The court found that the insured was entitled to a defense against claims for its alleged willful removal of coal from third parties' land. Liberty Mut. Fire Ins. Co. v. Bizzack Constr, 2017 U.S. Dist. LEXIS 70285 (W.D. Va. April 27, 2017).
The Virginia Department of Transportation (VDOT) contracted with Bizzack to perform work in widening U.S. Route 460. VDOT notified coal owners that it had been "necessary to remove certain coal" from their land during the construction of Route 460. Some of the coal owners sued Bizzack, seeking compensation for lost coal. They alleged Bizzack had illegally removed and sold their coal, and "damaged the remaining coal in place on the property."
Bizzack sought coverage from Liberty Mutual. Liberty Mutual filed suit seeking a declaration that it had no duty to defend or indemnify Bizzack. Cross-motions for summary judgment were filed. Liberty Mutual argued: (1) there was no "occurrence"; (2) exclusion j (5) applied; and (3) the "expected or intended injury" exclusion applied.
Liberty Mutual argued there was no "occurrence" because the underlying complaints alleged that Bizzack actions were "purposeful, intentional, wanton, willful, deliberate and malicious." Liberty Mutual asserted that because the underlying suits alleged that Bizzack acted intentionally, and because one cannot intend an accident, the underlying suits failed to allege an accident.
The court disagreed. The suits also alleged in the alternative that Bizzack acted negligently. At trial, the underlying plaintiffs could prevail on their negligence claim without adducing any evidence of intent. Therefore, an "occurrence" was alleged in the underlying suits.
Exclusion j (5) of the policy excluded from coverage any "property damage" to "[t]hat particular part of real property on which [the insured] . . . is performing operations, if the 'property damage' arises out of those operations." Liberty Mutual argued that the j (5) exclusion applied. The alleged damage took place during Bizzack's performance of excavation work on the project and therefore, any damage was to a "particular part of real property" on which Bizzack was "performing operation" and the alleged damage "arose out of such operations." The underlying complaints, however, could allege damage to property outside the bounds of the Route 460 project, which was not the real property on which Bizzack was performing operations for the project.
Therefore, exclusion j (5) was ambiguous. The meaning of the phrase "real property on which [the insured]. . . [is] performing operations" was subject to more than one reasonable interpretation. Bizzak suggested that the provision encompassed only real property on which Bizzack was contracted to perform operations - that is, only real properrty falling within the bounds of the project. However, the provision could also be reasonably interpreted to encompass any real property on which Bizzack actually operated, regardless of whether that property fell within or outside the bounds of the project. The ambiguous provision would be construed against Liberty Mutual.
Accordingly, there was a genuine dispute of material fact as to whether exclusion j (5) applied: it was impossible to tell from the underlying complaints whether the damaged coal was within or outside the bounds of the project.
The "expected or intended" exclusion did not apply for the same reason that the court found there was an "occurrence." The underlying complaints alleged negligence. Further, the exclusion stated that the damage must have been "expected or intended from the standpoint of the insured." This meant that the exclusion only applied if Bizzack specifically and subjectively expected or intended for its actions to damage the underlying plaintiffs' coal. By alleging that Bizzack was negligent, the underlying suits necessarily failed to allege that Bizzack actually and subjectively expected or intended for its actions to damage the coal.
Therefore, Liberty Mutual had a duty to defend and its cross-motion for summary judgment was denied.
