Case: 14-10906   Date Filed: 04/07/2015   Page: 1 of 11


                                                       [DO NOT PUBLISH]

           IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT
                      ________________________

                           No. 14-10906
                     ________________________

              D.C. Docket No. 2:11-cv-00215-MEF-TFM

PENNSYLVANIA NATIONAL MUTUAL CASUALTY INSURANCE
COMPANY,

                                       Plaintiff-Counter Defendant-Appellee,

                                versus

HOWARD SNIDER,
PAM SNIDER,

                                              Defendants-Counter Defendants-
                                                            Cross Claimants-
                                               Counter Claimants-Appellants,

JEFF BEALE HOMES,
JEFF BEALE,

                                               Defendants-Counter Claimants-
                                                           Cross Defendants.

                     ________________________

              Appeal from the United States District Court
                  for the Middle District of Alabama
                    ________________________

                            (April 7, 2015)
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Before MARCUS, JILL PRYOR and EBEL, * Circuit Judges.

PER CURIAM:

       Dr. and Mrs. Howard Snider appeal the district court’s declaratory judgment

that insurer Pennsylvania National Mutual Casualty Insurance Company (“Penn

National”) has no duty to indemnify its insured, Jeff Beale, with respect to the

Sniders’ $700,000 judgment against him. After careful review and oral argument,

we affirm.

                                               I.

       The Sniders hired Beale, through his sole proprietorship Jeff Beale Homes

(collectively “Beale”), to build their home in Pike Road, Alabama. According to

the Sniders, Beale agreed to complete the construction in six to eight months for a

total price of $650,000, but the work did not proceed as the parties had planned.

After more than a year of work, the project was over budget and incomplete.

Shortly thereafter, Beale walked off the job and did not return, forcing the Sniders

to hire a new builder to complete the construction. When the Sniders finally

moved into the home, they discovered problems with Beale’s work.




       *
         Honorable David M. Ebel, United States Circuit Judge for the Tenth Circuit, sitting by
designation.
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      The Sniders sued Beale in Alabama state court, asserting breach of contract

and breach of implied warranty claims. The Sniders pursued two theories of

recovery in the state court action. First, they claimed that Beale breached their oral

contract because, although the Sniders paid him the entire amount he was owed, he

failed to complete the construction on their home. Second, they claimed that Beale

breached their oral contract and an implied warranty under Alabama law because

the work he did perform was not done properly. Beale had a commercial general

liability policy (the “Policy”) through Penn National, and he informed the insurer

of the Sniders’ claims. Penn National provided Beale with a defense under a

reservation of rights.

      The Sniders’ claims against Beale proceeded to trial in state court. At trial,

the Sniders sought damages for the following injuries: (1) mental anguish, (2)

emotional distress, (3) the cost of completing the work that Beale left unfinished

but for which he was paid, (4) the cost of repairing Beale’s faulty work, (5) the

cost of repairing property damage caused by water intrusion resulting from Beale’s

faulty work, and (6) diminution in value of the home. The Sniders sought a total of

$1.25 million in damages for the cost of completing the work Beale failed to

perform, repairing Beale’s faulty work and conditions created by Beale’s faulty




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work, and the diminution in value of their home, 1 as well as unspecified damages

for their mental anguish and emotional distress.

       Ultimately, the jury awarded the Sniders $700,000. The jury’s verdict form

follows:




The verdict form reflects that the jury found in the Sniders’ favor on both their

breach of contract and implied warranty claims, 2 but the form does not indicate

what portion of the award was attributable to either claim. Although the jury

indicated that it was awarding damages for mental anguish and emotional distress,

the verdict form did not identify the amount of damages awarded for these injuries,

for which cause of action they were awarded, or whether the damages award

included compensation for any of the Sniders’ other injuries.



       1
          The Sniders sought $450,000 for the cost of completing work and repairs and $800,000
for the diminution in value.
       2
         The verdict form also indicates that the jury found in favor of the Sniders on their
“claims” for emotional distress and mental anguish. Emotional distress and mental anguish are
not causes of action but rather types of injury.
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      While the Sniders’ lawsuit against Beale was still pending, Penn National

filed this action seeking a declaration that it had no duty indemnify Beale under the

Policy with respect to the Sniders’ claims. The Sniders brought a counterclaim

against Penn National and a crossclaim against Beale to recover the $700,000

judgment. Penn National and the Sniders each moved for summary judgment. The

district court granted Penn National’s motion, ruling that Penn National had no

duty to indemnify, and denied the Sniders’ motion. This is the Sniders’ appeal.

                                         II.

      We review a district court’s grant of summary judgment de novo, “viewing

all the evidence, and drawing all reasonable factual inferences, in favor of the

nonmoving party.” Stephens v. Mid-Continent Cas. Co., 

, 1321

(11th Cir. 2014). The interpretation of a provision in an insurance contract “is a

question of law, also reviewed de novo.” 

is appropriate “if

the movant shows that there is no genuine dispute as to any material fact and the

movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The

parties agree that in this diversity action Alabama law governs our interpretation of

the Policy.

                                         III.

      The terms of the Policy set forth the scope of Penn National’s duty to

indemnify Beale. The Policy provides that Penn National will pay only “those


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sums that the insured becomes legally obligated to pay as damages because of

‘bodily injury’ or ‘property damage’ to which this insurance applies.” Policy at

§ I.A.1.a. 3 The Policy further limits coverage to those instances where the “‘bodily

injury’ or ‘property damage’ is caused by an ‘occurrence’ . . . .” 

I.A.1.b.

       Penn National argues that there is no coverage in this case because the

Sniders’ bodily injuries and property damage did not arise out of an occurrence.

The Policy defines an “occurrence” as “an accident, including continuous or

repeated exposure to substantially the same general harmful conditions.” 

V.13. The Supreme Court of Alabama has interpreted “accident” in the insurance

context to mean “[a]n unintended and unforeseen injurious occurrence; something

that does not occur in the usual course of events or that could [not] be reasonably

anticipated.” Hartford Cas. Ins. Co. v. Merchs. & Farmers Bank, 

,

1011 (Ala. 2005) (internal quotation marks omitted). Put differently, an accident

refers to “something unforeseen, unexpected, or unusual.” 

marks omitted). When the insured “at all times act[s] in a deliberate and

purposeful manner,” his conduct does not constitute an accident or occurrence. 

(internal quotation marks omitted).

       As the parties seeking coverage under the Policy, the Sniders bear the

burden of proving that coverage exists. See Ala. Hosp. Ass’n Trust v. Mut.

       3
        Under an endorsement to the Policy, the definition of bodily injury includes mental
anguish. See Extended Coverage Endorsement General Liability § II.
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Assurance Soc’y of Ala., 

, 1216 (Ala. 1989). Thus, they must show

that an accident caused the injuries for which they were awarded damages. At

trial, the Sniders advanced two independent theories of liability against Beale: (1)

he breached the contract by abandoning the job, and (2) he breached an implied

warranty in the contract because he performed faulty work. 4 We now consider

whether Beale’s conduct under each theory was intentional or accidental to

determine whether injuries arising out of the conduct are covered under the Policy.

       The Policy plainly does not cover damages arising out of Beale abandoning

the job. The Sniders admit that in the state court trial they argued Beale breached

the contract by walking off the job and sought damages for this breach. Beale’s

abandonment of the job was a deliberate, purposeful act, not an accident, and

damages arising out of this conduct are not covered under the Policy. See Shane

Traylor Cabinetmaker, L.L.C. v. Am. Res. Ins. Co., 

, 170 (Ala.

2013) (holding that there was no occurrence when the claim arose not from the

contractor’s defective work but from, among other things, the contractor

abandoning the job).

       This alone is sufficient to conclude that there is no coverage under the

Policy. We cannot discern from the verdict form the amount of damages the jury


       4
           Under Alabama law, there is an implied warranty that a contractor will “‘use reasonable
skill in fulfilling [his] contractual obligations.’” Blackmon v. Powell, 

, 5 (Ala. 2013)
(quoting Turner v. Westhampton Court, L.L.C., 

, 93 (Ala. 2004)).
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awarded the Sniders for their injuries caused by Beale’s abandonment of the job, as

opposed to injuries caused by Beale’s faulty work. 5 Alabama courts have held that

when (1) the injured party in the underlying action pursues two theories of liability,

(2) under one of the theories there is no coverage under the policy, and (3) the jury

returned a general verdict, then it is “impossible” to establish coverage under the

policy. Ala. Hosp. Ass’n 

.

       The Sniders try to circumvent this problem by arguing that the verdict form

shows that the jury awarded them damages only for emotional distress and mental

anguish caused by Beale’s faulty work. 6 But the verdict form does not support the

Sniders’ argument. First, the verdict form indicates that the jury found in the

Sniders’ favor on the breach of contract claim, which would include the Sniders’

allegations that Beale breached the contract by walking off the job. Second, the

verdict form does not show that all of the damages the jury awarded were for

mental anguish or emotional distress. The verdict form shows, at most, that some




       5
          The parties could have used a special verdict form to answer such questions, but they
did not. See Ala. Hosp. Ass’n 

. During deliberations, the jury asked the
trial court whether it was necessary to allocate its award among the claims. Neither party
requested that the court instruct the jury to provide such an itemization.
       6
         Under Alabama law, a party can recover an award for mental anguish on a breach of
contract claim where “the contractual duty or obligation is so coupled with matters of mental
concern or solicitude, or with the feelings of the party to whom the duty is owed, that a breach of
that duty will necessarily or reasonably result in mental anguish or suffering.” B & M Homes,
Inc. v. Hogan, 

, 671 (Ala. 1979) (internal quotation marks omitted). Alabama law
has recognized that “contracts dealing with residences” fall into this special category. 

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unidentified portion of the $700,000 verdict was to compensate the Sniders for

their emotional distress and mental anguish.

       In their briefs, the Sniders attempt to show that some of their injuries that

were the result of Beale’s faulty work were caused by accidental, not intentional,

conduct. Under Alabama law, when a contractor performs faulty work, generally

his conduct is not considered an accident. See Owners Ins. Co. v. Jim Carr

Homebuilder, LLC, No. 1120764,              So. 3d , 

, at *6 (Ala.

Mar. 28, 2014). When the contractor’s faulty work creates a condition that in turn

damages property, however, the conduct is considered an accident under Alabama

law. See 

underlying trial, the Sniders sought damages for repairing

Beale’s faulty work, 7 which the Policy does not cover, and damages for repairing

conditions created by Beale’s faulty work, 8 which the Policy does cover. Even

accepting that the Policy does cover damages arising from conditions created by

faulty work, the Sniders still have not carried their burden of proof. They offer no

compelling explanation of how they can establish coverage given that they pursued

two different theories of liability at trial in the underlying action, the Policy does

not cover damages arising out of Beale abandoning the job, and the jury returned a



       7
          For example, the Sniders sought damages for the cost of replacing a floor that Beale did
not install properly.
       8
         For example, the Sniders sought damages for the cost of repairing water damage inside
the house that resulted from a condition created by Beale’s faulty work.
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general verdict that did not identify the amount of damages being awarded under

each theory.

      The Sniders alternatively argue that there is coverage under the provision of

the Policy covering products-completed operation hazards (“PCOH”). They

contend that this provision of the Policy covers claims for bodily injury and

property damage even when the injury was not the result of an accident and thus

not caused by an occurrence. The Policy’s declaration page shows a $2 million

“Products-Completed Operations Aggregate Limit.” This limit “is the most [Penn

National] will pay under Coverage A for damages because of ‘bodily injury’ and

‘property damage’ included in the ‘products-completed operations hazard.’”

Policy at § III.3. The PCOH covers “all ‘bodily injury’ and ‘property damage’ . . .

arising out of ‘your product’ or ‘your work’” when the insured has completed its

work or abandoned the job. 

V.16.a. The Supreme Court of Alabama has

explained that the purpose of PCOH coverage is to insure bodily injury or property

damage that occurs after the insured has completed work. Jim Carr, 

, at *7-*8.

      The PCOH provision does not cover the Sniders’ injuries. The Policy

explains that the “Products-Completed Operations Aggregate Limit,” which

provides coverage for bodily injury or property damage included in the PCOH, is

“the most [Penn National] will pay under Coverage A.” Policy at § III.3.


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Coverage A, in turn, limits coverage to bodily injury and property damage “caused

by an ‘occurrence.’” 

I.A.1.b. The Sniders point out that the Alabama

Supreme Court held in Jim Carr that there was coverage under the PCOH. But, in

Jim Carr, the homeowners’ injuries were caused by an occurrence. See 

, at *8. Nothing in Jim Carr supports the Sniders’ argument that the

PCOH covers injuries not caused by an occurrence. Because the Sniders cannot

show that the jury’s entire award was for damages caused by an occurrence, they

cannot show that there is coverage under the PCOH.

                                              IV.

       The district court correctly concluded that the Sniders cannot prove coverage

under the Policy. 9 Accordingly, we affirm the judgment of the district court.

       AFFIRMED.




       9
        Penn National raises a number of other arguments that there is no coverage, but, having
concluded the Sniders’ claim is not covered, we need not address them.
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