DAVIS, Justice:
The petitioners herein, Lisbeth L. Cherrington (hereinafter "Ms. Cherrington");
The case sub judice originated in July 2004 when Ms. Cherrington entered into a "cost plus" contract with Pinnacle for the construction of a home in Greenbrier County, West Virginia. In addition to the completion of the home, the contract also included landscaping and interior furnishings. Mr. Mamone, who allegedly was working on his own behalf
During the construction of the home, disputes arose between Ms. Cherrington and Pinnacle when Ms. Cherrington believed that the contract price included all of the landscaping charges but she was asked to provide additional funds therefor. Additionally, Ms. Cherrington felt that she had been overcharged for the interior furnishings provided under the contract.
In 2006, Ms. Cherrington filed the instant lawsuit against Pinnacle and Old White Interiors, LLC, and, in 2007, Ms. Cherrington amended the complaint to add Mr. Mamone as a defendant. Both the original and first amended complaints contain substantially the same allegations that "Pinnacle was negligent in the construction of said home in the following matters: (a) Altering the design; (b) Negligently pouring and finishing the concrete floor; (c) Finishing and painting of the house; and (d) Placing and securing the foundation." Ms. Cherrington also averred that Pinnacle had breached its fiduciary duty to her by not securing materials and furnishings for the project within the contemplated contract price. She further claimed that she had sustained damages as a result of Pinnacle's "misrepresentations ... [and] negligent acts ... in that her home's fair market value has been and is substantially diminished; plaintiff paid excess moneys to Pinnacle above the amount actually owed; and plaintiff has been subjected to emotional distress and has otherwise been damaged." Ms. Cherrington also claimed that she had been "wrongfully and falsely overcharged for furnishings" and that "[t]he defendants' conduct
During the period of the home's contract negotiation and construction, both Pinnacle and Mr. Mamone had in effect policies of insurance from Erie. Pinnacle had a policy of commercial general liability ("CGL") insurance, that was effective from January 1, 2004, through January 1, 2005. Mr. Mamone had a policy of homeowners insurance with Erie, effective from January 14, 2004, through January 14, 2005, and a personal catastrophe ("umbrella") policy of insurance that was effective from April 19, 2004, through April 19, 2005. Following the filing of Ms. Cherrington's lawsuit, both Pinnacle and Mr. Mamone requested Erie to provide coverage and a defense in accordance with their respective policies. Erie denied both coverage and a duty to defend under the Pinnacle and Mamone policies.
Thereafter, Pinnacle and Mr. Mamone filed a third-party complaint against Erie seeking a declaration of the coverage provided by their policies of insurance.
By order entered December 6, 2011, the circuit court granted Erie's motion for summary judgment. The circuit court determined that Ms. Cherrington had failed to state a claim for damages that would be covered by any of the policies of insurance issued to Pinnacle or Mr. Mamone. In this regard, the court found that Pinnacle's CGL policy provided coverage for "bodily injury" or "property damage" but that Ms. Cherrington's allegations of emotional distress, without physical manifestation, did not constitute a "bodily injury" under the policy's definition of that term. Likewise, the circuit court concluded that Ms. Cherrington had failed to establish covered "property damage" insofar as the damages she alleged in her complaint were economic losses for diminution in the value of her home or excess charges she was required to pay under the contract. Citing Syl. pt. 3, Aluise v. Nationwide Mut. Fire Ins. Co., 218 W.Va. 498, 625 S.E.2d 260 (2005).
The circuit court also determined that Ms. Cherrington had not established that an "occurrence" or "accident" had caused the damages she allegedly had sustained because faulty workmanship, in and of itself, or absent a separate event, is not sufficient to give rise to an "occurrence." Citing Corder v. William W. Smith Excavating Co., 210 W.Va. 110, 556 S.E.2d 77 (2001); State Bancorp, Inc. v. United States Fid. & Guar. Ins. Co., 199 W.Va. 99, 483 S.E.2d 228 (1997). Thus, the court found that even if Ms. Cherrington had sustained covered losses, there had been no "occurrence" to trigger coverage under Pinnacle's CGL insurance policy.
Additionally, the circuit court found that, assuming arguendo, Pinnacle's CGL policy provided coverage for Ms. Cherrington's claims, coverage nevertheless would be barred by the operation of the policy's exclusions. Although the parties addressed exclusions L ("Damage to your Work"), M ("Damage to Impaired Property or Property Not Physically Injured"), and N ("Recall of Products, Work or Impaired Property"), the court concluded that exclusion M would operate to preclude coverage because it applies "irrespective of the existence of subcontractors." Citing North American Precast, Inc. v. General Cas. Co. of Wisconsin, 413 Fed.Appx. 574 (4th Cir.2011) (per curiam); Groves v. Doe, 333 F.Supp.2d 568 (N.D.W.Va.2004).
The circuit court further found that, for the same reasons, coverage was not provided by Mr. Mamone's personal policies of insurance because Ms. Cherrington had not sustained a "bodily injury" or "property damage" and because no "occurrence" had caused her loss. Additionally, the circuit court determined that even if Mr. Mamone's homeowners or umbrella policies provided coverage, such coverage would be barred by the operation of the policies' business pursuits exclusion because "the subject litigation
Finally, the circuit court ruled that Erie did not have a duty to provide either Pinnacle or Mr. Mamone a defense to Ms. Cherrington's lawsuit. From these adverse rulings, Pinnacle and Mr. Mamone, joined by Ms. Cherrington, appeal to this Court.
On appeal to this Court, the Petitioners challenge the circuit court's interpretation of the applicable policies of insurance and the resulting award of summary judgment to Erie based upon this interpretation. When asked to review a circuit court's construction of a policy of insurance, we previously have held that "[d]etermination of the proper coverage of an insurance contract when the facts are not in dispute is a question of law." Syl. pt. 1, Tennant v. Smallwood, 211 W.Va. 703, 568 S.E.2d 10 (2002). Moreover, "[t]he interpretation of an insurance contract, including the question of whether the contract is ambiguous, is a legal determination that, like a lower court's grant of summary judgement [sic], shall be reviewed de novo on appeal." Syl. pt. 2, Riffe v. Home Finders Assocs., Inc., 205 W.Va. 216, 517 S.E.2d 313 (1999).
In rendering its ruling regarding the scope of the policies' coverage in this case, the circuit court awarded summary judgment to Erie. "A motion for summary judgment should be granted only when it is clear that there is no genuine issue of fact to be tried and inquiry concerning the facts is not desirable to clarify the application of the law." Syl. pt. 3, Aetna Cas. & Sur. Co. v. Federal Ins. Co. of New York, 148 W.Va. 160, 133 S.E.2d 770 (1963). As we also observed in Syllabus point 2 of Riffe, 205 W.Va. 216, 517 S.E.2d 313, "[a] circuit court's entry of summary judgment is reviewed de novo." Syl. pt. 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994).
Our review of the parties' arguments will be guided by these standards.
Before this Court, the Petitioners assign as error the circuit court's rulings that (1) there was no property damage caused by an occurrence under Pinnacle's CGL policy; (2) the CGL policy's exclusions for "your work" and "impaired property or property not physically injured" precluded coverage; and (3) Mr. Mamone's homeowners and umbrella insurance policies, which cover acts of the insured as a salesman, did not provide coverage. Furthermore, the Petitioners argue that the circuit court refused to interpret the policies consistently with the reasonable expectations of Pinnacle and Mr. Mamone.
The first policy of insurance at issue in these proceedings is the policy of CGL insurance that Erie issued to Pinnacle. In the proceedings below, the circuit concluded that the CGL policy did not provide coverage for Ms. Cherrington's claims because (1) the alleged injuries and damages were not caused
The CGL policy that Erie issued to Pinnacle defines the scope of the policy's coverage in pertinent part as follows:
(Footnotes added). The policy then defines the term "occurrence," referenced in its insuring clause, as
Noticeably absent from the policy's definitional section, however, is the term "accident," which is used in the policy's definition of "occurrence" but which is not defined by the subject policy.
We previously have addressed the same issue that has been presented for the Court's resolution in the case sub judice: is defective workmanship a covered "occurrence" under the provisions of a policy of CGL insurance? Our decision in Erie Insurance Property and Casualty Co. v. Pioneer Home Improvement, Inc., 206 W.Va. 506, 526 S.E.2d 28 (1999), began this Court's trilogy of seminal cases on this issue by concluding that a claim for faulty workmanship is not covered by a CGL policy:
Syl. pt. 2, id. Finally, in Webster County Solid Waste Authority v. Brackenrich and Associates, Inc., 217 W.Va. 304, 617 S.E.2d 851 (2005), we further expanded our prior holdings that defective workmanship is not a covered occurrence by explaining our view of the scope of a CGL policy's coverage:
Syl. pt. 3, id. See also Syl. pt. 2, McGann v. Hobbs Lumber Co., 150 W.Va. 364, 145 S.E.2d 476 (1965) ("A liability insurance policy, unlike a builder's risk policy, is designed to indemnify the insured against damage to other persons or property caused by his work or property and is not intended to cover damage to the insured's property or work completed by him.").
Despite this Court's express holdings that a CGL policy does not provide coverage for defective workmanship, we are acutely aware that, after we rendered these rulings, many other courts also considered this issue and rendered their own rulings.
As we have noted, many cases have emerged since this Court's 2001 definitive holding in Corder considering whether defective workmanship is an "occurrence" under a policy of CGL insurance. To summarize these rulings, the courts adopting the majority view have concluded that the subject CGL policy provided coverage for the defective work.
With the passage of time comes the opportunity to reflect upon the continued validity of this Court's reasoning in the face of juridical trends that call into question a former opinion's current soundness. It has been said that "[w]isdom too often never comes, and so one ought not to reject it merely because it comes late." Henslee v. Union Planters Nat'l Bank & Trust Co., 335 U.S. 595,
In order for a claim to be covered by the subject CGL policy, it must evidence "bodily injury" or "property damage" that has been caused by an "occurrence." An "occurrence," in turn, is defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." The policy at issue herein, though, does not provide a definition for "accident." We previously have considered the proper meaning to be accorded to the term "accident" when it is used, but not defined, in a policy of insurance. In the sole Syllabus point of Columbia Casualty Co. v. Westfield Insurance Co., 217 W.Va. 250, 617 S.E.2d 797 (2005), we held as follows:
Pursuant to Columbia, then, it is apparent that the circumstances giving rise to the claimed damages or injuries must not have been "deliberate, intentional, expected, desired, or foreseen" by the insured. Id. The named insured under the subject CGL policy is Pinnacle.
It goes without saying that the damages incurred by Ms. Cherrington during the construction and completion of her home, or the actions giving rise thereto, were not within the contemplation of Pinnacle when it hired the subcontractors alleged to have performed most of the defective work. Common sense dictates that had Pinnacle expected or foreseen the allegedly shoddy workmanship its subcontractors were destined to perform, Pinnacle would not have hired them in the first place. Nor can it be said that Pinnacle deliberately intended or even desired the deleterious consequences that were occasioned by its subcontractors' substandard craftsmanship. To find otherwise would suggest that Pinnacle deliberately sabotaged the very same construction project it worked so diligently to obtain at the risk of jeopardizing its professional name and business reputation in the process. We simply cannot find that the alleged damages incurred by Ms. Cherrington were "deliberate, intentional, expected, desired, or foreseen" by Pinnacle, the insured under the CGL policy at issue in this case. See Syl., Columbia, 217 W.Va. 250, 617 S.E.2d 797.
Furthermore, a finding based upon our prior case law to the effect that the defective workmanship at issue in this case is not covered by the CGL policy's insuring clause is incongruous with the policy's express language providing coverage for the acts of subcontractors. As explained in more detail in Section III.A.2.a., infra, the CGL policy's Exclusion L specifically provides coverage for work performed by subcontractors by excepting it from the "your work" exclusion:
We previously have held that "[a]n insurance policy should never be interpreted so as to create an absurd result, but instead should receive a reasonable interpretation, consistent with the intent of the parties." Syl. pt. 2, D'Annunzio v. Security-Connecticut Life Ins. Co., 186 W.Va. 39, 410 S.E.2d 275 (1991). Application of our prior holdings to find that
Finally, we find our prior proscriptions limiting the scope of the coverage afforded by CGL policies to exclude defective workmanship to be so broad in their blanket pronouncement that a policy of CGL insurance may never provide coverage for defective workmanship as to be unworkable in their practical application. In Pioneer, we stated that "CGL policies of insurance do not provide protection for poor workmanship[.]" 206 W.Va. at 511, 526 S.E.2d at 33. In Corder, we reiterated this statement by holding that "[c]ommercial general liability policies are not designed to cover poor workmanship. Poor workmanship, standing alone, does not constitute an `occurrence' under the standard policy definition of this term[.]" Syl. pt. 2, in part, 210 W.Va. 110, 556 S.E.2d 77. In Brackenrich, we again announced that "faulty workmanship claims ... are outside the risks assumed by a traditional commercial general liability policy." Syl. pt. 3, in part, 217 W.Va. 304, 617 S.E.2d 851. Although all of these cases involved claims by a property owner against a contractor, our overly-broad, perfunctory holdings in Pioneer, Corder, and Brackenrich apply with equal force to preclude a contractor, such as Pinnacle, from recovering under its CGL policy for damages resulting from the defective work of its subcontractor even though Pinnacle's policy expressly provides coverage for "damaged work ... performed ... by a subcontractor." We do not think that a holding of this Court that must be altered every time the same issue comes before us is a solid pronouncement of the law upon which future litigants may reasonably rely to guide their future conduct. See Syl. pt. 2, Walker v. Doe, 210 W.Va. 490, 558 S.E.2d 290 (2001) ("This Court will use signed opinions when new points of law are announced and those points will be articulated through syllabus points as required by our state constitution.").
For the foregoing reasons, we therefore hold that defective workmanship causing bodily injury or property damage is an "occurrence" under a policy of commercial general liability insurance. To the extent our prior pronouncements in Syllabus point 3 of Webster County Solid Waste Authority v. Brackenrich and Associates, Inc., 217 W.Va. 304, 617 S.E.2d 851 (2005); Syllabus point 2 of Corder v. William W. Smith Excavating Co., 210 W.Va. 110, 556 S.E.2d 77 (2001); Syllabus point 2 of Erie Insurance Property and Casualty Co. v. Pioneer Home Improvement, Inc., 206 W.Va. 506, 526 S.E.2d 28 (1999); and Syllabus point 2 of McGann v. Hobbs Lumber Co., 150 W.Va. 364, 145 S.E.2d 476 (1965), and their progeny are inconsistent with this opinion, they are expressly overruled. Applying this holding to the facts of the case sub judice, we conclude that the circuit court erred by concluding that there had been no "occurrence" so as to trigger coverage under Pinnacle's CGL policy. Thus, we reverse the circuit court's ruling in this regard.
However, in addition to finding that the allegedly defective workmanship complained of herein constituted an "occurrence," we must also determine whether the remainder of the policy's insuring clause has been satisfied. Pinnacle's CGL policy provides that
(Footnotes added). Therefore, we must ascertain whether Ms. Cherrington's claimed losses as a result of said "occurrence" satisfy the definition of "bodily injury" or "property damage" so as to be covered under the subject policy.
The CGL policy at issue herein defines "bodily injury" as "bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time." In her complaint, Ms. Cherrington avers that she "has been subjected to emotional distress," but she does not allege that she has suffered a "bodily injury, sickness or disease" as a result of the defective workmanship. We previously have held that "[i]n an insurance liability policy, purely mental or emotional harm that ... lacks physical manifestation does not fall within a definition of `bodily injury' which is limited to `bodily injury, sickness, or disease.'" Syl. pt. 1, in part, Smith v. Animal Urgent Care, Inc., 208 W.Va. 664, 542 S.E.2d 827 (2000). Because there is no indication that Ms. Cherrington's emotional distress has physically manifested itself, we conclude that she has not sustained a "bodily injury" to trigger coverage under Pinnacle's CGL policy.
"Property damage" is defined by the subject CGL policy as
We find that, under either of these definitions, Ms. Cherrington has demonstrated that she has sustained "property damage" as a result of the allegedly defective construction and completion of her home. As either allegedly defective work, itself, or as a direct consequence thereof, Ms. Cherrington has identified the following defects for which she seeks repair and recompense: an uneven concrete floor on the home's lower level; roof leaking that has damaged the ceiling, walls, and chimney joint; wood components that directly touch the soil; settlement that allegedly has produced a sagging support beam and numerous cracks in the home's walls and partitions; and various other items requiring repair, including systems for water diversion, roof seams, flashing, caulking, and paint. Given this extensive list of damaged items in her home resulting from the allegedly defective construction and completion work, we find that Ms. Cherrington has asserted a claim for "`property damage' ... caused by an `occurrence'" under Pinnacle's CGL policy. Therefore, we reverse the circuit court's ruling concluding that Ms. Cherrington had not presented a claim for "property damage" for which coverage would be provided under Pinnacle's CGL policy.
(Emphasis in original).
At the outset, we note that while the circuit court provided greater detail for its finding that coverage is precluded by Exclusion M, it rendered a mere summary disposition of its rulings regarding the preclusive effect of Exclusions L and N when it "conclude[d] that various exclusionary provisions would operate to preclude coverage for [Ms. Cherrington's] claims[.]" We previously have held that "[a]lthough our standard of review for summary judgment remains de novo, a circuit court's order granting summary judgment must set out factual findings sufficient to permit meaningful appellate review. Findings of fact, by necessity, include those facts which the circuit court finds relevant, determinative of the issues and undisputed." Syl. pt. 3, Fayette Cnty. Nat'l Bank v. Lilly, 199 W.Va. 349, 484 S.E.2d 232 (1997). In other words, "[f]or meaningful appellate review, ... the circuit court's order must provide clear notice to all parties and the reviewing court as to the rationale applied in granting or denying summary judgment." Lilly, 199 W.Va. at 353-54, 484 S.E.2d at 236-37. Accord Thomas ex rel. Thomas v. State Farm Auto. Ins. Co., No. 11-0750, 2012 WL 5232255, at *2 n. 5 (W.Va. Oct. 19, 2012) (noting deficiency of circuit court's order); Pruitt v. West Virginia Dep't of Pub. Safety, 222 W.Va. 290, 294-95, 664 S.E.2d 175, 179-80 (2008) (same). In the case sub judice, the circuit court's order does not adequately explain, to the parties or to this Court, its rationale for finding that Exclusions L and N also operate to preclude coverage for Ms. Cherrington's claims. Despite this dearth of information, we nevertheless are able to consider the merits of the Petitioners' assignments of error regarding these rulings because the subject policies are contained in the appendix record and resolution of this issue ultimately requires our plenary determination of a question of law. See, e.g., Syl. pt. 1, Tennant v. Smallwood, 211 W.Va. 703, 568 S.E.2d 10 (holding that resolution of coverage provided by policy of insurance constitutes a question of law); Syl. pt. 2, Riffe v. Home Finders Assocs., Inc., 205 W.Va. 216, 517 S.E.2d 313 (same). Our consideration of these rulings notwithstanding, circuit courts are reminded of their duty to prepare orders that adequately inform the parties and this Court of the reasons underlying their rulings. See generally Fayette Cnty. Nat'l Bank v. Lilly, 199 W.Va. 349, 484 S.E.2d 232.
(Emphasis in original; footnotes added). Ruling upon the applicability of this exclusion to preclude coverage for Ms. Cherrington's claims, the circuit court stated simply that "[Ms. Cherrington] and [the Petitioners] maintained that exclusion (l) was inapplicable as various work complained of was performed by subcontractors." Before this Court, the Petitioners complain that the circuit court erred by finding that this exclusion operates to preclude coverage in this case, while Erie contends that the circuit court made no definitive ruling on this point. As we have observed, though, the circuit court expressly indicated that it "conclude[d] that various exclusionary provisions would operate to preclude coverage for [Ms. Cherrington's] claims against [Pinnacle]" immediately before it quoted the language of Exclusion L.
This Court construes insurance policies according to express language set forth therein. "Language in an insurance policy should be given its plain, ordinary meaning." Syl. pt. 1, Soliva v. Shand, Morahan & Co., Inc., 176 W.Va. 430, 345 S.E.2d 33 (1986), overruled on other grounds by National Mutual Insurance Co. v. McMahon & Sons, Inc., 177 W.Va. 734, 356 S.E.2d 488 (1987), overruled on other grounds by Potesta v. United States Fidelity & Guaranty Co., 202 W.Va. 308, 504 S.E.2d 135 (1998). Accord Polan v. Travelers Ins. Co., 156 W.Va. 250, 255, 192 S.E.2d 481, 484 (1972) ("[T]he terms of an insurance policy should be understood in their plain, ordinary and popular sense, not in a strained or philosophical sense."). Thus, "[w]here the provisions of an insurance policy contract are clear and unambiguous they are not subject to judicial construction or interpretation, but full effect will be given to the plain meaning intended." Syl., Keffer v. Prudential Ins. Co. of America, 153 W.Va. 813, 172 S.E.2d 714 (1970).
We find the language in Exclusion L to be plain and conclude that, by its own terms, Exclusion L excludes coverage for the work of Pinnacle but does not operate to preclude coverage under the facts of this case for work performed by Pinnacle's subcontractors. The first paragraph of Exclusion L specifically states that the subject CGL policy does not provide coverage for the insured's own work. However, in the second paragraph of this exclusion, an exception to its application and operation applies where the work at issue has been performed by subcontractors: "This exclusion does not apply if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor." Accord Capstone Bldg. Corp. v. American Motorists Ins. Co., 308 Conn. 760, 67 A.3d 961, 983 (2013) ("When read together, the `your work' exclusion and the `subcontractor exception' eliminate coverage for property damage caused by an insured contractor's work, but restore coverage for property damage caused by a subcontractor's work."); Broadmoor Anderson v. National Union Fire Ins. Co. of Louisiana, 912 So.2d 400, 408 (La.Ct.App. 2005) ("[W]hile the `your work' exclusion would broadly exclude property damage (as opposed to `bodily injury') arising from the insured's own defective work on a construction project, an insured/general contractor which experiences the unanticipated risk of its subcontractor's defective work remains covered for that risk under the products-completed operations coverage."); K & L Homes, Inc. v. American Family Mut. Ins. Co., 829 N.W.2d 724, 732 (N.D.2013) (explaining that form CGL policy language was amended in 1986 to include Exclusion L because "[t]he insurance and policyholder communities agreed that the CGL policy should provide coverage for defective construction claims so long as the allegedly defective work had been performed by a subcontractor rather than the policyholder itself" (internal quotations and citation omitted)). Here, the parties do not dispute that the majority of the construction and completion of Ms. Cherrington's home was done at the behest of Pinnacle by its subcontractors. Because Exclusion L expressly does not apply to preclude coverage for the work of subcontractors, we find that coverage is not barred by the operation of Exclusion L. Accordingly, we reverse the circuit court's ruling on this point.
(Emphasis in original; footnotes added). Determining that this exclusion operated to bar coverage, the circuit court primarily relied upon two federal court decisions to support its ruling. Despite its citation of supporting authority, the circuit court failed to explain how, exactly, Exclusion M applies to the facts of the case sub judice. Before this Court, the Petitioners contend that the circuit court's ruling finding that Exclusion M operates to bar coverage for Ms. Cherrington's claims was erroneous. By contrast, Erie argues that the circuit court correctly found that Exclusion M applies to the facts of this case to bar coverage.
As we have observed, this Court is constrained to interpret and apply provisions in policies of insurance according to their plain language and accepted meaning. See Syl. pt. 1, Soliva, 176 W.Va. 430, 345 S.E.2d 33; Polan, 156 W.Va. at 255, 192 S.E.2d at 484; Syl. Keffer, 153 W.Va. 813, 172 S.E.2d 714. However, in doing so, we will not apply a policy's plain language to obtain illogical or incongruous results. In other words, "[a]n insurance policy should never be interpreted so as to create an absurd result, but instead should receive a reasonable interpretation, consistent with the intent of the parties." Syl. pt. 2, D'Annunzio, 186 W.Va. 39, 410 S.E.2d 275.
The plain language of Exclusion M explicitly states that it applies to preclude coverage for two reasons: (1) a shortcoming in "your product" or "your work" and (2) an issue arising from the insured's or the insured's agent's failure to perform his/her contractual obligations. With respect to this first criterion, i.e., a shortcoming in "your product" or "your work," as we noted in the foregoing section, the vast majority of the construction work performed on Ms. Cherrington's
Moreover, we find that Exclusion M does not operate to bar coverage pursuant to its second proviso: an issue arising from the insured's or the insured's agent's failure to perform his/her contractual obligations. The parties do not contend that the construction and structural damages to Ms. Cherrington's home resulted from breach of contract or failure to perform contractual obligations,
(Emphasis in original; footnotes added). In the underlying order, the circuit court did not render a specific ruling on the applicability of Exclusion N to the facts of this case. Rather, the circuit court issued a blanket decision "conclud[ing] that various exclusionary provisions would operate to preclude coverage for [Ms. Cherrington's] claims against [Pinnacle]" and quoted the referenced policy provisions, including Exclusion N. On appeal to this Court, the Petitioners contend that Exclusion N does not operate to bar coverage for Ms. Cherrington's claims because it precludes coverage for recalled products and, as such, does not apply to the facts of this case. Erie does not comment upon the applicability or effect of Exclusion N.
From the foregoing discussion, it is clear that the terms of an insurance policy should be construed consistently with "their plain, ordinary and popular sense." Polan v. Travelers Ins. Co., 156 W.Va. at 255, 192 S.E.2d at 484. In doing so, we also are bound to afford the construction that avoids "an absurd result ... [and is] consistent with the intent of the parties." Syl. pt. 2, in part, D'Annunzio v. Security-Connecticut Life Ins. Co., 186 W.Va. 39, 410 S.E.2d 275. Yet, "[w]here the policy language involved is exclusionary, it will be strictly construed against the insurer in order that the purpose of providing indemnity not be defeated." Syl. pt. 5, National Mut. Ins. Co. v. McMahon & Sons, Inc., 177 W.Va. 734, 356 S.E.2d 488.
At issue herein is Exclusion N, which is also known as the "sistership" exclusion. This exclusion originated in an attempt to limit insurers' liability for damages attributable to recalled products:
Auto-Owners Ins. Co. v. Rhodes, 385 S.C. 83, 108, 682 S.E.2d 857, 871 (Ct.App.2009) (citations omitted). Accord Fireman's Fund Ins. Co. v. Amstek Metal, LLC, No. 07 C 647, 2008 WL 4066096, at *12 (N.D.Ill. Aug. 27, 2008); Atlantic Mut. Ins. Co. v. Hillside Bottling Co., Inc., 387 N.J.Super. 224, 239, 903 A.2d 513, 522-23 (App.Div.2006). In recognition of these origins, courts typically do not apply Exclusion N to preclude coverage for mere loss of use but rather reserve this exclusion for losses occasioned by a product that has been recalled or withdrawn from the market. See, e.g., Wausau Underwriters Ins. Co. v. State Auto. Mut. Ins. Co., 557 F.Supp.2d 502, 519 (D.N.J.2008) (finding Exclusion N inapplicable because complaint did not suggest that "stone fascia was recalled from the market or voluntarily withdrawn from use"); Acuity v. City Concrete L.L.C., No. 4:06CV0415, 2006 WL 2987717, at *7 (N.D.Ohio Oct. 17, 2006) ("Ohio courts have interpreted an identical provision [to Exclusion N] to require a recall from the market to trigger this exclusion." (citations omitted)); Mid-Continent Cas. Co. v. JHP Dev., Inc., No. Civ.A.SA04CA-192-XR, 2005 WL 1123759, at *8 (W.D.Tex. Apr. 21, 2005) (observing that "exclusion n is not applicable in contractor cases" (citation omitted)); Garamendi v. Golden Eagle Ins. Co., No. A106638, 2006 WL 337599, at *18 (Cal.Ct.App. Feb. 15, 2006) ("Exclusion (n) is the product recall exclusion. It is inapplicable because it does not apply to work that has already failed. The exclusion applies to preventative recalls. There was no recall of any product at issue in the underlying action." (footnote and citations omitted)); Auto-Owners Ins. Co. v. Rhodes, 385 S.C. at 108, 682 S.E.2d at 871 (concluding that "[t]he circumstances giving rise to the Tort action, without question, did not involve a product recall; therefore, the
In the case sub judice, the circuit court has not explained its reasoning for finding that Exclusion N precludes coverage in this case. Neither has Erie spoken on this point even though it is bound to prove the facts that support the operation of an exclusion. See Syl. pt. 7, McMahon, 177 W.Va. 734, 356 S.E.2d 488 ("An insurance company seeking to avoid liability through the operation of an exclusion has the burden of proving the facts necessary to the operation of that exclusion."). Consistent with our conclusions in the preceding sections, we find that Exclusion N does not apply to bar coverage under the facts of this case.
First, as we previously observed with respect to Exclusion M, applying Exclusion N to preclude coverage for Ms. Cherrington's loss of use of her property would produce an absurd and inconsistent result with the policy's coverage provisions. See Syl. pt. 2, D'Annunzio, 186 W.Va. 39, 410 S.E.2d 275. The policy at issue in this case specifically provides coverage for the work of subcontractors. A natural consequence of damages occasioned by defective work would be loss of use of that defective structure or portion thereof. To apply this exclusion to preclude coverage for the damages occasioned by the very same work that the policy expressly covers would render such coverage illusory and would be contrary to the policy's stated intention to provide indemnity for this specific loss. See Syl. pt. 5, in part, McMahon, 177 W.Va. 734, 356 S.E.2d 488 (holding that insurance policy exclusions "will be strictly construed ... in order that the purpose of providing indemnity not be defeated"). Thus, we find that Exclusion N does not apply to preclude coverage in this case.
Moreover, the historical basis for the adoption of this exclusion and the construction afforded to it by courts considering its application further forecloses the application of Exclusion N to bar coverage. While portions of Ms. Cherrington's house have been rendered unusable or cannot be used to the same extent as they would be had they not been damaged by allegedly defective workmanship, none of the products used in the construction of the home nor the house, itself, has been recalled from the market as contemplated by the intent underlying the origins of this exclusion. See, e.g., Indian Harbor, 2010 WL 3584412, at *8; Rhodes, 385 S.C. at 108, 682 S.E.2d at 871. Therefore, we find that application of Exclusion N to the facts of the case sub judice simply does not comport with the exclusion's "plain, ordinary and popular sense." Polan, 156 W.Va. at 255, 192 S.E.2d at 484.
Finally, as noted previously, Erie has failed to supply any supporting facts upon which to base the operation of Exclusion N or to carry its burden of proving that this exclusion operates to bar coverage in this case. See Syl. pt. 7, McMahon, 177 W.Va. 734, 356 S.E.2d 488. Accordingly, we reverse that portion of the circuit court's order concluding that Exclusion N precludes coverage for Ms. Cherrington's claims.
Additionally, the parties dispute whether coverage is provided by Mr. Mamone's policies of homeowners insurance and umbrella insurance. Based upon our foregoing discussion, we similarly conclude that Ms. Cherrington
The pertinent language of Mr. Mamone's homeowners policy provides:
(Emphases in original). Mr. Mamone's homeowners policy further defines "business" as "any full-time, part-time or occasional activity engaged in as a trade, profession or occupation, including farming."
When considering the language of an insurance policy, we previously have held that "[w]here the provisions of an insurance policy contract are clear and unambiguous they are not subject to judicial construction or interpretation, but full effect will be given to the plain meaning intended." Syl., Keffer v. Prudential Ins. Co., 153 W.Va. 813, 172 S.E.2d 714. In other words, "the terms of an insurance policy should be understood in their plain, ordinary and popular sense, not in a strained or philosophical sense." Polan v. Travelers Ins. Co., 156 W.Va. at 255, 192 S.E.2d at 484. Accord Syl. pt. 1, Soliva v. Shand, Morahan & Co., Inc., 176 W.Va. 430, 345 S.E.2d 33 ("Language in an insurance policy should be given its plain, ordinary meaning."). We previously have examined the language of the "business pursuits" exclusion and found such provision clearly provides as follows: "The term `business pursuits,' when used in a clause of an insurance policy excluding from personal liability coverage injuries `arising out of business pursuits of any insured,' contemplates a continuous or regular activity engaged in by the insured for the purpose of earning a profit or a livelihood." Syl. pt. 1, Camden Fire Ins. Ass'n v. Johnson, 170 W.Va. 313, 294 S.E.2d 116 (1982). Accord Syl. pt. 5, Huggins v. Tri-County Bonding Co., 175 W.Va. 643, 337 S.E.2d 12 (1985). Applying this exclusionary
Nevertheless, the Petitioners contend that coverage is provided through operation of the "salesperson" exception. The policy language at issue in the case sub judice contains an exception to the "business pursuits" exclusion for "salespersons." This exception has been found to apply to provide coverage only where the insured is, in fact, employed as a "salesperson" at the time of the occurrence giving rise to the claim. See Killian v. Tharp, 919 S.W.2d 19, 22 (Mo.Ct.App.1996) (finding that policy language providing coverage for business pursuits of a salesperson did not apply to provide coverage where insured was not employed as a salesperson). We are not persuaded, however, by the Petitioners' arguments that Mr. Mamone was a salesperson in his dealings with Ms. Cherrington.
Unquestionably, Mr. Mamone's duties as an agent of Pinnacle included the sale of Pinnacle's contracting, development, and construction services. However, with the exception of an isolated reference in his deposition wherein Mr. Mamone states that "the salesman in me kicked in" with regard to his initial contacts with Ms. Cherrington, the record in this case does not indicate that Mr. Mamone's sales responsibilities were anything but incidental to the broader duties he performed for Pinnacle. In this regard, it is noteworthy that Mr. Mamone is identified on Pinnacle's website not as a salesperson, but as the corporation's "principal." Similarly, in the third-party complaint filed by Pinnacle and Mr. Mamone, Mr. Mamone is described as "the president and shareholder of ... The Pinnacle, Group, Inc.," not as a Pinnacle salesperson. Thus, the record does not support a finding that Mr. Mamone either was employed as a salesperson or that he was acting as a salesperson in his dealings with Ms. Cherrington; rather, the record clearly establishes that any sales work performed by Mr. Mamone was merely incidental to his primary role as the president of Pinnacle. Finally, Ms. Cherrington has not, in her suit against Mr. Mamone and Pinnacle, alleged that either party has committed sales misconduct. On the contrary, Ms. Cherrington's original and amended complaints charged Mr. Mamone and Pinnacle with negligent home construction and improper billing for the associated construction and design costs. As such, we simply cannot conclude that Mr. Mamone was a salesperson for purposes of the "salesperson" exception to the "business pursuits" exception in his policy of homeowners insurance. Accordingly, we affirm that portion of the circuit court's order finding no coverage on this basis.
The relevant portion of Mr. Mamone's umbrella insurance policy states:
(Emphasis in original). Mr. Mamone's umbrella policy additionally defines "business" as "any activity engaged in as a trade, profession or occupation, other than farming." As in the foregoing section, we also find this policy language to be plain. See Syl., Keffer v. Prudential Ins. Co., 153 W.Va. 813, 172 S.E.2d 714. See also Syl. pt. 5, Huggins v.
Unlike Mr. Mamone's homeowners policy, his umbrella policy does not contain a "salesperson" exception to the policy's "business pursuits" exclusion. It is undisputed that, under the circumstances of this case, Ms. Cherrington sued Mr. Mamone in his capacity as an agent of Pinnacle and for acts that he allegedly did or did not perform in this regard. Consequently, coverage is barred by the umbrella policy's "business pursuits" exclusion.
While Mr. Mamone's umbrella policy contains an exception to the "business pursuits" exclusion that conceivably could operate to provide coverage for Mr. Mamone's business activities, this exception does not apply to the facts of this case because the exception specifically states that it provides coverage for "
For the foregoing reasons, the December 6, 2011, order of the Circuit Court of Greenbrier County is hereby affirmed as to its findings that Mr. Mamone's policies of homeowners insurance and umbrella insurance do not provide coverage under the facts of this case. However, that portion of the circuit court's order ruling that Pinnacle's policy of CGL insurance also does not provide coverage under these facts is hereby reversed, and this case is remanded for further proceedings consistent with this opinion.
Affirmed, in part; Reversed, in part; and Remanded.
