Canal Indemnity Company v. Carbin
5:16-cv-00630
N.D. Ala.Aug 10, 2017Background
- Canal Indemnity sued for a declaratory judgment that it has no duty to defend Frankie Carbin (d/b/a Carbin Construction) in a state-court construction dispute between Carbin and Aaron and Sherry Ford.
- Underlying suit: Carbin sued the Fords on a mechanic’s lien and for sums due; the Fords counterclaimed and alleged Carbin walked off the job after receiving most contract payments and refused further work until paid more.
- Canal’s commercial general liability policy covers damages for "bodily injury" or "property damage" caused by an "occurrence," defined as an "accident." The policy does not define "accident."
- Carbin submitted the Fords’ counterclaim to Canal seeking a defense; Canal filed this federal action seeking a declaration of no duty to defend.
- Central factual/legal dispute: whether the Fords’ allegations describe property damage arising from an "accident" (an unintended/unforeseen injurious occurrence) such that Canal must defend.
Issues
| Issue | Plaintiff's Argument (Canal) | Defendant's Argument (Carbin) | Held |
|---|---|---|---|
| Whether underlying allegations describe property damage caused by an "accident"/"occurrence" under the policy | Alleged conduct (abandoning job, refusing to finish unless paid) was intentional or foreseeable under the contract, not an "accident," so no duty to defend | Carbin says it did not intend injury; price changes were caused by Fords’ upgrades/payment failures and thus were not an intentional occurrence | Court: Held no duty to defend; allegations describe intentional/foreseeable conduct, not an "accident." |
| Whether contract provisions made the price-change/payment dispute foreseeable | Canal: Contract required written change orders and addressed payment for upgrades, making the dispute foreseeable, not accidental | Carbin: Upgrades were verbal and caused by Fords, so Carbin’s conduct was not intentional injury | Court: Contract terms show such payment/upgrade disputes were foreseeable; not accidental. |
| Whether abandonment/walk-off was intentional or could be accidental | Canal: Abandonment was an intentional act (even if motivated by nonpayment) and thus not an "accident" | Carbin: Leaving the job was unintentional or at least not intended to cause injury | Court: Following precedent, abandonment was intentional; not an "accident." |
| Whether allegations of negligence/wantonness convert the claim into an "occurrence" | Canal: The factual allegations, not labels, show deliberate conduct; negligence/wanton labels do not transform deliberate actions into an "accident." | Carbin: Allegations of negligent construction and damage could constitute an "accident" and trigger coverage | Court: Rejected Carbin; Alabama authority does not treat similar deliberate conduct or faulty workmanship as an "accident." |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard)
- Anderson v. Liberty Lobby, 477 U.S. 242 (genuine-issue standard at summary judgment)
- Hartford Casualty Ins. Co. v. Merchants & Farmers Bank, 928 So. 2d 1006 (Ala. 2005) (definition of "accident" in insurance context)
- Liberty Mut. Ins. Co. v. Wheelwright Trucking Co., 851 So. 2d 466 (Ala. 2002) ("accident" as unexpected happening)
- U.S. Fid. & Guar. Co. v. Warwick Dev. Co., Inc., 446 So. 2d 1021 (Ala. 1984) (faulty workmanship not an "occurrence")
- Emplrs. Mut. Cas. Co. v. Smith Constr. & Dev., L.L.C., 949 F. Supp. 2d 1159 (N.D. Ala. 2013) (abandonment of construction project treated as intentional conduct)