Opinion
CIVIL ACTION NO. 1:06-cv-1181-GET.
April 30, 2007
ORDER
The above-styled matter is presently before the court on:
(1) defendant's motion for summary judgment [docket no. 22];
(2) plaintiff's motion to amend [docket no. 29].
On April 17, 2006, plaintiff filed this declaratory judgment action in the Superior Court of Gwinnett County, Georgia seeking a declaration that defendant has a duty to defend and indemnify plaintiff in an action styled Weld Racing Inc. V. Clean Air America, Inc., Case No. 04CV215203, pending in the Circuit Court of Jackson County, Missouri pursuant to two policies of insurance. On May 17, 2006, defendant removed the action to this court pursuant to 28 U.S.C. 1332, 1446. Plaintiff later paid Weld Racing $110,000.00 to settle the underlying action.
On December 20, 2006, defendant filed a motion for summary judgment. On January 16, 2007, plaintiff filed a motion to amend.
Motion to Amend
Plaintiff moves to amend its complaint for declaratory judgment to dismiss certain claims for relief. Specifically, plaintiff seeks to dismiss its claims for the recovery of defense costs and for bad faith. Defendant does not object to plaintiff's motion to amend. Therefore, plaintiff's motion to amend its complaint [docket no. 29] is GRANTED.
Furthermore, because the underlying action settled within the policy limits of the first policy, plaintiff informs the court that it no longer asserts any claims under the umbrella policy. Therefore, the only claim remaining is plaintiff's request for indemnification under commercial general liability insurance policy number 20 UUN UY7785 DH.
Motion for Summary Judgment
Standard
Courts should grant summary judgment when "there is no genuine issue as to any material fact . . . and the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party must "always bear the initial responsibility of informing the district court of the basis of its motion, and identifying those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). That burden is `discharged by `showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Id. at 325; see also U.S. v. Four Parcels of Real Property, 941 F.2d 1428, 1437 (11th Cir. 1991).Once the movant has met this burden, the opposing party must then present evidence establishing that there is a genuine issue of material fact. Celotex, 477 U.S. at 325. The nonmoving party must go beyond the pleadings and submit evidence such as affidavits, depositions and admissions that are sufficient to demonstrate that if allowed to proceed to trial, a jury might return a verdict in his favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257 (1986). If he does so, there is a genuine issue of fact that requires a trial. In making a determination of whether there is a material issue of fact, the evidence of the non-movant is to be believed and all justifiable inferences are to be drawn in his favor. Id. at 255; Rollins v. TechSouth, Inc., 833 F.2d 1525, 1529 (11th Cir. 1987). However, an issue is not genuine if it is unsupported by evidence or if it is created by evidence that is "merely colorable" or is "not significantly probative." Anderson, 477 U.S. at 249-50. Similarly, a fact is not material unless it is identified by the controlling substantive law as an essential element of the nonmoving party's case. Id. at 248. Thus, to create a genuine issue of material fact for trial, the party opposing the summary judgment must come forward with specific evidence of every element essential to his case with respect to which (1) he has the burden of proof, and (2) the summary judgment movant has made a plausible showing of the absence of evidence of the necessary element. Celotex, 477 U.S. at 323.
Facts
In light of the foregoing standard, the court finds the following facts for the purpose of resolving this motion for summary judgment only. CAA designs, manufactures and installs air filtration systems for commercial applications. CAA's air filtration systems are designed and engineered to meet specific needs of the customer. Jorgen Brahm made the initial site visit to Weld Racing facilities in Kansas City to evaluate their needs. Weld Racing was constructing a new plant, so a number of the designs evolved and changed as the construction project progressed. After the air filtration equipment was placed in the Weld Racing facilities by CAA, the air filtration system caught fire on several occasions.
Plaintiff Clean Air America ("CAA") seeks a declaratory judgment that defendant owes reimbursement for damages incurred in the underlying lawsuit brought by Weld Racing against CAA in the Circuit Court of Jackson County, Missouri. Weld Racing brought the underlying lawsuit for damages it sustained in the fires. Weld Racing's negligence count asserts that CAA breached its "duty to use due care in selecting appropriate systems to use as a ventilation and dust collection system for the Weld facilities." The complaint also asserts that Weld was "not satisfied with the performance of the ventilation and dust collection systems and wants the units removed from [its] facilities." Weld Racing also alleges that CAA "failed to warn Weld that its ventilation and dust collection systems were inappropriate . . .; would fail when used in Weld's facility; . . . [and] were not designed, intended or manufactured for use as a ventilation or dust collection system in a wheel manufacturing facility where combustible materials would be present."
CAA tendered Weld Racing's claim for defense under liability insurance policy number 20 UUN UY7785 DH for the policy period June 27, 2003 through June 27, 2004. The policy requires the defendant "to defend the insured against any `suit' seeking [property damage]" resulting from an "occurrence" during the policy period, and to "pay those sums that the insured becomes legally obligated to pay as damages because of . . . `property damage' to which this insurance applies." The policy defines "occurrence" as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions."
After reviewing the allegations and investigating the facts, defendant denied coverage under the terms of the policy. CAA filed this declaratory judgment action after receiving this denial.
Discussion
Defendant argues that the claims alleged by Weld Racing against CAA in the underlying action do not constitute an "occurrence" under the policy. Defendant further argues that even if there was an occurrence, the "completed operations exclusion" in the policy bars coverage.Under Georgia law, contracts of insurance are interpreted by the ordinary rules of contract construction. Boardman Petroleum, Inc. v. Federated Mut. Ins. Co., 269 Ga. 326, 327 (1998). Where the terms of the contract are clear and unambiguous, the court is to look to the contract alone to ascertain the parties' intent.Id. at 328. The contract is to be considered as a whole and each provision is to be given effect and interpreted so as to harmonize with the others. Id. Any ambiguities in the contract are to be construed against the insurer as the drafter of the document. Id.
The policy at issue in this case provides coverage for "property damage" caused by an "occurrence" that takes place during the policy period. The policy defines "occurrence" as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions."
Georgia courts have construed the term "accident" to signify "an unintended happening rather than one occurring through intention or design." See, e.g., Allstate Ins. Co. v. Grayes, 216 Ga. App. 419, 421 (1995); Thrif-Mart, Inc. v. Commercial Union Assurance Cos., 154 Ga. App. 344, 346 (1980); See also O.C.G.A. § 1-3-3(2) ("`Accident' means an event which takes place without one's foresight or expectation or design."). Therefore, "accident" and "intention" are interpreted as converse terms.Thrif-Mart, 154 Ga. App. at 346. Accordingly, Georgia courts generally have held that where an act is intentional, it does not constitute an "accident" as that term is defined in an insurance policy. See, e.g., Grayes, 216 Ga. App. at 421.
Insurance policies with language similar to that at issue in this case have been construed to cover only injury resulting from accidental acts and not injury accidentally caused by intentional acts. See Owners Ins. Co, v. James, 295 F. Supp. 2d 1354, 1364 (N.D. Ga. 2003) (citing Georgia cases involving interpretation of policies with similar language). See e.g. Georgia Farm Bureau Mut. Ins. Co. v. Meriwether, 169 Ga. App. 363, 363 (1983) (finding policy only covered injury from accidental acts where policy provided coverage for "property damage . . . caused by an occurrence" and "occurrence" was defined as "an accident . . . which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured".). Weld Racing's negligence claims in the underlying action were premised on a breach of CAA's duty to use due care in the design of the ventilation and dust collection system. Weld Racing alleged that this design resulted in fire damage to its facility.
The fires and the resulting damage alleged in the underlying action did not result from an accidental act but were accidentally caused by the intentional act of CAA's design. Thus, there was no occurrence under the terms of the policy and plaintiff is not entitled to indemnity from defendant. Accordingly, defendant's motion for summary judgment [docket no. 22] is GRANTED. As the court has determined that there is no coverage under the policy for the underlying action, the court need not address defendant's argument related to the "completed operations exclusion."
Summary
(1) Defendant's motion for summary judgment [docket no. 22] is GRANTED;
(2) Plaintiff's motion to amend [docket no. 29] is GRANTED.