Court Opinion

ID: 9513358
Source: CourtListenerOpinion
Date Created: 2023-08-06 22:34:38.42461+00
Date Added: 2024-06-11T09:05:50.215260
License: Public Domain

MESCHKE, Justice,
concurring and dissenting.
[¶26] I join in reversing and remanding, and I join in most of the majority opinion. I respectfully disagree, however, with the conclusion in part VII. Because the majority’s analysis in part VII is incomplete, I also respectfully disagree with the conclusion in paragraph 19 that this policy does not cover liability for the cost of the finish, the sanding, and finishing work by Kensoks, and the direction' in paragraph 21 to carve a corresponding reduction out of the settlement agreement for those items. In my opinion, the specific products-completed operations hazards coverage in this policy insured liability “for the cost of the finish and the sanding and finishing performed by Kensok’s” otherwise excluded from the general liability coverage.
[¶ 27] The “Declarations ” page of American Family’s “Commercial General Liability Coverage Part ” listed “Limits of Insurance ” that included:5
GENERAL AGGREGATE LIMIT (OTHER THAN PRODUCTS-COMPLETED OPERATIONS).$2,000,000
PRODUCTS-COMPLETED OPERATIONS AGGREGATE LIMIT.$2,000,000
This “Declarations” page had other details, including:
Advance Premium ALL PR/ OTHERS CO $674.00 (INCL)
[¶ 25] VANDE WALLE, C.J. and SANDSTROM, JJ., concur.
and:
TOTAL ADVANCE PREMIUM $674.00 The body of the policy said:
SECTION 1 COVERAGES
*609COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY
1. Insuring Agreement.
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies. ...
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2. Exclusions.
This insurance does not apply to:
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b. “Bodily injury” or “property damage” for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages:
(1) Assumed in a contract or agreement that is an “insured contract,” provided the “bodily injury” or “property damage” occurs subsequent to the execution of the contract or agreement; or
(2) That the insured would have in the absence of the contract or agreement.
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j.“Property damage” to:
(1) Property you own, rent, or occupy;
(2) Premises you sell, give away or abandon, if the “property damage” arises out of any part of those premises;
(3) Property loaned to you;
(4) Personal property in the care, custody or control of the insured;
(5) That particular part of real property on which you 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
(6) That particular part of any property that must be restored, repaired or replaced because “your work” was incorrectly performed on it....

Paragraph (6) of this exclusion does not apply to “property damage” included in the “products-completed operations hazard.”

k. “Property damage” to “your product” arising out of it or any part of it.
l. “Property damage” to “your work” arising out of it or any part of it and included in the “products-completed operations hazard.”
This exclusion does not apply if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor.
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These generalized exclusions from general liability coverage thus remove and except, thus insuring, “property damage” to “your work,” which is insured by being specifically “included in the ‘products-completed operations hazard’ ” coverage.
[¶28] A separate “SECTION III — LIMITS OF INSURANCE” explained:
1. The Limits of Insurance shown in the Declarations and the rules below fix the most we will pay regardless of the number of:
a. Insureds;
b. Claims made or “suits” brought; or
c. Persons or organizations making claims or bringing “suits.”
2. The General Aggregate Limit is the most we will pay for the sum of:
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b. Damages under Coverage A, except damages because of “bodily injury” or .“property damage” included in the “products-completed operations hazard; ” and
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3. The Products-Completed Operations Aggregate Limit is the most we will pay under Coverage A for damages because of “bodily injury” and “property damage” included in the “products-completed operations hazard.”
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(Emphasis added).
[¶ 29] “SECTION V — DEFINITIONS” included a subsection 11 defining the “products-completed operations hazard” that the Declarations specifically agreed to insure with only a few specific and narrowly defined *610exceptions from this expanded coverage.6 This Section V also included a subsection 12 defining “Property damage,” a subsection 14 defining “Your product,” and a subsection 15 defining ‘Tour work,” all terms used to define the more specific inclusions and exclusions for the produets-eompleted operations coverage listed on the Declarations page.
[¶30] In their appellants’ brief, Fishers expressly argued “The ‘Products-Completed Operations Hazard’ Provisions Expressly Provide for Coverage,” pointing to definitions 11, 14, and 15. Fishers argued (footnote omitted):
Completed operations hazard and products hazard are two separate and distinct additional coverages which may be purchased with CGL policies. Completed operations hazard is generally intended to cover damages arising from the insured’s work after the work is completed. Products hazard is intended to cover damages caused by the insured’s defective products. See, 11 Couch, Insurance §§ 44:272, 44:273 (2d ed.1982).
Pursuant to the policy definitions 14 (product) and 15 (work), Kensok’s “product” included the finish it sold or handled which allegedly adhered the flooring planks to one another and caused the panelization damages, and Kensok’s “work” included the preparation of the flooring and application of the finish at the Fishers’ home. The produets-eompleted operations hazard provided coverage for all property damage arising out of the finishing products sold or handled by Kensok’s, along with warranties provided for those products. It also provided coverage for all property damage arising out of completed work performed by Kensok’s, along with warranties provided for the work. The exception to exclusion j(6) makes it clear that coverage is available for property damage arising from Kensok’s work or products.
Inexplicably, in its appellee’s brief, American Family only argued (without citation to any authority):
This is a misreading of the policy. This policy did not contain a “Products-Completed Operation” endorsement for coverage. Rather, it contains a definition for “Products-Completed Operations Hazard.”
In their reply brief, Fishers pursued their expanded-coverage argument:
However, the Declarations page of the policy clearly and unambiguously sets forth coverage for “Products-Completed Operations” in the aggregate limit of $2,000,000. (APPENDIX PAGE 38). The Declarations attached to policy are a part of the policy and are to be read accordingly in determining the coverages available. See, Aeroline Flight Service v. Insurance Co. Of No. Amer., [257 Iowa 409] 133 N.W.2d 80 (Iowa 1965). Moreover, the presence or absence of the endorsement is not determinative as the coverage may be created without actual delivery of the policy. Ulledalen v. United States Fire Ins., [74 N.D. 589] 23 N.W.2d 856, 868 (N.D.1946). There should be no question that such *611coverage was intended and was present here.
American Family’s apathetic argument to give a meaning to something not expressed in the policy deserves scant attention. Fishers’ argument deserves a decision.
[¶ 31] I agree with Fishers’ argument. In my opinion, this policy expressly extended “products-completed operations” coverage to Kensok’s products and work.
[¶ 32] Kensok’s was specifically insured for liability for “‘property damage’ occurring away from premises you own or rent and arising out of ‘your product’ or ‘your work’_” See policy definition ll.a at footnote 2, ante. The “Property damage” defined at subsection 12 includes this loss.7 The definitions at subsections 14, ‘Your product,”8 and 15, ‘Your work,”9 clearly encompass Kensok’s own work and materials for the Fishers as part of the “property damage” liability insured by the “products-completed operations hazard” coverage. The specific exceptions from the additional “prod-uets-completed operations” coverage are much more confined than the exclusions from the general liability coverage, which are phrased to exclude the “products-completed operations” hazard that is separately insured in this policy. Unfortunately, the majority recognizes the policy included the “products-completed operations” coverage, but fails to give it any meaning.
[¶33] American Family’s argument that there can be no “products-completed operations” coverage without an “endorsement for coverage” would distort and pervert the rules for interpreting a contract. An insurance contract consists of the printed form policy, its declarations, and any endorsements attached to it. 13A John Appleman and Jean Appleman, Insurance Law and Practice § 7537 (1976). The policy and its endorsements must be read together. Id. It makes no sense to construe a policy with some unexplained endorsement not attached to the policy.
[¶ 34] As we explained in Johnson v. Center Mut. Ins. Co., 529 N.W.2d 568, 571 (N.D.1995)(some citations omitted):
Special rules of construction govern policy endorsements. An endorsement is part of the insurance contract between the parties. See 13A Appleman, supra, at § 7537; 1 Couch, supra, at §§ 4:32, 4:36. The entire policy, including endorsements, is to be interpreted as a whole, with every attempt made to give effect to all provisions. Continental Western Insurance Co. v. The Dam Bar, 478 N.W.2d 373, 375 (N.D.1991); Haugen v. Auto-Owners Insurance Co., 191 N.W.2d 274, 280 (N.D.1971); 13A Appleman, supra, at § 7537; 1 Couch, supra, at § 4:36. However, we have consistently held that when there is a conflict between an endorsement and other policy provi*612sions, the endorsement prevails. See The-din, supra, 518 N.W.2d at 706; Hart Construction Co. v. American Family Mutual Insurance Co., 514 N.W.2d 384, 891 (N.D.1994)....
American Family’s argument that the policy and its declarations page do not mean what they say, because of some unexplained missing endorsement, verges on nonsense. We construe an insurance policy as a whole, not with a missing piece.
[¶35] In my opinion, we should reverse entirely and remand for entry of a judgment for Fishers for their entire settlement with Kensok’s for all of the property damage, and without directing a proportionate reduction of the settlement for the incidental cost of the finish, the sanding, and the finishing work performed by Kensok’s that was specifically insured by the additional coverage for “products-completed operations.”
[¶ 36] Also, to fairly implement our decision in Johnson v. Center Mut. Ins. Co., 529 N.W.2d at 572, since American Family cavalierly abandoned its insured with spurious policy interpretations, we should broadly construe this policy’s Supplementary Payments agreement to pay “4. All reasonable expenses incurred by the insured at our request to assist us in the investigation or defense of the claim or ‘suit.’” We have held that language is reasonably interpreted to require an insurance company to pay the insured’s expenses in defending a law suit with the insurance company to determine policy coverage, specifically when the insured prevails. State Farm Fire and Cas. Co. v. Sigman, 508 N.W.2d 323, 325 (N.D.1993). Here, the insured, Kensok’s, assigned its rights to Fishers, who litigated on Kensok’s behalf to establish coverage. Therefore, I also dissent from that part of paragraph 23 of the majority opinion that declines “to cover Fishers’ attorney fees, as assignees of Kensok’s, incurred in enforcing [this] Miller-Shugart settlement agreement.”
[¶ 37] MAKING, J., concurs.

. This "Business Key Policy" was certified for American Family Mutual Assurance Company by a Supervisor who had "custody of policy records of said Company.” She certified:
THAT POLICY 33-X08164-01 WAS in full force and effect for the above KENSOKS HARDWOOD & SEAMLESS FLOORS on 03-25-94.
THAT the policy, was and is subject to the Declarations, Insuring Agreements, Terms, Conditions, Limitations and Exclusions contained in the policy and all applicable Endorsements. ,

. a. "Produets-eompleted operations hazard” includes all “bodily injury” and “property damage” occurring away from premises you own or rent and arising out of "your product” or “your work " except:
(1) Products that are still in your physical possession; or
(2) Work that has not yet been completed or abandoned.
b. "Your work” will be deemed completed at the earliest of the following times:
(1) When all of the work called for in your contract has been completed.
(2) When all of the work to be done at the site has been completed if your contract calls for work at more than one site.
(3) 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 completed.
c. This hazard does not include "bodily injury” or "property damage” arising out of:
(1) The transportation of property, unless the injury or damage arises out of a condition in or on a vehicle created by the "loading or unloading” of it;
(2) The existence of tools, uninstalled equipment or abandoned or unused materials;
(3) Products or operations for which the classification in this Coverage Part or in our manual of rules includes products or completed operations.
(Emphasis added).

. "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.

. "Your product" means:
a. Any goods or products, other than real property, manufactured, sold, handled, distributed or disposed of by:
(1) You;
(2) Others trading under your name; or
(3) A person or organization whose business or assets you have acquired; and
b. Containers (other than vehicles), materials, parts or equipment furnished in connection with such goods or products.
“Your product” includes:
a. Warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of "your product;” and
b. The providing of or failure to provide warnings or instructions.
"Your product” does not include vending machines or other property rented to or located for the use of others but not sold.

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