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United States Fidelity & Guaranty v. Brennan

OPINION FILED SEPTEMBER 15, 1980.

UNITED STATES FIDELITY AND GUARANTY COMPANY, PLAINTIFF-APPELLANT,

v.

RICHARD W. BRENNAN, DEFENDANT-APPELLEE.



APPEAL from the Circuit Court of Morgan County; the Hon. GORDON D. SEATOR, Judge, presiding.

MR. JUSTICE GREEN DELIVERED THE OPINION OF THE COURT:

On April 19, 1976, plaintiff, United States Fidelity and Guaranty Company, filed suit in the circuit court of Morgan County seeking a declaration of its rights and duties under a policy of liability insurance it had issued to defendant Richard W. Brennan. After a hearing on the merits, the circuit court entered an order on February 15, 1980, declaring that plaintiff was under a duty to defend defendant in case No. 75-L-1094 before that court. Plaintiff appeals.

The pleadings admitted (1) the issuance of the policy, a copy of which was attached to the complaint, (2) that defendant was in the business of "heating, ventilating, air conditioning, and sheet metal work" and during the term of the policy was performing work under a contract with a school district which was plaintiff in case No. 75-L-1094, and (3) that two counts of the complaint in the foregoing case were directed against defendant alleging damages to the school district arising from defendant's performance of the contract. The complaint also alleged that an actual controversy existed between the parties because defendant claimed the policy covered the case brought by the school district and plaintiff maintained that coverage was denied by various exclusionary provisions of the policy.

The parties agreed that the trial court might take judicial notice of the pleadings in case No. 75-L-1094 and agree that the same is properly before us now. The only evidence presented to the trial court was a copy of the policy which was attached to the complaint and a copy of the transcript of a conversation between an adjuster for plaintiff and the defendant. In reaching its decision the trial court stressed the scarcity and indefinite nature of the evidence presented.

The complaint in case No. 75-L-1094 alleged that defendant contracted with the school district to furnish and install heating, ventilating, and air conditioning units on the roof of two of the school district's schools and that contrary to the contract, defendant performed his work in such an unworkmanlike manner and contrary to the provisions of the contract that large quantities of water were permitted to seep through the roof and into walls and ceilings, causing great damage. The complaint also alleged that in an unworkmanlike manner defendant failed to coordinate his work with that of another contractor, thereby causing the leaking. The policy provided defendant with contractual liability and comprehensive general liability coverages.

We agree with plaintiff that defendant had no coverage for the lawsuit under the contractual liability phase of the policy because of a provision thereof which stated, "`contractual liability' * * * shall not be construed as including * * * a warranty that work performed by or on behalf of the Named Insured will be done in a workmanlike manner."

The main thrust of plaintiff's theory is that the comprehensive general liability provisions also fail to give coverage because of a provision of endorsement number two of the policy which provides that the bodily injury and property damage liability coverage provisions do not apply to liability for damages "included with the completed Operations Hazard or the Products Hazard."

The completed Operations Hazard is defined as:

"[C]ompleted operations hazard includes bodily injury and property damage arising out of operations or reliance upon a representation or warranty made at any time with respect thereto, but only if the bodily injury or property damage occurs after such operations have been completed or abandoned and occurs away from premises owned by or rented to the Named insured. `Operations' include materials, parts or equipment furnished in connection therewith. Operations shall be deemed completed at the earliest of the following times:

(1) when all operations to be performed by or on behalf of the Named Insured under the contract have been completed,

(2) when all operations to be performed by or on behalf of the Named Insured at the site of the operations have been completed, or

(3) when the portion of the work out of which the injury or damage arises has been put to its intended use by any person or organization other than another contractor or subcontractor engaged in performing operations for a principal as a part of the same project.

Operations which may be required further service or maintenance work, or correction, repair or replacement because of any defect or deficiency, but which are otherwise complete, shall be deemed completed."

• 1 Plaintiff, as the insurer, had the burden of proving that a loss otherwise covered comes within the provisions of an exclusion stated in the policy. (Marsh v. Metropolitan Life Insurance Co. (1979), 70 Ill. App.3d 790, 388 N.E.2d 1121.) The complaint in the suit brought against defendant by the school district gives no indication that its claimed loss occurred after the operation had been completed. The transcript of the conversation between defendant and the adjuster is rather confused. It indicates that defendant was called back to a particular school building several times because of complaints by school district personnel that water leaks were resulting from defendant's installation. However, it ...


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