813 F. Supp. 2d 823
S.D. Miss.2011Background
- Peerbooms' home flooded repeatedly from 1998-2005; FEMA urged elevation for flood insurance, leading to Absolute Foundation Solutions raising the home 24 inches.
- Absolute lifted the structure about 21 inches by August 28, 2009; the house collapsed during a lunch break, causing extensive damage.
- Peerbooms filed suit in Lamar County (MS) asserting negligence, breach of contract, and fraud; punitive damages sought against Caballero.
- Lafayette Insurance issued a standard CGL policy to Absolute; Lafayette refused coverage and defended under reservation of rights, then filed this declaratory judgment action.
- Mississippi-law eight-corners test governs whether Lafayette owes defense/indemnity; focus on whether property damage results from an occurrence and whether exclusions apply.
- Court granted Lafayette's summary judgment, finding business-risk exclusions (j(5) and j(6)) likely bar coverage because Absolute was hired to raise the entire house and the damage occurred during that work.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Peerbooms' damages were caused by an occurrence. | Lafayette argues the damage was not an accident and not an occurrence. | Peerbooms contend the damage could be an inadvertent accident | Not resolved at summary judgment; potential occurrence present |
| Whether the policy exclusions for the insured's own defective work apply. | Exclusions j(5)/j(6) preclude coverage for damage to the property where work occurred. | Damage may involve property beyond the specific work area; exclusions should apply only to the insured's own work | Summary judgment for Lafayette on exclusions |
| Scope of the 'particular part of real property' that Absolute was working on. | Absolute was hired to raise the entire house; the 'particular part' was the whole structure. | Cruse/Wilshire limit the exclusion to the part of property where work occurred; could be narrower | The entire house was the object of Absolute's work; exclusions apply |
| Whether j(1) occupancy/causal-exposure exclusion is also applicable. | Occupancy/exclusion could bar coverage for property owned or occupied by the insured. | Not necessary to reach j(1) given j(5)/j(6) applicability | Not necessary to determine j(1) since j(5)/j(6) preclude coverage |
Key Cases Cited
- Architex Association, Inc. v. Scottsdale Insurance Co., 27 So.3d 1148 (Miss. 2010) (construction defect can be an occurrence depending on facts; faulty workmanship not automatically excluded)
- Cruse (Hartford Cas. Co. v. Cruse), 938 F.2d 601 (5th Cir. 1991) (exclusion applies to damage to the part of property where the insured worked, not to entire property)
- Wilshire Ins. Co. v. RJT Construction, LLC, 581 F.3d 222 (5th Cir. 2009) (your work exclusion bars damage to insured's own work but not to other property damaged by that work)
- Grinnell Mut. Reinsurance Co. v. Lynne, 686 N.W.2d 118 (N.D. 2004) (business risk exclusions preclude coverage for damage to property that is the insured's own work)
- Hartford Casualty Co. v. Cruse, 938 F.2d 601 (5th Cir. 1991) (definition and scope of 'particular part' of property under exclusion; foundation work context)