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Schenkel & Shultz, Inc. v. Homestead Insurance Co.

July 16, 1997

SCHENKEL & SHULTZ, INC.,

PLAINTIFF-APPELLANT,

v.

HOMESTEAD INSURANCE COMPANY,

DEFENDANT-APPELLEE.



Appeal from the United States District Court for the Northern District of Indiana, Fort Wayne Division. No. 95 CV 184 Roger B. Cosbey, Magistrate Judge.

Before BAUER, HARLINGTON WOOD, JR., and ROVNER, Circuit Judges.

HARLINGTON WOOD, JR., Circuit Judge.

ARGUED February 27, 1997

DECIDED JULY 16, 1997

Schenkel and Shultz, Inc. ("S & S"), a firm of architects, engineers, and construction managers, made miscalculations in the design and construction of a building for Center City Associates, L.P. ("CCA"), resulting in a cost overrun of more than $1 million. S & S filed a claim with Homestead Insurance Company ("Homestead") under its professional liability policy ("the Policy"). Homestead denied coverage because S & S violated some of the terms of the Policy. The district court found that Homestead properly denied coverage and granted summary judgment in favor of Homestead. We affirm.

I. BACKGROUND

S & S, a Fort Wayne, Indiana corporation, purchased professional liability insurance from Homestead, a Pennsylvania corporation. The Policy covered up to $1 million of damages with a deductible of $100,000, and ran from March 11, 1993 to March 11, 1996. The Policy contained, inter alia, exclusions that denied coverage in particular circumstances. Exclusions V.B.1. and V.C.3., which are the exclusions at issue in this case, read:

B. Notwithstanding anything contained in this Policy to the contrary, the coverage herein shall not apply to a claim made against the Insured:

1. By a person, firm or organization (or its subrogee, assignee, indemnitee, contractor, subcontractor, subsidiary, affiliate or division) that wholly or partly owns, operates, manages, or controls the Insured, whether directly or indirectly, or that is wholly or partly owned, operated, managed or controlled by the Insured, whether directly or indirectly . . .

* * *

C. Notwithstanding anything contained in this Policy to the contrary, the coverage hereunder shall not apply with respect to a project for which any construction, including but not limited to any demolition, erection, excavation or the assembly, fabrication or installation of any components or equipment, was performed in whole or in part:

* * *

3. By a person, firm or organization (or its contractor, subcontractor, subsidiary, affiliate or division) that wholly or partly owns, operates, manages or controls the Insured, whether directly or indirectly, or that is wholly or partly owned, operated, managed or controlled by the Insured, whether directly or indirectly . . . (Appellant App. at 24-25.)

We will discuss these exclusions collectively as the "Ownership Exclusions" because they both raise the same issue in this ...


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