Cizek Homes v. Columbia Nat. Ins. Co. ( 2014 )

Decisions of the Nebraska Court of Appeals
CIZEK HOMES v. COLUMBIA NAT. INS. CO. 361
Cite as 22 Neb. Ct. App. 361
require perfection of a parent when deciding whether termina-
tion of parental rights is appropriate.
We conclude that there is insufficient evidence to prove that
termination of Deborah’s parental rights to Seth and Dinah is
in the children’s best interests. We reverse that portion of the
juvenile court’s order which terminated Deborah’s parental
rights to Seth and Dinah.
VI. CONCLUSION
We find that the juvenile court erred when it found that
the State had proven, by clear and convincing evidence, that
terminating Deborah’s parental rights would be in Seth’s and
Dinah’s best interests. Accordingly, we reverse that portion of
the juvenile court’s order which terminated Deborah’s parental
rights and remand the matter for further proceedings.
R eversed and remanded for
further proceedings.
Cizek Homes, Inc., appellee, v. Columbia National
Insurance Company, appellant.
___ N.W.2d ___
Filed September 9, 2014. No. A-13-585.
1. Summary Judgment: Appeal and Error. In reviewing a summary judgment, an
appellate court views the evidence in a light most favorable to the party against
whom the judgment is granted and gives such party the benefit of all reasonable
inferences deducible from the evidence.
2. Summary Judgment: Final Orders: Appeal and Error. When adverse parties
have each moved for summary judgment and the trial court has sustained one of
the motions, the reviewing court obtains jurisdiction over both motions and may
determine the controversy which is the subject of those motions or make an order
specifying the facts which appear without substantial controversy and direct such
further proceedings as the court deems just.
3. Insurance: Contracts: Appeal and Error. The interpretation of an insurance
policy presents a question of law that an appellate court decides independently of
the trial court.
4. Insurance: Contracts. To determine whether coverage exists under an insurance
policy, the first determination is whether there is an initial grant of coverage
for the claimed loss. If so, it must then be determined whether any exclu-
sion applies.
Decisions of the Nebraska Court of Appeals
362 22 NEBRASKA APPELLATE REPORTS
5. Insurance: Contracts: Liability: Pleadings. Coverage under an insurance pol-
icy contains two obligations—the duty to defend and the duty to indemnify. The
duty to defend is broader than the duty to indemnify, and in the first instance, it
is measured by the allegations of the complaint against the insured.
6. ____: ____: ____: ____. To determine whether a duty to defend exists, an insurer
must investigate and discover the relevant facts, in addition to looking at the alle-
gations of the complaint. An insurer bears a duty to defend whenever it ascertains
facts which give rise to the potential of liability under the policy.
7. Insurance: Contracts: Liability. Faulty workmanship, standing alone, is not an
occurrence under a standard commercial general liability policy.
8. Insurance: Contracts: Pleadings. When the allegations of the complaint support
a conclusion that no insurance coverage exists, and in the absence of any other
facts which would support an inference of coverage, an insurer has no duty to
defend or indemnify an insured.
9. Appeal and Error. An appellate court is not obligated to engage in an analysis
which is not needed to adjudicate the case and controversy before it.
Appeal from the District Court for Douglas County: P eter
C. Bataillon, Judge. Reversed and remanded with directions.
John C. Brownrigg, Heather B. Veik, and Thomas J. Culhane,
of Erickson & Sederstrom, P.C., L.L.O., for appellant.
John D. Stalnaker and Robert J. Becker, of Stalnaker, Becker
& Buresh, P.C., for appellee.
Irwin, Moore, and Riedmann, Judges.
Riedmann, Judge.
INTRODUCTION
Columbia National Insurance Company (Columbia) appeals
from the order of the Douglas County District Court denying
its motion for summary judgment and entering judgment in
favor of Cizek Homes, Inc. (Cizek). Finding that the claims
settled did not arise out of an “occurrence” as that term is
defined in Columbia’s commercial general liability (CGL)
policy issued to Cizek, we reverse, and remand with directions
to enter judgment in favor of Columbia.
BACKGROUND
Underlying Claim.
Cizek is a building contractor that has been in the home
building business for nearly 40 years. In 1995, Cizek
Decisions of the Nebraska Court of Appeals
CIZEK HOMES v. COLUMBIA NAT. INS. CO. 363
Cite as 22 Neb. Ct. App. 361
purchased a parcel of real estate known as Lot 75. In 2003,
Cizek sold Lot 75 to Carl and Zoe Riekes and constructed a
residence thereon. In 2006, the Riekeses notified Cizek that
the soil beneath the residence was settling and causing physi-
cal damage to their residence. Cizek monitored the settling,
and in June 2007, an engineer determined that the settling
had ceased.
During this process, Cizek notified Columbia, its insurance
carrier, of the claim. Columbia denied any coverage associated
with the Riekeses’ claim for damage to the residence. When
the Riekeses decided on a method of repairing the damage to
their home, they presented a settlement agreement to Cizek to
complete the repairs, and in the event Cizek did not agree to
complete the repairs, the Riekeses presented a draft complaint
that they intended to file against Cizek for breach of contract
and negligence. The draft complaint contained allegations that
negligence and faulty workmanship had purportedly caused the
damage to the home.
Cizek reached a settlement with the Riekeses prior to the fil-
ing of the underlying complaint, and it completed the repairs to
their home. In the settlement agreement, the parties described
the Riekeses’ claim as one “for damages to the Residence
due to soil conditions and/or improper construction of the
Residence by [Cizek], which claims [Cizek] denies.” Cizek
submitted the claim to Columbia, which again denied cover-
age for the cost of the repairs, claiming that the damages did
not arise from an “occurrence” as that term was defined in the
CGL policy.
Policy Terms.
According to the terms of the CGL policy, Columbia agreed
to “pay those sums that [Cizek] becomes legally obligated to
pay as damages because of ‘bodily injury’ or ‘property dam-
age’ to which this insurance applies.” The insurance applies to
“‘bodily injury’” or “‘property damage’” only if the “‘bodily
injury’” or “‘property damage’” is caused by an “‘occur-
rence’” that takes place in the “‘coverage territory.’” The
policy defines “‘[o]ccurrence’” as “an accident, including
Decisions of the Nebraska Court of Appeals
364 22 NEBRASKA APPELLATE REPORTS
continuous or repeated exposure to substantially the same gen-
eral harmful conditions.”
The policy also included an exclusion entitled “Recall Of
Products, Work Or Impaired Property.” This provision excluded
coverage for the following:
Damages claimed for any loss, cost or expense incurred
by you or others for the loss of use, withdrawal, recall,
inspection, repair, replacement, adjustment, removal or
disposal of:
(1) “Your product”;
(2) “Your work”; or
(3) “Impaired property”;
if such product, work, or property is withdrawn or recalled
from the market or from use by any person or organiza-
tion because of a known or suspected defect, deficiency,
inadequacy or dangerous condition in it.
Under the policy, the definition of the term “your product”
includes any goods or products, other than real property, manu-
factured, sold, handled, distributed, or disposed of by Cizek.
The definition of the term “your work” includes work or opera-
tions performed by Cizek or on Cizek’s behalf.
Declaratory Judgment Action.
Based on Columbia’s denial of coverage, Cizek filed a
declaratory judgment action in the district court. In its com-
plaint, Cizek alleged that it constructed a residence for the
Riekeses and that the residence sustained damage as a result
of settling of the soil on which it was constructed. Cizek
further alleged that “[a]s a result of the damages, [Cizek]
became legally obligated to engage in repairs to the Reikes’s
[sic] home, and to incur costs to do so, including costs and
expenses to make repairs, architect costs, and costs to pro-
vide alternative housing to the Reikes’s [sic] during the
required repairs.”
The parties moved for summary judgment on several occa-
sions. The dispositive ruling came in the district court’s order
entered on May 20, 2013. In that order, the district court noted
that at a pretrial conference on January 25, the parties agreed
that there were no disputed facts and that Columbia was not
Decisions of the Nebraska Court of Appeals
CIZEK HOMES v. COLUMBIA NAT. INS. CO. 365
Cite as 22 Neb. Ct. App. 361
contending that Cizek was negligent in building the Riekeses’
house on Lot 75 as the lot was on the date of construction, nor
was it contending that Cizek was guilty of any faulty work-
manship; rather, Columbia took the position that it was not
relevant to this issue of coverage whether or not Cizek was
negligent. Based upon Columbia’s position, the district court
found that there was no faulty workmanship on the part of
Cizek and that therefore, there was an “occurrence” and an ini-
tial grant of coverage under the policy. The district court also
determined that the “Recall” exclusion did not apply because
Columbia never alleged that Cizek did anything wrong, was
negligent, or was guilty of any defective or faulty workman-
ship. Because there was no work of Cizek that resulted in a
loss of use, withdrawal, recall, inspection, repair, replacement,
adjustment, removal, or disposal, the exclusion was inap-
plicable. As a result, the court denied Columbia’s motion for
summary judgment and granted summary judgment in favor
of Cizek.
Columbia subsequently filed a motion to alter or amend
the judgment, alleging that the court erred in granting sum-
mary judgment in favor of Cizek or, in the alternative, that the
amount of damages stipulated to by the parties was incorrectly
reflected in the court’s order. The district court amended its
prior order to reflect the parties’ stipulation that the amount of
damages suffered by Cizek was $158,114.93. The court also
granted Cizek’s motion for attorney fees and taxation of costs,
and awarded $42,707.70 as taxable costs to Cizek. Columbia
timely appeals to this court.
ASSIGNMENTS OF ERROR
Columbia assigns that the district court erred in (1) granting
summary judgment in favor of Cizek, (2) denying Columbia’s
motion for summary judgment, (3) finding that there was an
“occurrence” as that term is defined in the insurance policy
issued by Columbia to Cizek and finding that there was an
initial grant of coverage for Cizek’s claim, and (4) finding that
the “Recall Of Products, Work Or Impaired Property” exclu-
sion in the policies at issue did not apply to preclude coverage
for Cizek’s claim.
Decisions of the Nebraska Court of Appeals
366 22 NEBRASKA APPELLATE REPORTS
STANDARD OF REVIEW
[1] In reviewing a summary judgment, an appellate court
views the evidence in a light most favorable to the party
against whom the judgment is granted and gives such party
the benefit of all reasonable inferences deducible from the
evidence. Auto-Owners Ins. Co. v. Home Pride Cos., 268 Neb.
528, 684 N.W.2d 571 (2004).
[2] When adverse parties have each moved for summary
judgment and the trial court has sustained one of the motions,
the reviewing court obtains jurisdiction over both motions and
may determine the controversy which is the subject of those
motions or make an order specifying the facts which appear
without substantial controversy and direct such further pro-
ceedings as the court deems just. City of Columbus v. Swanson,
270 Neb. 713, 708 N.W.2d 225 (2005).
[3] The interpretation of an insurance policy presents a
question of law that we decide independently of the trial court.
Federated Service Ins. Co. v. Alliance Constr., LLC, 282 Neb.
638, 805 N.W.2d 468 (2011).
ANALYSIS
[4] To determine whether coverage exists under an insurance
policy, we must first determine whether there is an initial grant
of coverage for the claimed loss. If so, we must then determine
whether any exclusion applies. See Auto-Owners Ins. Co. v.
Home Pride Cos., supra.
Initial Grant of Coverage.
The insuring agreement of Columbia’s policy states in per-
tinent part: “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.” It further
states that the insurance only applies if the property damage is
caused by an “‘occurrence’” that takes place in the “‘coverage
territory.’” “‘Occurrence’” is further defined as “an accident,
including continuous or repeated exposure to substantially the
same general harmful conditions.”
The Riekeses alleged in their draft complaint against Cizek
that the lot was unsuitable for construction, that the home
Decisions of the Nebraska Court of Appeals
CIZEK HOMES v. COLUMBIA NAT. INS. CO. 367
Cite as 22 Neb. Ct. App. 361
was not constructed in accordance with the terms and con-
ditions of the building contract, and that the residence was
not constructed in conformance with acceptable construction
and industry standards. In its declaratory judgment complaint
against Columbia, Cizek alleged that the damage to the home
was caused by the settling of the soil and admitted that it
was legally obligated to pay for the cost of repairs to the
Riekeses’ home.
Prior to denying coverage, Columbia investigated the
Riekeses’ claim against Cizek and concluded that the damage
to the home was caused by construction of the house on soil
that later settled.
Although Cizek denies that it was negligent or that it
engaged in faulty workmanship, the facts do not reveal a cause
for the house settling other than its having been built on soil
that was not properly compacted. As Columbia contends, it is
not necessary to determine whether Cizek was in fact negligent
or engaged in faulty workmanship in order to determine cover-
age; rather, given the posture of this case, coverage is deter-
mined based upon the allegations contained in the Reikeses’
complaint against Cizek and the facts revealed in an investiga-
tion of that claim. See Peterson v. Ohio Casualty Group, 272
Neb. 700, 724 N.W.2d 765 (2006).
Peterson v. Ohio Casualty Group, supra, was a declar-
atory judgment action in which an anesthesiologist, John
C. Peterson, sought coverage under his homeowner’s and
umbrella policies for a defamation claim. The defamation
claim was brought by a former coworker for statements
Peterson allegedly made pertaining to his former coworker’s
competence. Each insurance policy contained a business pur-
suit exclusion that generally precluded coverage for damages
arising out of an insured’s business pursuits. The insurer
denied Peterson’s request for a defense and for indemnity, cit-
ing the exclusion. Peterson filed a declaratory judgment action
and, during the pendency of the action, settled the underlying
defamation action.
[5,6] The Peterson court recognized that coverage under an
insurance policy contains two obligations—the duty to defend
and the duty to indemnify. The duty to defend is broader than
Decisions of the Nebraska Court of Appeals
368 22 NEBRASKA APPELLATE REPORTS
the duty to indemnify, and in the first instance, it is measured
by the allegations of the complaint against the insured. Id.
To determine the duty to defend, an insurer must investigate
and discover the relevant facts, in addition to looking at the
allegations of the complaint. An insurer bears a duty to defend
whenever it ascertains facts which give rise to the potential of
liability under the policy. Id.
Applying these principles, the Peterson court noted that
the record provided a complete set of facts in the underlying
litigation and that the “record made by the parties on their
cross-motions for summary judgment discloses no facts out-
side the pleadings which would bear on the issue of whether
Ohio Casualty had a duty to defend Peterson in the now
completed [underlying] litigation.” Id. at 710-11, 724 N.W.2d
at 774-75.
In determining that the trial court did not err in grant-
ing summary judgment in favor of the insurer, the Nebraska
Supreme Court analyzed the allegations of the complaint
which included the statements that were alleged to be defama-
tory. The court determined that these allegations asserted a
claim arising out of Peterson’s professional practice and that
therefore, they fell within the business pursuit exclusion. The
court concluded:
The allegations and claims against Peterson contained in
the [underlying] pleadings fall squarely within the policy
exclusions, and in the absence of any other facts which
would support an inference of coverage, we conclude
that Ohio Casualty had no duty to defend or indemnify
Peterson with respect to the claims asserted against him
in the [underlying] lawsuit.
Id. at 712, 724 N.W.2d at 775-76.
In Peterson v. Ohio Casualty Group, supra, the court looked
to the allegations of the complaint and the facts developed
during the insurer’s investigation to determine whether the
insurer had a duty to defend or indemnify the insured. In the
present action, Cizek did not seek a duty to defend, because the
underlying claim was settled prior to the Riekeses filing a com-
plaint. Despite this factual distinction about the duty to defend,
we nevertheless find the Peterson framework of analysis is
Decisions of the Nebraska Court of Appeals
CIZEK HOMES v. COLUMBIA NAT. INS. CO. 369
Cite as 22 Neb. Ct. App. 361
appropriate for us to employ to determine whether Columbia
had a duty to indemnify Cizek in the present case.
The Riekeses alleged in their complaint that the home sus-
tained damage because Cizek failed to construct the home in
accordance with the terms and conditions of the contract, the
applicable building codes and manufacturers’ recommenda-
tions, and the accepted construction and industry standards.
They further alleged that Cizek was negligent in designing
and constructing the home and did not take into consideration
the nature of the land upon which it was built. The investiga-
tion undertaken by both Cizek and Columbia reveal that the
cause of the damage was the settling of the soil upon which
the home was built. Cizek admits this in its declaratory judg-
ment complaint.
In essence, the Riekeses assert a claim for faulty workman-
ship as it relates to Cizek’s preparation of the soil, and Cizek
admits that a problem existed in the soil upon which the home
was built. Cizek further admits that it was legally obligated
to pay for the cost of repairs, but denies that it was negligent.
The evidence reveals that the damage was only to the home
itself and that no other property was damaged. This fact is
relevant to whether there was an “occurrence,” as further dis-
cussed below.
The issue of insurance coverage turns upon whether there
has been an “occurrence” as that term is defined in the pol-
icy. Both parties direct us to Auto-Owners Ins. Co. v. Home
Pride Cos., 268 Neb. 528, 684 N.W.2d 571 (2004), to resolve
this question.
[7] In Auto-Owners Ins. Co. v. Home Pride Cos., supra,
Auto-Owners Insurance Company (Auto-Owners) brought a
declaratory judgment action to determine its obligations under
a CGL policy issued to its insured, Home Pride Companies,
Inc. (Home Pride). Home Pride had hired a subcontractor
to roof an apartment building. After the project was com-
pleted, the owner began noticing problems with the roof.
The owner ultimately filed suit against Home Pride, alleging
faulty workmanship that it claimed damaged the roof structures
and buildings. Home Pride tendered defense of the claim to
Auto-Owners, which assumed the defense under a reservation
Decisions of the Nebraska Court of Appeals
370 22 NEBRASKA APPELLATE REPORTS
of rights. Auto-Owners then initiated a declaratory judgment
action. The issue on appeal was whether damage caused by
faulty workmanship was covered under a CGL policy. The
answer hinged on the question of whether faulty workmanship
constituted an “occurrence” as that term was defined in the
policy. The Nebraska Supreme Court determined as a matter of
first impression that faulty workmanship, standing alone, is not
an occurrence under a CGL policy. Id.
Looking to the allegations of the underlying complaint,
the Home Pride Cos. court noted that the owners alleged that
Home Pride, through its subcontractor, negligently installed the
shingles, which negligence caused the shingles to fall off and,
as a consequence, damage the roof structures and buildings.
Because more than just Home Pride’s “work” was damaged,
there was an “occurrence,” and Auto-Owners owed a duty to
defend the underlying complaint. Of import, the court also
noted that “to the extent that Home Pride may be found liable
for the resulting damage to the roof structures and the build-
ings, Auto-Owners is obligated to provide coverage.” Id. at
539, 684 N.W.2d at 580. The court did not require indemnifi-
cation for the cost incurred in replacing the shingles, which is
consistent with its holding that a CGL policy does not provide
coverage for faulty workmanship that damages only the result-
ing work product.
The decision by the Home Pride Cos. court does not discuss
whether the insured denied that it was engaged in faulty work-
manship and that issue appears irrelevant to the court in mak-
ing its decision. Rather, the court looked to the allegations of
the complaint to determine whether there was a duty to defend,
and the court required indemnification only for the damage to
the roof structure and buildings in the event Home Pride was
held liable for the resulting damage.
[8] From Auto-Owners Ins. Co. v. Home Pride Cos., 268
Neb. 528, 684 N.W.2d 571 (2004), and Peterson v. Ohio
Casualty Group, 272 Neb. 700, 724 N.W.2d 765 (2006),
we glean that when the allegations of the complaint support
a conclusion that no insurance coverage exists, and in the
absence of any other facts which would support an inference
of coverage, an insurer has no duty to defend or indemnify an
Decisions of the Nebraska Court of Appeals
IN RE INTEREST OF ZOEY S. 371
Cite as 22 Neb. Ct. App. 371
insured. In the present action, the allegations of the complaint
support a conclusion that the damage to the home was caused
by faulty workmanship or a similar impropriety in Cizek’s
performance. According to Auto-Owners Ins. Co. v. Home
Pride Cos., supra, this does not constitute an “occurrence”
under the terms of the policy. While Cizek denied that it was
negligent, no facts were presented that would support an infer-
ence that the damage was caused by an occurrence. Therefore,
the district court erred when it determined that Columbia had
a duty to indemnify Cizek for the costs incurred in repairing
the Riekeses’ home.
[9] Having determined that there was no occurrence, there
can be no initial grant of coverage under the policy; therefore,
it is unnecessary to address the application of the “Recall”
exclusion. An appellate court is not obligated to engage in an
analysis which is not needed to adjudicate the case and contro-
versy before it. Hall v. County of Lancaster, 287 Neb. 969, 846
N.W.2d 107 (2014).
CONCLUSION
Under the facts of this case, we find that the property dam-
age was not caused by an occurrence; therefore, we reverse
the trial court’s order of summary judgment in favor of Cizek
and remand the cause with directions to enter an order grant-
ing summary judgment in favor of Columbia.
R eversed and remanded with directions.
In re I nterest of Zoey S., a child
under 18 years of age.
State of Nebraska, appellee,
v. Jesse S., appellant.
___ N.W.2d ___
Filed September 9, 2014. No. A-13-811.
1. Juvenile Courts: Judgments: Appeal and Error. Cases arising under the
Nebraska Juvenile Code are reviewed de novo on the record, and an appellate
court is required to reach a conclusion independent of the trial court’s findings.
However, when the evidence is in conflict, the appellate court will consider and