Court Opinion

ID: 4220752
Source: CourtListenerOpinion
Date Created: 2017-11-15 21:17:26.823235+00
Date Added: 2024-06-11T14:42:18.299107
License: Public Domain

11/15/2017
               IN THE COURT OF APPEALS OF TENNESSEE
                           AT NASHVILLE
                               September 7, 2017 Session

           ERIE INSURANCE EXCHANGE V. GARY H. MAXWELL, ET AL.

                Appeal from the Chancery Court for Putnam County
                   No. 2016-14    Ronald Thurman, Chancellor

                            No. M2017-00193-COA-R9-CV

Erie Insurance Exchange (“Erie”) commenced this declaratory judgment action seeking a
declaration that Erie has no duty to defend its insureds in a separate action because the
policies of insurance issued to its insureds provided no coverage for the claims asserted in
that action. The insureds are the defendants in a separate action in which the buyers of the
insureds’ home allege that the insureds made negligent misrepresentations concerning the
property’s propensity to flood. The buyers sought to recover damages they sustained
from flooding that occurred after the sale. Following discovery, Erie filed a motion for
summary judgment on the ground that the “negligence” and “negligent
misrepresentation” claims asserted against its insureds do not contain any allegations that
constitute an “occurrence” as that term is defined in the policies; therefore, there is no
coverage and no duty to defend the insureds. The trial court denied the motion, and this
appeal followed. We have determined that the “negligence” and “negligent
misrepresentation” claims asserted against Erie’s insureds do not arise from an
“occurrence” as that term is defined in the insurance policies; therefore, there is no
coverage, and Erie has no duty to defend the insureds in the other action. For these
reasons, we reverse the judgment of the trial court and remand with instructions to enter
summary judgment in favor of Erie.

      Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
                            Reversed and Remanded

FRANK G. CLEMENT JR., P.J., M.S. delivered the opinion of the Court, in which RICHARD
R. DINKINS and W. NEAL MCBRAYER, JJ., joined.

Parks T. Chastain and Ashley E. Geno, Nashville, Tennessee, for the appellant, Erie
Insurance Exchange.

Patrick Shea Callahan, Cookeville, Tennessee, for the appellees, Gary H. Maxwell and
Lucretia H. Maxwell.
                                       OPINION

       On January 25, 2016, Erie Insurance Exchange (“Erie”) commenced this action for
declaratory judgment that it has no duty to defend or indemnify Gary and Lucretia
Maxwell in an action brought against the Maxwells by Paul and Barbara Chapman.

       The dispute between the Maxwells and Chapmans arises from the Chapmans’
purchase of the Maxwells’ residential property on March 7, 2014. Prior to the sale, the
Maxwells completed a residential property disclosure in which they allegedly
misrepresented the propensity of the property to flood and the city’s corrective action to
mitigate that propensity. Five months after the Chapmans purchased the property from
the Maxwells, the residence sustained damage as a result of two floods within three days.
In the civil action that followed, the Chapmans alleged that they relied on the Maxwells’
representations regarding the propensity for flooding and that they sustained property
damage as a result of, inter alia, the Maxwells’ negligence and negligent
misrepresentations. The Chapmans asserted six claims but only two of those claims are at
issue in this appeal, that of negligence and negligent misrepresentation.

      The Chapmans’ negligence claim against the Maxwells states:

      25. The Defendants had a duty to advise Plaintiffs of the defects and
      problems with the property relative to the flooding that occurs at 609
      Denton Avenue, Cookeville, Tennessee.
      26. The Defendants breached this duty by failing to advise the Plaintiffs of
      the defects and problems with the flooding of the property prior to their
      purchase of the property on March 7, 2014. The Defendants knew, or
      should have known, that the representations set forth above were incorrect
      or false.
      27. As a result of the negligence of the Defendants Gary H. Maxwell and
      wife Lucretia H. Maxwell, the Plaintiffs have sustained substantial
      damages.

      The Chapmans’ negligent misrepresentation claim against the Maxwells states:

      29.    Defendants had a duty to advise the Plaintiffs of the defects and
      problems with flooding of the property prior to their purchase of the
      property on March 7, 2014.
      30.    The Defendants made representations to the prospective purchasers
      in an effort to induce them into entering into a contract for the sale of real
      estate which is the subject matter of this litigation.

                                          -2-
      31.    The representations made by the Defendants were false. The
      Plaintiffs relied upon the negligent misrepresentations of the Defendants
      and purchased the property from them.
      32. As a result of the negligent misrepresentation and fraudulent
      inducement by the Defendants, the Plaintiffs sustained substantial damages.

        The Maxwells notified Erie of the lawsuit and insisted that Erie had a duty to
defend and indemnify them based on two policies Erie had issued to the Maxwells.
Thereafter, Erie commenced this action in which they sought a declaratory judgment that
the policies of insurance it issued to the Maxwells provided no coverage for the claims
asserted in the lawsuit filed against them by the Chapmans in the Chancery Court for
Putnam County, Tennessee;1 therefore, Erie has no duty to defend the Maxwells in that
action.

       Erie subsequently filed a Motion for Summary Judgment based on the ground that
the undisputed facts established that neither policy provided any coverage for the
allegations in the Chapman lawsuit. In pertinent part, Erie contended that none of the
claims asserted in the Chapman Complaint contained an allegation constituting an
“occurrence” as that term was defined by either policy or applicable law; therefore, the
policies provided no coverage for the claims asserted.

      The trial court agreed with Erie on four of the six claims that were at issue but
denied the motion as it pertained to the claims based on negligence and negligent
misrepresentation. The order that followed read in pertinent part:

      1. Erie Insurance Exchange’s (“Erie”) Motion for Summary Judgment is
      granted as it relates to allegations of intentional acts. In other words, Erie is
      under no duty to defend or indemnify Gary and Lucretia Maxwell (the
      “Maxwells”) against Paul and Barbara Chapman’s (the “Chapmans”)
      claims of 1) Violation of the Tennessee Residential Property Disclosure
      Act, 2) Concealment, 3) Fraud and Intentional Misrepresentation, and 4)
      Breach of Contract, alleged as causes of action against Gary and Lucretia
      Maxwell in the underlying case styled Paul J. Chapman, et ux Barbara J.
      Chapman v. Gary H. Maxwell, et ux Lucretia H. Maxwell, No. 2015CV17,
      Chancery Court for Putnam County, Tennessee.

      2. Erie’s Motion for Summary Judgment is denied as it relates to
      allegations of “Negligence” and “Negligent Misrepresentation”. This Court
      finds the issue is not ripe at this time because a question of fact exists with

      1
          Case No. 2015CV17

                                            -3-
       regard to Erie’s duty to indemnify. Erie has a duty to defend with regard to
       allegations of “negligence” and “negligent misrepresentation”.

       Erie then filed a Motion for Permission to File an Interlocutory Appeal pursuant to
Tenn. R. App. P. 9 to appeal the denial of its motion for summary judgment concerning
the “negligence” and “negligent misrepresentation” claims. The trial court granted Erie’s
motion, and this court granted Erie’s Application for Permission to Appeal.

                                         STANDARD OF REVIEW

       This court reviews a trial court’s decision on a motion for summary judgment de
novo without a presumption of correctness. Rye v. Women’s Care Ctr. of Memphis,
MPLLC, 477 S.W.3d 235, 250 (Tenn. 2015) (citing Bain v. Wells, 936 S.W.2d 618, 622
(Tenn. 1997)). Accordingly, this court must make a fresh determination of whether the
requirements of Tenn. R. Civ. P. 56 have been satisfied. Id.; Hunter v. Brown, 955
S.W.2d 49, 50-51 (Tenn. 1997). In so doing, we consider the evidence in the light most
favorable to the non-moving party and draw all reasonable inferences in that party’s
favor. Godfrey v. Ruiz, 90 S.W.3d 692, 695 (Tenn. 2002).

        Summary judgment should be granted when “the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the 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.” Tenn. R. Civ. P. 56.04. In this case, there are no disputed
facts. “[I]ssues regarding an insurer’s duty to defend are matters of law.” Travelers
Indem. Co. of Am. v. Moore & Assocs., 216 S.W.3d 302, 305 (Tenn. 2007) (citing
Standard Fire Ins. Co. v. Chester-O’Donley & Assocs. Inc., 972 S.W.2d 1, 6 (Tenn. Ct.
App. 1998)). Our review of a trial court’s determinations on issues of law is de novo,
without any presumption of correctness. Lind v. Beaman Dodge, Inc., 356 S.W.3d 889,
895 (Tenn. 2011).

                                                  ANALYSIS

      Erie raises two issues on appeal.2 We have determined that the dispositive issue is
whether the Chapmans’ claims against Erie’s insureds for “negligence” and “negligent
misrepresentation” arising from alleged misrepresentations made in the sale of a home

       2
           The issues as stated by Erie in its appellant’s brief read:

       I. Whether the Trial Court erred in misapplying the “duty to defend” analysis?
       II. Whether the Trial Court erred in holding Erie had a duty to defend when there is
       conflicting law (none in Tennessee) on the issue of whether “negligence” and “negligent
       misrepresentation” arising from misrepresentation made in the sale of a home constitutes
       an “occurrence” or “property damage”?

                                                      -4-
state a claim of “property damage caused by an occurrence,” as those terms are defined
in the insurance policies Erie issued to the Maxwells.

       In determining whether an insurer has a duty to defend, we are to rely solely on
the allegations contained in the underlying complaint. St. Paul Fire & Marine Co. v.
Torpoco, 879 S.W.2d 831, 835 (Tenn. 1994) (citing American Policyholders’ Ins. Co. v.
Cumberland Cold Storage Co., 373 A.2d 247 (Me. 1977)). The insurer’s duty to defend
is triggered when the underlying complaint alleges damages that are within the risk
covered by the insurance contract and for which there is a potential basis for recovery. Id.
This duty “arises if even one of the allegations is covered by the policy.” Travelers, 216
S.W.3d at 305 (Tenn. 2007). Furthermore, if there is any doubt as to whether the claimant
has stated a cause of action within the coverage of the policy, it is resolved in favor of the
insured. Id. (citing Dempster Bros., Inc. v. U.S. Fid. & Guar. Co., 388 S.W.2d 153, 156
(Tenn. Ct. App. 1964)).

       When interpreting insurance contracts, we apply the “same rules of construction
used to interpret other contracts.” Travelers, 216 S.W.3d at 305-6 (citing McKimm v.
Bell, 790 S.W.2d 526, 527 (Tenn. 1990)). Insurance contracts “must be interpreted fairly
and reasonably, giving the language its usual and ordinary meaning.” Id. at 306. (quoting
Naifeh v. Valley Forge Life Ins. Co., 204 S.W.3d 758, 768 (Tenn. 2006)). Furthermore,
insurance contracts are to be construed reasonably and logically as a whole. Id.

       Applying these principles, we have determined that Erie does not have a duty to
defend the Maxwells against the claim of negligence or negligent misrepresentation
because the alleged misrepresentations did not cause the damage to the property. To
understand this conclusion, we must review the policies at issue. Erie issued two policies
to the Maxwells: a Home Protector Policy3 and a Personal Catastrophe Liability Policy.4
The Home Protector Policy states:

       We will pay all sums up to the amount shown on the Declarations which
       anyone we protect becomes legally obligated to pay as damages because of
       bodily injury or property damage caused by an occurrence during the
       policy period. We will pay for only bodily injury or property damage
       covered by this policy.

      This policy defines “occurrence” as “an accident, including continuous or repeated
exposure to the same general harmful conditions.” Similar to the Home Protector Policy,
the Personal Catastrophe Liability Policy covers “property damage resulting from an

       3
           This policy covered the period of September 29, 2013 to September 29, 2014.
       4
           This policy covered the period of February 10, 2015 to February 10, 2016.

                                                   -5-
occurrence.” Also, like the Home Protector Policy, the Personal Catastrophe Liability
Policy defines “occurrence” as “an accident . . . which results in . . . property damage.”
Therefore, for a claim to be covered under either policy, the claim must arise from “an
accident . . . which results in . . . property damage.”5 Neither policy defines “accident”;
however, our courts have defined “accident” as an unintentional act.6 While in certain
situations a negligent act may also be an accident, the two terms are not necessarily
synonymous. Gassaway v. Travelers Ins. Co., 439 S.W.2d 605, 607 (Tenn. 1969). “The
nature of the action . . . whether it be tort, contract or otherwise, may be a factor in
determining if there has been an accident under a given factual situation. . . .” Id.

       The Chapmans’ complaint clearly states a claim of negligence and a claim of
negligent misrepresentation concerning the propensity of the property to flood; however,
for there to be coverage the claims must allege that the Chapmans sustained property
damage that was caused by an “occurrence,” as that term is defined in the policies.
Under both Erie policies, “property damage” is only covered if the damage is caused by
an “occurrence.” “Occurrence” is defined by the policies as “an accident, including
continuous or repeated exposure to the same general harmful conditions.” By reading the
Chapmans’ complaint in pari materia, it is apparent the property damage sustained by the
Chapmans was caused by flooding, not by the alleged misrepresentation of the Maxwells.
Thus, the occurrence that caused the property damage was flooding, not
misrepresentations by the Maxwells.

      Although we have found no Tennessee authority that addresses this narrow issue,
our conclusion is supported by cases Erie relies on from other jurisdictions where most

        5
           Property damage is defined in both policies and while the definitions are somewhat different,
the differences have no bearing on the issues on appeal. The Personal Catastrophe Liability Policy defines
“property damage” as “injury to or destruction of tangible property including loss of its use, but not the
decrease in value of the tangible property due to the damage.” The Home Protector Policy defines
“property damage” as:

            1. Physical injury to or destruction of tangible property, including loss of its use.
               All such loss of use shall be deemed to occur at the time of the physical injury
               that caused it.
            2. Loss of use of tangible property which is not physically injured or destroyed. All
               such loss of use shall be deemed to occur at the time of the occurrence.
        6
          In Gassaway, 439 S.W.2d at 608, the court stated that “accident” “should be interpreted in its
ordinary and popular sense.” It defined the term as “an event not reasonably to be foreseen, unexpected
and fortuitous.” Id. The Court acknowledged that this definition of “accident” is problematic because
foreseeability is an element of negligence. Travelers, 216 S.W.3d at 308. Holding that a negligent act
does not constitute an “accident,” because the consequences of a negligent act are, by definition,
foreseeable, is inconsistent with the Court’s previous holding that a negligent act can be an accident. Id.
Merriam-Webster defines “accident” as “an unforeseen and unplanned event or circumstance” or “lack of
intention or necessity.”

                                                   -6-
courts hold that a claim for negligent misrepresentation arising from the sale of property
is not considered an “occurrence.”7 We will discuss seven of the cases from other
jurisdictions.

       The Texas Court of Appeals considered facts similar to those here in State Farm
Lloyds v. Kessler, 932 S.W.2d 732 (Tex. App. 1996). As is the case here, the
homeowners’ insurer sought a declaration that it had no duty to defend its insureds
against claims by the buyers of the insureds’ home who alleged the insureds
misrepresented that the home had no foundational or drainage problems. State Farm, 932
S.W.2d at 734. And as Erie is doing here, the insurer contended that the allegations did
not constitute any claim for damages caused by “an occurrence” or loss. Id. The Kessler
court agreed with the insurer, explaining that the damages were not “property damages.”
Id. at 738. The court also held that “[e]ven if the damages alleged were property
damages, which they are not, they did not result from an occurrence or loss.” Id. In
pertinent part, the Kessler court explained:

        The Kesslers’ homeowner’s policy requires that the property damages be
        caused by an occurrence. The policy defines occurrence as “an accident,
        including exposure to conditions, which results in property damage during
        the policy period.” The umbrella policy requires that a loss cause the
        property damage. The policy defines loss as “an accident that results in . . .
        property damage during the policy period. This includes injurious exposure
        to conditions.” Because neither an accident nor exposure to conditions
        caused the damages alleged by the Fannings, no occurrence or loss
        happened. Therefore, the policies do not cover the damages sought by the
        Fannings.

Id.

       The Kessler court also relied on reasoning in Houston Petroleum Co. v. Highlands
Ins. Co., 830 S.W.2d 153 (Tex. App. 1990), and Safeco Ins. Co. of America v. Andrews,
915 F.2d 500 (9th Cir. 1990). The Houston court held that misrepresentations and failures
to disclose are not conditions that a person or property can be exposed to under the

        7
          The cases Erie cites in its appellant’s brief that held as such include: Nat’l Fire Ins. of Hartford
v. C. Hodges & Associates, PLLC, 825 F. Supp. 2d 792, 797-98 (W.D. Tex. 2011); State Farm Lloyds v.
Kessler, 932 S.W.2d 732 (Tex. App. 1996), writ denied (June 12, 1997); Augenblick v. Nationwide Ins.
Co., No. CIV. A. 99-3419, 1999 WL 975118 (E.D. Pa. Oct. 8, 1999); Aluise v. Nationwide Mut. Fire Ins.
Co., 625 S.E.2d 260, 268-69 (2005); see also 21st Century N. Am. Ins. Co. v. Wolfington, 892 F. Supp. 2d
692, 699 (E.D. Pa. 2012) (citing State Farm Fire and Cas. Co. v. Brewer, 914 F. Supp. 140, 142 (S.D.
Miss. 1996) (noting the law is “‘virtually unanimous’ that damages flowing from misrepresentation in
home sales ‘have no basis in property damage’ but are ‘economic and contractual in nature and as such do
not fall within the scope of coverage’ of typical homeowners’ insurance policy”)).

                                                    -7-
policies. Houston, 830 S.W.2d at 156. “We hold that exposure to ‘fraudulent promises,
false representations, and untrue statements’ does not, as a matter of law, fall within the
plain meaning of the definition of ‘occurrence.’” Id.

       In Safeco Ins. Co. of America v. Andrews, a seller’s misrepresentations about the
condition or defects of the property to be sold were held not to fall within the definition
of occurrence. Safeco, 915 F.2d at 502. In the underlying case giving rise to Safeco’s
declaratory judgment action, the plaintiff, Kandace Kuehl, was seeking damages for
Andrews’s alleged negligence in failing to inspect and inform Kuehl of defects in the
property and for misrepresentation “materially affecting the value or desirability” of the
property. Id. at 501 The Safeco court held that

       Kuehl’s claims do not expose Andrews to liability for any damage to
       tangible property, but rather for economic loss resulting from Andrews’s
       alleged failure to discover and disclose facts relevant to the property’s value
       and desirability. Such harm is outside the scope of the policy. See Allstate
       Insurance Co. v. Miller, 743 F. Supp. 723 (N.D. Cal. 1990). Although the
       defective condition of the property is an element of Kuehl’s claims, the
       defects cannot, even when interpreting the policy broadly, be considered
       the cause of Kuehl’s damages. The cause of the damage was Andrews’s
       alleged misrepresentations, which are not an “occurrence” or a “peril
       insured against” under the terms of the policy. There is, therefore, no
       potential for liability that arguably comes within the scope of the insurance
       coverage provided by Safeco.

Id. at 502. (emphasis added). The same conclusion was reached in Nat’l Fire Ins. of
Hartford v. C. Hodges & Associates, PLLC, 825 F. Supp. 2d 792, 797-98 (W.D. Tex.
2011), where the court found a developer’s allegedly negligent misrepresentations to
purportedly induce tenants to sign leases were not an “occurrence” as that term was
defined by the policies in question.

       The Supreme Court of Appeals of West Virginia came to a similar conclusion in
Aluise v. Nationwide Mut. Fire Ins. Co., 625 S.E.2d 260 (2005). The Supreme Court of
Appeals of West Virginia found absent policy language to the contrary, a homeowner’s
policy defining an “occurrence” as “bodily injury or property damage resulting from an
accident” does not provide coverage for an insured homeowner who is sued by a home
buyer for economic loss caused because the insured negligently or intentionally failing to
disclose defects in the home. Id. at 269. This conclusion was based in part on the
following:

       It has been recognized that courts “are virtually unanimous in their holdings
       that damages flowing from misrepresentation and/or fraud have no basis
       [as] property damage; rather, the only cognizable damages from such torts

                                            -8-
       are economic and contractual in nature and as such do not fall within the
       scope of coverage afforded by [homeowners] policies[.]” State Farm Fire
       and Cas. Co. v. Brewer, 914 F. Supp. 140, 142 (S.D. Miss.1996) (citing
       Safeco Ins. Co. of America v. Andrews, 915 F.2d 500 (9th Cir.1990)).
       Accord Allstate Ins. Co. v. Morgan, 806 F. Supp. 1460 (N.D.Cal.1992);
       Allstate Ins. Co. v. Chaney, 804 F. Supp. 1219 (N.D. Cal.1992); Allstate Ins.
       Co. v. Hansten, 765 F. Supp. 614 (N.D. Cal.1991); State Farm Fire and
       Cas. Co. v. Gwin, 658 So. 2d 426 (Ala. 1995); Devin v. United Servs. Auto.
       Assoc., 6 Cal. App. 4th 1149, 8 Cal. Rptr. 2d 263 (1992); Dixon v. National
       Am. Ins. Co., 411 N.W.2d 32 (Minn. App. 1987); Qualman v. Bruckmoser,
       163 Wis. 2d 361, 471 N.W.2d 282 (1991).

Aluise at 268.

        The reasoning and holding in Augenblick v. Nationwide Ins. Co., No. CIV. A. 99-
3419, 1999 WL 975118 (E.D. Pa. Oct. 8, 1999), also supports our conclusion that the
Maxwells’ alleged misrepresentations do not constitute an occurrence as the term is
defined in the Erie policy. In Augenblick, the insured sought to compel Nationwide to
defend and indemnify her in a suit that arose from the sale of her home. Id. at *1. As is
the case before us in this appeal, in Augenblick, the insured had sold real property to
buyers, who subsequently sued the insured claiming that she concealed defects in the
property and misrepresented its true condition. Id. The buyers sued the insured under
several theories, including negligent misrepresentation premised upon the buyers’
allegations that the insured’s false representations about the property were negligently
made and her failure to disclose material defects constituted negligent conduct. Id. The
Eastern District of Pennsylvania ruled upon a declaratory judgment action that the
question really is “whether a negligent misrepresentation made by a seller to a buyer
qualifies as an ‘occurrence.’” Id. at *4. The Augenblick court’s analysis of that question is
as follows:

       It appears at first glance that a suit alleging negligent misrepresentation is
       not the kind of contingency for which one purchases a homeowner’s
       insurance policy. A homeowner’s policy is usually purchased as protection
       against chance events that cause bodily injury to the insured or another
       party, or property damage to the insured home.

       Plaintiff argues that liability insurance may be triggered by allegations of
       negligent misrepresentation. This Court accepts the Plaintiff’s contention
       that there is a difference between fraudulent misrepresentation and
       negligent misrepresentation under Pennsylvania law. See, Kerrigan v.
       Villei, 22 F. Supp. 419 (E.D.Pa.1998). While that distinction may be
       important for the Migachevs when proving their case, its importance is

                                            -9-
       diminished in the context of determining whether the misrepresentation is
       an ‘accident’.

       Essentially, this Court finds that Nationwide has no obligation to defend
       Ms. Augenblick based on a charge of Negligent Misrepresentation because
       any damage arises out of a breach of contract, not from an accident. Ms.
       Augenblick entered a contract that required her to present to the Migachevs
       a reasonably sound house. According to the Underlying Complaint, she
       either intentionally or negligently failed to do this. In other words, she
       breached the contract. The purpose and intent of an insurance policy is to
       protect the insured from liability for essentially accidental injury to the
       person or property of another rather than coverage for disputes between
       parties to a contractual undertaking. See, Redevelopment Authority of
       Cambria County v. Intern. Ins. Co., 685 A.2d 581, 588 (Pa. Super. 1996).
       Ms. Augenblick is attempting to convert her insurance policy into a
       performance bond that not only protects her from liability for damages
       directly arising from the home, but also from contracts she enters to dispose
       of the property. Such coverage cannot be reasonably expected by the
       insured. See, Cambria County, 454 Pa. Super. at 591.

       The Migachevs’ suit does not refer to the actual structural damage of the
       property, but to the economic loss caused by the intentional or negligent
       misrepresentations of Ms. Augenblick. The contract required truthful
       representations by Ms. Augenblick. If she failed to comply with the terms
       of this contract, whether intentionally or negligently, she may have
       breached the contract. The fact that she may have breached the contract
       only through negligence does not transform this case into a tort action for
       damage while Ms. Augenblick owned the property. See, Snyder Heating
       Co. Inc. v. PMA Ins. Co., 715 A.2d 483 (Pa. Super. 1998).

Augenblick, 1999 WL 975118, at *4-5.

        As the Augenblick court noted, a homeowner’s policy is purchased to protect
against chance events that cause property damage to the home or bodily injury to the
insured or a third party. Therefore, it is fair to conclude that an action alleging negligent
misrepresentation is not the sort of contingency for which one purchases a homeowner’s
policy.

        We are also persuaded by the reasoning of the Louisiana Court of Appeal in
Lawyer v. Kountz, the facts of which are also similar to the case at bar, which opined that
“[t]o find coverage existed in this case would be to find that based on an act of sale, a
homeowner’s insurer becomes the warrantor of the condition of the insured property.

                                           - 10 -
This is not the type of coverage which is contemplated by these homeowner’s policies . . .
.” Lawyer v. Kountz, 716 So. 2d 493, 498 (Louis Ct. App. 1998).

       We acknowledge, as the Maxwells correctly note in their brief, that there are
jurisdictions that differ with the above holdings; however, we have concluded that the
decisions from those jurisdictions are distinguishable and unpersuasive. The cases in
which the Maxwells rely opine that negligent misrepresentation is an accident within the
meaning of a liability insurance policy. Here, we are not determining whether negligent
misrepresentation is an accident but rather, whether the alleged misrepresentations by the
Maxwells caused the damage to the property. We have determined the misrepresentations
did not cause the damage; therefore, the cases the Maxwells cite are unpersuasive.

       For the foregoing reasons, we hold that the Chapmans’ complaint does not state a
claim for property damage that resulted from an occurrence as that term is defined in the
Erie policies. Therefore, the Maxwells have no coverage under the Erie Policies for the
claims asserted against them by the Chapmans, and as a result, Erie owes no duty to
defend or indemnify the Maxwells in that action. We, therefore, reverse the judgment of
the trial court as it pertains to the claims of “negligence” and “negligent
misrepresentation” and remand with instructions for the trial court to enter summary
judgment in favor of Erie, finding Erie is under no duty to defend the Maxwells against
the Chapmans’ claims for “negligence” and “negligent misrepresentation.”

                                    IN CONCLUSION

        Accordingly, the judgment of the trial court is reversed, and this case is remanded
for further proceedings consistent with this opinion. Costs of appeal are assessed against
the appellees, Gary H. Maxwell and Lucretia H. Maxwell.

                                                   ________________________________
                                                   FRANK G. CLEMENT JR., P.J., M.S.

                                          - 11 -