El Dorado Foundry, Machine & Supply Company v. Continental Casualty CompanyAnnotate this Case
ARKANSAS COURT OF APPEALS
NOT DESIGNATED FOR PUBLICATION
December 15, 2004
EL DORADO FOUNDRY, AN APPEAL FROM UNION COUNTY
MACHINE & SUPPLY CO. CIRCUIT COURT
APPELLANT [NO. CIV02-299-4]
v. HONORABLE CAROL CRAFTON ANTHONY
CONTINENTAL CASUALTY CO.
Larry D. Vaught, Judge
Appellant El Dorado Foundry, Machine, & Supply Company is insured under a commercial general liability policy issued by appellee Continental Casualty Company. In 2001, Cross Oil Refinery claimed that it suffered damages when appellant incorrectly repaired Cross's equipment. Appellant asked appellee to defend the claim and provide coverage for any damages that might be assessed, but appellee refused. Appellant then sued appellee, seeking a declaration that a defense and coverage were owed. The trial court granted summary judgment in favor of appellee. We affirm.
The facts, as gleaned from the relevant pleadings in the case, are as follows. In the course of performing routine maintenance during a two-week shutdown, Cross Oil Refinery discovered that several of its heat exchangers were in need of immediate repair.1 Cross engaged appellant to perform the repairs, and appellant advised that it could have the heat exchangers back in operation by December 15, the date that Cross planned to restart the refinery.
After appellant made the repairs and delivered the exchangers to Cross, Cross tested them and discovered that, on at least one exchanger, appellant had improperly installed the tube bundles in the tube sheets. In order to correct the mistake in the fastest way possible, Cross paid another company to machine new gasket grooves in the tube sheets so that the tube bundles would fit and operate properly. Thereafter, according to Cross, it discovered that appellant had also improperly rolled the tubes onto the tube sheets, causing the tubes to leak. Appellant was required to come out to the refinery and re-roll each tube. As a result, Cross claimed, it could not restart the refinery until December 22, and it sought recompense from appellant in the amount of $683,003.
Appellant asked appellee to cover and defend the claim under its commercial general liability policy, which indemnifies appellant for damages it becomes legally obligated to pay for "bodily injury" and "property damage" caused by an "occurrence." Appellee responded that the claim did not involve "property damage" caused by an "occurrence," and further that certain business-risk exclusions applied. The issue was ultimately decided by the Union County Circuit Court upon appellant filing a declaratory judgment action and upon both parties filing motions for summary judgment. The court granted appellee's motion and ruled that appellant's alleged failure to perform repairs in a workmanlike manner was not an "occurrence" as defined by the policy; that even if there was an occurrence, Cross suffered no "property damage" as defined by the policy; and that the policy excluded coverage for damages caused by improper workmanship. Appellant appeals from that ruling.
Ordinarily, we approve the granting of a motion for summary judgment only when the state of the evidence portrayed by the pleadings, affidavits, discovery responses, and admissions on file is such that there is no genuine issue of material fact remaining. See Cumming v. Putnam Realty, 80 Ark. App. 153, 92 S.W.3d 698 (2002). We also normally view the evidence in the light most favorable to the party resisting the motion and resolve any doubts and inferences against the moving party. Tunnel v. Progressive N. Ins. Co., 80 Ark. App. 215, 95 S.W.3d 1 (2003). However, when the parties file cross motions for summary judgment, as was done in this case, they essentially agree that there are no material facts remaining and that summary judgment is an appropriate means of resolving the case. See id. Under such circumstances, we simply determine whether the appellee was entitled to judgment as a matter of law. See id.
The policy issued to appellant by appellee defines "occurrence" as: an accident, including continuous or repeated exposure to substantially the same general harmful conditions.
Appellant argues that, because the policy does not go on to define the term "accident," an ambiguity exists, and a genuine issue of material fact remains to be decided. Appellant is in no position to argue that summary judgment was inappropriate due to the existence of a fact question. Cross motions for summary judgment were filed at the trial level, and in its response to appellee's motion, appellant did not assert that a fact question remained to be decided; rather it asserted in its own motion that it was entitled to judgment as a matter of law. When parties file cross motions for summary judgment on the same legal theory and same material facts, an appellant cannot argue on appeal that the trial judge erred in ruling on the case as a matter of law. See Cranfill v. Union Planters Bank, __ Ark. App. __, ___S.W.3d ___ (Apr. 14, 2004); Chick-A-Dilly Props., Inc. v. Hilyard, 42 Ark. App. 120, 856 S.W.2d 15 (1993).
In any event, appellant's argument that an ambiguity exists is not well taken. In Continental Insurance Co. v. Hodges, 259 Ark. 541, 534 S.W.2d 764 (1976), our supreme court defined "accident" in this context as "an event that takes place without one's foresight or expectation - an event that proceeds from an unknown cause, or is an unusual effect of a known cause, and therefore not expected." Id. at 542, 534 S.W.2d at 765. Thus, the term has been given a particular meaning by law and is not "undefined" as appellant suggests.
The next logical step in our review is to determine whether appellant's allegedly faulty repairs constituted an accident or occurrence. The trial court ruled that they did not. However, we need not reach that issue, nor need we address appellant's argument that Cross did not suffer "property damage" as defined by the policy. Instead, we conclude that, even if Cross sustained property damage caused by an occurrence, coverage is clearly barred under the exclusions section of the policy.
The trial court ruled that two exclusions - the so-called "your work" exclusion, also known as exclusion j(6), and the "impaired property" exclusion, or exclusion m - precluded coverage in this case. Because the claim meets the requirements of exclusion m, we affirm the trial court on that basis without the necessity of discussing exclusion j(6).
Exclusion m provides that there is no coverage under the policy for:
"Property damage" to "impaired property" or property that has not been physically injured, arising out of:
(1) A defect, deficiency, inadequacy or dangerous condition in "your product" or "your work"; or
(2) A delay or failure by you or anyone acting on your behalf to perform a contract or agreement in accordance with its terms.
This exclusion does not apply to the loss of use of other property arising out of sudden and accidental physical injury to "your product" or "your work" after it has been put to its intended use.
The term "impaired property" means:
tangible property other than "your product" or "your work" that cannot be used or is less useful because:
a. It incorporates "your product" or "your work" that is known or thought to be defective, deficient, inadequate or dangerous; or
b. You have failed to fulfill the terms of a contract or agreement;
if such property can be restored to use by:
a. The repair, replacement, adjustment, or removal of "your product" or "your work"; or
b. Your fulfilling the terms of the contract or agreement.
This exclusion precludes coverage for economic losses suffered by a third party as a result of the insured's poor workmanship or use of faulty materials on the party's property. 9 Lee R. Russ, Couch on Insurance § 129:12 (3d ed. 2000). According to Cross, appellant's poor workmanship on the heat exchangers rendered the refinery incapable of use until further repairs were made. Further, Cross claims to have suffered economic losses - repair costs and lost profits - as a result of deficiencies in appellant's work. Thus, Cross's claim against appellant clearly falls within the parameters of exclusion m and, as a result, appellee owes no coverage nor a duty to defend on the claim.2
In light of the foregoing, we affirm the trial court's entry of summary judgment.
Gladwin and Robbins, JJ., agree.
1 A heat exchanger is a large piece of equipment used in the oil-refining process. It consists of several bundles of one-inch diameter tubes that fit into tube sheets, which are round, flat pieces of metal located at each end of the exchanger. Crude oil flows back and forth through the tubes until it is sufficiently heated to proceed to the next phase.
2 Even though the trial court mentioned exclusion m as one of several bases for granting summary judgment to appellee, appellant does not challenge the applicability of exclusion m in its appellate brief. We note that, where a trial court offers more than one independent alternative ground for a ruling and fewer than all of those grounds are attacked on appeal, the appellate court will affirm the trial court's decision. See, e.g., Pugh v. State, 351 Ark. 5, 89 S.W.3d 909 (2002); Pearrow v. Feagin, 300 Ark. 274, 778 S.W.2d 941 (1989); Camp v. State, 66 Ark. App. 134, 991 S.W.2d 611 (1999).