Opinion ID: 1001696
Heading Depth: 3
Heading Rank: 1

Heading: We will pay for ALL RISKS OF DIRECT PHYSICAL

Text: LOSS to covered property (including the cost of labor expended therewith, for which a premium charge is made) caused by any of the covered causes of loss. (Including general average & salvage charges for which insured is legally liable.) Covered property is defined as: a. Structures (including foundations, additions, attachments, permanent fixtures, and materials and supplies) fixtures, equipment, machinery and similar property which will become a per- manent part of the structure described in the declarations or schedule, while under con- struction, reconstruction/erection, fabrication or repair at the premises described in the dec- larations of schedule; ... d. Property of others, used or to be used in, or incidental to the construction operations, for which you may be responsible or shall, prior to any loss for which you make a claim, have assumed responsibility. II PROPERTY NOT COVERED. Covered property does not include: a. Machinery, tools, equipment or other property which will not become a permanent part of the structure(s) described in the declarations or schedule unless the replacement cost of such property is included in the contract price and reported to us . . . . By letter Hartford denied coverage. We set out that letter in full: 4 Dear Mr. Johnson [Claim manager of Clark] and Ms. Van Voast [Project manager]: This letter is a response to a claim from Lehr McGovern Bovis Inc., and their representative, Goodman Gable Gould, for costs associated with re-erection, and repairs to a pylon which fell over at Arlington National Cemetary on July 3, 1996. The policy's Builder's Risk Project Certificate describes the project as Construction of cast-in-place museum and memorial. One floor above grade and one floor below grade. Approximately 30,000 squ.ft. structure. There is no reference to insuring pylons. The Builders Risk Coverage Form, page 1. A. Coverage states, We will pay for ALL RISKS OF DIRECT PHYSI- CAL LOSS TO Covered Property (including the cost of labor expended therewith, for which a premium charge is made) caused by any of the Covered Causes of Loss. (Including General Average and Salvage charges for which the insured is legally liable.) Covered Property is defined as: a. Structures (including foundations, additions, attachments, permanent fixtures, and materials and supplies) fixtures, equipment machinery, and similar property which will become a permanent part of the structure described in the Declarations or schedule while under construction, reconstruction/erection fabrication, or repair at the premise described in the Declarations or schedule. Since we did not insure the pylon itself, it is not covered under the policy. The site plans include costs for repairing, cleaning, and pointing up the pylons. These costs are included in the work we insure. Had the pylon undergone this work, prior to this loss, we would have covered the cost of repairing the work performed, but not the erection or any damages sustained to the pylon. Since work to the pylon had 5 not commenced at the time the pylon fell, our coverage will not apply. Since the pylon itself was not covered under the policy, and since none of the scheduled work was performed on the pylon at the time of the loss, we must respectfully deny this claim. By denying this claim, we are not waiving any other rights, or defenses afforded us under the terms of our policy with The Clark Construction Group. Very Truly Yours, /s/ Thomas E. Curtin, Jr. Thomas E. Curtin, Jr. Claim Consultant 0335g/2-3 sym Hartford moved to dismiss under Rule 12(b)(6), and the court granted the motion on the basis that the exclusion provision of II controlled because, it found, there was no indication that the pylon property was to become a permanent part of the memorial or that Clark or plaintiff ever disclosed to Hartford the replacement cost of the pylons to include such cost in the contract. And, the court concluded, for property to be covered it must not only satisfy the definition of Coverage but also not be specifically excluded. It recognized that there might be ambiguities in the policy but declined to address them because it found that the plain and unambiguous language of the exclusion clause made it unnecessary. The court erred. This case could not be decided on 12(b)(6) grounds. It is unclear whether the pylons were to be a permanent part of the memorial. They supported the lighting, existent and new, that would be used to illuminate the memorial. Hartford acknowledges that it was obligated to repair, clean, and point up the pylons. It is not clear that the court had before it all of the site plans, including the 6 work on the pylon that was damaged, or that it had before it the project's declarations and schedules. Hartford's letter denying coverage is internally inconsistent and, by itself, casts doubt on Hartford's position. It asserts without explanation that the pylons are not covered at all. But then it goes on to acknowledge that Clark is obligated to repair, point up and paint the pylons. That obligation appears in subsection I(a), which defines structures that will become a permanent part of the structure described in the Declarations or schedule. Thus with respect to repairs, Hartford did not assert that the pylons to be repaired are not a permanent part of the structure, but rather relies upon the assertion that repairs had not been commenced. In addition to these inconsistencies it is at least arguable that under subsection I(d) the pylons are property of others incidental to the construction operations, for which Hartford may be responsible. Additionally, it appears to us uncertain whether the phrase while under construction, reconstruction, erection, fabrication or repair in subsection I(a) refers to repair (etc.) of the particular item or repair (etc.) of any item of the project. There are also ambiguities in the policy as the court recognized. The court as fact finder must resolve them. The decision of the district court is vacated and the case is remanded for consideration on a fully developed record. VACATED AND REMANDED 7