Custom Planning & Dеvelopment, Inc. and Tony Soufastai, the insureds, sued their insurer, American National Fire Insurance Company for breach of its contract to indemnify them for a claim that had been defended on a reservation of right at arbitration. The arbitrator found that there had been no negligence by the builder but that there had been a breach of implied warranty and of contract. Thе insurer contended that there was no occurrence under the policy; that there was a contractual liability exclusion; that there was a business risk exclusion; and that there was an exclusion by damage to property. The trial court granted summary judgment. Finding no error, we affirm.
In December 1997, Soufastai purchased a lot at 1630 Powers Ridge Place, Atlanta, Fulton County, and began еxcavating the property; he discovered that the site consisted
On Deсember 5, 2000, the Calloways invoked the arbitration provision in the sales contract. On January 2, 2001, American National sent its first reservation of rights letter to Custom Planning and Soufastai. On July 2, 2001, American Nationаl sent its second reservation of rights letter.
On July 10-11, 2001, the arbitration was conducted. The award stated:
On the Claim for damages resulting from negligently designed and constructed retaining wall which did not meet cоnstruction standards of the industry nor customs of the building trade, all of which constituted a breach of implied warranty and of contract between the Parties, . . . Tony Soufastai and Custom Planning & Development, Inc. shall pay . .. $168,876. . . . The Claim for alleged damages to the pool on the subject property resulting from the retaining wall failure is denied in its entirety.
1. The Insureds contend that the trial court erred in finding that the failure of the crosstie retaining wall was not an occurrence within the meaning of the policy.
Under Section I — Coverage, 1. Insuring Agreement, b. “The ‘bodily injury’ or ‘property damage’ is сaused by an ‘occurrence’ that takes place in the ‘coverage territory.’...” Under the policy definitions section, “occurrence” is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”
“Accident” is not defined within the policy. The generally accepted meaning for “accident” is contained in OCGA § 1-3-3 (2): “ ‘[ajccident’ means an event which takes place without one’s foresight or expectation or design.” See also
City of Atlanta v. St. Paul Fire &c. Ins. Co.,
Occurrence does not mean a breach of contract, fraud, or breach of warranty from the failure to disclose material information.
Ga. Farm &c. Ins. Co. v. Hall County,
supra at 813. Further,
2. The Insureds contend that the trial court erred in finding that the contractual liability exclusion of the policy bars coverage.
The arbitration award did not find that faulty workmanship caused damage to other property through negligence; the arbitration award did find breach of implied warranty and of breach of contract in the work performed in constructing the crosstie retaining wall. Thus, negligence was excluded as the basis for liability either for other property or of the сrosstie retaining wall. See SawHorse, Inc. v. Southern Guaranty Ins. Co. of Ga., supra at 496 (1) (a). For there to be liability for faulty workmanship through negligence, there would have to be damage to property other than the work itself, i.e., the crosstie retaining wall, and such defects would have to be caused by negligence, and not either breach of contract or of implied warranty. See id. at 497 (1) (b).
3. The Insureds contend that the trial court erred in finding that the business risk exclusion of the policy bars coverage.
Property damage occurring to real property comes within the “business risk” exclusion where the damage occurred in performing the construction operation incident to the work itself. The arbitrator awarded damages for the defective construction of the crosstie retaining wall based upon breach of implied warranty and breach of contract.
[T]he business risk borne by the contractor to replace or repair defective work to make the building project conform to the agreed contractual requirements... is not covered---The coverage applicable under the CGL policy is for tort liability for injury to persons and dаmage to other property, and not for contractual liability of the insured for economic loss because the product or completed work is not that for which the damaged person bargained.
(Citation and punctuation omitted.) Sapp v. State Farm Fire &c. Co., supra at 203-204 (1) (b); accord Bituminous Cas. Corp. v. Northern Ins. Co. of N.Y., supra at 534.
“[The] purpose of this comprehensive liability insurance coverage is to provide protection for personal injury or for property damage caused by the completed product, but not for the replacement and repair of that product.” (Citation and punctuation omitted.)
Gary L. Shaw Builders v. State Auto. Mut. Ins. Co.,
Exclusion j (6) еliminates coverage for “that particular part of any property that must be restored, repaired or replaced because ‘your work’ was incorrectly performed on it. This exclusion does not apply to liability assumed under a sidetrack agreement or to ‘property damage’ included in the ‘products-completed operations hazard.’ ”
4. The remainder of the Insureds’ enumerations of error are controlled by the foregoing divisions.
Judgment affirmed.