cy ap p l y t o a g en eral co n t ract o r’s c l a i m ag ai n s t i t s o wn i n s u rer. 1 0 An d

wh en a s u b co n t ract o r s eek s fi rs t -p art y co v erag e u n d e r a CGL, co u rt s co n s i d er t h e

9 (Pu n ct uat i o n o m it ted ; em p has i s s u p pl ied .) QBE In s

. Co

. v. Co u ch Pi p el i n e &
G r a d i n g
, In c. , 3 03 Ga. Ap p

. 1 9 6

, 1 9 9-2 0 0 (2 ) (6 9 2 SE2 d 7 9 5 ) (2 0 10 ), q u o t i n g S a w H o r s e, In c. v. S

ou th er n Gu a r. In s

. Co

. o

f Ga

. , 2 6 9 G a. Ap p

. 4 9 3, 4 9 5 -4 9 6 (1 ) (6 0 4 SE2 d 5 4 1 ) (2 0 0 4 ).

1 0 See, e.g ., Bi t u mi n o u s Ca s. Co r p

. v. No r t h er n In s

. Co

. o

f New Y o r k

, 2 4 9 Ga. Ap p

. 53 2

, 5 3 3 -5 3 4 (5 4 8 SE2 d 4 9 5 ) (2 00 1 )

, c i t i n g S ap p v. S t a t e F

ar m Fi r e & Ca s

. Co

. , 2 2 6 Ga. Ap p

. 2 0 0 , 2 0 3 -2 0 4 (b ) (4 86 SE2 d 7 1 ) (1 9 9 7 ).

9s u b co n t ract o r’ s s co p e of wo rk

. 1 1 Geo rg i a co u rt s h av e n o t, h o w ev er, co n s id ered wh i ch

p art y ’ s s co p e o f wo rk s h o u l d b e co n s i d ered wh en d et erm i n i ng wh et h er a bu s i n es s ri s k

e x cl u si o n ap p l i es t o a g en eral co n t ract o r’ s cl ai m fo r fi rs t -p art y co v erag e as a n

ad d it i o n al i n s u red u n d er i t s s u b co n t ract o r’ s CGL p o l i cy

. 1 2

Here, A u to Own ers d i d n o t g u aran t ee t h e w o rk o f Dai -Co l e, an d t h e b u s i n es s

ri sk ex cl us i o n s i n t he p o l i cy rem o v ed fro m co v erag e t h e d efect i v e w o rk m an s h i p by

Dai -Co le t hat c a u s e d d am ag e t o t h e p ro ject

. GCC, as t h e g en eral co n tract o r, was

res p o n s i b l e fo r al l wo rk do n e w i t h i n th e sco p e o f wo rk wh i ch i t co n t ract ed t o p erfo rm

1 1 See, e.g ., Sa wHo r

s e , 2 6 9 Ga. A p p

. at 49 5 (1 ); Ca na l In d em. Co

. v. Bl a cks h ea r Fa rmer

s To b a cco W

a r eh o u s e, In c. , 2 2 7 Ga. A p p

. 6 3 7

, 63 9 -6 4 0 (2 ) (4 9 0
SE2 d 1 2 9) (1 9 9 7).

1 2 In d en y i ng s u m

m ary ju d g m en t t o Au t o Ow n e r s , t h e t ri al co urt rel ied u p o n Ha t ha wa y Dev. Co

., In c. v. Amer i ca n Emp i r e S u r pl u s Li nes In s . Co

. , 3 0 1 Ga. Ap p. 6 5 (6 8 6 SE2 d 85 5 ) (2 0 0 9 ), i n w h i c h t h i s Co u rt h el d th at a g en eral co nt ract o r m ay

reco v er a ju d g m en t ag ai ns t a s u b co n t ract or fro m t he i n s u ran ce co m p an y t h at i s s u ed

t h e s u bco n t ract o r’ s CGL po li cy

. Th e t ri al co u rt ’ s rel i an ce is m i s p laced

. Al t h o u g h t h e
g en eral co n t r a c to r i n Ha t h a wa y i n it i al l y fi l ed a d irect cl ai m ag ai n st th e i n s u ran ce

co m p an y as an ad d i t i on al i n s u red

, t h e g en eral co nt ract o r ab an d on ed t h at arg u m en t o n
ap p eal

. See i d

. at 6 6

, n .1

. Th u s , t he s o l e i s s ue o n ap p eal w as wh et h er t h e g en eral

co n tract or co u l d reco ver a defau l t j u d g m e n t ag ai n s t t he su b co n t ract o r fro m t h e

s u b co n t ract o r’ s i n s u ran ce co m p an y fo r d efect i v e p lum

bing w or k by the s ub co n t ract o r
t h at d am ag ed o t her p o rt i o n s o f t h e ap art m en t b u i l d i n g p ro ject s

. See id

. at 6 5 -6 6

. A

g en eral co n t ract o r’ s fi rs t-p art y cl ai m s ag ai n s t an i n s u ran ce co m p an y as an ad d i t i o n al
i n s u red are n o t eq u i v al en t t o a g en eral co n t ract o r ’s c l a i m s as a ju d g m en t cred it o r
ag ai n s t i t s d eb t o r’ s i n s u rer.

10fo r t h e Pi ed m o nt Park Co n s erv an cy

. To li m i t t h e b u si nes s ri sk ex cl u s io n s t o o n l y t h at

wo rk p erfo rm ed b y D ai -Co l e wo u l d p e r m i t G CC m o re co v erag e as an ad d i t i o n al

i n s u red th an t h at g ran t ed to Dai -Co l e as p ol i cy -h o l d er an d wo u l d effect i v el y req u i re

Au t o Own ers t o fi n an ci al l y g u aran t ee Dai -Co le’ s wo rk

. Fu rt her, th e b u si n es s ri s k

ex cl u s i o n s ex p res s l y ex cl u d ed p ro pert y d am ag e t o t h e wo rk o f a n am ed i n s u red

ari s in g o ut o f t he w o rk

, an d th e p o li cy co n t em p l at ed t h e p o s s i bi l i t y o f q u al i fy i n g an

ad d it i o n al i n s u red as a n am ed i n s u red u n d er t h e p ol i cy

.

Un d er t hes e ci rcu m s t an ces , t h e b u si nes s ri s k ex cl u s i o n s i n t he Au t o Own ers

p o l i cy ex cl u d e co verag e fo r GCC’ s fi rs t -p art y cl ai m fo r rei m b u rs em en t fo r d am ag es

cau s ed by Dai -Co l e’ s fau l t y wo rk m an s h i p

. 1 3 T he t ri al co u rt erred b y d en y i n g

s u m m ary ju d g m en t o n t h i s i s s u e.

2

. Th e t ri al co u rt fu rt her erred b y den y i n g Au t o Own ers ’ s m o ti o n fo r s u m m ary

ju d g m en t as t o GCC’ s cl ai m fo r b ad fai t h p en al t i es an d at t o rn ey fees

. U n d e r O C G A

§ 3 3 -4 -6

, an award o f at t o rn ey fees an d a bad fa i t h p en al ty i s n o t au t h o ri zed i f t h e

i n s u rer “ h ad an y reas o nab l e g ro u n d t o co n t es t th e cl ai m .” 1 4 Bas ed o n o u r h ol d i n g in

1 3 See Ta yl o r Mo r r i so n S

vcs

. , 29 3 Ga. at 4 6 1 -4 6 2 (1 ). See al s o S a wHo r s e, In c. , 2 6 9 Ga. Ap p . at 4 96 -4 9 7 (1 ) (a); S a p p , 2 2 6 Ga. Ap p . at 2 0 3 -2 0 4 (b ).

1 4 (Pu n ct u at i o n o m i t t ed .) Gr a n g e Mu t

. Ca s. Co

. v. La w , 2 2 3 Ga. Ap p

. 7 4 8

, 7 5 0 (2 ) (4 79 SE2 d 3 57 ) (1 9 9 6 ).

11Di v is i o n 1

, Au t o O wn ers h ad a reas o n ab le g ro u nd t o co nt es t GCC’ s cl ai m

. Th u s ,

p en al t i es an d fees u n der OCGA § 3 3 -4 -6 are n o t au t h o ri zed

.

Ju d g men t r ever sed . Ph i p p s , P. J., a n d

Bo gg s
, J., co n cu r

.

12