Appeal by plaintiff
from judgment entered 14 April 2003 by
Judge Robert P. Johnston in Mecklenburg County Superior Court.
Heard in the Court of Appeals 7 June 2004.
DeVORE, ACTON & STAFFORD, P.A., by Fred W. DeVore, III,
attorney for plaintiff-appellant.
NEXSEN PRUET ADAMS KLEEMEIER, P.L.L.C., by James W. Bryan, and
WILEY REIN & FIELDING, L.L.P., by Mary E. Borja, for
defendants-appellees.
TIMMONS-GOODSON, Judge.
Liliane Miller (“plaintiff” ) appeals the trial court judgment
denying plaintiff's motion for summary judgment and granting
Assurance Company of America's motion for summary judgment. For
the reasons discussed herein, we affirm the judgment of the trial
court.
The facts and procedural history pertinent to the instant
appeal are as follows: In February 1994, plaintiff purchased a
home constructed and sold by Royce L. Owens Construction, Inc.
(“Owens Construction”). Owens Construction constructed the
exterior of the home using a product known as Exterior InsulationFinish Systems (“EIFS”), or “synthetic stucco.” On 24 July 1996,
plaintiff hired Peter J. Verna (“Verna”), a professional engineer,
to inspect the home. Verna's inspection revealed, inter alia,
rotting wood on the trim of the home and a bulge in the stucco on
the side of the home.
On 13 September 1999, plaintiff filed a complaint against
Royce L. Owens and Bruce B. Blackmon d/b/a Royce L. and Bruce B.
Blackmon Owens,
(See footnote 1)
alleging breach of contract, negligence, breach of
express warranty, and breach of implied warranty of habitability.
On 16 October 2001, the trial court issued an order granting
summary judgment in favor of plaintiff and awarding plaintiff
$96,688 plus court costs.
On 10 December 2001, plaintiff filed a petition (“the
petition”) for declaratory judgment against The Zurich Corporation
(“Zurich”) and Owens Construction. The petition contained the
following pertinent allegations:
4. Unbeknownst to petitioner, during the
construction of the home and for some
time after the construction of the home,
Zurich insured [Owens Construction].
5. On or about September 13, 1999, the
petitioner filed suit against [Owens
Construction] for certain defects and
structural damage she has incurred in her
home.
6. A copy of the lawsuit was provided to
Zurich as the insurance company for
[Owens Construction]. Although Zurich
made an appearance in the case andprovided counsel for [Owens
Construction], Zurich eventually withdrew
from the case contending that it did not
have coverage during the coverage
periods.
. . . .
8. The petitioner is a third party
beneficiary of any insurance policy
purchased by [Owens Construction] that
provides insurance coverage for defects
in the petitioner's home.
. . . .
10. Zurich contends that it is not required
to provide coverage to the petitioner
because the discovery of the moisture
intrusion occurred outside the coverage
dates of the policy.
The petition requested that the trial court “make a determination
as to the coverage issues raised in this case by applying the
principles of North Carolina law and establishing, as a matter of
law, whether the respondent insurance company is required to
provide coverage to the petitioner.” In support of her request,
plaintiff specifically cited Gaston County Dyeing Machine Co. v.
Northfield Ins. Co., 351 N.C. 293, 524 S.E.2d 558 (2000).
On 6 February 2002, Assurance Company of America (“Assurance”)
filed an answer noting that Assurance was improperly referred to in
the petition as “The Zurich Corporation.” The record on appeal
establishes that Assurance was the insurer for “Blackmon & Owens”
from 1 July 1994 to 1 July 1996. Under its insurance policy with
Owens Construction, Assurance agreed to pay any amount that Owens
Construction became legally obligated to pay as a result of
property damage, provided the damage was caused by an “occurrence”that took place during the policy period. The policy defined
“occurrence” as “an accident, including continuous or repeated
exposure to substantially the same general harmful conditions.”
On 12 March 2002, plaintiff filed a motion for summary
judgment. On 19 March 2002, Royce L. Owens and Owens Construction
also filed a motion for summary judgment. After hearing oral
arguments, the trial court issued a written judgment (“the
judgment”) on 14 April 2003. In the judgment, the trial court
concluded that no genuine issue of material fact remained in the
case, and the trial court ordered:
the Motion for Summary Judgment of Defendant
Assurance Company of America seeking a
manifestation trigger is GRANTED; That
plaintiff Miller's Motion for Summary Judgment
Seeking Coverage Under the Policy issued by
Assurance for the Judgment obtained against
Royce L. Owens Construction, Inc. in case
number 99 CVS 13946 is DENIED; that any
property damage at issue occurred for
insurance purposes during the policy period
when the elevated moisture level was first
discovered or “manifested”; that any property
damage associated with the construction defect
claims asserted by Plaintiff was first
discovered or “manifested” after the
expiration of the Assurance Company of America
policy period; and therefore the Court
determines that Assurance does not provide
coverage to the plaintiff in this matter; that
Assurance is not responsible to satisfy,
indemnify or otherwise defend or pay on the
judgment obtained by Miller against Royce L.
Owens Construction, Inc. in case number 99 CVS
13946. This judgment concludes all matters in
controversy in this declaratory judgment
action.
(emphasis in original). From this judgment , plaintiff appeals.
Plaintiff argues on appeal that the trial court erred by
granting summary judgment in favor of Assurance and denying summary
judgment for plaintiff. We disagree.
When reviewing a motion for summary judgment, this Court must
consider whether “(1) the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, show that there is no genuine issue as to any material
fact; and (2) the moving party is entitled to judgment as a matter
of law.”
Gaunt v. Pittaway, 139 N.C. App. 778, 784, 534 S.E.2d
660, 664,
appeal dismissed and disc. review denied, 353 N.C. 262,
546 S.E.2d 401 (2000),
cert. denied, 534 U.S. 950, 151 L. Ed. 2d
261 (2001); N.C. Gen. Stat. § 1A-1, Rule 56(c) (2003). “'The
movant has the burden of showing that summary judgment is
appropriate. Furthermore, in considering summary judgment motions,
we review the record in the light most favorable to the
nonmovant.'”
Hayes v. Turner, 98 N.C. App. 451, 456, 391 S.E.2d
513, 516 (1990) (quoting
Leake v. Sunbelt Ltd. of Raleigh, 93 N.C.
App. 199, 201, 377 S.E.2d 285, 287,
disc. review denied, 324 N.C.
578, 381 S.E.2d 774 (1989) (internal citations omitted)).
In
Gaston County Dyeing Machine Co. v. Northfield Insurance
Co., 351 N.C. 293, 524 S.E.2d 558 (2000), our Supreme Court
expressly overruled this Court's opinion in
West American Insurance
Co. v. Tufco Flooring East, which held that “for insurance
purposes, property damage 'occurs' when it is manifested or
discovered.” 104 N.C. App. 312, 317, 409 S.E.2d 692, 695 (1991).
In
Gaston County, the Court concluded that, for the purposes ofdetermining insurance liability, there is no “bright-line rule”
that property damage occurs at the time of manifestation or on the
date of discovery. 351 N.C. at 303, 524 S.E.2d at 565. Instead,
the Court held, “where the date of the injury-in-fact can be known
with certainty, the insurance policy or policies on the risk on
that date are triggered.”
351 N.C. at 303, 524 S.E.2d at 564.
Accordingly, this Court has subsequently stated that, for the
purposes of determining insurance liability, “[i]f this Court can
determine when the injury-in-fact occurred, the insurance policy
available at the time of the injury controls.”
Hutchinson v.
Nationwide Mut. Fire Ins. Co., ___ N.C. App. ___, ___, 594 S.E.2d
61, 63 (2004). Thus, “even in situations where damage continues
over time, if the court can determine when the defect occurred from
which all subsequent damages flow, the court must use the date of
the defect and trigger the coverage applicable on that date.”
Id.
at ___, 594 S.E.2d at 64.
In
Hutchinson, the plaintiffs argued that the damages to their
retaining wall were caused by the continuing entry of water into
the wall. According to the plaintiffs, the entry of the water was
caused by the insured contractor's faulty construction of the wall.
Although this Court agreed with the plaintiffs' theory of injury,
we noted that “the evidence is clear that the damage to plaintiffs'
retaining wall occurred outside of the period in which defendant
insured [the contractor].”
Id. at ___, 594 S.E.2d at 64.
Accordingly, we held that “[w]ithout any additional information
suggesting that the damage was caused during the three days ofcoverage prior to discovery, we affirm the trial court's order
granting summary judgment to defendant.”
Id. at ___, 594 S.E.2d at
64.
In the instant case, plaintiff's damages arise from the slow
rot and decay of the structure of the home, caused by the
continuous entry of moisture into the structure through the
synthetic stucco. Plaintiff asserts that the date of her injury
occurred when she purchased the home in February 1994, and that she
first discovered damage to her home on approximately 16 July 1999.
However, the record clearly establishes that the insurance policy
between Assurance and Owens Construction was not effective on the
date plaintiff purchased the home, nor was the insurance policy
effective on the date plaintiff allegedly discovered the injury or
while Owens Construction constructed the home.
According to the record before this Court, Owens
Construction's insurance policy with Assurance was effective from
1 July 1994 to 1 July 1996. The policy contains the following
pertinent provisions:
SECTION I - COVERAGES
COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE
LIABILITY
1. Insuring Agreement.
a. We will pay those sums that the
insured becomes legally obligated to
pay as damages because of “bodily
injury” or “property damage” to
which this insurance applies. We
will have the right and duty to
defend any “suit” seeking those
damages. We may at our discretion
investigate any “occurrence” andsettle any claim or “suit” that may
result.
. . . .
b. This insurance applies to “bodily
injury” and “property damage”
only
if:
(1) The “bodily injury” or
“property damage” is
caused by an “occurrence”
that takes place in the
“coverage territory”; and
(2)
The “bodily injury” or
“property damage” occurs
during the policy period.
(emphasis added).
The above-detailed provisions are exact copies of those at
issue in
Hutchinson. In
Hutchinson, we stated that “[u]nder the
insurance policy in this case, coverage is triggered by 'property
damage' when the property damage is caused by an 'occurrence' and
when the property damage occurs within the policy period. The
issue for this Court to determine is whether the property damage
occurred within the policy period.”
Id. at ___, 594 S.E.2d at 63.
In the instant case, it is clear that plaintiff's property damage
was caused by Owens Construction's actions or inactions at the time
the home was constructed. However, as discussed above, Owens
Construction completed its construction and sold the home to
plaintiff in February 1994, more that four months before
Assurance's insurance policy with Owens Construction took effect.
Thus, “without any additional information suggesting that the
damage was caused during” the dates of coverage, we conclude that
Assurance bears no liability for the damages that Owens
Construction owes plaintiff. Therefore, we hold that no genuineissue of material fact remains in the suit between plaintiff and
Assurance, and that plaintiff is not entitled to judgment as a
matter of law. Accordingly, we affirm the trial court's judgment
denying plaintiff's motion for summary judgment and granting
summary judgment in favor of Assurance.
Affirmed.
Chief Judge MARTIN and Judge HUNTER concur.
Report per Rule 30(e).
Footnote: 1