THIRD DIVISION

ELLINGTON, P. J.,

DILLARD and MCFADDEN, JJ.

NOTICE: Motions for reconsideration must be

physically received in our clerk’s office within ten

days of the date of decision to be deemed timely filed.

http://www.gaappeals.us/rules/

July 8, 2015

In the Court of Appeals of Georgia

A15A0384. DOLAN et al. v. AUTO OWNERS INSURANCE

COMPANY.

ELLINGTON, Presiding Judge.

Auto Owners Insurance Company filed this declaratory judgment action

seeking a determination that certain provisions contained in its commercial general

liability policy excluded coverage to its insured, Anthony Hite d/b/a Air Mechanix,

L.L.C. (“Air Mechanix”), for claims arising from Air Mechanix’s alleged negligent

installation of air conditioning ductwork into the home of Michael Dolan and Shana

Jackson. The trial court granted summary judgment to Auto Owners. For the

following reasons, we affirm in part and reverse in part.

To prevail on a motion for summary judgment, the moving party must

demonstrate that there is no genuine issue of material fact, and that the undisputed
facts, viewed in a light most favorable to the party opposing the motion, warrant

judgment as a matter of law. OCGA § 9-11-56 (c); Lau’s Corp. v. Haskins, 261 Ga.

491 (405 SE2d 474) (1991).

In brief sum, the pertinent facts are as follows. Dolan and Jackson filed a

complaint against Air Mechanix, among others,

1

in the State Court of Chatham

County, asserting claims of negligence per se, professional and simple negligence,

and fraud. The complaint alleged that in March 2009, Air Mechanix replaced the duct

system of the air conditioning unit in their residence. In June 2009, Dolan and

Jackson discovered mold growth on the vent covers. An independent contractor

ultimately concluded that the duct system, which contained holes, gaps, loose

connections, and insufficient mastic, had been defectively installed in violation of the

applicable city ordinances, resulting in excessive moisture and mold contamination

throughout the residence. Dolan and Jackson allege that they grew ill with respiratory

problems as a result and were subsequently forced to vacate the residence and

abandon their personal belongings. Their complaint seeks to recover repair costs,

moving costs, expenses associated with rental property, costs of living, costs related

1 Dolan and Jackson’s complaint against several other defendants was the

subject of a separate appeal, Case Number A14A1066, and the trial court’s order in

that case was affirmed in an unpublished opinion.

2
to the replacement of personal property, medical expenses, punitive damages,

attorneys fees, and costs of litigation. 

Auto Owners, as insurer of Air Mechanix, filed the instant declaratory

judgment action and soughtsummary judgment that Dolan and Jackson’s claims were

excluded under the terms of its commercial general liability policy. The policy at

issue has a general aggregate policy limit of $2,000,000 (for claims other than

“products-completed operations”), and an additional “products-completed operations”

aggregate limit of $2,000,000. 

Under the general heading of “SECTION I - COVERAGES” and as a subset

of “COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY,”

the policy contains a provision entitled “Exclusions.” Auto Owners contends that

Dolan and Jackson’s property claims are defeated by Exclusions (j) (6) and (j) (7),

which provide:

2. Exclusions

This insurance does not apply to:

. . . 

(j) Damage to Property

3
“Property Damage”2

to:

. . . 

(6) That particular part of real property on which any insured or any

contractors or subcontractors working directly or indirectly on your

behalf are performing operations, if the “property damage” arises out of

those operations; or

(7) That particular part of any property that must be restored, repaired

or replaced because “your work”

3

 was incorrectly performed on it. 

. . . 

Paragraph (7) of this exclusion does not apply to “property damage”

included in the “products-completed operation hazard.” 

The policy defines “products-completed operation hazard” as property damage or

bodily injury occurring away from property owned by the Air Mechanix and “arising

2 The policy defines “property damage” as “[p]hysical injury to tangible

property, including all resulting loss of use of that property” or “[l]oss of use of

tangible property that is not physically injured.” 

3 The policy defines “your work” as “[w]ork or operations performed by you

or on your behalf” and “[m]aterials, parts or equipment furnished in connection with

such work or operations.” 

4
out of . . . [Air Mechanix’s] work . . . when all the work to be done at the job site has

been completed.” 

Additionally, Auto Owners asserts that Dolan and Jackson’s personal injury

claims are defeated by a separate endorsement pertaining to damage caused by “fungi

or bacteria” (the “Fungi Endorsement”). The Fungi Endorsement excludes coverage

for any “‘bodily injury’ arising out of . . . ‘[a] fungi or bacteria incident,’” and

includes in its definition of “fungi” all “mold, mildew, mycotoxins, spores, scents or

byproducts produced or released by any type or form of fungus.” A “fungi or bacteria

incident” is defined as:

an incident which would not have occurred, in whole or in part, but for

the actual, alleged or threatened inhalation of, ingestion of, contact with,

exposure to, existence of, or presence of, any “fungi” or bacteria on or

within a building or structure, including its contents, regardless of

whether any other cause, event, material or product contributed

concurrently or in any sequence to such damage. 

The endorsement also limits coverage for “property damage” resulting from a “fungi

or bacteria incident” to $50,000. 

The trial court held that Dolan and Jackson’s claims were defeated in their

entirety by Exclusions (j) (6) and (j) (7), quoted above. The trial court further held

5
that their bodily injury claims were excluded by the Fungi Endorsement, which it

noted also limited recovery for property damage to $50,000. This appeal follows.

We begin our analysis by noting that

[a]s with any other contract, where the terms of an insurance contract are

clear and unambiguous, and capable of only one reasonable

interpretation, the court is to look to the contract alone to ascertain the

parties’ intent. Even when the trial court is authorized to construe an

insurance contract, because a pertinent provision is ambiguous, the trial

court must construe strictly against the insurer any ambiguities in the

contract and any exclusion from coverage sought to be invoked by the

insurer as drafter of the document and must read the insurance contract

in accordance with the reasonable expectations of the insured where

possible. 

(Citations and punctuation omitted.) Henderson v. Georgia Farm Bureau Mut. Ins.

Co., 328 Ga. App. 396, 399 (1) (762 SE2d 106) (2014). Moreover, “[a]n insurer

seeking to defeat a claim based on a policy exclusion has the burden of proving that

the exclusion is applicable, and the absence of evidence does not prove the exclusion

applies.” (Citation omitted.) Hathaway Dev. Co. v. Am. Empire Surplus Lines Ins.

Co., 301 Ga. App. 65, 70 (3) (686 SE2d 855) (2009); see Am. Strategic Ins. Corp. v.

Helm, 327 Ga. App. 482, 486 (759 SE2d 563) (2014) (“[A]n insurer seeking to

invoke a policy exclusion carries the burden of proving its applicability in a given

6
case, with the exclusion to be strictly construed against the insurer.”) (citation and

punctuation omitted).

1. Property Damage. Dolan and Jackson argue that the trial court erred in

holding that their claims for property damage were defeated by the Exclusions (j) (6)

and (j) (7). Specifically, they contend that the “Exclusions” subsection in its entirety

applies only to claims falling within the general aggregate policy limit, as opposed

to those falling within the products-completed operations aggregate. They assert

instead that the “products-completed operations hazard” has a separate and distinct

set of exclusions contained within its definition. They further argue that, in any event,

Exclusions (j) (6) and (j) (7) do not extend to work already completed, thus included

in the “products-completed operations hazard,” as that term is defined in the policy.

We reject Dolan and Jackson’s over-generalized proposition that the

“Exclusions” provision in the policy never limits claims falling within the productcompleted operations aggregate. That position has no support in a plain reading of the

document. See York Ins. Co. v. Williams Seafood of Albany, Inc., 273 Ga. 710, 712

(1) (544 SE2d 156) (2001) (noting that an insurance policy “should be read as a

layman would read it”). The “Exclusions” subsection is located on the

“COMMERCIAL GENERAL LIABILITY COVERAGE FORM” under the heading

7
“SECTION I - COVERAGES[.] COVERAGE A. BODILY INJURY AND

PROPERTY DAMAGE LIABILITY,” and begins with the general proposition that

“This insurance does not apply to . . . .” Nothing in the language of the policy

supports that the Exclusions provision should be limited as Dolan and Jackson

suggest. See Ryan v. State Farm Mut. Auto. Ins. Co., 261 Ga. 869, 872 (413 SE2d

705) (1992) (looking at the policy as a whole and considering the “ordinary and legal

meaning of the words employed” in order to ascertain the intended allocation of

coverage and costs).

Nevertheless, we agree with Dolan and Jackson to the extent that they argue

that Exclusions (j) (6) and (j) (7) do not bar coverage for their claims. Exclusion (j)

(6) excludes coverage for property damage arising out of operations that Air

Mechanix or anyone on its behalf “are performing.”4 The policy’s use of the present

tense verb, at the very least, creates an ambiguity as to whether it was intended to

include completed work. And because ambiguities will be construed against Auto

4 We note that the question as to whether the specific claims being asserted by

Dolan and Jackson otherwise fall within the scope of Exclusion (j) (6) is not currently

before us and will not be addressed. See generally Transp. Ins. Co. v. Piedmont

Const. Grp., LLC., 301 Ga. App. 17, 18-19 (1) (686 SE2d 824) (2009) (exploring the

breadth of “that particular part of real property” in a nearly identically worded

exclusion when damage caused by faulty workmanship extends beyond that of the

contractor’s work itself).

8
Owners, the drafter, and in favor of coverage, we will narrowly read the exclusion to

apply only to work currently being performed. See Hathaway Dev. Co., 301 Ga. App.

at 73 (3) (holding that policy provision excluding coverage for property damage on

which insured was “performing operations” did not apply to completed work).

Likewise, as admitted by Auto Owners, Exclusion (j) (7) has no application to

completed work. By its express terms, the exclusion “does not apply to ‘property

damage’ included in the ‘products-completed operations hazard.’”

5 Dolan and

Jackson contend that all of the work to be done by Air Mechanix at their residence

had been completed prior to the damage so asto fall within the “[p]roducts-completed

operations hazard,” and the record contains no evidence to dispute that assertion. It

follows that Auto Owners failed to meet its burden of proving that Exclusion (j) (7)

defeated Dolan and Jackson’s claims. See Hathaway Dev. Co., 301 Ga. App. at 70

(3).

5 We do not agree with Auto Owners that a separate provision excluding

coverage for “‘[p]roperty damage’ to ‘your work’ arising out of it or any part of it and

included in the ‘products-completed operations hazard’” applies to these claims.

“Your work” is defined in the policy as “[w]ork . . . performed by you or on your

behalf” and “[m]aterials, parts or equipment furnished in connection with such work

or operations.” This clearly does not exclude from coverage costs associated with

damage to the residence and other personal property stemming from mold

contamination and excess moisture. 

9
2. Bodily Injury. Dolan and Jackson further argue that the trial court erred in

holding that the Fungi Endorsement defeats their claims for bodily injury. This

contention, however, is based upon the same argument that we rejected in Division

1; namely, that the Fungi Endorsement does not apply to claims falling within the

products-completed operations aggregate.The endorsement modifies the “commercial

general liability coverage” and is an added exclusion to the policy’s coverage of

bodily injury and property damage liability. Nothing in the language of the Fungi

Endorsement or the policy itself justifies a conclusion that it was not intended to limit

coverage falling within the products-completed operations aggregate. See Ryan, 261

Ga. at 872.

In sum, we reverse the trial court’s order and judgment to the extent that it held

that Dolan and Jackson’s property damage claims were defeated by Exclusions(j) (6)

and (j) (7), but affirm the trial court’s ruling that recovery for their bodily injury

claims are barred by the Fungi Endorsement, which also limits the recovery on their

property damage claims to $50,000. 

Judgment affirmed in part and reversed in part. Dillard and McFadden, JJ.,

concur.

10