Skanska-Schweitzer v. Farm Bureau General Insurance Company of Mi ( 2016 )

STATE OF MICHIGAN
COURT OF APPEALS
SKANSKA-SCHWEITZER, also known as UNPUBLISHED
SKANSKA-SCHWEITZER, A JOINT VENTURE December 13, 2016
Plaintiff-Appellant,
v No. 328031
Calhoun Circuit Court
FARM BUREAU GENERAL INSURANCE LC No. 14-002227-CK
COMPANY OF MICHIGAN,
Defendant-Appellee.
Before: M. J. KELLY, P.J., and O’CONNELL and BECKERING, JJ.
PER CURIAM.
Plaintiff, Skanska-Schweitzer (Skanska) appeals as of right the trial court’s order granting
summary disposition under MCR 2.116(C)(10) to defendant, Farm Bureau General Insurance
Company of Michigan (Farm Bureau), in Skanska’s declaratory action regarding Farm Bureau’s
responsibility to defend Skanska in a separate lawsuit. We reverse and remand.
I. FACTUAL AND PROCEDURAL BACKGROUND
In November 2006, Skanska and Battle Creek Public Schools (the school) entered into a
construction management contract that involved in part renovations to an elementary school’s
playground. Skanska agreed to specific duties, such as receiving bids and advising the school
regarding bid awards. The contract also contained a specific provision that allowed the schools
to contract with parties outside of the construction manager contract.
In August 2009, the school contracted with Horrocks Nursery Farms, Inc. (Horrocks) for
landscaping services at the elementary school. The landscape contract named Skanska as the
construction manager, but it expressly allowed the school to award contracts connected to the
project but outside Skanska’s administration. Horrocks had a commercial insurance policy with
Farm Bureau. The insurance policy specifically named Skanska as an insured and provided
coverage for “those sums that the Insured becomes legally obligated to pay as damages because
of ‘bodily injury’ or ‘property damage’ to which this insurance applies.”
In late September 2009, the school asked Skanska to obtain a price quote to remove a
teeter totter at the elementary school. Skanska’s representative, Thomas Beuchler, testified at
deposition that he forwarded the request to Horrocks, who informed Skanska that it could do the
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work for $1,000. Beuchler informed the school of the price, and the school told Beuchler to have
the work done. Beuchler then told Horrocks to proceed with the work and that Skanska would
submit a change order shortly. As a Horrocks employee removed the teeter totter, he left the
unmoored teeter totter unattended and it fell on Cameron Wiggins. On October 5, Horrocks
submitted a “Request Change Order” to add removing the teeter totter to the parties’ contract, but
Skanska refused to authorize the change order.
Wiggins subsequently sued Horrocks and Skanska for negligence. Skanska submitted
letters to Horrocks and Farm Bureau that asked Farm Bureau to defend and indemnify Skanska
in the Wiggins action. Skanska ultimately filed its claim for declaratory relief in this action,
alleging that Farm Bureau was contractually obligated to defend and indemnify Skanska. Farm
Bureau moved for summary disposition, asserting that Horrocks’s policy only applied to claims
against Skanska for work that Horrocks conducted for Skanska. According to Farm Bureau,
because Skanska never approved a change order to add the teeter totter to the scope of the
landscaping contract and the school paid Horrocks directly for the work, the teeter totter removal
was under a separate contract with the school, and Farm Bureau was not obligated to defend or
indemnify Skanska.
Skanska responded that there was a question of fact regarding whether Horrocks removed
the teeter totter “for” Skanska. The trial court disagreed, concluding that Horrocks did not
remove the teeter totter for Skanska because Horrocks removed it under a separate contract.
Accordingly, the trial court also concluded that Farm Bureau did not have a duty to defend or
indemnify Skanska. After the trial court denied Skanska’s motion for reconsideration, Skanska
filed this appeal.
II. STANDARDS OF REVIEW
This Court reviews de novo the trial court’s decision on a motion for summary
disposition. Gorman v American Honda Motor Co, Inc, 302 Mich App 113, 115; 839 NW2d 223
(2013). When a party moves the trial court for summary disposition under MCR 2.116(C)(8)
and (10) and the trial court considered documents outside the pleadings when deciding the
motion, we review the trial court’s decision under MCR 2.116(C)(10). Hughes v Region VII
Area Agency on Aging, 277 Mich App 268, 273; 744 NW2d 10 (2007). A party is entitled to
summary disposition under MCR 2.116(C)(10) if “there is no genuine issue as to any material
fact, and the moving party is entitled to judgment . . . as a matter of law.” A genuine issue of
material fact exists if, when viewing the record in the light most favorable to the nonmoving
party, reasonable minds could differ on the issue. Gorman, 302 Mich App at 116.
This Court reviews de novo the proper interpretation of a contract, Klapp v United Ins
Group Agency, Inc, 468 Mich 459, 469; 663 NW2d 447 (2003), and the legal effect of a
contractual provision, DeFrain v State Farm Mut Auto Ins Co, 491 Mich 359, 366-367; 817
NW2d 504 (2012). This Court applies the same principles to contractual interpretation as to
statutory interpretation, with the purpose of determining and enforcing the parties’ intent. See
Klapp, 468 Mich at 468. The goal of contractual interpretation is to honor the parties’ intent and
to enforce the contract’s plain terms. Davis v LaFontaine Motors, Inc, 271 Mich App 68, 73;
719 NW2d 890 (2006). We discern the parties’ intent from the contract’s language. Id.-2-
III. DUTY TO DEFEND
Skanska contends that the trial court erred when it determined that Farm Bureau had no
duty to defend Skanska under Horrocks’s policy. We agree.
While both an insurer’s duty to defend and its duty to indemnify arise “only with respect
to insurance afforded by the policy, . . . the duty to defend is broader than the duty to indemnify.”
American Bumper & Mfg Co v Hartford Fire Ins Co, 452 Mich 440, 450; 550 NW2d 475 (1996).
“If the allegations of a third party against the policyholder even arguably come within the policy
coverage, the insurer must provide a defense.” Id. at 450-451. We must resolve any doubt about
whether allegations in the complaint come within the scope of the policy in favor of the insured.
Detroit Edison v Mich Mut Ins Co, 102 Mich App 136, 142; 301 NW2d 832 (1980).
Farm Bureau argues that Skanska cannot rely on the allegations in Wiggins’s complaint
to determine coverage because Skanska is not insured under Horrocks’s policy. The relevant
policy language names Skanska as an insured “only with respect to liability . . . in the
performance of [Horrocks’s] ongoing operations . . . where those operations are being conducted
by [Horrocks] for the additional insured.”
In the lawsuit regarding the teeter totter, Wiggins alleged that Skanska was liable because
of actions taken by a Horrocks employee while the employee was performing landscaping work.
Wiggins’s complaint sought to hold Skanska liable for injuries that ultimately resulted from
Horrocks’s actions. We conclude that the trial court erred in granting defendant summary
disposition because the allegations in Wiggins’s complaint that Horrocks was doing work for
Skanska were sufficient to trigger Farm Bureau’s duty to defend Skanska against that complaint.
IV. DUTY TO INDEMNIFY
Skanska also contends that the trial court erred in granting summary disposition regarding
Farm Bureau’s duty to indemnify because there were genuine questions of material fact
regarding whether Horrocks was doing work “for” Skanska. We agree.
As stated in our decision in the companion case, Wiggins v Horrocks Nursery Farms,
unpublished opinion per curiam of the Court of appeals (Docket No. 328027), removal of the
teeter totter was not originally part of the landscape contract between Skanska and Horrocks and
was not subsequently made a part of that contract through a change order. However, the
language of Horrocks’s insurance policy is broader than whether Horrocks and Skanska had a
contract regarding the work; under the contractual language, the existence of coverage depends
on whether Horrocks performed the teeter totter removal pursuant to ongoing operations that
Horrocks was conducting for Skanska:
A. Section II – Who Is An Insured is amended to include as an additional
insured the person(s) or organization(s) shown in the Declarations [which
includes Skanska], but only with respect to liability for “bodily injury”,
“property damage” or “personal and advertising injury” caused, in whole or in
part, by:
1. Your acts or omissions; or
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2. The acts or omissions of those acting on your behalf;
in the performance of your ongoing operations at all locations where those
operations are being conducted by you for the additional insured(s).
The trial court’s determination that the teeter totter removal was not part of any direct
contract between Skanska and Horrocks, standing alone, does not provide a sufficient basis for
granting summary disposition. First, the various construction contracts allowed the school to
enter into contracts outside of Skanska’s administration but in connection with the project.
Accordingly, even if Horrocks did not remove the teeter totter for Skanska but removed it
pursuant to a separate contract, the teeter totter removal was at a location where Horrocks was
conducting operations for Skanska. Second, while the lack of an express contract is certainly
evidence that Horrocks did not remove the teeter totter for Skanska, it does not preclude such a
finding. Skanska presented evidence that it procured Horrocks to perform the teeter totter
removal for the school and that, without Skanska’s involvement, Horrocks would not have been
engaged in the teeter totter removal when Wiggins was injured. Third, though Skanska did not
approve the change order that Horrocks submitted, Horrocks did in fact submit a request to
change its contract with Skanska to include the teeter totter removal. This provides further
evidence that the teeter totter removal was a part of ongoing operations that Horrocks was
conducting for Skanska.
For these reasons, we conclude that reasonable minds could differ regarding whether
Horrocks performed the teeter totter removal pursuant to ongoing operations Horrocks was
conducting for Skanska at the elementary school. Accordingly, we conclude that the trial court
improperly granted summary disposition on this issue under MCR 2.116(C)(10).
We reverse and remand for further proceedings. We do not retain jurisdiction.
/s/ Michael J. Kelly
/s/ Peter D. O’Connell
/s/ Jane M. Beckering
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