ATTEMPT TO MAKE A CGL INTO A COURSE OF CONSTRUCTION POLICY FAILS
Barry Zalma

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COURT MAY NOT CHANGE AN APPLE INTO AN ORANGE

On December 6, 2017, a fire destroyed the residence in Belle Chasse, Louisiana. The residence was under construction, but substantially completed at the time. In Numa C. Hero & Son, LLP Through Its General Partner George Allen Hero v. Brit UW Limited And Erwin Insurance Agency, Inc., No. 2022-CA-0405, Court of Appeals of Louisiana, Fourth Circuit (December 21, 2022) the Court of Appeals resolved Hero’s claim for the destruction of the property even though because it was not described on the policy declarations page.

The property was owned by Numa C. Hero & Son, LLP, through its general partner, George Allen Hero (“Hero”). Hero was constructing the residence on the above mentioned property, which upon completion was to be purchased by his daughter and son-in-law, Victoria and John Dillman.

THE POLICY

Through its agent, the Erwin Insurance Company, Inc. (“Erwin”), Hero had obtained an insurance policy (the 4S policy), covering a number of properties it owned, from Certain Underwriters at Lloyd’s of London, primarily Brit UW Limited (hereinafter collectively referred to as “Brit UW” or “defendants”). The policy provided general liability and certain property damage coverage. It contained a commercial general liability coverage form; a building and personal property coverage form; and separate declarations for each type of coverage. The policy’s declarations are separate and distinct for “Commercial Property Coverage” and “Commercial General Liability Coverage.” The insuring agreement makes clear, with respect to property damage coverage (and not liability coverage), only “Covered Property” that is “described” in the Commercial Property Coverage Part Declarations, and for which “a Limit of Insurance is shown in the Declarations for that type of property” is covered.

The Property Coverage Declarations describe no premises, building or structure in Belle Chasse or Plaquemines Parish, including the subject property.

THE LITIGATION

On June 4, 2018, Hero sued for damages for breach of contract and alternatively for malpractice against Brit UW and Erwin claiming property damaged by the fire at 431 Planters Canal Road. Hero contended that the house, then under construction, was covered by the 4S policy, and if the policy did not provide coverage, its insurance agent, Erwin, was liable for malpractice for failing to secure such insurance coverage.

Although previous attempts at summary judgment failed the defendants were successful in their fourth attempt. They contended that there was no Commercial Property Coverage under the 4S policy for Hero’s claim for fire damages sustained to the building under construction. In their motion for summary judgment, the defendants were able to make a prima facie case that there was no property damage coverage under the 4S policy for the structure that was destroyed by fire.

ANALYSIS

The summary judgment procedure is designed to secure the just, speedy, and inexpensive determination of every action. The burden is on the adverse party to produce factual support sufficient to establish the existence of a genuine issue of material fact or that the mover is not entitled to judgment as a matter of law. A prior denial of a summary judgment does not preclude the granting of a similar, or even the same motion, later in the case.

The party seeking insurance coverage bears the burden not only proving a relevant, existing policy, but also, coverage under that policy. The insuring agreement in the Building and Personal Property Coverage Form provides that:

The Declarations section. Because the lot designation for 431 Planters Canal Road, listed as location 44 on Form 0033, is not referenced in the “Description of Premises” or the “Coverages Provided” sections; there is no indication of any “building” on that lot; there is no limit of insurance shown for that property or structure; and there is no premium charged for coverage.

Based on the face of the Property Declarations, when compared with the Property Coverage insuring agreement, it was clear that commercial property coverage was not afforded for any structure located on Planters Canal Road. Accordingly, Hero failed to meet its burden to prove that Property Coverage existed for the structure under any policy, including the 4S Policy, issued by the defendants.

Although Hero responded to the motion for summary judgment, Hero did not attach any “evidence” to show that the defendants were not entitled to summary judgment.

Argument of counsel, which includes memoranda submitted in support of or in opposition to a motion for summary judgment, is not evidence, no matter how artful and persuasive. Likewise, argument of counsel and briefs, no matter how artful, are not sufficient to raise a genuine issue of material fact.

Further, an opponent to a motion for summary judgment must attach evidence demonstrating a dispute in material issues of fact to its opposition and cannot merely incorporate by reference, exhibits previously attached to other legal documents. Accordingly, Hero failed to meet its evidentiary burden in opposition to the defendants’ motion for summary judgment.

Evidence, such as affidavits and deposition testimony, are permissible to determine whether an insurance policy is in force or where there is a factual issue as to the applicability of a provision of a policy. Also, the trial court’s consideration of evidence in support of a motion for summary judgment is an evidentiary ruling which is subject to the abuse of discretion standard of review.

The deposition testimony and affidavit offered in support of the defendants’ motion were offered to show that no policy was in effect for the residence under construction and that neither Hero nor its agents ever requested such coverage. Hero’s argument that it expected or believed that it had insurance coverage does not support a finding of ambiguity nor is it evidence that coverage was ordered or obtained. Insurance coverage is determined from the written instrument, not the parties’ expectations. That Hero may not have known that another type of policy was required does not mean there is coverage under this policy, it only supports an action against Hero’s broker. As such, there is no ambiguity in the insurance contract.

All of the issues raised in this appeal were also raised by Hero in its motion for new trial; Hero asks the court to take a different view of the factual evidence, the deposition testimony, and its reading of the policy. Hero does not demonstrate that the trial court abused its discretion in any way. Accordingly, there was no abuse of discretion in the court’s refusing to grant Hero a new trial.

The trial court judgment granting of summary judgment in favor of the Brit UW defendants and against the Hero plaintiffs was affirmed.

ZALMA OPINION

A court will not change an orange into an apple by judicial fiat nor will it change a policy covering the insured’s liability to third persons into a course of construction policy. If such a policy was ordered Hero may have a case against the agent. If not, the Hero plaintiffs received the coverage they ordered and the case against the agent will be difficult to prove.

(c) 2022 Barry Zalma & ClaimSchool, Inc.

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Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializin is available at http://www.zalma.com and [email protected].

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Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and [email protected]

Write to Mr. Zalma at [email protected]; http://www.zalma.com; http://zalma.com/blog; daily articles are published at 
Zalma on Insurance

Insurance, insurance claims, insurance law, and insurance fraud .
By Barry Zalma

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