MacMillin Co. v. Aetna Casualty & Surety Co.

BROCK, C.J. The defendants, the Aetna Casualty and Surety Company and the Standard Fire Insurance Company (collectively [190] Aetna), appeal from a decree of the Superior Court (Barry, J.) requiring Aetna to provide coverage and pay the costs of defense to the plaintiff, The MacMillin Company, Inc. (MacMillin). On appeal, the defendants argue, inter alia, that the trial court erred in finding coverage because MacMillin’s business activities at issue in the underlying action fall within a professional services exclusion in its policies. Because we conclude that the trial court’s ruling on this issue was in error, we need not consider questions raised by Aetna’s reliance on other exclusions in its policies. The incident giving rise to this petition occurred in 1985-86 when MacMillin constructed a production facility for the Filtrine Manufacturing Company and J.P.C.D., Inc. (Filtrine). Following completion, the floor of the facility cracked, causing damage to equipment, necessitating repair of the floor and resulting in loss of use of the facility. MacMillin brought an action against Filtrine seeking to recover the sum of $36,924 remaining unpaid under the contract. Filtrine counterclaimed, alleging breach of contractual duty by MacMillin as architect, engineer and contractor; inadequate design and specification; and improper construction. During trial, the lawsuit was settled by MacMillin’s agreeing to pay Filtrine $250,000. At all times relevant to these events, MacMillin held two Aetna Comprehensive General Liability Insurance policies and two Aetna Excess Indemnity policies. However, prior to trial and settlement of the actions, Aetna denied plaintiff’s requests for defense and coverage of Filtrine’s claims, relying upon several exclusions in the policy, including the following professional services provision: “(B) The insurance afforded with respect to liability assumed under an incidental contract is subject to the following exclusions: (2) if the insured is an architect, engineer or surveyor, to bodily injury or property damage arising out of the rendering of or the failure to render professional services by such insured, including (a) the preparation or approval of maps, drawings, opinions, reports, surveys, change orders, designs or specifications, and (b) supervisory, inspection or engineering services.” (Emphasis added.) Aetna argues that Filtrine’s claims are not covered under the policies because MacMillin provided professional [191] services as architeet/engineer for the construction of the facility. MacMillin responds that it is not an engineering/architectural firm and that these services were incidental to its role as “general contractor.” “[F]inal interpretation of the language in an insurance policy is a question of law ... [for] this court to decide.” Curtis v. Guaranty Trust Life Ins. Co., 132 N.H. 337, 340, 566 A.2d 176, 178 (1989). “[W]e construe the language of an insurance policy as would a reasonable person in the position of the insured based on a more than casual reading of the policy as a whole.” Haley v. Allstate Ins. Co., 129 N.H. 512, 514, 529 A.2d 394, 396 (1987). In reviewing the record, we note that the contract between MacMillin and Filtrine specifically provided that the contractor (MacMillin) would serve as architect/ engineer. The record is replete with testimony that MacMillin did not enter into any sub-contract for design and engineering services, but rather provided these professional services itself, in addition to the work it undertook as general contractor. Upon a thorough reading of the insurance policy and the record on appeal, we rule that the express language of Part 1(B)(2) excludes from coverage Filtrine’s claims against MacMillin. Accordingly, we hold that the trial court erred in ruling that the professional services exclusion does not apply- We note also that the trial court erroneously found that Part 1(A) of the Broad Form Comprehensive General Liability Endorsement and. Exclusion (B)(2) are ambiguous. Part 1(A) reads: “I. CONTRACTUAL LIABILITY COVERAGE (A) The definition of incidental contract is extended to include any oral or written contract or agreement relating to the conduct of the named insured’s business.” The court reasoned that because the architectural and design work were incidental to the construction contract, Part 1(A) covering incidental contracts and Exclusion B(2) for professional services were mutually contradictory and therefore ambiguous. “When interpreting an insurance contract, we will determine its meaning ‘based upon the meaning that would be attached to it by a reasonable person.’” Spaulding v. Concord Gen. Mut. Ins. Co., 122 N.H. 515, 516, 446 A.2d 1172, 1173 (1982) (quoting Exeter Banking Co. v. N.H. Ins. Co., 121 N.H. 1083, 1086, 438 A.2d 310, 313 (1981)). “[P]oliey terms can create ambiguity as to coverage only when the parties may reasonably differ about their interpretation.” City of Manchester v. General [192] Reinsurance Corp., 127 N.H. 806, 809, 508 A.2d 1063, 1065 (1986) (citation omitted). “We will not force language to create an ambiguity in order to resolve it against the insurer, when it is clear from contextual analysis that no coverage was intended.” Id. We read the policy with this standard in mind, and “determine what is reasonable by considering [the] policy as a whole and on the basis of a more than casual reading, evaluating any claimed ambiguity by reference to the context in which the relevant language occurs.” Id. (citations omitted). In the case of exclusions from coverage, “the insurer must clearly state the exclusion in conjunction with whatever sections it is intended to modify.” Commercial Union Assurance Cos. V. Gollan, 118 N.H. 744, 749, 394 A.2d 839, 843 (1978). We conclude that the professional services exclusion is expressly written to modify Part 1(A). Although MacMillin is not an architectural or engineering company, its contract with Filtrine expressly provided for those services. Therefore, this contract clearly falls within Exclusion B(2). We fail to see how the two provisions are in any way ambiguous or could lead MacMillin to reasonably conclude that it would be covered for its contract with Filtrine providing for architect/engineer services. Accordingly, we hold that the trial court erred in finding an ambiguity. Reversed; judgment for the defendants. JOHNSON, J., concurred specially in support of the majority opinion; Thayer, J., concurred; Horton and Batchelder, JJ., dissented.