Title: Federal Insurance Company v. PAT Homes, Inc.
Citation: 113 Ariz. 136, 547 P.2d 1050
Docket Number: 12220-PR
State: Arizona
Issuer: Arizona Supreme Court
Date: April 6, 1976

113 Ariz. 136 (1976) 547 P.2d 1050 FEDERAL INSURANCE COMPANY, incorporated under the laws of New Jersey, Appellant, v. P.A.T. HOMES, INC., an Arizona Corporation, Appellee. No. 12220-PR. Supreme Court of Arizona, In Banc. April 6, 1976. *137 Harrison G. Dickey, Tucson, Dunn, Jones, Teilborg, Sanders, Haga &amp; Parks, P.C., Phoenix, for appellant. D'Antonio &amp; Videen by Armand Salese, Tucson, for appellee. GORDON, Justice: Appellee, P.A.T. Homes, Inc. obtained a judgment against Dunham Concrete Contracting, Inc. Appellee then had issued and served a writ of garnishment on appellant, Federal Insurance Company. From the order of the Superior Court of Pima County granting appellee's motion for summary *138 judgment, appellant appealed. The Court of Appeals, Division Two, reversed, 24 Ariz. App. 59, 535 P.2d 1063 (1975). Opinion of the Court of Appeals vacated and the judgment of the Superior Court of Pima County affirmed. We accepted this petition for review to determine whether the exclusionary clauses in a comprehensive general liability insurance policy exclude coverage for liability of the insured for construction work done in an unworkmanlike manner. The insurance policy in question was in effect when Dunham Concrete Contracting, Inc. entered into a contract with appellee, P.A.T. Homes, Inc., for the construction of footing, stem walls and floors for lots 157 through 238 in Rita Manor Terrace, a housing subdivision in Pima County. The insurance policy in question issued by the appellant to Dunham Concrete Contracting, Inc. provides for comprehensive general liability, automobile liability and contractual liability. Under the comprehensive general liability provision there are two different types of coverages: Coverage A, Bodily Injury Liability and Coverage B, Property Damage Liability. Appellee sought recovery under Coverage B which contains the following exclusions: The pivotal issue is whether these exclusions are clear and unambiguous so that the claimed loss resulting from the insured's own work is excluded from the policy's coverage. Appellant, citing Haugan v. Home Indemnity Co., 86 S.D. 406, 197 N.W.2d 18 (1972), contends that the policy in question does not provide coverage for the loss sustained by appellee, and that further it is error for the court to compare exclusion (a) and exclusion (1) for the purpose of raising ambiguity. We cannot agree with the findings in Haugan, and therefore will not follow its ruling. At the same time we note that the Haugan opinion was a divided one with Judge Winans dissenting. The language of exclusion (1) in the instant policy has been construed by the Florida Court of Appeals with an opposite holding. Fontainebleau Hotel Corp. v. United Filigree Corp., 298 So. 2d 455 (Fla.App. 1974). We quote with approval the language of the Supreme Court of Oregon: We follow the principle of construction that where various jurisdictions reach different conclusions as to the meaning, intent, and effect of the language of an insurance contract ambiguity is established. In construing the meaning of an insurance policy the language used in the policy should be viewed from the standpoint of the average layman who is untrained in either the law or insurance. Droz v. Paul Revere Life Insurance Co., 1 Ariz. App. 581, 405 P.2d 833 (1965). Under this standard we find that there are at least three reasonable and possible interpretations of the clauses in question. As Judge Hathaway stated in his dissent from the majority: While either of these clauses standing alone might be determined to have no ambiguity, "the policy must be read as a whole in order to give a reasonable and harmonious meaning and effect to all of its provisions." Droz v. Paul Revere Insurance Co., supra, 1 Ariz. App. at 583, 405 P.2d at 835. The exclusions are reasonably susceptible to a construction that would afford coverage to the insured. First we note that "[i]n construing an insurance contract, where there is any ambiguity, or more than one possible construction of the provisions thereof, it is to be construed most strongly against the insurer and in favor of the insured." D.M.A.F.B. Fed. Cr. U. v. Employers Mut. L. Ins. Co. of Wis., 96 Ariz. 399 at 402, 403, 396 P.2d 20 at 23 (1964). See also Watson v. Ocean A. &amp; G. Corp., Ltd., 28 Ariz. 573, 238 P. 338 (1925). If we construe these provisions in this manner exclusion (a) in the policy would read that property damage for breach of warranty that work will be done in a workmanlike manner is expressly not excluded. Exclusion (1) would read that any other property damage to work performed by the insured arising out of his work is excluded. This interpretation resolves any ambiguity and construes the language of the policy as a whole thereby giving effect to every part as far as is possible. Appellant further contends that the "Broad Form Property Damage Liability" endorsement of the insurance policy precludes coverage for the loss sustained by appellee. The "Broad Form Property Damage Liability" endorsement reads in part: Under Coverage D (Automobile Liability) there is no exclusion (1). The policy as written for the insured contains two exclusions (1), one under Coverage B Property Damage Liability and one under Coverage Z Contractual Property Damage Liability. Obviously the "Broad Form Property Damage Liability" endorsement is misreferenced, and the endorsement would have to be referenced to deny coverage to the appellee. This we will not do *140 since the referencing of the endorsement "must depend upon the exercise of speculation, surmise and conjecture." Home Insurance Company v. Lomax, 17 Ariz. App. 520, at 524, 498 P.2d 594, at 598 (1972). The insurer drafted the confusion in the policy and, therefore, it should be resolved in favor of the insured. D.M.A.F.B. Fed. Cr. U. v. Employers Mut. L. Ins. Co. of Wis., supra. We quote with approval the recognized rule of law: The opinion of the Court of Appeals is vacated and the judgment of the trial court is affirmed. CAMERON, C.J., STRUCKMEYER, V.C.J., and HAYS and HOLOHAN, JJ., concur.