Court Opinion

ID: 9641951
Source: CourtListenerOpinion
Date Created: 2023-08-22 17:44:01.8487+00
Date Added: 2024-06-11T10:05:43.323414
License: Public Domain

WATHEN, Justice,
with whom McKU-SICK, Chief Justice, and ROBERTS, Justice, join, dissenting.
I concur with the conclusion of the majority that the rights of the parties must be determined under Maine law and that the Superior Court determination of coverage (duty to indemnify) be deleted. I dissent from that portion of the opinion of the majority finding a duty to defend on the facts of the present case.
The majority reaches their conclusion by finding an “ambiguity in the interrelationship of the exclusions” set forth in paragraphs (a), (n), and (o). They then follow the dictates of familiar law to construe the ambiguity against the insurer. Certainly the Comprehensive General Liability policy in question is complex, but not unduly so. Examining it as a whole, I find no ambiguity and, hence, no occasion to construe in favor of either of the parties. Exclusions (n) and (o) clearly and unequivocally preclude coverage for the business risk that the insured contractor’s product or completed work prove to be unsatisfactory. If, as in the instant case, a contractor performs unsatisfactory work, repair or replacement of the faulty work is a business expense for which insurance coverage is not provided. Conversely, if the faulty work causes an accident resulting in physical damage to others, coverage is afforded and the exception to exclusion (a) preserves coverage even if the claim is based upon a quasi-con-traetual warranty theory.
The foregoing summary of the relationship between the relevant provisions of the policy is in accord with the rulings of a majority of the courts which have decided the identical issue. The case of Weedo v. Stone-E-Brick, Inc., 81 N.J. 233, 405 A.2d 788 (1979) is particularly instructive. The court in Weedo was called upon to consider the same standardized policy as presented in this case, containing exclusions identical to (a), (n) and (o). The Appellate Division had ruled that the co-existence of the three exclusions created, “at the very least, an ambiguity which must be resolved in favor of the insured so as to provide coverage.” 155 N.J.Super. at 486, 382 A.2d at 1159. The Supreme Court of New Jersey disagreed and stated:
Because we are of the view that exclusion “(a)” cannot serve to becloud the clear import of the “business risk” exclusions, we necessarily disagree that an ambiguity exists in the policy before us. ... We conceive a genuine ambiguity to arise where the phrasing of the policy is so confusing that the average policyholder cannot make out the boundaries of coverage. In that instance, application of the test of the objectively reasonable expectation of the insured often will result in *924benefits of coverage never intended from the insurer’s point of view. The benefits granted, however, will pertain to the same landscape of risk as contemplated by the policy in issue, that is, the “doctrine of ambiguity” works to effectuate the consumer’s expectation that the policy purchased extended greater coverage in the particular underwriting area. ... In this case Stone-E-Brick’s interpretation of the policy would result in coverage for repair and replacement of its own faulty workmanship. This interpretation relies on the supposition that the exception to exclusion “(a)” — “but this exclusion does not apply to a warranty that work performed by or on behalf of the named insured will be done in a workmanlike manner” — grants coverage for claims based on the warranty described. Not so. The contention runs directly counter to the basic principle that exclusion clauses subtract from coverage rather than grant it.
405 A.2d at 794-95.
I would adopt the view set forth in Wee-do. The majority of those jurisdictions which have considered the issue have reached the same conclusion. See Biebel Bros., Inc. v. United States Fidelity & Guaranty Co., 522 F.2d 1207 (8th Cir.1975); Ross Island Sand & Gravel Co. v. General Insurance Co. of America, 315 F.Supp. 402, 404 (D.Or.1970); aff’d., 472 F.2d 750 (9th Cir.1973); Adams Tree Service, Inc. v. Hawaiian Insurance & Guaranty Co., 117 Ariz. 385, 388-89, 573 P.2d 76, 79-80 (Ct.App.1977); B.A. Green Construction Co. v. Liberty Mutual Insurance Co., 213 Kan. 393, 397-98, 517 P.2d 563, 566-67 (1973); Timberline Equipment Co. v. St. Paul Fire and Marine Insurance Co., 281 Or. 639, 645-46, 576 P.2d 1244, 1247-48 (1978); Haugen v. Home Indemnity Co., 86 S.D. 406, 413, 197 N.W.2d 18, 22 (1972); Overson v. United States Fidelity & Guaranty Co., Utah, 587 P.2d 149, 150-51 (1978); Engine Service, Inc. v. Reliable Insurance Co., Wyo., 487 P.2d 474, 475-76 (1971).
The majority in this case relies upon three decisions and three dissenting opinions, 455 A.2d at 922, which as the Weedo court observed “[suffer] from the same misconception that the exception to “(a)” grants coverage which must be viewed in conjunction with the exclusions in the ‘business risk’ clauses.” 405 A.2d at 796. The majority does not go so far as to claim that exclusion (a) grants coverage but, rather, states that “it creates the appearance of coverage” and an ambiguity, thereby foretelling the result. I reject that reasoning and would reverse the judgment below. We are surpassing the objectively reasonable expectation of the insured when we construe this policy to provide coverage for the repair and replacement of its own faulty workmanship or product.
On Motion for Reconsideration
MEMORANDUM OF DECISION.
The appeal in this case was decided on January 4, 1983. The defendant, pursuant to Rule 76A(b), M.R.Civ.P., has filed a motion for reconsideration on the following grounds:
The Court’s decision does not resolve the issues presented to the Superior Court.
The Court’s decision distinguishes the duty to indemnify from the duty to defend on a basis without foundation in the decision itself or in Maine law.
We deny the motion for reconsideration. We take the opportunity, however, to make a correction which does not alter the substance of the decision.
We said in the opinion:
Since the record in this case does not completely eliminate the possibility of the existence of material facts respecting the intention of the parties in the purchase and sale of this insurance contract, summary judgment may have been premature insofar as it imposed on the insurer the obligation to provide coverage, meaning to compel satisfaction of any judgment recovered against the insured. See American Policyholders’ Insurance Co. v. *925Cumberland Cold Storage Co., 373 A.2d 247, 250 (Me.1977). Cf. Tinker v. Continental Insurance Company, 410 A.2d 550 (Me.1980).
We withdraw and delete that part of the opinion as an improvident statement of our primary position on the issue and we replace it by the following:
In American Policyholders’ Insurance Company v. Cumberland Cold Storage, 373 A.2d 247 (Me.1977) at 250, we recognized that there may be situations in which declaratory judgment may be entered simultaneously as to both the duty to defend and the duty to pay or indemnify. In the instant case, as in the Cumberland Cold Storage case, the Superior Court Justice, in determining whether the insurance company had a duty to defend the plaintiff under the reference insurance policy, did apply the proper and exclusive comparison test between the allegations of the underlying complaint and the terms of the policy. See also, Travelers Indemnity Co. v. Dingwell, 414 A.2d 220 (Me.1980) at 227. The Superior Court’s determination that the allegations of the underlying complaint did bring the claim of damage of the City of Waterville within the apparent coverage of the insurance policy as interpreted by a majority of this Court properly established the defendant’s duty to defend. But the Superior Court in this declaratory judgment action was not presented with undisputed facts which would necessarily be determinative of coverage, a necessary prerequisite for the issuance of a simultaneous summary judgment for the plaintiff on both questions, the insurance company’s duty to defend and to indemnify. See Union Mutual Fire Insurance Co. v. Inhabitants of Town of Topsham, 441 A.2d 1012 (Me.1982).
In all other respects, the decision is reaffirmed.
The entry will be:
Motion for reconsideration denied.
All concurring.