Property damage caused by a subcontractor's sheet piling was found to be within the policy's operation classification, which included "grading of land." Canal Indemn. Co. v. Margaretville of NSM, Inc., No. 13-13541 (11th Cir. April 15, 2014). [Decision here].
Canal issued a CGL policy to the insured. The policy had a classification limitation provision:
This insurance applies to bodily injury, property damage, personal injury, advertising injury or medical expense arising out of only those operations that are classified and shown on the Commercial General Liability Coverage Declarations . . .
The policy's Declarations, in turn, referred to the operation classification as" "Grading of Land - INCL. Borrowing, Filling or Back Filling." The policy did not define these terms.
The insured was hired to do excavation work for the foundation of a building. While doing the excavation, the insured noticed the digging was creating a risk of harm to the adjacent property. Therefore, the insured installed sheet piling along the property line to prevent the excavation work from undermining the foundation of the adjacent property. The sheet piles that were placed in the ground were 19 to 20 feet in length. The sheet piling was installed using an excavator with a vibrating pile driver.
The adjacent property owner sued the insured for negligence in installing sheet pilings, which caused damage to its property. The complaint also alleged the insured breached its duty not to engage in activities which would cause damage to the adjacent property.
The district court determined there was no coverage. The Eleventh Circuit, however, found the policy ambiguous as to whether sheet piling arose out of the operations of grading, filling, back filling, and borrowing such that sheet piling must be covered.
The Dictionary of Architecture and Construction defined grading as "the action of excavating or filling or a combination thereof." The district court focused on its interpretation that grading was a "horizontal" activity, while sheet piling was a "vertical" activity, but the definition of grading included excavating, which was a vertical activity. Further, the underlying allegation that the insured breached its duty "not to engage in activities which would cause damage to Plaintiffs' property," could also arise out of grading, which the policy covered.
