Court Opinion

ID: 7874993
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:05:17.898453+00
Date Added: 2024-06-11T16:31:21.866586
License: Public Domain

FOLEY, Judge
(dissenting).
I respectfully dissent. It is my view that the decision of the Minnesota Supreme Court in Bor-Son Building Corp. v. Employers Commercial Union, 323 N.W.2d 58 (Minn.1982), should be reviewed in light of the more recent decision in Southwest Louisiana Grain, Inc. v. Howard A. Duncan, Inc., 438 So.2d 215 (La.App.1983). I further contend Bor-Son does not control the decision here.
The present case, like Bor-Son and Louisiana Grain, involves a denial of coverage where a subcontractor was allegedly negligent in a building construction. Applying Bor-Son, the trial court granted summary judgment against the plaintiff construction company. Unlike Bor-Son, where all work was subcontracted, here, appellant retained some of the work for itself and subcontracted other work to independent subcontractors.
The insurance policies analyzed in the two cited cases, Bor-Son and Louisiana Grain, are comprehensive general liability policies (CGL), both of which contain broad form endorsements. The Bor-Son decision did not reflect that its analysis involved a broad form endorsement with completed operations coverage, nor did that decision address the various exclusionary provisions. However, in oral argument before *743this court, counsel stated that Bor-Son dealt with a broad form policy. An examination of certain provisions of the policies in question is essential to an understanding of my dissent and recommendation. The two CGL policies issued by St. Paul Fire and U.S. Fire contain virtually identical language.
The main body of both CGL policies contains two exclusions, one for property damage to operations in progress, the other for property damage for completed operations. The exclusion covering completed operations (clause T.) contains the following language:
T. to property 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; * * *
(Emphasis added).
For an additional annual premium of approximately $25,000.00, appellant purchased the broad form endorsement with completed operations coverage. This policy replaces the exclusion language in clause T. with the following:
With respect to the completed operations hazard, to property damage to work performed by the Named insured arising out of the work or any portion thereof, or out of the materials, parts or equipment furnished in connection therewith.
(Emphasis added).
The substitute provision was in force at all material times. The CGL exclusion and its substitute under the broad form endorsement are virtually identical to the clauses contained in the insurance policy in the Louisiana Grain case. There the exclusion clause in the general CGL policy stated:
[W]ith respect to completed operations hazard, to property damage to work performed by or on behalf of the named insured arising out of work or any portion thereof, or out of the materials, parts or equipment furnished in connection therewith.
(Emphasis added). The above exclusion was replaced in the broad form policy by the following:
[W]ith respect to the completed operations hazard, to property damage to work performed by the named insured arising out of the work, or any portion thereof, or out of the materials, parts or equipment furnished in connection therewith.
Louisiana Grain, 438 So.2d at 221 (emphasis added). In addressing the claimed exclusion of coverage with respect to conduct of a subcontractor, the Louisiana Court of Appeals concluded: “the substitute clause in the broad form does not exclude coverage for property damage to work performed on behalf of the named insured arising out of the work.” Id. at 223.
Here, it is significant that there was a substitute clause incorporated into the insurance contract when the appellant purchased broad form property damage coverage, including completed operations, for an additional $25,000.00 annual premium. To reiterate, the exclusion in pertinent part reads: “work performed by the named insured.” Again, this substitution replaces the CGL general exclusion which read in pertinent part: “work performed by or on behalf of doe named insured.” (Emphasis added).
Noting the different language in the two clauses, the Louisiana Court of Appeals said: “One seems to exclude work performed by both the insured and subcontractors. The other appears to exclude only work performed by the insured, thus indicating coverage of subcontractors.” Id. at 222. Either the substituted clause excludes only work performed by the named insured, or it creates an ambiguity.
In general, while contractors do assume certain business risks (Bor-Son), where a policy is ambiguous with respect to coverage, the Louisiana court concluded, “[s]uch an ambiguity would be construed in favor of the insured.” Id. This language is consistent with Minnesota law on the construction of insurance contracts. Nordby v. At*744lantic Mut. Ins. Co., 329 N.W.2d 820, 822 (Minn.1983); Columbia Heights Motors, Inc. v. Allstate Ins. Co., 275 N.W.2d 32, 34 (Minn.1979); Farmers and Merchants State Bank of Pierz v. St. Paul Fire & Marine Ins. Co., 309 Minn. 14, 18, 242 N.W.2d 840, 842 (1976). Also significant to the decision here is the fact that “the property is realty, a factor favoring coverage. * * * Only rarely has the exclusion been applied to realty * * *.” Ohio Cas. Ins. Co. v. Terrace Enterprises, Inc., 260 N.W.2d 450, 453-54 (1977) (reg’g denied Jan. 4, 1978).
Because Bor-Son does not address the language discrepancy when a broad form policy exclusion replaces a different exclusion in a CGL policy, and because I believe there is an ambiguity which should be construed in favor of the insured, I, therefore, dissent.