Lead Opinion
[¶ 1] Ole Lynne appeals from a summary judgment in a declaratory action commenced by Grinnell Mutual Reinsurance Company (“Grinnell”) to resolve issues of policy coverage. The district court held Grinnell had no duty to defend or
I.
[¶ 2] Lynne is a farmer who engages in construction work during the winter months. Lynne orally contracted with Edward Larson to construct a new foundation for a farm house built on Larson’s property in 1912. The process involved lifting the house from its foundation and supporting it with iron timbers while a new foundation was constructed under the house.
[IT 3] Lynne drilled holes in the old foundation to accommodate four iron timbers to support the house while Lynne demolished the old foundation and constructed a new one. After Lynne removed the existing foundation and constructed footings, he hired a subcontractor, Dena Kama, to place concrete blocks on top of the footings. In the process of placing the blocks, either Lynne or Kama discovered the house would have to be raised another eight inches in order for the basement walls to be sufficiently accommodated. While Lynne was in the process of raising the house, the iron timbers “rolled over.” The house fell off the support jacks and into the basement approximately three feet. Lynne claimed the house fell as a result of unusually high winds on the day of the incident. Grinnell argues the house fell as a result of Lynne’s faulty workmanship, thus barring him from recovery under his insurance policy.
[¶ 4] Kama brought an action against Larson and Lynne to recover $8,385.95, money owed to him for work performed. After the house fell into the basement, Kama had to rebuild some of the damaged walls. Kama also modified the foundation to accommodate another house Larson purchased to be placed upon the foundation. Larson filed a cross-claim against Lynne, seeking to recover $35,000 in expenses allegedly incurred by Larson in connection with the removal and replacement of the house.
[¶ 5] At the time of the incident, Lynne had a commercial general liability policy with Grinnell. Lynne filed a claim against his policy seeking a defense of Kama’s and Larson’s lawsuits and indemnity for any damages. Grinnell denied coverage, but agreed to defend Lynne under a reservation of rights.
[¶ 6] Grinnell filed a complaint in a separate action seeking declaratory relief, claiming the commercial general liability policy does not cover the claims against Lynne by Larson or Kama because of the business risk exclusions in the policy. Grinnell argues the policy does not cover the losses incurred by Lynne because the damage to the house fits into one or more policy exclusions from coverage. Grinnell argues: business risk exclusions preclude coverage because the damage to the house was due to Lynne’s incorrectly performing the work he had agreed to do; the house is excluded under the real property exclusion which provides that damage to real property upon which Lynne or a subcontractor was working is not covered by Lynne’s policy. Originally, the district court granted summary judgment in favor of Grinnell on Larson’s claim, but denied summary judgment as to Kama’s claim because there was an issue of material fact as to whether Kama’s work on the project was complete. Later, the district court granted summary judgment in favor of Grinnell on Kama’s claim when it became clear through deposition testimony that Kama had not yet completed the project at the time the damage occurred.
[¶ 7] Lynne appeals to this Court.
II.
[¶ 8] Grinnell’s action for declaratory judgment was brought pursuant to N.D.C.C. § 32-23-06, which provides:
[T]he court shall render or enter a declaratory judgment or decree in an action brought by or against an insurance company to determine liability of the insurance company to the insured to defend, or duty to defend, although the insured’s liability for the loss may not have been determined.
Grinnell moved for summary judgment in the declaratory action, and the district court granted summary judgment in favor of Grinnell based on the policy’s exclusion from coverage.
[¶ 9] Summary judgment is a “procedural device for the prompt and expeditious disposition of a controversy without a trial if either party is entitled to judgment as a matter of law, and if no dispute exists as to either the material facts or the inferences to be drawn from undisputed facts, or if resolving disputed facts would not alter the result.” Hall Family Living Trust v. Mut. Serv. Life Ins. Co.,
[¶ 10] “The party opposing summary judgment cannot simply rely on factual assertions in a brief or pleadings and cannot rely on unsupported allegations; such conclusory assertions are insufficient to raise an issue of material fact.” Warner and Co. v. Solberg,
Although the party seeking summary judgment has the burden of showing that there is no genuine issue of material fact, the party resisting the motion may not simply rely upon the pleadings. Nor may the opposing party rely upon unsupported, conclusory allegations. The resisting party must present competent admissible evidence by affidavit or other comparable means which raises an issue of material fact and must, if appropriate, draw the court’s attention to relevant evidence in the record by setting out the page and line in depositions or other comparable documents containing testimony or evidence raising an issue of material fact.
In summary judgment proceedings, neither the trial court nor the appellate court has any obligation, duty, or responsibility to search the record for evidence opposing the motion for summary judgment. The opposing party must also explain the connection between the factual assertions and the legal theories in the case, and cannot leave to the court the chore of divining what facts are relevant or why facts are relevant, let alone material, to the claim for relief.
[¶ 11] Lynne argues a genuine issue of material fact exists sufficient to preclude summary judgment in favor of Grinnell. Lynne argues high winds contributed to the collapse of the house. See Shelby Ins. Co. v. Northeast Structures, Inc.,
[¶ 12] The only reference this Court is able to glean .from the record is in Lynne’s deposition. Lynne stated, “[i]t was a high wind and — I don’t know. It was real windy that day. That’s all I know. It was miserable out there.” Lynne briefly mentions wind in his brief on page 4: “The day that Lynne went to raise the house the few inches needed to install the last layer of blocks, the wind was blowing strongly with gusts as it is well known to do in North Dakota.” In his brief, Lynne concedes the wind may not have been the cause for damage to the house in his brief when he states, “Lynne had completed the lifting process when for some as yet unexplained reason, the house moved, the support timbers rolled and the house fell.”
[¶ 13] Lynne acknowledges in his brief windy conditions are common in North Dakota. Lynne presented no evidence indicating the winds were different from those reasonably expected and for which a house mover in North Dakota ought to be prepared. When no pertinent evidence on an essential element of the claim is presented to the district court in opposing a motion for summary judgment, it is presumed no such evidence exists. Azure, v. Belcourt Pub. Sch. Dist.,
[¶ 14] Lynne does not direct this Court to the page and line number pointing out issues that support the conclusion that a genuine issue. of material fact precludes summary judgment, nor does, he argue them sufficiently to meet the non-moving party’s burden to provide more than mere conclusory statements. We agree with the district court that Lynne failed to establish a genuine issue of material fact. We conclude Lynne failed to establish a genuine issue of material fact as -to whether high winds caused the incident, rather than faulty contract performance of Lynne.
III.
[¶ 15] Grinnell argues two exclusions apply to preclude coverage of Lynne’s claim under the commercial general liability policy. • The first is exclusion 2(j)(5) which states, “[t]his insurance does not apply to: ... [t]hat particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the ‘property damage’ arises out of those operations.” The second exclusion is 2(j)(6), which provides, “[t]his insurance does not apply to ... [t]hat particular part of any property that must be restored, repaired or replaced because ‘your work’ was incorrectly performed on it.” Grinnell argues these provisions preclude coverage for Lynne’s claim.
[¶ 16] Generally known . as “business risk exclusions,” the purpose of these provisions is to prevent policyholders from converting liability insurance into protection from foreseeable business risks. Jeffrey W. Stempel, A Mixed Bag for Chicken Little: Analyzing Year 2000 Claims and Insurance Coverage, 48 Emory L.J. 169, 236 (1999). Insurance companies theorize that a business risk, such as costs
[¶ 17] Business risk exclusions are intended to provide coverage for tort liability, but not for contract liability of the insured for loss because the product or completed work was not that for which the other party had bargained. See Bor-Son Bldg. Corp. v. Employers Commercial Union Ins. Co.,
[¶ 18] In this case, Grinnell argues its commercial insurance policy is not meant to act as a warranty, and Lynne should be responsible for any damages resulting from the collapse and any resulting contract claims. A commercial liability insurance policy is not meant to act as a warranty of the insured’s work. Rowland H. Long, The Law of Liability Insurance, § 10.05(8) (2004).
The exclusions from coverage for property damage contained in paragraphs j., m. and n. and other similar exclusions in the CGL policy are generally referred to as “business risk” exclusions, and are designed to exclude coverage for defective workmanship by the insured causing damage to the project itself. Gary L. Shaw Builders v. State Auto. Mut. Ins. Co.,182 Ga.App. 220 , 223 (355 S.E.2d 130 ) (1987); Elrod’s Custom Drapery Workshop v. Cincinnati Ins. Co.,187 Ga.App. 670 (371 S.E.2d 144 ) (1988). The principle behind such exclusions is based on the distinction made between two kinds of risk incurred by a contractor such as Donmac. The first is the business risk borne by the contractor to replace or repair defective work to make the building project conform to the agreed contractual requirements. This type of risk is not covered by the CGL policy, and the “business risk” exclusions in the policy make this clear. Gary L. Shaw, supra at 224,355 S.E.2d 130 . The second is the risk that the defective or faulty workmanship will cause injury to people or damage to other property. Because of the potentially limitless liability associated with this risk, it is the type for which CGL coverage is contemplated. Weedo v. Stone-E-Brick, Inc.,81 N.J. 233 ,405 A.2d 788 , 791 (1979). “While it may be true that the same neglectful craftsmanship can be the cause of both a business expense of repair and a loss represented by damage to persons and property, the two consequences are vastly different in relation to sharing the cost of such risks as a matter of insurance underwriting. ... The risk intended to be insured is the possibility that the goods, products or work of the insured, once relinquished or completed, will cause bodily injury or damage to property other than to the product or completed work itself, and for which the insured may be found liable. The insured, as a source of goods or services, may be liable as a matter of contract law to make good on products or work which is defective or otherwise unsuitable because it is lacking in some capacity. This may even extend to an obligation to completely replace or rebuild the deficient product or work. This liability, however, is not what the coverages in question are designed to protect against. The coverage [applicable under the CGL policy] is for tort liability for ... [injury to persons and damage to other property] and not for contractual liability of the insured foreconomic loss because the product or completed work is not that for which the damaged person bargained.... ”
Glens Falls Ins. Co. v. Dommac Golf Shaping Co.,
4
[¶ 19] The district court concluded the insurance policy in this case was not ambiguous and exclusion 2(j)(5) precluded coverage for Lynne’s claim. Lynne argues the district court erred in concluding the insurance policy was not ambiguous.
[¶ 20] This issue turns on the interpretation of the insurance policy issued by Grinnell to Lynne. Whether an insurance contract is ambiguous is generally a question of law. Fisher v. American Family Mut. Ins. Co.,
[¶ 21] Lynne attempts to defeat application of the exclusions with a number, of arguments that dissect the policy provisions. Lynne’s first argument is that the policy provisions excluding coverage for Lynne’s claim are ambiguous and thus, must be construed against the insurer. In Ziegelmann v. TMG Life Ins. Co.,
Our goal when interpreting insurance policies, as when construing other contracts, is to give effect to the mutual intention of the parties as it existed at the time of contracting. We look first to the language of the insurance contract, and if the policy language is clear on its face, there is no room for construction. “If coverage hinges on an undefined term, we apply the plain, ordinary meaning of the term in interpreting the contract.” While we regard insurance policies as adhesion contracts and resolve ambiguities in favor of the insured, we will not rewrite a contract to impose liability on an insurer if the policy unambiguously precludes coverage. We will not strain the definition of an undefined term to provide coverage for the insured. We construe insurance contracts as a whole to give meaning and effect to each clause, if possible. The whole of a contract is to be taken together to give effect to every part, and each clause is to help interpret the others.
We construe ambiguous contract provisions narrowly; however, this case fits within even a narrow interpretation of the business risk exclusion.
[¶ 22] “Exclusions from coverage in an insurance policy must be clear and explicit and are strictly construed against the insurer.” Grinnell Mut. Reinsurance Co. v. Center Mut. Ins. Co.,
[¶ 23] Initially, the district court granted summary judgment holding exclusion 2(j)(5) applied and Grinnell had no duty to defend or indemnify Lynne for the claims
[¶ 24] Applying the language of the policy exclusions, the district court examined the causes of actions asserted by Larson and Kama against Lynne in the underlying lawsuit. While acknowledging allegations of negligence, the court stated it was necessary to determine that the claims “are not in reality contract claims cloaked as tort claims ” (citing Jerry Davis, Inc. v. Maryland Ins. Co.,
In summary, the Court believes that it is on solid ground in awarding summary judgment in favor of Grinnell Mutual based upon the applicability of Exclusion 2j.(5), Section IA, of the CGLP [commercial general liability policy] which Grinnell Mutual issued to Lynne. That exclusion clearly states that no coverage is provided under the CGLP for “property damage” to “that particular part of real property on which you (i.e., Lynne) or any contractors or subcontractors (i.e., Kama) working directly or indirectly on your behalf are performing operations, if the ‘property damage’ arises out of those operations.” Reasonable persons could not disagree that at the time of the loss: 1. Lynne was performing operations; 2. on real property (owned by Larson); and, 3. damage (to the property) arose out of those operations.
[¶ 25] The language of the policy indicates “[t]hat particular part of real property” on which Lynne was working is subject to the exclusion. The particular part of real property on which Lynne was working was the house. Thus, damage to the house resulting from Lynne’s work will not be covered by the policy due to the exclusions included in the policy. In Fisher v. American Family Mut. Ins. Co.,
B.
[¶ 26] Lynne argues the damage to the house did not “arise out of’ Lynne’s work and contract performance. In the alternative, Lynne argues the term “arises out of’ is ambiguous and should be construed against Grinnell. We disagree.
[¶ 27] Citing Grinnell Mut. Reinsurance Co. v. Center Mut. Ins. Co.,
[¶ 28] In Grinnell, we discussed the causal connection test established in Norgaard v. Nodak Mut. Ins. Co.,
[¶29] Lynne’s operation was to lift the house from its foundation, tear out and replace the existing foundation, and place the house on a new foundation. The day on which the damage to the house occurred, Lynne was in the process of lifting the house for a second time. During this lift, the timbers supporting the house rolled over and the house subsequently fell into the basement. These facts are sufficient to meet the causal connection test because the damage to the house could not have occurred without Lynne’s act of raising the house. See also Houser v. Gilbert,
[¶ 30] We are not persuaded that no causal relationship exists between the nature of the work performed by Lynne and the resulting damage to the house. We conclude, as a matter of law, the damage to the house arose out of the inherent nature of the work performed by Lynne.
C.
[¶ 31] Next, Lynne argues the house is not real property and therefore, exclusion 2(j)(5) does not apply because it states in part, “[t]his insurance does not apply to: ... ‘[property damage’ to ... [t]hat particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the ‘property damage’ arises out of those operations.”
[¶ 32] The district court found Lynne was performing operations on real property owned by Larson and the damage to the property arose out of operations by Lynne. The record reflects Lynne was to raise the house off its foundation so the foundation could be rebuilt.
[¶ 33] In his brief, Lynne devotes one paragraph to the argument that his work was directed only at the basement and foundation, not to the house proper. Lynne offered no case law or other authority to support this position. We deem issues not adequately briefed or argued on appeal to be waived. Snyder v. N.D. Workers Comp. Bur.,
[¶ 34] We conclude Lynne did, in fact, perform work on the house and the house was “[t]hat particular part of real property” upon which Lynne directly performed operations.
D.
[¶ 35] The next argument offered by Lynne to defeat application of the exclusion is that the house is not real property, but rather, is personal property because the house was not attached to the foundation at the time of the damage. We disagree.
[¶ 36] In North Dakota, whether an item is a fixture or personal property is defined by statute:
A thing is deemed to be affixed to land when it is attached to it by roots, as in the case of trees, vines, or shrubs, or imbedded in it, as in the case of walls, or permanently resting upon it, as in the case of buildings, or permanently attached to what is thus permanent, as by means of cement, plaster, nails, bolts, or screws.
N.D.C.C. § 47-01-05.
[¶37] This Court has previously applied a three-part test to determine whether an object is a fixture or personal property. Strobel v. Northwest G.F. Mut. Ins. Co.,
[¶ 38] In this case, the intention of the person using the realty, Larson, is key to determining whether the house was a fixture or personal property. The house was located on the original foundation since 1912 and only removed for purposes of replacing the foundation. Nothing in the record indicates Larson intended to move the house from its location once the foundation was complete. Furthermore, the manner in which the building was annexed indicates its nature as a fixture. The building was temporarily placed upon timbers in order to raise it to the level necessary to complete the basement, and for part of that time, Larson’s family lived in the house and only moved when the plumbing and electrical work had to be disconnected. Finally, the adaptation of the house to the environment demon
[¶ 39] The house is a fixture and not personal property, because the actions of the owner manifest an intention to have the house remain on the property permanently. We conclude the house is real property within the scope of the exclusion.
IV.
[¶ 40] The next issue raised by Lynne is whether the policy exclusions preclude coverage for damage to work performed by Karna, a subcontractor. The essence of this issue is whether the policy issued to Lynne covers the claim by Karna from .the destruction of his work on the basement walls resulting from the house falling. Grinnell argues both exclusions, 2(j)(5) and 2(j)(6), operate to preclude Kama’s claim.
[¶ 41] Karna sought damages for work performed on the basement. Part of his claim relates to his initial efforts on the basement and is unrelated to the house falling. The remainder of the claim is extra work performed by Karna to accommodate a different house purchased by Larson and .placed upon the foundation. Lynne argues his policy should cover Kar-na’s claim.
[¶ 42] The district court initially determined a genuine issue of material fact existed as to whether Kama’s work was complete on the project, and subject to an exception to exclusion 2(j)(6). An exception to exclusion 2(j)(6) from the policy’s broad coverage provides coverage for property damage included in the products-completed operations hazard. Fisher v. American Family Mut Ins. Co.,
[¶ 43] Although the district court examined the possibility that the exception of exclusion 2(j)(6) may have provided coverage for Kama’s claim, the district court did not otherwise rely on exclusion 2(j)(6) in granting summary judgment in favor of Grinnell. “In this case, because no determination has yet been made as to whether Lynne’s work on Larson’s house was ‘incorrectly performed’, and because reasonable persons could differ as to whether this is the case, any award of summary judgment in favor of Grinnell Mutual cannot be based upon the asserted applicability of Exclusion 2j.(6) of the CGLP.” The trial court relied only on exclusion 2(j)(5).
[¶ 44] The plain language of the policy exclusion 2(j)(5), even if narrowly construed against the insurer, operates to preclude coverage for Kama’s claim. The purpose of the business risk exclusion in a contractor’s general liability policy is to preclude coverage for claims arising out of contract, rather than tort. The district court properly characterized Kama’s claim as part of the contractual obligation of Lynne to Larson, rather than a tort claim. As previously discussed, a policy’s business risk exclusions, such as those present in this case, do not provide coverage for
V.
[¶ 45] Lynne directs our attention to the recent Minnesota case, Thommes v. Milwaukee Ins. Co.,
VI.
[¶ 46] We affirm the district court’s summary judgment in favor of Grinnell.
Concurrence Opinion
concurring.
[¶ 48] I respectfully specially concur. I agree that Lynne has not raised a genuine question of material fact to avoid summary judgment. If, however, an act of God was a proximate cause of the loss, then in my opinion, there was an “occurrence” within the meaning of the policy.
[¶ 49] Under the policy in the present ease, an “occurrence” is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Other jurisdictions have recognized that the term “accident” in insurance policies includes damage caused by acts of God. 57A Am.Jur.2d Negligence § 42 (1989); see Royal Indemnity Co. v. McClatchey,
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies....
b. This insurance applies to “bodily injury” and “property damage” only if: (1) the “bodily injury” or “property damage” is caused by an “occurrence” that takes place in the “coverage territory” ...
Our Court has stated that “[i]f an act of God and the negligence of the defendant combine to produce the injury, the defendant is liable.” Lang v. Wonnenberg,
[¶ 50] I do not believe .that exclusion 2j(5) would apply under these circum
In determining the meaning of the phrase “arising out of,” courts have recognized that the causal relationship need not constitute a proximate cause, but on the other hand if an injury is directly caused by some independent or intervening cause it does not arise out of the use of an automobile, notwithstanding there may have been some remote connection between the use of an automobile and the injury complained of.
Norgaard v. Nodak Mut. Ins. Co.,
[¶ 51] In Shelby Ins. Co. v. Northeast Structures, Inc.,
[¶ 52] Lynne raised as an affirmative defense “an act of nature” occurred which caused the house to roll off the jacks. North Dakota recognizes the affirmative defense of “Act of God.” Huber v. Oliver County,
[¶ 53] I, therefore, respectfully specially concur.
[¶ 54JWILLIAM A. NEUMANN, JJ., concur.