99 P.3d 1153 | Nev. | 2004
This case arises out of the collapse of the Las Vegas Hilton marquee sign on July 18, 1994. The district court granted summary judgment against appellants United National Insurance Company and Assicurazioni Generali S.P.A., holding that they owed defense and settlement expenses to respondents Frontier Insurance Company, Inc., and Uriah Enterprises, Inc. On appeal, we are asked to determine when the duty to defend and the duty to indemnify an insured arise under a comprehensive general liability (CGL) insurance policy covering “occurrences” during a policy period. To resolve these issues, we must analyze the meaning of the word “occurrence” and the phrase “property damage,” as defined by the policy.
We conclude that the plain meaning of the language in the CGL insurance policy is unambiguous. The meaning of the word “occurrence” and the phrase “property damage,” read together, require that a tangible, physical injury occur during the policy period in order to trigger coverage under an “occurrence” policy. We also conclude that the duty to defend arises when there is a potential for coverage based on the allegations in a complaint and the duty to indemnify arises when there is actual coverage under an insurance policy. Since the allegations in the complaints against Uriah do not allege that a tangible, physical injury occurred to the sign during the United and Generali CGL insurance policy period and no other evidence suggested that the sign sustained any such injury during the policy period, we conclude that there was both no potential for coverage and no actual coverage under the CGL insurance policy. We therefore conclude that United and Generali owed no duty either to defend or indemnify Uriah from lawsuits arising from the sign’s collapse.
FACTS
On September 8, 1993, John Renton Young Lighting and Sign Company contracted with the Las Vegas Hilton Corporation to erect a 362-foot-tall marquee sign on the hotel’s property. The following day, Young Sign Company subcontracted with Uriah to erect prefabricated steel support components for the sign. At the time, Uriah was insured under a CGL insurance policy issued by United and Generali, which provided:
The Underwriters will pay on behalf of the Assured all sums which the Assured shall become legally obligated to pay as damages because of:
*682 A. Bodily Injury or
B. Property Damage
to which this insurance applies, caused by an occurrence, and the Underwriter shall have the right and duty to defend any suit against the Assured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient ....
(Emphasis added.)
The CGL insurance agreement provided coverage from April 29, 1993, through April 29, 1994. During this time, Uriah paid $40,500 in insurance premiums to United and Generali and erected the structural steel for the sign, which was completed by December 1993.
On April 29, 1994, the CGL insurance policy issued by United and Generali expired. On that date, Uriah obtained a new CGL insurance policy from Frontier. About three months later, on July 18, 1994, the sign collapsed during a violent windstorm.
As a result of the collapse, lawsuits were filed against Uriah. On April 20, 1995, Fireman’s Fund Insurance Company, which was an insurer of Young Sign Company, filed a complaint naming Uriah as a defendant and alleging negligence in the erection of the sign, as well as breach of contract and breach of implied warranty. Specifically, Fireman’s Fund alleged that Uriah negligently, carelessly, and improperly modified and welded connections for the sign’s support structure, which resulted in the sign’s collapse. On March 8, 1996, Hilton also filed a complaint naming Uriah as a defendant and alleging negligence, breach of contract, and breach of implied warranty. Uriah asked both United and Generali to defend and indemnify Uriah through their designated representative, All American Adjusters/Adjusters Corporation of America, in March 1995. However, United and Generali did not formally respond to this request until February 1998, nearly four years after the sign’s collapse. They refused to cover or defend Uriah because the collapse occurred after the expiration of the policy period.
Meanwhile, Frontier defended and indemnified Uriah. Eventually, Frontier settled the lawsuits brought against Uriah by Fireman’s Fund and Hilton for $250,000. The costs of investigating, defending, and settling the lawsuits totaled $696,667.35.
On May 15, 1998, Frontier and Uriah filed an insurance subro-gation action against United and Generali for indemnification of defense and settlement expenses. Both sides moved for summary
The district court determined that the CGL policy’s language was ambiguous and should be construed against United and Generali. The district court granted partial summary judgment in favor of Frontier and Uriah, holding that United and Generali breached a duty to defend in the lawsuits. Approximately one year later, Frontier and Uriah moved for summary judgment again, and the district court entered a final judgment in their favor. Frontier and Uriah were awarded $431,070.95 in damages for defense and settlement expenses arising from this unfortunate event.
DISCUSSION
An appeal from an order granting a motion for summary judgment is reviewed de novo.
Here, since neither party argues that this case raises an issue involving a disputed material fact, the only issue we must address is whether the district court properly held that Frontier and Uriah
Language of the CGL insurance policy
We have previously held that “[a]n insurance policy is a contract of adhesion.”
In the instant case, the CGL insurance policy provides that “[t]he Underwriters will pay on behalf of the Assured all sums which the Assured shall become legally obligated to pay as damages because of . . . property damage . . . caused by an occurrence” during the policy period. The parties agree that there must be both an “occurrence” and “property damage” during the policy period for coverage to be effective; however, the parties disagree on when the “occurrence” must take place and what constitutes “property damage.”
The word “occurrence” is defined in the CGL insurance policy as “an accident, including continuous or repeated exposure to conditions, which results in . . . property damage.” Although we have held that a similar insuring clause contained broad language,
Property damage
The phrase “property damage” is defined in the CGL insurance policy as follows:
(1) physical injury to or destruction of tangible property which occurs during the policy period, including the loss of use thereof at any time resulting therefrom, or (2) loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period.
The first prong of the definition applies to physical injury to tangible property which occurs during the policy period, including the loss of use of tangible property at any time resulting therefrom. The second prong of the definition applies to the loss of use of tangible property which has not been physically injured or destroyed, provided such loss of use is caused by an accident which results in property damage during the policy period. Therefore, under both prongs of the definition of the phrase “property damage,” we conclude that tangible, physical injury to property must occur during the policy period in order for coverage to be triggered.
In sum, reading the word “occurrence” and the phrase “property damage’ ’ together, we conclude that the policy language is unambiguous and requires that tangible, physical injury must occur during the CGL policy period for coverage to be triggered under either prong of the definition. This interpretation is supported by decisions in a number of other jurisdictions that have similarly interpreted identical CGL insurance policies.
Duty to indemnify
The duty to indemnify arises when an insured “becomes legally obligated to pay damages in the underlying action that gives rise to a claim under the policy.”
The record in this case does not reveal whether the district court made an express holding regarding the duty to indemnify. However, United and Generali argue that the district court’s ruling effectively held that they owed a duty to indemnify Uriah for settlement expenses in the lawsuits arising from the sign’s collapse. Frontier and Uriah have failed to address the issue of indemnification before this court.
Frontier and Uriah have produced no evidence that the sign experienced tangible, physical injury during the CGL insurance policy period from April 29, 1993, through April 29, 1994. Rather, Uriah’s own safety officer stated that after inspecting the collapsed sign, he could not “find anything that [Uriah] ... did that went wrong.”
The record reflects that the only tangible, physical injury or loss of use of the sign occurred when it collapsed on July 18, 1994. We have previously stated that “[t]he right to indemnification for litigation expenses should not depend on the pleading choices of a third party, who through an excess of caution or optimism may allege far more than he can prove at trial.”
Duty to defend
The duty to defend is broader than the duty to indemnify.
However, “the duty to defend is not absolute.”
United and Generali argue that they owed no duty to defend Uriah in the sign-collapse lawsuits because the complaints did not allege that property damage occurred during the policy period for which they insured Uriah. In response, Frontier and Uriah argue that allegations of negligence, breach of contract, and breach of implied warranty in the complaints filed by Fireman’s Fund and Hilton against Uriah created a potential for coverage under the CGL insurance policy and, therefore, United and Generali owed a duty to defend Uriah in those lawsuits.
The CGL insurance policy expressly provides that United and Generali had a duty to defend Uriah against any suit, “even if any of the allegations of the suit are groundless, false, or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient.” After the collapse of the sign, two complaints were filed naming Uriah as a defendant.
Fireman’s Fund filed a complaint alleging, among other things, that “[p]rior to and on July 18, 1994 . . . [Uriah] owed a duty ... to exercise due care and caution in the erection of the sign so
In Millers Mutual Fire Insurance v. Ed Bailey, the Supreme Court of Idaho considered whether a CGL insurance policy, with language identical to the one at hand, extended coverage to foam insulation installed during the policy period that caught fire after the policy expired.
In the case at bar, the complaints clearly alleged that Uriah was negligent in the erection of the sign, including improper welding and modifications of the bolts connecting the various steel components of the sign. The Supreme Court of Illinois recently stated that property suffers physical, tangible injury when it “is altered in appearance, shape, color or in other material dimension.”
We view improper welding or general negligent acts as intangible, economic injuries and not the type of physical, tangible injury or destruction to property that a reasonable person would contem
CONCLUSION
We conclude that United and Generali owed no duty to either defend or indemnify Uriah under the language of the CGL insurance policy, where the policy period was from April 29, 1993, through April 29, 1994, and the sign collapsed on July 18, 1994. Accordingly, we reverse the district court’s order granting summary judgment in favor of Frontier and Uriah and, in light of this opinion, remand with instructions to the district court to grant summary judgment in favor of United and Generali.
The parties have not litigated waiver issues in this appeal.
Bulbman, Inc. v. Nevada Bell, 108 Nev. 105, 110, 825 P.2d 588, 591 (1992).
NRCP 56(c).
Dermody v. City of Reno, 113 Nev. 207, 210, 931 P.2d 1354, 1357 (1997).
Rockwell v. Sun Harbor Budget Suites, 112 Nev. 1217, 1222, 925 P.2d 1175, 1179 (1996) (quoting Wiltsie v. Baby Grand Corp., 105 Nev. 291, 292, 774 P.2d 432, 433 (1989)).
NRCP 56(e).
Id.
CHI of Alaska v. Employers Reinsurance, 844 P.2d 1113, 1115 (Alaska 1993).
Farmers Insurance Group v. Stonik, 110 Nev. 64, 67, 867 P.2d 389, 391 (1994).
Id.
Vitale v. Jefferson Ins. Co., 116 Nev. 590, 594, 5 P.3d 1054, 1057 (2000).
Id.
Id.
Farmers, 110 Nev. at 67, 867 P.2d at 391.
Bidart v. American Title, 103 Nev. 175, 178, 734 P.2d 732, 734 (1987).
See Vitale, 116 Nev. at 595, 5 P.3d at 1057.
See, e.g., Millers Mut. Fire Ins., Etc. v. Ed Bailey, 647 P.2d 1249, 1250-52 (Idaho 1982); Traveler’s Ins. Co. v. C.J. Gayfer’s, 366 So. 2d 1199, 1201-02 (Fla. Ct. App. 1979).
Zurich Ins. Co. v. Raymark Industries, 514 N.E.2d 150, 163 (Ill. 1987).
Outboard Marine v. Liberty Mut. Ins., 607 N.E.2d 1204, 1221 (Ill. 1992).
Piedmont Equip. Co. v. Eberhard Mfg., 99 Nev. 523, 528, 665 P.2d 256, 259 (1983).
Horace Mann Ins. Co. v. Barbara B., 846 P.2d 792, 795 (Cal. 1993).
Bidart, 103 Nev. at 179, 734 P.2d at 734 (emphasis added).
Gray v. Zurich Insurance Company, 419 P.2d 168, 177 (Cal. 1966).
Home Sav. Ass’n v. Aetna Cas. & Surety, 109 Nev. 558, 565, 854 P.2d 851, 855 (1993).
Aetna Cas. & Sur. Co. v. Centennial Ins. Co., 838 F.2d 346, 350 (9th Cir.1988).
See Helca Min. Co. v. New Hampshire Ins. Co., 811 P.2d 1083, 1090 (Colo. 1991).
Aetna Cas. & Sur. Co., 838 F.2d at 350.
See Morton by Morton v. Safeco Ins. Co., 905 F.2d 1208, 1212 (9th Cir.1990).
See Helca, 811 P.2d at 1089-90.
Id. at 1252.
Id. (quoting Home Mutual Fire Insurance Co. v. Hosfelt, 233 F. Supp. 368, 370 (D. Conn. 1962)).
Id. at 1253.
Traveler’s Ins. Co. v. Eljer Mfg., Inc., 757 N.E.2d 481, 496 (Ill. 2001).
Id.
We have carefully reviewed all of Frontier and Uriah’s arguments, including whether there was coverage under the incidental contracts provision or completed operations hazards provision of the policy. We conclude that these provisions are still bound by the initial policy requirement that there must be an “occurrence” of “property damage” during the policy period in order for there to be coverage and, therefore, these arguments are without merit.