Standard Pacific of the Carolinas, LLC v. Amerisure Insurance , 500 F. App'x 237 ( 2012 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 11-1444
STANDARD PACIFIC OF THE CAROLINAS, LLC,
Plaintiff – Appellant,
v.
AMERISURE INSURANCE COMPANY,
Defendant – Appellee.
Appeal from the United States District Court for the District of
South Carolina, at Rock Hill. Joseph F. Anderson, Jr., District
Judge. (0:10-cv-01620-JFA)
Argued: September 19, 2012 Decided: December 19, 2012
Before NIEMEYER and DIAZ, Circuit Judges, and Max O. COGBURN,
Jr., United States District Judge for the Western District of
North Carolina, sitting by designation.
Reversed and remanded by unpublished per curiam opinion.
Payton Dwight Hoover, DEAN & GIBSON, Charlotte, North Carolina,
for Appellant. Tracy Lynn Eggleston, COZEN O'CONNOR, Charlotte,
North Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Standard Pacific of the Carolinas, LLC (“Standard Pacific”)
brought this action against Amerisure Insurance Company
(“Amerisure”), seeking a declaration of its rights to a defense
and indemnity under an “additional insured” endorsement in an
insurance policy. The district court granted summary judgment
to Amerisure on Standard Pacific’s claim, concluding that the
endorsement did not clearly require the insurer to provide “your
work” coverage. In our view, however, the district court read
the endorsement too narrowly. Rather, construing the policy in
favor of the insured, we hold that it provides coverage to
Standard Pacific. Accordingly, we reverse.
I.
A.
On June 21, 2008, Terry Shortt fell off his bicycle and
broke his back after encountering an allegedly deteriorated
section of an asphalt walking path in the common area of Ridge
Point Community in Rock Hill, South Carolina. Standard Pacific,
formerly known as Westfield Homes of the Carolinas, LLC, was the
developer of the Ridge Point Community project. Standard
Pacific hired Matthews Construction Company, Inc. (“Matthews”)
as the general contractor for the project pursuant to a “Land
Development-Construction Agreement” (the “Agreement”).
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Amerisure was Matthews’s insurer. Matthews completed its work
at the Ridge Point community in August 2004, about four years
before Shortt’s accident.
Shortt sued Standard Pacific, Matthews, and others in South
Carolina state court, alleging that they jointly and severally
breached their duty to exercise reasonable care in designing,
developing, constructing, managing, and maintaining the walking
path to prevent dangerous and hidden conditions. Standard
Pacific in turn filed a separate state suit in South Carolina
seeking, among other relief, the court’s declaration of the
relative rights and obligations of the parties under the terms
of an insurance policy issued by Amerisure to Matthews.
Amerisure subsequently removed the case to the United States
District Court for the District of South Carolina.
B.
Amerisure issued a Commercial General Liability Insurance
Policy to Matthews, effective from January 1, 2008, to January
1, 2009. The policy had a general aggregate limit of $2,000,000
and a “products-completed operations” aggregate limit of
$2,000,000. J.A. 112. The policy included a “Contractor’s
Blanket Additional Insured Endorsement.” J.A. 28. The
endorsement provided coverage under the policy to additional
parties whom Matthews was required to insure by “written contact
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or agreement.” The endorsement limited the coverage of such
additional parties to liability arising out of:
(a) Premises you own, rent, lease, or occupy, or
(b) Your ongoing operations performed for that
additional insured, unless the written contract or
agreement or the certificate of insurance requires
“your work” coverage (or wording to that same effect)
in which case the coverage provided shall extend to
“your work” for that additional insured.
Id. (emphasis added). The policy defined “your work” as “[w]ork
or operations by you or on your behalf” and “[m]aterials, parts
or equipment furnished in connection with such work or
operations.” J.A. 105.
The Agreement, which predated the insurance policy,
contained several provisions relevant to this appeal. First, it
required Matthews to furnish Standard Pacific with a certificate
from a licensed insurance company showing that (1) Matthews had
in effect a policy of general liability insurance providing
coverage at least equivalent to the 1986 Commercial General
Liability Insurance policy, 1 with at least “a $500,000.000
Products/Completed Operations Aggregate Limit,” J.A. 184, and
(2) Standard Pacific’s predecessor, Westfield Homes of North
Carolina, was an additional insured under the policy. Id.
1
The 1986 Commercial General Liability Insurance Policy is
a standard form insurance policy created by the Insurance
Services Organization.
4
Second, the Agreement required Matthews to:
“indemnify, defend and hold harmless [o]wner,
[c]onstruction [m]anager and the owner of the Site . .
. from and against any and all claims, loss, damage or
expense (including attorneys’ fees and other costs of
defense incurred by [o]wner in defending against any
claims or in enforcing this indemnity and defense
obligation) arising out of or in connection with the
performance of the [w]ork.”
Id.
C.
Standard Pacific moved for “Partial Judgment on the
Pleadings/Summary Judgment” regarding Amerisure’s insurance
coverage and duty to defend. J.A. 350-56. The district court
denied the motion and instead sua sponte granted summary
judgment to Amerisure. The court noted that, “the plain
language of the insurance policy allows for ‘your work’ coverage
for the additional insured only when a written agreement
requires it explicitly or with equivalent language.” J.A. 559.
The court reviewed the Agreement between Standard Pacific and
Matthews and concluded that “[n]owhere in the ‘Work,’
‘Protection of Work,’ or ‘Indemnity’ sections [of the Agreement]
does Matthews agree to provide the equivalent to ‘your work’
coverage.” J.A. 558. And to the extent that there was
ambiguity as to what type of coverage was required by the
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Agreement, the district court concluded that any ambiguity was
to be construed against Standard Pacific as the drafter. 2
Standard Pacific moved for reconsideration of the district
court’s order, which the court denied. After voluntarily
dismissing, without prejudice, its remaining claims, Standard
Pacific timely appealed.
II.
We review a grant or denial of summary judgment de novo,
applying the same standard applied by the district court.
Overstreet v. Kentucky Cent. Life Ins. Co., 950 F.2d 931, 938
(4th Cir. 1991).
We consider here whether the language of the Agreement is
sufficient to trigger coverage for Standard Pacific under the
additional insured endorsement contained in the Amerisure policy
issued to Matthews. Amerisure contends that the coverage
afforded Standard Pacific by the endorsement is limited to
Matthews’s ongoing operations because the Agreement does not
clearly require “your work” coverage. Standard Pacific responds
that the endorsement does not require the use of the term “your
2
The district court also held that the Agreement does not
violate South Carolina Code § 32-2-10, which declares
construction contracts that indemnify the promisee against
liability resulting from their own negligence void as against
public policy. That ruling has not been appealed.
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work” to provide the relevant coverage, but rather allows for
coverage if the Agreement includes “wording to that same
effect.” According to Standard Pacific, such wording is found
in several places in the Agreement. We agree with Standard
Pacific.
Under South Carolina law, “clauses of exclusion” in an
insurance policy are to be “narrowly interpreted,” while
“clauses of inclusion” are “to be broadly construed.” McPherson
v. Mich. Mut. Ins. Co., 426 S.E.2d 770, 771 (S.C. 1993). 3
Relatedly, where the words of an insurance policy are capable of
two reasonable interpretations, the court will adopt the
construction most favorable to the insured. Forner v. Butler,
460 S.E.2d 425, 427 (S.C. 1995). In this case, the endorsement
issued to Matthews by Amerisure requires that a contract with an
additional insured include the phrase “your work” or “wording to
that same effect” in order to invoke coverage for completed
operations. Thus, Standard Pacific is entitled to coverage if
the Agreement satisfies either one of these conditions.
Although it is certainly true, as the district court found,
that the Agreement does not explicitly refer to “your work”
3
The parties do not dispute that this diversity action is
governed by the law of South Carolina. Nor do they assert that
the appeal presents anything other than a question of law
regarding the scope of coverage under the policy.
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coverage, we conclude that it does include “wording to that same
effect” sufficient to trigger coverage. To begin with, the
“Liability Insurance” section of the Agreement requires a
minimum amount of “Products/Completed Operations” coverage,
which South Carolina law recognizes as encompassing coverage for
“bodily injury and property damages arising out of ‘your
product’ or ‘your work.’” Laidlaw Envtl. Servs. (TOC), Inc., v.
Aetna Cas. & Sur. Co. of Ill., 524 S.E.2d 847, 851 (S.C. 1999).
Moreover, the “Indemnity” section of the Agreement obligates
Matthews to indemnify and hold harmless Standard Pacific “from
and against any and all claims, loss, damage or expense . . .
arising out of or in connection with the performance of the Work
or any portion thereof.” J.A. 185 (emphasis added). Although
“arising out of” and “performance” are undefined in the
Agreement, the meaning of those terms given by other sources
supports the conclusion that the parties contemplated “your
work” coverage.
In that regard, the Supreme Court of South Carolina has
interpreted “arising out of” to mean “caused by” in the context
of an exclusionary clause in a general liability policy.
McPherson, 426 S.E.2d at 771. Additionally, “performance” is
commonly understood to mean “[t]he successful completion of a
contractual duty” and is also “termed full performance.”
Black’s Law Dictionary 1252 (9th ed. 2009). And although
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“performance” usually “result[s] in the performer’s release from
any past or future liability,” id., the parties here
specifically contracted for prospective indemnity for claims
arising out of the performance of Matthews’s work.
In sum, Matthews committed in the Agreement to extend “your
work” coverage to Standard Pacific, if not expressly then by
using “wording to that same effect” as contemplated by the
policy endorsement. We think this conclusion is both free from
doubt and consistent with a view of the policy most favorable to
the insured. McPherson, 426 S.E.2d at 771. The district court
therefore erred in granting summary judgment to Amerisure.
III.
For the foregoing reasons, we reverse the judgment of the
district court and remand with instructions that it enter
summary judgment for Standard Pacific.
REVERSED AND REMANDED
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