All America Insurance Company v. Lampasona Concrete Corporation , 95 Mass. App. Ct. 79 ( 2019 )

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18-P-247 Appeals Court
ALL AMERICA INSURANCE COMPANY vs. LAMPASONA CONCRETE
CORPORATION & others.1
No. 18-P-247.
Essex. December 5, 2018. - March 19, 2019.
Present: Rubin, Milkey, & McDonough, JJ.
Insurance, Insurer's obligation to defend, Comprehensive
liability insurance, Contractor's insurance, Coverage.
Contract, Insurance, Indemnity. Indemnity.
Civil action commenced in the Superior Court Department on
October 9, 2015.
The case was heard by Timothy Q. Feeley, J., on a motion
for summary judgment.
Doreen M. Zankowski for Northeast Hospital Corporation.
Michael F. Aylward for the plaintiff.
MILKEY, J. This case arises out of the construction of
Beverly Hospital (hospital), which is owned by Northeast
1 Northeast Hospital Corporation, Dacon Corporation, and
H.G. Moore Associates, Inc.
2
Hospital Corporation (NHC). Following construction of the
hospital, NHC filed a complaint in Superior Court against the
general contractor, Dacon Corporation (Dacon), alleging property
damage to the finished first floor and other areas of the
hospital. In that action, Dacon filed a third-party complaint
seeking indemnification from various subcontractors, including
Lampasona Concrete Corporation (Lampasona), for improper
installation of the concrete slab that lies underneath the
finished first floor.
In a separate action that resulted in this appeal,
Lampasona's insurer, All America Insurance Company (All
America), filed a complaint against the defendants seeking a
judgment declaring that it has no duty to defend or indemnify
Lampasona under the comprehensive general liability (CGL) policy
that Lampasona had purchased. On review of All America's motion
for summary judgment, a Superior Court judge concluded that
Lampasona's work on the concrete slab was inseparable from work
that other subcontractors performed on other layers of the
flooring system. On that basis, the judge determined that an
exclusion to the CGL policy applied, and he allowed summary
judgment in All America's favor. For the reasons that follow,
we vacate the judgment and remand for further proceedings.
Standard of review. We review the allowance of a motion
for summary judgment de novo without deference to the motion
3
judge's reasoning. See Miller v. Cotter, 448 Mass. 671, 676
(2007). In our review, we construe all facts "in the light most
favorable to the nonmoving party." Drakopoulos v. United States
Bank Nat'l Ass'n, 465 Mass. 775, 777 (2013).
Background. 1. Nature of dispute. The first floor of the
hospital has at least three layers: a bottom vapor barrier, the
concrete slab, and a top layer of either tile or carpet. While
Lampasona installed the concrete slab, different subcontractors
installed the other two layers. In the action that NHC brought
against Dacon, NHC alleges that Lampasona made multiple errors
in installing the concrete slab. These errors included
puncturing the vapor barrier, which allowed moisture to pass
through into the concrete slab, and improperly mixing fiber
reinforcement into the concrete, which contributed to moisture
wicking to the surface. The resulting moisture problems caused
damage to the tiles and carpet, such as causing the tiles to
buckle.
NHC already has repaired many areas of the floor. This
process required NHC to remove the existing tiles and carpet,
burn off fiber from the top of the concrete, and roll on a
moisture mitigation system. Despite the summary judgment
context of the declaratory judgment action, the judge assumed
that the entire flooring system, including the vapor barrier
4
upwards, must be replaced.2 There is no basis in the record for
this "finding," and, in any event, all facts should have been
construed in the light most favorable to NHC.
2. All America insurance policy. Under the CGL policy
issued to Lampasona, All America agreed to pay all "sums that
the insured becomes legally obligated to pay as damages because
of . . . 'property damage' to which this insurance applies." In
order for the insurance to apply to property damage, the damage
has to be caused by an "occurrence," which is defined as "an
accident, including continuous or repeated exposure to
substantially the same general harmful conditions."
The CGL policy also contains three exclusions that are
relevant to the parties' arguments on appeal. The exclusion
under § j(6) states that the 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." However, this exclusion does not apply to damage
"occurring away from premises you own or rent and arising out of
. . . 'your work'" if the work has been completed or abandoned.
NHC raised this error in a motion for reconsideration.
2 In
denying the motion for reconsideration, the judge noted that
whether the vapor barrier needed to be replaced did not alter
his analysis.
5
The CGL policy also contains two additional exclusions.
The exclusion under § l of the policy does not cover damage to
"'your work' arising out of it or any part of it." The other
exclusion, under § m, does not cover damage to "impaired
property." "Impaired property" is defined, in relevant part, as
property other than Lampasona's work that can be restored by
"[t]he repair, replacement, adjustment or removal of"
Lampasona's work.
3. Summary judgment. Following a hearing in the
declaratory judgment action, a Superior Court judge granted
summary judgment in All America's favor based on the application
of the § j(6) exclusion. Citing to Bond Bros., Inc. v.
Robinson, 393 Mass. 546 (1984), the judge explained that the
"key" to his ruling was his determination that Lampasona's work
played an "integral and inseparable part . . . in the
installation of a flooring system that was comprised of multiple
layers, but constituted one completed product: interior
flooring for the first floor of [the hospital]." The judge also
stated that while installing the concrete slab, "Lampasona's
work was incorrectly, even if inadvertently, performed on the
vapor barrier." The judge concluded that § j(6) of the policy
excluded coverage for any damage that resulted from the pierced
vapor barrier.
6
Discussion. 1. Section j(6) exclusion. We begin by
addressing § j(6), the sole ground relied on by the judge in
granting summary judgment. That exclusion exempts from coverage
an insured contractor's faulty workmanship, but only with
respect to "that particular part of the property subject to the
faulty workmanship." Frankel v. J. Watson Co., 21 Mass. App Ct.
43, 46 (1985). A review of the facts in Frankel shows why that
exclusion does not apply here. In Frankel, homeowners alleged
that their farmhouse began to sag due to the negligent
construction of the foundation. Id. at 44. Because the
contractor's work product was limited to the foundation and did
not extend to the farmhouse, the contractor's general liability
policy covered damage to the farmhouse. Id. at 46. Frankel is
thus a fairly straightforward application of the general rule
that "although a commercial general liability policy does not
provide coverage for faulty workmanship that damages only the
resulting work product, the policy does provide coverage if the
faulty workmanship causes . . . property damage to something
other than the insured's work product." S. Plitt, D. Maldonado,
J.D. Rogers, & J.R. Plitt, Couch on Insurance 3d § 129:4 (rev.
ed. 2015).
In the case before us, it is undisputed that Lampasona did
not install the vapor barrier on which the concrete slab sits,
or the floor tiles or carpeting installed on top of the concrete
7
slab. The alleged damage that Lampasona caused to those parts
of the hospital property (e.g., the piercing of the vapor
barrier and the buckling of the floor tiles) does not fall
within the § j(6) exclusion. See Frankel, 21 Mass. App. Ct. at
46.3
Bond Bros., Inc. v. Robinson, 393 Mass. 546 (1984), the
principal case on which the judge relied, is not to the
contrary.4 There, a subcontractor was hired to install rebar in
connection with the construction of a concrete wall, but failed
to perform the rebar work for a portion of the wall. Id. at
547. The missing rebar meant that "the wall did not meet design
criteria, was structurally unstable, and required remedial
work." Id. In other words, the faulty workmanship at issue in
Bond Bros. (the missing rebar) did not cause, but itself was,
the damage. That is different from what happened here, where
All America argues that Bond Bros., discussed in detail
3
below, calls into question the continued viability of Frankel.
We previously have rejected such a claim. See Lusalon, Inc. v.
Hartford Acc. & Indem. Co., 23 Mass. App. Ct. 903, 904-905
(1986), S.C., 400 Mass. 767 (1987) (recognizing that both Bond
Bros. and Frankel stand for same proposition: "the liability of
[an] insurer [does] not extend to parts of the property that the
insured [has] worked on").
All America also relies on cases involving general
4
contractors. See, e.g., Donovan v. Commercial Union Ins. Co.,
44 Mass. App. Ct. 596 (1998). Those cases are inapposite, as a
general contractor's work product includes the entire project,
whereas subcontractors work on discreet components of a project.
8
Lampasona's work on the concrete slab caused damage to other
parts of the hospital that were not part of its work.
None of this is to say that the judge necessarily was wrong
in concluding that the vapor barrier, concrete slab, and floor
tiles or carpeting fairly could be characterized as layers of an
integrated flooring system. However, that fact by itself is
beside the point for purposes of determining whether the § j(6)
exclusion applies. Where Lampasona was hired to install one
layer of the flooring system but caused discrete damage to the
other layers, that damage falls outside the § j(6) exclusion.
Cf. Essex Ins. Co. v. BloomSouth Flooring Corp., 562 F.3d 399,
410 (1st Cir. 2009) (concluding, in reliance on Frankel, that
carpet installer enjoyed coverage under its CGL policy with
regard to damage it may have caused to concrete subfloor on
which carpeting was installed, notwithstanding exclusion for
property damage to carpet installer's product).5
We further note that the § j(6) exclusion, by its express
terms, does not apply to damage that occurred after Lampasona
completed its work. Construing the facts in the light most
5 To the extent the judge was suggesting that Lampasona's
actions necessarily brought the vapor barrier within Lampasona's
scope of work, we discern no merit in that suggestion. See
Essex Ins. Co., 562 F.3d at 410 (rejecting argument that
concrete subfloor on which carpeting was installed became carpet
installer's work product).
9
favorable to the nonmoving party, NHC has alleged that some of
the damage occurred after the construction of the hospital.
Such damage would not fall within the scope of the § j(6)
exclusion in any event.
2. Alternative grounds. We now turn to whether the grant
of summary judgment can be sustained on alternative grounds.
All America argued in the trial court, as it does on appeal,
that there was no separate "occurrence" here that could trigger
coverage.6 Rather, according to All America, a claim against
Lampasona simply would be one for faulty workmanship, which
would not be covered. To support this argument, All America
relies on cases such as Bond Bros. All America's contention
that there was no "occurrence" fails for the same reasons
discussed above with respect to the § j(6) exclusion. The claim
here is not simply that Lampasona's work was substandard and
needs to be replaced, but that this work caused damage to
particular parts of the hospital property outside of its own
work. The puncturing of the vapor barrier and the migration of
water through the concrete slab causing damage to the layer
above it fit readily within the definition of an occurrence.
See Trustees of Tufts Univ. v. Commercial Union Ins. Co., 415
6 "Occurrence" is defined in the policy as "an accident,
including continuous or repeated exposure to substantially the
same general harmful conditions."
10
Mass 844, 848 (1993) (applying term "occurrence" to exposure to
contaminants).
All America also argues that two alternative exclusions
apply: those under § l and § m. However, the exclusion under
§ l by its clear terms applies only to damage to Lampasona's own
work, and the alleged property damage here was to other
subcontractors' work. Cf. Essex Ins. Co., 562 F.3d at 409-410
(discussing analogous exclusion for damage to insured's
product). All America's reliance on the § m exclusion is
similarly unavailing, as the record does not support a
conclusion that any damaged property can be restored to use
merely through the repair, replacement, adjustment, or removal
of Lampasona's work.7
Conclusion. For all of the above reasons, we conclude that
the judge erred in ruling, as a matter of law, that All America
faced no duty to defend or indemnify Lampasona for the claims
7 One additional point bears comment. The judge questioned
NHC's standing. Given that NHC was brought to this litigation
as a defendant, we are not clear why the judge felt that its
standing was implicated. In any event, because NHC's ability to
recover under Lampasona's policy depends on the resolution of
the coverage issues that All America raised (at least insofar as
they implicate All America's duty to indemnify), it is plain
that NHC has "a definite interest in the matters in contention"
sufficient to confer standing. Bonan v. Boston, 398 Mass. 315,
320 (1986).
11
that NCH has brought.8 We therefore vacate the judgment and
remand for additional proceedings consistent with this opinion.
So ordered.
8 At oral argument, All America urged us -- in the event we
reversed -- to offer detailed views on the particular species of
potential damages here for which it could be liable. Especially
given the underdeveloped state of the factual record, it would
be inappropriate to offer such musings.