Court Opinion

ID: 3040000
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:02:03.49335+00
Date Added: 2024-06-11T07:37:59.016408
License: Public Domain

United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 05-2539
                                   ___________

Royal Insurance Company of            *
America,                              *
                                      *
          Plaintiff - Appellant,      *
                                      * Appeal from the United States
      v.                              * District Court for the District of
                                      * Nebraska.
Duhamel Broadcasting Enterprises,     *
Inc.,                                 * [UNPUBLISHED]
                                      *
          Defendant - Appellee.       *
                                 ___________

                             Submitted: December 14, 2005
                                Filed: March 13, 2006
                                 ___________

Before BYE, BOWMAN, and GRUENDER, Circuit Judges.
                          ___________

PER CURIAM.

      This declaratory judgment action involves the interpretation of an insurance
policy issued by Royal Insurance to Duhamel Broadcasting Enterprises, Inc. (DBE),
covering a television tower located near Hemingford, Nebraska, which fell down on
September 24, 2002. Following a bench trial, the district court1 held the policy was

      1
        The Honorable Thomas D. Thalken, United States Magistrate Judge for the
District of Nebraska, presiding by consent of the parties pursuant to 28 U.S.C. §
636(c).
unambiguous and Royal had no duty to indemnify DBE for the collapse of the tower.
The district court also denied DBE's counterclaims based on promissory estoppel,
reformation and negligence. We affirm.

        DBE is in the business of radio and television broadcasting. It owns
approximately fifteen radio/television towers, including the 1,965-foot tower involved
in this action. In early 2002, DBE undertook to add additional reinforcements to the
tower in anticipation of adding an HDTV antenna. Among other changes, DBE's
engineering consultant recommended replacing eighteen diagonal braces with stronger
braces. On September 24, 2002, a construction crew was onsite replacing the braces.
Workers removed two of the braces but failed to put in place temporary braces to
support the structure while the reconstruction was underway. As a result, the tower
fell down.

        Also in early 2002, DBE was notified by its insurance carrier it would no longer
be insuring radio/television towers. DBE contacted Dave Schmidt Insurance Agency
and requested assistance in securing a new carrier. Schmidt submitted an application
to Royal seeking coverage for all of DBE's towers. As part of the application
disclosure, DBE advised Royal it was in the process of modifying the Hemingford
tower and expected the work to be completed by late fall. Royal's underwriter sent a
letter to Schmidt requesting additional information, including certificates from the
contractors performing the upgrades confirming they carried insurance containing
adequate policy limits and listed DBE as an additional insured. Thereafter, Royal sent
a twenty-five-page proposal responding to DBE's request for coverage. The proposal
only listed exclusions for acts of war and terrorism, but at the bottom of each page
advised DBE the policy, not the "descriptive proposal," would dictate the terms of
coverage. DBE accepted the proposal, and the policy covering the Hemingford tower
was delivered September 17, 2002. It is undisputed DBE did not read the policy
during the next seven days when the tower collapsed.

                                          -2-
       DBE submitted a claim to Royal and it denied coverage. Royal based its denial
on several exclusions not included in the proposal – only two of which are relevant
to this appeal. First, Royal's policy excluded coverage for towers "undergoing . . .
alteration . . . if the loss or damage is caused by or results from the . . . alteration.
Second, Royal denied coverage based on an exclusion excepting from coverage "loss
or damage caused by or resulting from . . . faulty, inadequate or defective . . .
workmanship." Royal filed this declaratory judgment action asking the court to
declare the rights and obligations of the parties to the contract. DBE answered
arguing the exclusions did not apply. Additionally, DBE counterclaimed arguing
Royal was estopped from denying coverage because the exclusions were not included
in the proposal. Alternatively, DBE argued the insurance contract should be reformed
to reflect the mutual intent of the parties or Royal was negligent in failing to provide
the coverage requested.

       At trial, Royal argued there was no coverage because the tower was undergoing
alterations at the time of its collapse and the alterations caused the tower to fail. DBE
argued the term "alteration" implied action more extensive than swapping out eighteen
of the 1000 plus diagonal braces. Alternatively, DBE argued alteration did not include
the "process" of altering the tower. Instead, alteration was used as a noun and the
exclusion did not apply because it was the negligence of the contractors in performing
the work necessary to alter the tower – not the completed alteration – that caused the
collapse.

       Royal also argued there was no coverage as the loss or damage was caused by
faulty workmanship, i.e., the negligence of the construction crew. DBE argued the
exclusion did not apply because faulty workmanship did not include contractor
negligence. Rather, faulty workmanship referred only to flaws in the finished product,
not the construction process which brought it about.

                                          -3-
       The district court found the policy language unambiguous and interpreted
alteration to include replacing the diagonal braces to change the weight bearing
characteristics of the tower. Additionally, the court rejected DBE's argument that
"alteration" was used only as a noun and did not include the process of altering the
tower.

       Next, the district court recognized "workmanship" could describe the process
of producing something as well as the finished product. It concluded, however, the
distinction in this case was meaningless because the different definitions could be read
consistently and did not render the contract language ambiguous.

        The district court also considered and rejected each of DBE's counterclaims.
First, the district court found promissory estoppel inapplicable because there was no
express promise by Royal to provide coverage for the Hemingford tower without
coverage exceptions. Rather, the proposal repeatedly stated any discrepancies
between the proposal and the policy would be resolved by the wording contained in
the policy. Moreover, because the alleged promise was followed by a written contract
which clearly set forth the rights and obligations of the parties, no injustice would be
occasioned by holding the parties to the contract terms.

       Similarly, the district court refused to reform the contract because there was no
"clear, convincing, and satisfactory evidence" the agreement did not express the true
intent of the parties. Royal was aware of the ongoing alterations to the tower before
it issued the policy and requested proof the contractors performing the work carried
insurance containing adequate coverage limits, thereby suggesting it did not intend to
insure the work process itself. Accordingly, the court concluded the evidence was of
insufficient quality to demonstrate the parties ever clearly communicated on the issue
of whether the alterations to the tower would be a covered risk.

                                          -4-
       On appeal, DBE argues the district court erred in rejecting its interpretation of
the contract terms "alteration" and "workmanship." Alternatively, it argues the district
court improperly dismissed its counterclaims based on promissory estoppel and
reformation.

      After carefully reviewing the record on appeal, we affirm the order and
judgment of the district court. Because an extended discussion would add nothing to
the well-reasoned order of the district court, we affirm by virtue of 8th Cir. R. 47B.
                        ______________________________

                                          -5-