CORRECTED MEMORANDUM OPINION AND ORDER
Plaintiff Lafayette Insurance Company filed the present action seeking a declaratory judgment that its commercial general liability insurance policy issued to defendant Absolute Foundation Solutions (Absolute) provides no coverage for damages to the home of Edward and Heather Peer-boom, which the Peerbooms have claimed was caused by Absolute’s negligence in performing certain work on their home. The case is presently before the court on Lafayette’s motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. The Peerbooms and Absolute have separately responded to the motion and the court, having considered the memoranda of authorities, together with attachments, submitted by the parties, concludes the motion is well taken and should be granted.
For purposes of the present motion, the following facts are not in dispute:
Edward and Heather Peerboom’s home in Hattiesburg, Mississippi flooded five times during an approximate eight-year period, from January 1998 to August 2005. In August 2009, after they were informed by FEMA that it would no longer provide them flood insurance if the home were not elevated, the Peerbooms hired Absolute to raise the structure twenty-four inches above the flood zone so it could be re-shored and the flood insurance on the house could be continued. In general terms, the project involved excavating beneath the home’s slab foundation, placing hydraulic jacks at various locations below the slab, and using the jacks to evenly raise the structure, a few inches at a time. By midday on August 28, 2009, Absolute had raised the structure approximately twenty-one inches without incident. Absolute’s crew then left for lunch, and returned to discover that the house had fallen, resulting in substantial damage to the entire structure.
On February 25, 2010, the Peerbooms filed suit against Absolute and Caballero in the Circuit Court of Lamar County, Mississippi, asserting claims of negligence, breach of contract and fraud, and seeking compensatory damages for the total destruction of their home and their resulting emotional distress, and demanding punitive damages on account of Caballero’s alleged fraud. 1 Upon receiving notice of the suit, Absolute filed a claim with Lafayette under its CGL policy, and tendered defense of the underlying action to Lafayette. Lafayette denied coverage, and agreed to defend Absolute and Caballero, under reservation of rights, following which Lafayette filed the present action, seeking a declaratory judgment that it is not obligated to defend or indemnify Absolute/Cabellero under its CGL policy, and it now seeks summary judgment on its complaint herein
Under Mississippi law, which applies in this diversity action, the determination whether a liability carrier has a duty to defend depends on the policy language and the allegations of the complaint.
QBE Ins. Corp. v. Brown & Mitchell, Inc.,
In their complaint against Absolute, the Peerbooms allege that they entered into a contract with Absolute “to raise [their] structure up to 24 inches above its previous level while maintaining the integrity of the structure;” that on August 28, 2009, while “Absolute was performing the job on
Three requirements must be met in order to trigger a duty to defend, and potentially indemnify, which are: (1) the Peer-booms must allege they sustained a loss because of “property damage”; (2) the alleged damage must be alleged to have been caused by an “occurrence”; and (3) there must be no valid exclusion that applies.
See Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co.,
Lafayette’s policy defines “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” While the policy defines “occurrence” as an “accident,” the policy does not define “accident.” However, in a series of decisions, the Mississippi Supreme Court has provided guidance as to the meaning of the term. The court, for example, has explained that an “insured’s intentional actions [do] not constitute ‘accidents,’ and the damages resulting therefrom [do] not amount to ‘occurrences,’ ” even if the insured acts in a negligent manner.
Architex Association, Inc. v. Scottsdale Insurance Co.,
Recently, in
Architex Association, Inc. v. Scottsdale Insurance Co.,
the Mississippi Supreme Court considered the meaning of “occurrence” in the context of an insured’s claim for coverage for property damage due to a construction defect.
The court began by acknowledging “a clear jurisdictional split regarding whether defective subcontractor construction constitutes an ‘occurrence’ under a CGL policy,” with “ ‘one line of cases [holding] that faulty or improper construction does not constitute an accident [and that] the damage is [instead] the natural and ordinary consequence of the insured’s act,”’ and “‘[t]he other line of cases [holding] that improper or faulty construction does constitute an accident as long as the resulting damage is an event that occurs without the insured’s expectation or foresight.’ ”
Id.
at 1156 (quoting
Lee Builders, Inc. v. Farm Bureau Mut. Ins. Co.,
The court in Architex considered that “part of the confusion between insurers and insureds, and in conflicting opinions of courts, is caused by branding faulty workmanship, defective work, and other similar phrases as ‘occurrences’ or not.” Id. at 1159-1161. The court stated that faulty or improper construction, or defective workmanship (or gaining knowledge of same) is not in itself an “occurrence,” but rather is “typically the result of either accidental or intentional acts,” id. at 1157 (emphasis added), and it noted that CGL policies “are designed to provide liability protection for the general contractor and their subcontractors for accidental, inadvertent acts which breach accepted duties and proximately cause damage to a person or property,” id. at 1156 (emphasis added). The court concluded that whether a contractor’s acts are intentional, or instead accidental/inadvertent, will depend on the facts of the particular case. Making this point, the court wrote:
Faulty workmanship, defective work, et al., may be accidental, intentional, or neither.... [T]he underlying facts will determine whether the complaint of “property damage” (defective or faulty workmanship) was proximately caused by breach of a recognizable duty and whether that breach was accidental or intentional; or, whether the “property damage” was caused by neither. In two of the three aforementioned scenarios, no coverage would exist. Only when “property damage” is proximately caused by an accident (an inadvertent act) does an “occurrence,” as defined by the policy, trigger coverage.
Id.
at 1161.
See also Carl E. Woodward LLC v. Acceptance Indem. Co.,
No. 1:09cv781-LG-RHW,
Not only does the Peerbooms’ complaint not identify what caused the house to fall, but to date, none of the parties has offered an explanation or theory, or, so far as the court is aware, even claims to have an opinion about what likely went wrong. 4 In their response to the present motion, the Peerbooms state that chief among the many questions that remain unanswered in this ease is “why the house fell.” Indeed, they assert the answer to this question is “perhaps unknowable.” Jeff Junkins, an Absolute employee who participated in the Peerboom job for Absolute, has submitted an affidavit in which he states that he is “still unable to determine what caused the Peerboom home to rotate and collapse.”
In determining whether coverage exists, or the potential for coverage exists so that Lafayette has a duty to defend, and perhaps to indemnify, depending on the outcome of the underlying case, it is the court’s charge to evaluate whether the allegations in the underlying complaint, or the “true facts” made known to the insurer, fall within the coverage of the policy.
QBE Ins. Corp.,
(5) That 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; or
(6) That particular part of any property that must be restored, repaired or replaced because “your work” was incorrectly performed on it.
Paragraph (6) of this exclusion does not apply to “property damage” included in the “products-completed operations hazard”.
‘Your work” is defined, in pertinent part, as “work or operations performed by you or on your behalf.”
These exclusions, usually labeled j(5) and j(6) in standard CGL policies, are “business risk” exclusions, “common features in commercial general liability insurance policies that are designed to exclude coverage for defective work performed by the insured.”
Mid-Continent Cas. Co. v. JHP Dev., Inc.,
The subject exclusions apply only to damage caused while the work is ongoing, id. at 213,-a requirement that is clearly met here, since the claimed damage occurred during the house-jacking operation. By its terms, exclusion j(5) applies only to “property damage” to “[t]hat particular part of real property on which [the insured] [is] performing operations, if the ‘property damage’ arises out of those operations. And, the Fifth Circuit has held that “the plain meaning of exclusion j(6) is that property damage only to parts of the property that were themselves the subjects of the defective work is excluded.” Id. at 214.
The court in
ACUITY v. Burd & Smith Construction, Inc.
addressed the nature of a CGL policy, and of business risk exclusions, stating, “[A] CGL policy is not a performance bond and is not intended to protect a contractor’s business risk to re
Consistent with that purpose, other courts have generally construed those property damage exclusions to exclude coverage when the property damage is to the property on which the insured has contracted to perform operations and not to exclude coverage when the property damage is to property that the insured was not performing operations on. See Hartford Cas. Co. v. Cruse,938 F.2d 601 , 603-04 (5th Cir.1991); Southwest Tank and Treater Mfg. Co. v. Mid-Continent Cas. Co.,243 F.Supp.2d 597 , 603-04 (E.D.Tex.2003) Some courts have specifically recognized that facts in each case are determinative of the particular part of property on which an insured is performing its operations and that buildings may be divided into parts in attempting to determine which part or parts are the object of the insured’s work product. A common thread for deciding whether there is coverage for property damage is the scope of the insured’s contract. See Hartford Cas. Co.,938 F.2d at 603 ....
Id.
(additional citations omitted). As one court has observed, “[ajlthough it may be possible to define the scope of the instant exclusion in the abstract .... buildings can be divided into so many parts that attempting to determine which part or parts are the subject of the insured’s operations can produce several reasonable conclusions.”
Travelers Cas. and Surety Co. v. Dormitory Authority State of N.Y.,
As in the case at bar, the “decisive issue” in
Hartford Casualty Co. v. Cruse,
relied on by defendants, was “definition of [the insured’s] work product.”
The Cruses hired J & J (the insured) to perform foundation work. Damages due to defective foundation work that affected property other than the foundation do not fall within the terms of Exclusion (o), which “carves out of the policy damage to the particular work performed by the insured, but not the overall damage that the incorporation of the defective work product causes to the entire entity.” Todd Shipyards Corp. v. Turbine Service, Inc., 674 F.2d 401 , 421 (5th Cir.) (work product not the ship, and not even the entire turbine, but only the components of the turbine that insured attempted to repair or replace), cert. denied,459 U.S. 1036 ,103 S.Ct. 447 ,74 L.Ed.2d 602 ,459 U.S. 1036 ,103 S.Ct. 448 ,74 L.Ed.2d 603 (1982); accord Travelers Ins. Co. v. Volentine,578 S.W.2d 501 , 503-04 (Tex.Civ.App.-Texarkana 1979, no writ) (insured’s work or work product was repair of engine valves only, thus coverage extended to other parts of damaged engine).
J & J performed work on the foundation only, not the entire house, and this fact distinguishes the present case from those cases where the general contractor undertakes to construct or reconstruct an entire structure, and damage is limited to that structure. See, e.g., [T.C. Bateson Constr. Co. v. Lumbermens Mut. Casualty Co.,784 S.W.2d 692 , 697-98 (Tex.App.-Houston [14th Dist.] 1989, writ denied) (business risk exclusion applies because builder contracted to construct entire library and all damage was to building itself) ]; Sarabia v. Aetna Cas. and Sur. Co.,749 S.W.2d 157 , 157-58 (Tex.App.-El Paso 1988, no writ) (“major overhaul” of a diesel truck engine, with no damage “after the overhaul other than what [insured] had repaired, replaced or reworked”); [Eulich v. Home Indemnity Co.,503 S.W.2d 846 , 849 (Tex.Civ.App.-Dallas 1973, writ refd n.r.e.) (construction of entire building; exclusion applied to damage to building after it collapsed due to installation of steel member with less strength than required by contract) ].
The facts presented in
Wilshire Insurance Co. v. RJT Construction, LLC,
also relied on by defendants, were similar to those in
Cruse.
RJT Construction, the named insured under a CGL policy, was hired to “raise[], level[], and stabiliz[e] the foundation of the residence that had been induced to move as a result of the accidental discharge of water from a plumbing system.”
The complaint alleges that the faulty foundation caused damage to other parts of the house that RJT did not work on including the walls and ceilings. The “your work” exclusion does not preclude coverage for damage to the parts of the house resulting from the allegedly faulty foundation. Because these damages present a covered claim, Wilshire must defend the entire suit.
Id.
at 227. In
Wilshire,
although the insurer contended that the underlying complaint defined RJT’s work to include the entire house, the court found otherwise, stating, “To. the contrary, the complaint makes clear that RJT was brought onto the job as the ‘foundation repair subcontractor.’ ”
Id.
at 227 n. 16.
See also E & R Rubalcava Constr., Inc. v. Burlington Ins. Co.,
The facts in the present case are materially distinguishable from those of
Cruse
and
Wilshire,
and in the court’s opinion, dictate a different result. In
Cruse
and
Wilshire,
the insureds were hired to perform foundation leveling or repair services and in each case, the insured performed work on the foundation
only,
not the remaining parts of the house. The
Cruse
court noted, in fact, that this is what distinguished
Cruse
from other eases in which an insured’s work product was the entire structure or building project, rather than simply a portion thereof.
Cruse,
For example, and in contrast to
Cruse
and
Wilshire,
the insured in
Grinnell Mutual Reinsurance Co. v. Lynne,
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.
Id. at 125. In concluding that the business risk exclusion precluded coverage for damages to the house, the court noted that the purpose of such exclusions “is to prevent policyholders from converting liability insurance into protection from foreseeable business risks” and that “[a] commercial liability insurance policy is not meant to act as a warranty of the insured’s work.” Id. at 124.
As in
Grinnell,
the court in
Barber v. Berthiaume,
No. CV054009532S,
Excluding the damage to the house under exclusions j(5) and j(6) also effectuates the cited purpose of CGL policies. Such policies are “intended to protect the insured from liability for injury or damage to persons or property of others; they are not intended to pay the costs associated with repairing or replacing the insured’s defective work and products.” Traveler’s [Ins. Co. v. Eljer Mfg.,197 Ill.2d 278 ],258 Ill.Dec. 792 , 757 N.E.2d [481] at 503 [ (2001) ]; State Farm Fire and Cas. Co. v. Tillerson,334 Ill.App.3d 404 ,268 Ill.Dec. 63 ,777 N.E.2d 986 , 993 (Ill.App.Ct.2002) (“these exclusions are premised on the theory that liability policies are not intended to provide protection against the insured’s own faulty workmanship or product, which are normal risks associated with the conduct of the insured’s business”). Here, Chorak requests coverage for its defective work. Put another way, it asks for Auto-Owners to cover damage as a result of the normal risks associated with lifting a home. Chorak does not request coverage for damage to any other property.
Id. at *4.
In
Erie Insurance Exchange v. Pugh,
No. 98 CA 53,
From the foregoing, it is manifest that the “particular part” of the property on which Absolute was hired to perform work and on which it was working was the Peer-booms’ entire house. The risk that the house would fall and sustain damage in the process of Absolute’s house-raising operation and sustain damage as a result was not merely a fortuitous event but a business risk which falls squarely within exclusions j(5) and j(6).
8
For this reason, La
Accordingly, it is ordered that Lafayette’s motion for summary judgment is granted. 10
A separate judgment will be entered in accordance with Rule 58 of the Federal Rules of Civil Procedure.
Notes
. See Edward Peerboom and Heather Peerboom v. Absolute Foundation Solitions, Inc., and Cesar Caballero, Case No. 2010-36 (Lamar County Cir. Ct.).
. The policy’s coverage Part A states:
A. Coverage under Part A-Bodily Injury and Property Damage Liability
1. Coverage under the Insuring Agreement
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. We will have the right and duty to defend the insured against any "suit” seeking those damages. However, we will have no duty to defend the insured against any "suit” seeking damages for "bodily injury” or "property damage” to which this insurance does not apply. We may, at our discretion, investigate any "occurrence” and settle any claim or "suit” that may result. But ... 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....
. Lafayette also contends the Peerbooms’ claims for fraud, breach of contract and punitive damages do not allege an "occurrence” under the policy and Mississippi case law. Additionally, it argues that there is no coverage under Part B, for "Personal or Advertising Injury,” as the facts alleged in the underlying action do not implicate any of the listed "offenses” making up the definition of "Personal and Advertising Injury.”
Absolute has not responded to Lafayette’s motion as it pertains to coverage for the underlying breach of contract claim, and has expressly confessed Lafayette’s arguments that the underlying action does not allege "bodily injury” or "Personal and Advertising Injury,” as defined by the CGL policy, and that coverage does not lie for the Peerbooms' fraud claim. And in the court’s view, the Peerbooms have implicitly confessed the motion on these issues by making no response to Lafayette’s arguments on these points. The parties’ dispute thus centers on whether any of the "property damage” claimed by the Peerbooms was caused by an "occurrence,” and if so, whether coverage is excluded under the business risk exclusions.
. An August 31, 2009 report prepared by Lafayette adjuster Mickey Carney, of GAB Robins, recited that Hal Kane of Kane & Associates Engineers and Constructors was to investigate and develop theory(ies) about the cause, and indicated that Kane’s report would be ready the first week of September 2009. The Peerbooms note in their response that although it is well past that date, Lafayette has not produced any report from Kane.
. Since the act which likely caused the claimed "property damage" is as yet undetermined, then it is likewise not known at this point whether "the likely (and actual) effect of the act was well within [Absolute's] foresight and anticipation.”
Allstate Ins. Co. v. Moulton,
.Lafayette has argued that for the same reasons the Peerbooms' claimed “property damage” was not caused by an "occurrence”, their claimed losses are excluded from coverage as " 'property damage' expected or intended from the standpoint of the insured.” However, just as the court cannot conclude as a matter of law that the Peerbooms’ claimed "property damage” was not caused by an "occurrence,” the court cannot conclude as a
. Another case that bears mention is
Frankel v. J. Watson Company, Inc., 21
Mass.App.Ct. 43,
. Contrary to the Peerbooms’ urging, the exclusion applies, notwithstanding that Absolute was working to raise the house, as opposed to working
on
the house.
See NGM Ins. Co. v.
. The court notes that in addition to these exclusions, Lafayette also relies on the policy exclusion for "property damage” to
(1) Property you own, rent, or occupy, including any costs or expenses incurred by you, or any other person, organization or entity, for repair, replacement, enhancement, restoration or maintenance of such property for any reason, including prevention of injury to a person or damage to another's property ...
Pointing to Webster’s Dictionary’s definition of "occupy” to mean "to take or hold possession or control of” or "to reside in as an owner or tenant,” Lafayette contends for application of exclusion (j)(1), which precludes coverage for “property damage” to "[pjroperty you own, rent, or occupy,” claiming that on the date in question, Absolute had control of the Peerboom home.
See SnyderGeneral Corp. v. Century Indem. Co.,
. The court notes that the Peerbooms have included in their response to the motion a Rule 56(f) request for continuance of the motion so they can conduct discovery toward ascertaining what caused the house to fall. However, since the proposed discovery is not pertinent to the basis of the court’s conclusion that summary judgment is in order, their request will be denied.