314 P.3d 1055
Utah Ct. App.2013Background
- In 2002 AFCU contracted Kier as general contractor for a branch; Kier subcontracted Broberg Masonry to supply and install manufactured stone veneer.
- Broberg obtained a CGL policy from Owners with Kier listed as an Additional Insured.
- The CGL policy covers damages caused by an occurrence and provides a defense, but excludes damage to Broberg's product and Broberg's work.
- AFCU sued Kier for defective construction; Kier brought a third-party claim against Broberg and Owners; Owners moved for summary judgment and the district court denied it.
- The district court held that the CGL policy provided coverage for AFCU’s claims; Owners appealed via interlocutory review, and the Utah Court of Appeals granted relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Exclusions k and l bar coverage for Broberg's work and product? | Exclusions k and l apply to bar coverage for damage to Broberg's product and work. | District court correctly analyzed policy terms, but you may interpret 'you' differently to avoid exclusion. | Exclusions k and l bar coverage; Breach of coverage denied; policy limits not triggered. |
| Who is 'you' and 'your' in the exclusions? | Broberg is the Named Insured; Kier is not a Named Insured. | The district court's interpretation that Kier is the Named Insured may be correct under the policy language. | 'You' and 'your' refer to Broberg, the Named Insured; Kier is not a Named Insured for these exclusions. |
| Does the subcontractor exception to Exclusion l restore coverage for the veneer damage? | If the exception applies, coverage is restored for Broberg’s veneer work. | The exception applies only to work performed on Broberg’s behalf by a subcontractor. | The exception does not restore coverage because veneer work was performed by Broberg, not a subcontractor of Broberg. |
| Does the district court’s denial of summary judgment conflict with the Exclusions and the interpretation of 'you'? | The district court’s reading allowed coverage for Kier under the subcontractor doctrine. | Policy exclusions clearly apply when properly read with 'you' as Broberg. | The district court erred; summary judgment in favor of Owners is proper; remand for entry of summary judgment for Owners. |
Key Cases Cited
- Pollard v. Truck Ins. Exch., 2001 UT App 120 (Utah Ct. App. 2001) (interpretation of insurance policy terms under plain meaning)
- National Union Fire Ins. Co. v. Liberty Mut. Ins. Co., 234 F. App’x 190 (5th Cir. 2007) (defines 'you' as named insured for exclusions)
- Jacobsen Construction Co. v. Industrial Indemnity Co., 657 P.2d 1325 (Utah 1983) (subcontractor definition and fiber glass tanks context)
- Great American Insurance Co. v. Woodside Homes Corp., 448 F. Supp. 2d 1275 (D. Utah 2006) (subcontractor fault and CGL coverage context)
- Alf v. State Farm Fire & Cas. Co., 850 P.2d 1272 (Utah 1993) (interpretation of insurance contracts and exclusions)