Court Opinion

ID: 4198559
Source: CourtListenerOpinion
Date Created: 2017-08-24 13:12:43.47692+00
Date Added: 2024-06-11T14:39:44.888573
License: Public Domain

#27932, #27969, #27938, #27955-aff in pt, rev in pt & rem-JMK
2017 S.D. 51

                           IN THE SUPREME COURT
                                   OF THE
                          STATE OF SOUTH DAKOTA

                                     ****
                                (#27932, #27969)

OWNERS INSURANCE COMPANY,                          Plaintiff and Appellant,

      v.

TIBKE CONSTRUCTION, INC.,                          Defendant and Appellee,

      and

JOEY BROWN and SONYA BROWN
and JERRY’S EXCAVATING, INC.,                      Defendants.

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                                (#27938, #27955)

OWNERS INSURANCE COMPANY,                          Plaintiff and Appellee,

      v.

TIBKE CONSTRUCTION, INC.,                          Defendant and Appellant,

      and

JOEY BROWN and SONYA BROWN,
and JERRY’S EXCAVATING, INC.,                      Defendants.

                                     ****
                   APPEAL FROM THE CIRCUIT COURT OF
                      THE SECOND JUDICIAL CIRCUIT
                   MINNEHAHA COUNTY, SOUTH DAKOTA
                                     ****
                      THE HONORABLE JOHN R. PEKAS
                                Judge
                                     ****
                                                   CONSIDERED ON BRIEFS
                                                   ON FEBRUARY 13, 2017
                                                   OPINION FILED 08/23/17
RONALD A. PARSONS JR. of
Johnson Janklow Abdallah
 Reiter & Parsons LLP
Sioux Falls, South Dakota

MARK D. O’LEARY
Sioux Falls, South Dakota   Attorneys for plaintiff and
                            appellant Owners Insurance
                            Company #27932 and plaintiff
                            and appellee #27938.

DANIEL R. FRITZ
NICOLE O. TUPMAN of
Lindquist & Vennum, PLLP
Sioux Falls, South Dakota   Attorneys for defendant and
                            appellee Tibke Construction,
                            Inc. #27932 and defendant and
                            appellant #27938.
#27932, #27969, #27938, #27955

KERN, Justice

[¶1.]        Homeowners sued a general contractor and a subcontractor for

damages to their home. General contractor was insured under a commercial

general liability (CGL) policy and requested defense and indemnification from its

insurer. Insurer disputed coverage but defended general contractor under a

reservation of rights. Insurer later filed a declaratory-judgment action, seeking a

judgment that the CGL policy did not provide coverage for general contractor

against homeowners’ allegations. The parties filed cross-motions for summary

judgment. The circuit court denied the motions, finding that a genuine issue of

material fact existed regarding the foreseeability of homeowners’ damages. Both

parties filed petitions for intermediate appeal, which we granted and consolidated.

We affirm the denial of summary judgment in favor of insurer, but we reverse the

denial of summary judgment in favor of general contractor and remand for entry of

an order consistent with this opinion.

                                  BACKGROUND

[¶2.]        Joey and Sonya Brown hired Tibke Construction Inc. as a general

contractor to build a new house in Brandon, South Dakota. Tibke hired Jerry’s

Excavating Inc. as a subcontractor to prepare the soil and perform excavation work.

In October 2012, Tibke completed the project.

[¶3.]        On September 3, 2014, the Browns sued Tibke and Jerry’s Excavating

for negligent construction and breach of contract. The Browns alleged that Jerry’s

Excavating failed to conduct soil-compaction testing before construction. In their

complaint, the Browns averred the home was unknowingly built upon highly

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expansive soils, resulting in damage to the home in the form of “excessive

settlement, cracking, structural unsoundness, and other damages.” The Browns

submitted that the damages were caused exclusively by acts or omissions of Jerry’s

Excavating but that the damage existed only on portions of the home not worked on

by Jerry’s Excavating. The Browns did not allege that Tibke improperly

constructed any portion of the home, including the foundation and walls.

[¶4.]        Owners Insurance Company insured Tibke under a CGL policy. Under

the terms of the policy, Owners provided coverage for claims arising out of property

damage caused by an occurrence and not subject to policy exclusions. Tibke

submitted a claim to Owners for defense and indemnification from the Browns’

lawsuit. Owners disputed coverage but agreed to defend Tibke in the suit under a

reservation of rights.

[¶5.]        On February 3, 2016, Owners filed an action for declaratory relief

against Tibke, Jerry’s Excavating, and the Browns, seeking a determination of the

parties’ rights and obligations under the CGL policy. Owners alleged that it had no

duty to defend or indemnify Tibke for the property damage because “faulty

workmanship” cannot be an occurrence under the CGL policy and that two

exclusions, j(7) and l, precluded coverage. Owners and Tibke filed cross-motions for

summary judgment on the question of coverage in the declaratory-judgment action.

The Browns and Jerry’s Excavating joined Tibke’s motions.

[¶6.]        On June 13, 2016, the circuit court held a hearing on the cross-motions

for summary judgment. After argument, the court declined to rule on the question

of whether Tibke’s claim was covered by the policy. Instead, the court denied the

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motions, finding that there were disputed questions of material fact regarding

whether there was expansive soil under the home and, if so, whether it was

foreseeable. 1

[¶7.]            Owners and Tibke filed petitions for an intermediate appeal, which we

granted and consolidated. We restate the three issues raised by the parties as

follows:

                 1.   Whether the damages alleged by the Browns were caused
                      by an occurrence as defined by the CGL policy.

                 2.   Whether exclusion j(7) precludes coverage under the CGL
                      policy for the Browns’ alleged property damage.

                 3.   Whether exclusion l precludes coverage under the CGL
                      policy for the Browns’ alleged property damage.

                              STANDARD OF REVIEW

[¶8.]            “We review a court’s denial of a motion for summary judgment under

the de novo standard of review.” N. Star Mut. Ins. v. Korzan, 2015 S.D. 97, ¶ 12,

873 N.W.2d 57, 61. “Summary judgment is appropriate ‘if the pleadings,

depositions, answers to interrogatories, and admissions on file, together with the

1.      In rendering its ruling, the circuit court stated:
                 The underlying problem still comes back to whether or not it
                 was foreseeable, and I understand that there’s some questions
                 about whether or not it was virgin soil ready to be constructed
                 on, however, in this particular instance, I don’t believe that
                 Tibke Construction can adequately invoke the coverage terms,
                 unless there’s been the ability to have a fact finder say it’s
                 foreseeable. And I’m going to be denying the motion for
                 summary judgment for both parties based on that, because I
                 believe there are questions of fact that ought to be resolved, and
                 I think it’s going to be done in the underlying lawsuit at this
                 point—so I’m going to be denying the cross motions for summary
                 judgment on that.

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affidavits, if any, show that there is no genuine issue as to any material fact and

that the moving party is entitled to a judgment as a matter of law.’” Id. (quoting

SDCL 15-6-56(c)).

[¶9.]        “The interpretation of an insurance policy is a question of law,

reviewed de novo.” Swenson v. Auto-Owners Ins. Co., 2013 S.D. 38, ¶ 13, 831

N.W.2d 402, 407. “The existence of the rights and obligations of parties to an

insurance contract are determined by the language of the contract, which must be

construed according to the plain meaning of its terms.” Id. We consider the

provisions of the CGL policy as a whole. Nelson v. Farmers Mut. Ins. Co. of Neb.,

2004 S.D. 86, ¶ 11, 684 N.W.2d 74, 77.

[¶10.]       “When an insurer seeks to invoke a policy exclusion as a means of

avoiding coverage, the insurer has the burden of proving that the exclusion applies.”

Ass Kickin Ranch, LLC v. N. Star Mut. Ins. Co., 2012 S.D. 73, ¶ 9, 822 N.W.2d 724,

727. “This burden is satisfied when the insurer shows the claim ‘clearly falls

outside of policy coverage.’” State Farm Fire & Cas. Co. v. Harbert, 2007 S.D. 107,

¶ 18, 741 N.W.2d 228, 234 (quoting State Farm Mut. Auto. Ins. Co. v. Wertz, 540

N.W.2d 636, 638 (S.D. 1995)). When “the provisions of an insurance policy are

fairly susceptible of different interpretations, the interpretation most favorable to

the insured should be adopted.” Culhane v. W. Nat’l Mut. Ins. Co., 2005 S.D. 97,

¶ 19, 704 N.W.2d 287, 293.

                                      DECISION

[¶11.]       1.     Whether the damages alleged by the Browns were caused
                    by an occurrence as defined by the CGL policy.

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[¶12.]       Tibke purchased a CGL policy, which contains an insuring clause

providing a grant of coverage. The insuring clause is set forth in § I of the policy

and provides:

             1. Insuring Agreement
                 a. [Owners] will pay those sums that the insured becomes
                    legally obligated to pay as damages because of . . .
                    “property damage” to which this insurance applies.
                 b. This insurance applies to . . . “property damage” only if:
                    (1) The … “property damage” is caused by an
                         “occurrence[.]”

Section V defines occurrence and property damage:

             14. “Occurrence” means an accident, including continuous or
                 repeated exposure to substantially the same general
                 harmful conditions.
             ....
             18. “Property damage” means:
                 a. Physical injury to tangible property, including all
                     resulting loss of use of that property. All such loss of
                     use shall be deemed to occur at the time of the physical
                     injury that caused it; or
                  b. Loss of use of tangible property that is not physically
                     injured. All such loss shall be deemed to occur at the
                     time of the “occurrence” that caused it.

[¶13.]       Whether the CGL policy provides Tibke coverage for the alleged

damages to the house initially depends on whether there was property damage

caused by an occurrence. It is undisputed that the Browns suffered property

damage as a result of construction on unstable soil. Accordingly, the only issue

relevant to the initial question of coverage is whether the alleged failure to test the

soil was an occurrence.

[¶14.]       Tibke claims that the alleged failure to test the soil beneath the house

was an accident and thus an occurrence. Tibke also emphasizes that under the

policy, an accident includes “continuous or repeated exposure to substantially the

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same general harmful conditions,” such as expansive soil beneath a house. Citing

Couch on Insurance and several cases, Owners argues in response that “a claim for

damages arising from incorrectly performed work,” like failing to test the soil

beneath a construction site, does not constitute an accident because the CGL policy

is not meant to cover faulty workmanship. Further, Owners argues that the alleged

faulty workmanship in this case is not a covered occurrence because it arose “from

the defendants’ intentional choice not to conduct soil testing and their deliberate

decision to construct the house on that soil despite their choice not to test it.”

[¶15.]       The CGL policy does not define accident, but we have defined it as “an

event that is ‘undesigned, sudden, and unexpected.’” Corner Constr. Co. v. U.S. Fid.

& Guar. Co., 2002 S.D. 5, ¶ 28, 638 N.W.2d 887, 894 (quoting Taylor v. Imperial

Cas., 82 S.D. 298, 302, 144 N.W.2d 856, 858 (1966)). In determining whether an

event is an accident, we assess the event “according to the quality of the result

rather than the quality of the causes.” Taylor, 82 S.D. at 304, 144 N.W.2d at 859.

Thus, if inadvertent faulty workmanship causes unexpected injuries to people or

property, it may constitute an accident and thus an occurrence. “Currently, the

majority of state supreme courts who have decided the issue of whether inadvertent

faulty workmanship is an accidental ‘occurrence’ potentially covered under the CGL

policy have decided that it can be an ‘occurrence.’” K&L Homes, Inc. v. Am. Family

Mut. Ins. Co., 829 N.W.2d 724, 729-31 (N.D. 2013) (listing state supreme courts

reaching this conclusion).

[¶16.]       We decided this question in Corner Construction by holding an

insured’s subcontractor’s faulty work could qualify as an occurrence under a CGL

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policy, in agreement with the majority of other jurisdictions. 2002 S.D. 5, ¶¶ 27-29,

638 N.W.2d at 894-95; see also Haugan v. Home Indem. Co., 86 S.D. 406, 408-11,

197 N.W.2d 18, 20-21 (1972) (contemplating that an insured’s subcontractor’s

failure to perform work in a “workman-like manner” is an occurrence). In Corner

Construction, an insured’s subcontractor “left voids in the insulation between . . .

studs and failed to securely attach [a] vapor barrier . . . [which] fell, causing

temperature fluctuations and other ventilation problems.” Id. ¶ 29, 638 N.W.2d at

895. Here, as in Corner Construction, the subcontractor’s faulty work “result[ed] in

property damage that was neither expected nor intended by the insured[.]” Id.

Accordingly, the alleged failure to test soil was an accident and thus an occurrence

under the CGL policy. See also Am. Family Mut. Ins. Co. v. Am. Girl, Inc., 673

N.W.2d 65, 69-71, 75-79 (Wis. 2004) (holding that the “faulty site-preparation

advice of [a] soil engineering subcontractor,” which led to improper soil preparation

and caused soil settlement under a building, was an occurrence for the purposes of a

CGL policy).

[¶17.]         Owners’ argument that the alleged faulty work was intentional and

thus not an accident is unavailing. The failure to test the soil was not an

intentional or deliberate action but an unplanned omission, which caused an

unexpected result. “[A] deliberate act, performed negligently, is an accident if the

effect is not the intended or expected result; that is, the result would have been

different had the deliberate act been performed correctly.” Lamar Homes, Inc. v.

Mid-Continent Cas. Co., 242 S.W.3d 1, 8 (Tex. 2007).

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#27932, #27969, #27938, #27955

[¶18.]       The failure to test the soil was an occurrence because it was an

accident—an unexpected event. This occurrence allegedly caused property damage

to the house in the form of excessive settlement, cracking, and structural

unsoundness. Tibke has established that coverage exists under § I of the CGL

policy.

[¶19.]       2.    Whether exclusion j(7) precludes coverage under the CGL
                   policy for the Browns’ alleged property damage.

[¶20.]       We next address whether any exclusions in the CGL policy bar the

coverage provided by the insuring clause. Section I of the CGL policy sets forth a

number of exclusions. The exclusion contained in j(7) states that:

             “Property damage” to:
             ....
             (7) That particular part of any property that must be restored,
             repaired or replaced because “your work” was incorrectly
             performed on it.
             ....
             Paragraph (7) of this exclusion does not apply to “property
             damage” included in the “products-completed operations
             hazard”.

Section V of the CGL policy defines your work:

             a.    Means:
                   (1)   Work or operations performed by you or on your
                         behalf; and
                   (2)   Materials, parts or equipment furnished in
                         connection with such work or operations.
             b.    Includes:
                   (1)   Warranties or representations made at any time
                         with respect to the fitness, quality, durability,
                         performance or use of “your work”; and
                   (2)   The providing of or failure to provide warnings or
                         instructions.

[¶21.]       Tibke claims j(7)’s plain language “does not include repairs to correctly

performed work.” Because the Browns only allege a failure to test the soil, not

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defective construction of any portion of the house that was damaged, Tibke contends

j(7) does not exclude the alleged property damage to the house. Owners resists

Tibke’s interpretation of j(7), relying on Swenson, 2013 S.D. 38, ¶ 29, 831 N.W.2d

402, 411, and Haugan, 86 S.D. 406, 197 N.W.2d 18, for the proposition that property

damage to the whole of a construction project is excluded by j(7) for faulty work on a

part of it.

[¶22.]         We begin our analysis with the plain language of the CGL policy.

First, j(7) only applies to property damage affected by your work. The definition of

your work in the policy includes “work or operations performed by [Tibke] or on

[Tibke’s] behalf.” Jerry’s Excavating was a subcontractor working on Tibke’s behalf.

Thus, j(7) may apply to property damage arising from Jerry’s Excavating’s alleged

faulty work.

[¶23.]         However, j(7) only excludes property damage to “[t]hat particular part

of any property that must be restored, repaired or replaced because ‘your work’ was

incorrectly performed on it.” (Emphasis added.) The word it refers back to that

particular part of the property on which the insured’s work was incorrectly

performed. The plain language of j(7) is concerned with the repair, restoration, or

replacement of a specific part of the property, not the damage to a property as a

whole. “[L]iability for damage to property other than that specific incorrectly

performed part is beyond the reach of [j(7)].” Scott C. Turner, Insurance Coverage of

Construction Disputes § 32:6 (2d ed.), Westlaw (database updated June 2017). In

this case, Tibke and Jerry’s Excavating allegedly performed faulty work only by

failing to test the soil. The Browns made no allegation concerning defective

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construction of the foundation, walls, or other parts of the house that allegedly

suffered property damage. The house was not that particular part of the property

on which Jerry’s Excavating’s failure to test the soil was incorrectly performed.

Therefore, j(7) does not exclude coverage for the alleged property damage to the

house.

[¶24.]         Other courts have interpreted j(7) in a similar fashion. The United

States Court of Appeals for the Fifth Circuit has held that language similar to j(7)

here did not preclude coverage for a builder’s “failure to properly water-seal the

exterior finishes and retaining walls” of a condominium project, which resulted in

water damage to “interior drywall, stud framing, electrical wiring, and wood

flooring[.]” Mid-Continent Cas. Co. v. HJP Dev., Inc., 557 F.3d 207, 210 (5th Cir.

2009). 2 The Fifth Circuit explained its interpretation of the exclusion as follows:

               The plain meaning of the exclusion—property damage to “[t]hat
               particular part of any property that must be restored, repaired
               or replaced because ‘your work’ was incorrectly performed on
               it”—is that property damage only to parts of the property that
               were themselves the subjects of the defective work is excluded.
               This becomes clear when the exclusion is broken down into its
               component requirements: the “particular part” referred to is the
               part of the property that (1) must be restored, repaired or
               replaced (2) because the insured’s work was incorrectly
               performed on it. The second requirement makes clear that the
               “particular part” of the property must have been the subject of
               incorrectly performed work. The narrowing “that particular
               part” language is used to distinguish the damaged property that
               was itself the subject of the defective work from other damaged
               property that was either the subject of nondefective work by the
               insured or that was not worked on by the insured at all.

2.       The CGL policy at issue in JHP Development, Inc., refers to this exclusion as
         j(6), but its language is nearly identical to j(7) in Owners’ CGL policy.
         557 F.3d at 214-15. This exemplifies the importance of analyzing the specific
         language used in each policy as they vary both in enumeration and content.

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Id. at 215 (emphasis added). The language of j(7) is narrow, and we will adhere to

its plain meaning. Swenson, 2013 S.D. 38, ¶ 13, 831 N.W.2d at 407; see also

Fortney & Weygandt, Inc. v. Am. Mfrs. Mut. Ins. Co., 595 F.3d 308, 311 (6th Cir.

2010) (finding j(7) inapplicable because it makes “clear that the exclusion applies

only to building parts on which defective work was performed, and not to the

building generally”).

[¶25.]       Our holding in Swenson is factually distinguishable from the present

case. In Swenson, owners of real property hired a contractor, insured under a CGL

policy, to build a house. 2013 S.D. 38, ¶ 2, 831 N.W.2d at 404. During the course of

construction, the insured left “various building materials (including framing

lumber)” outside and exposed to the elements. Id. ¶ 4, 831 N.W.2d at 405.

Exposure damaged the building materials, which were incorporated into the house.

Id. ¶¶ 4-5, 831 N.W.2d at 405. The parties eventually discovered “mold growth,

water damage, and other construction defects in the home,” which an investigator

determined was caused by the contractor’s failure to protect the building materials

from exposure. Id. ¶ 6, 831 N.W.2d at 405. Litigation commenced, and on appeal,

we held that j(7) excluded coverage for damage to the house because the contractor

“performed the work incorrectly by using the damaged building materials in

constructing the home, failing to protect the home from rain, snow, and other

weather during construction, etc.” Id. ¶ 28, 831 N.W.2d at 411. The damage to the

home arose from incorporating defective materials into the house, which required

those materials to be replaced and construction efforts duplicated. In contrast, the

only alleged improper work in this case was the failure to test the soil. The Browns

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did not allege that Tibke improperly constructed the foundation and other

structures of the house. Thus, Swenson is distinguishable.

[¶26.]        Further, Owners reliance on Haugan is misplaced as its holding

involved different exclusions. In Haugan, an insured under a CGL policy

negligently constructed an aircraft hangar and an office building. 86 S.D. at 409,

197 N.W.2d at 20. The insured “failed to provide proper footings and other

foundations,” which caused portions of the building to sink into the ground and

separate from the foundation, causing deterioration of the entire structure. Id. We

held that property damage from the insured’s faulty work was precluded by several

exclusions. Provision (m) in the policy interpreted in Haugan excluded “[p]roperty

damage to work performed by or on behalf of the Named insured arising out of the

work or any portion thereof, or out of materials, parts or equipment furnished in

connection therewith.” Id. at 412, 197 N.W.2d at 21-22 (emphasis added).

Exclusion (m) is broader than j(7) because it applies to property damage “arising out

of the work or any portion thereof.” (Emphasis added.) Here, j(7) only excludes

property damage to that particular part of the property on which the insured

incorrectly performed work. Thus, Haugan is inapposite for assessing the

application of j(7) in this case.

[¶27.]        Owners cannot meet its burden to show that j(7) excludes coverage for

property damage to the house arising from the alleged failure to test the soil. See

Ass Kickin Ranch, LLC, 2012 S.D. 73, ¶ 9, 822 N.W.2d at 727. The allegedly

damaged structures of the house were not the particular parts of property on which

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Tibke or Jerry’s Excavating allegedly performed its defective work. Therefore, j(7)

is inapplicable.

[¶28.]        3.     Whether exclusion l precludes coverage under the CGL
                     policy for the Browns’ property damage.

[¶29.]        Section I also includes exclusion l, which precludes coverage for:

                     “Property damage” to “your work” arising out of it or any
                     part of it and included in the “products-completed
                     operations hazard”.

Section V defines the products-completed operations hazard (PCOH):

              a.     Includes all . . . “property damage” occurring away from
                     premises you own or rent and arising out of “your
                     product” or “your work” except:
                            ...
                     (2)    Work that has not yet been completed or
                            abandoned. However, “your work” will be deemed
                            completed at the earliest of the following times:
                            (a)    When all of the work called for in your
                                   contract has been completed.
                            (b)    When all of the work to be done at the job
                                   site has been completed if your contract calls
                                   for work at more than one job site.
                            (c)    When that part of the work done at a job
                                   site has been put to its intended use by any
                                   person or organization other than another
                                   contractor or subcontractor working on the
                                   same project.
              Work that may need service, maintenance, correction,
              repair or replacement, but which is otherwise complete,
              will be treated as complete. . . .

[¶30.]        Tibke argues that exclusion l is inapplicable because it only bars

coverage for property damage arising after the insured’s work is completed. Tibke

claims that the failure to test the soil occurred at the start of the project, so “[t]he

foundation for the Browns’ home would have been exposed to the expansive soil

immediately upon being poured.” Tibke concludes that alleged damage to the

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foundation and the rest of the house from “the constant heaving and settling of the

soil, while possibly imperceptible, would have been ongoing throughout the

construction of the house.” Additionally, Tibke contends Owners has failed to

introduce any evidence “indicating when the damages alleged in the underlying suit

began to occur.”

[¶31.]       Owners believes, based on the plain language of the CGL policy, that

exclusions j(7) and l operate similarly but that exclusion l excludes coverage after

the project is completed, while j(7) excludes work before the project is completed.

Further, Owners submits that unlike certain other CGL policies, the CGL policy in

this case does not contain a “subcontractor exception” to this exclusion. The

“subcontractor exception” is a feature offered in some CGL policies that provides

that certain exclusions do not preclude coverage for property damage caused by the

work of the insured’s subcontractors. See Turner, supra ¶ 23, § 33:9 (explaining the

“subcontractor exception”). Thus, Owners believes exclusion l precludes coverage

regardless of whether Tibke or Jerry’s Excavating caused the alleged property

damage.

[¶32.]       The presence or absence of a subcontractor exception, however, is

irrelevant in this case. This is because exclusion l precludes coverage for property

damage to “your work” if the damage arises out of “your work . . . or any part of it.”

(Emphasis added.) The definition of your work includes the insured’s work or work

done on the insured’s behalf. Thus, it is immaterial whether Tibke or Jerry’s

Excavating caused the alleged property damage.

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[¶33.]       We conclude, however, that the exclusion does not apply to the

property damage in this case. Although the property damage to Tibke’s work arose

out of Jerry’s Excavating’s work (failure to test the soil), exclusion l applies only if

the damage is included in the PCOH. Here, the property damage does not meet the

definition of the PCOH because the construction of the house had “not yet been

completed or abandoned.” In other words, “[exclusion l] does not apply to property

damage which first began before the insured’s work was completed.” Turner, supra

¶ 23, § 33:6. It is undisputed that the alleged failure to test the soil occurred at the

beginning of the construction project. Tibke asserts the house suffered damage

throughout construction from ongoing soil expansion and contraction before the

work was finished. Owners bears the burden of proving the exclusion applies but

has not produced evidence that the damages occurred after completion of

construction. Ass Kickin Ranch, LLC, 2012 S.D. 73, ¶ 9, 822 N.W.2d at 727.

Accordingly, the alleged damage to the house is not included in the PCOH, and

exclusion l therefore does not exclude coverage.

                                     CONCLUSION

[¶34.]       The circuit court erred by denying Tibke’s motion for summary

judgment on the question whether the Browns’ claims are covered by the CGL

policy. While factual questions regarding the foreseeability of the expansive soils

under the house may have been relevant to whether Tibke breached a duty to the

Browns in the underlying suit, they are not relevant to the existence of coverage

under the policy. The alleged failure to test the soil at the construction site was an

occurrence, which triggered coverage. Neither exclusion j(7) nor exclusion l

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preclude coverage in this case. The CGL policy requires Owners to defend Tibke

against the Browns’ suit for damages. Therefore, we affirm the judgment denying

Owners’ motion, reverse the judgment denying Tibke’s motion, and remand for

further proceedings consistent with this opinion.

[¶35.]       GILBERTSON, Chief Justice, and ZINTER and SEVERSON, Justices,

and WILBUR, Retired Justice, concur.

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