831 N.W.2d 402
S.D.2013Background
- Swenson and Stewart contracted DJ Construction to build a home; the DJ Construction policy with Owners insured coverage up to $1,000,000 per occurrence.
- DJ Construction sought defense and indemnity from Owners, but Owners denied coverage after determining no coverage under the policy terms.
- Swenson and Stewart entered a stipulated judgment with DJ Construction, assigning DJ’s rights against Owners to Swenson and Stewart, who then sued Owners for defense, indemnity, and bad faith.
- Policy exclusions j(5), j(6), and j(7) exclude certain property damage; building materials were left exposed outdoors during winter 2007–2008 and later used in construction, leading to disputes about coverage.
- The circuit court granted summary judgment for Owners, concluding the exclusions applied to bar coverage; Swenson and Stewart appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do Exclusions j(5), j(6), and j(7) exclude coverage under the policy? | Swenson argues exclusions do not apply to all alleged damages. | Owners contends exclusions clearly bar coverage for the claimed damages. | Yes; exclusions apply and bar coverage. |
Key Cases Cited
- Demaray v. De Smet Farm Mut. Ins. Co., 2011 S.D. 39 (2011) (insurance coverage analysis; law of policy interpretation)
- State Farm Mut. Auto. Ins. Co. v. Harbert, 741 N.W.2d 228 (S.D. 2007) (duty to defend; interpretation of policy language)
- Biegler v. Am. Family Mut. Ins. Co., 2001 S.D. 13 (2001) (interpretation of policy terms; estoppel considerations)
- Culhane v. W. Nat'l Mut. Ins. Co., 704 N.W.2d 287 (S.D. 2005) (care, custody, or control; exclusion analysis)
- Alverson v. Nw. Nat'l Cas. Co., 1997 S.D. 9 (1997) (unambiguous exclusions; coverage determination)