Spirtas Company v. Nautilus Insurance Company
715 F.3d 667
8th Cir.2013Background
- Spirtas hired to demolish the Seneca Bridge and subcontracted the longest span to Dykon.
- Dykon’s charges largely failed, mangling the span and delaying completion.
- Spirtas incurred about $81,952 in additional costs and Kraemer backcharged Spirtas $150,329 under the contract.
- Spirtas carried a Nautilus commercial general liability policy and made a claim for $232,280.92, which Nautilus denied.
- The district court granted Nautilus summary judgment; Spirtas appealed seeking declaratory judgment, breach, and vexatious refusal to pay, with Nautilus cross-claiming for declaratory relief.
- The Seventh Circuit reviews de novo and, although it assumes coverage under the policy, agrees that the three exclusions at issue preclude coverage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does exclusion j(5) bar coverage? | Spirtas argues endorsement is narrow and coverage may apply. | Nautilus contends the incident falls within the exclusion as to the particular part of real property. | Yes, exclusion j(5) precludes coverage. |
| Does exclusion j(6) bar coverage? | Argues there was no restoration/reparation of the damaged property. | The mangled state required restoration of the affected river area. | Yes, exclusion j(6) precludes coverage. |
| Does exclusion m bar coverage? | Span/river damage cannot be treated as impaired property. | Span/river qualify as impaired property under the policy. | Yes, exclusion m precludes coverage. |
| Should coverage be decided by affirmative terms or by exclusions? | Coverage could apply under affirmative terms of the policy. | Exclusions render coverage unavailable regardless of affirmative terms. | Exclusions control; coverage issues unnecessary to decide. |
Key Cases Cited
- Columbia Mutual Insurance Co. v. Schauf, 967 S.W.2d 74 (Mo. banc 1998) (narrow reading of 'particular part' exclusion to limit damage to the area of work)
- Brake Landscaping & Lawncare, Inc. v. Hawkeye-Security Ins. Co., 625 F.3d 1019 (8th Cir. 2010) (applies exclusion to preclude coverage for unintended lawn damage from herbicide)
- Shahan v. Shahan, 988 S.W.2d 529 (Mo. banc 1999) (strictly construed exclusions against insurer; plain meaning governs)
- Westfield Ins. Co. v. Robinson Outdoors, Inc., 700 F.3d 1172 (8th Cir. 2012) (assesses coverage where exclusions apply alongside endorsements)
- Modern Equip. Co. v. Cont’l W. Ins. Co., 355 F.3d 1125 (8th Cir. 2004) (addresses ambiguity and exclusion scope in insurance contracts)