Columbia Mutual Insurance Company, Respondent, v. Cliff F. Schauf, d/b/a Cliff's Home Repair, Appellant, Frank M. Amberson, Inc., Appellant, Leonard and Elizabeth Sodaro, Defendant.

This slip opinion is subject to revision and may not reflect the final opinion adopted by the Court. Opinion Missouri Court of Appeals Western District Case Style: Columbia Mutual Insurance Company, Respondent, v. Cliff F. Schauf, d/b/a Cliff's Home Repair, Appellant, Frank M. Amberson, Inc., Appellant, Leonard and Elizabeth Sodaro, Defendant. Case Number: No. 53781 Handdown Date: 09/02/1997 Appeal From: Circuit Court of Clay County, Hon. Larry D. Harmon Counsel for Appellant: Russell Tluscik, Michael A. Childs and Jerry W. Brumfield Counsel for Respondent: William M. Modrcin Opinion Summary: Cliff F. Schauf appeals the trial court's grant of summary judgment in favor of Columbia Mutual Insurance Company. The issue presented is whether the exclusion clause within Mr. Schauf's liability insurance policy precludes Columbia's liability for damage resulting to a third party's structure as a result of certain of Mr. Schauf's business activities. The exclusion clause excluded from coverage damage caused by Mr. Schauf's or his employees' "performing operations." AFFIRMED. Division IV holds: (1) Where Mr. Schauf stated that "clean up" was a critical part of the job and was included as part of his bid for completing a job, damage caused from "clean up" was excluded from coverage under the "performing operations" exclusion clause. (2) Even though Mr. Schauf was cleaning his equipment in only two rooms of the house when the entire property was damaged, he was "performing operations" throughout the entire house and was properly denied recovery for damages caused to the entire house. (3) Where Mr. Schauf did not argue a specific ambiguity or contradiction within the contract but only that a reasonable insured would expect liability coverage for this type of occurrence, the contract was not ambiguous, and he was not entitled to recover. Citation: Opinion Author: Robert C. Ulrich, Chief Judge, Presiding Judge

Opinion Vote: AFFIRMED. Spinden and Hanna, JJ., concur. Opinion: The issue presented is whether the exclusion clause within a business owner's liability insurance policy precludes the insurer's liability for damage resulting to a third party's structure as a result of certain of insured's business activities. The exclusion clause within the insurance policy excluded from coverage damage caused by the insured's business activity, and "clean up" of equipment used by the insured to perform his business activity is covered by the exclusion clause. The insurer, therefore, was not obligated to pay for the damage incurred due to the insured's "clean-up" procedures. The summary judgment in favor of the insurer is affirmed. Mr. Cliff Schauf d/b/a Cliff's Home Repair sought recovery from his insurance carrier, Columbia Mutual Insurance Company, for damages caused by Mr. Schauf to a house where he was working as a painting subcontractor. The damages occurred when Mr. Schauf's pump generator used by him to paint walls caught fire while he was cleaning his painting equipment inside the house. The fire caused extensive damage throughout the house and required replacement of sheetrock, insulation, subflooring, molding, windows, a sliding door, and textured ceilings. All of the costs were paid by the contractor, Frank Amberson, and his insurer, who are jointly pursuing the instant action as a subrogation claim against Mr. Schauf. Columbia Mutual Insurance Company (Columbia) filed a summary judgment motion on the ground that an exclusion clause in Mr. Schauf's insurance policy precluded his recovery. Section B(1)(k)(5) of Mr. Schauf's policy excludes coverage for "property damage" to: that part of real property on which you or any contractor or subcontractor working directly or indirectly on your behalf is performing operations, if the "property damage" arises out of those operations. Mr. Schauf also filed a motion for summary judgment. The trial court granted Columbia summary judgment and denied Mr. Schauf's motion. This appeal followed. Mr. Schauf contends that genuine issues exist regarding whether he was "performing operations" within the meaning of the exclusion clause at the time the fire occurred; whether the policy excluded coverage for all of the damage caused; and whether the policy's language was ambiguous. Appellate review of summary judgment is de novo. ITT Commercial Fin. Corp. v. Mid-America Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). The record is reviewed in the light most favorable to the party against whom judgment was entered, according that party all reasonable inferences that may be drawn from the record. Id.

Summary judgment is upheld on appeal if the movant is entitled to judgment as a matter of law and no genuine issues of material fact exist. Id. at 377. Fact assertions contained in affidavits or otherwise that support a party's motion for summary judgment are taken as true unless contradicted by the non-moving party's response to the summary judgment motion. Id. at 376. A defending party may establish a right to judgment as a matter of law by showing any one of the following: (1) facts that negate any one of the elements of the claimant's cause of action; (2) the non-movant, after an adequate period of discovery, has not and will not be able to produce evidence sufficient to allow the trier of fact to find the existence of any of the claimant's elements; or (3) there is no genuine dispute as to the existence of each of the facts necessary to support the movant's properly pleaded affirmative defense. Id. at 381. Once the movant has established a right to judgment as a matter of law, the non-movant must show that one or more of the material facts asserted by the movant not to be in dispute is, in fact, genuinely disputed. Id. The non-moving party may not rest upon mere allegations and denials of the pleadings, but must use affidavits, depositions, answers to interrogatories, or admissions on file to demonstrate the existence of a genuine issue for trial. Id.; Reeves v. Kessler, 921 S.W.2d 16, 19 (Mo. App. 1996). The rules for the interpretation of insurance contracts are well established: [W]here insurance policies are unambiguous, they will be enforced as written absent a statute or public policy requiring coverage.... If the language is ambiguous, it will be construed against the insurer.... and ambiguity exists when there is duplicity, indistinctness, or uncertainty in the meaning of the words used in the contract. Peters v. Employers Mut. Cas. Co., 853 S.W.2d 300, 302 (Mo. banc 1993). Insurance contracts are to be given a reasonable construction and interpreted so as to afford coverage rather than defeat coverage. Nixon v. Life Investors Ins. Co. of America, 675 S.W.2d 676, 679 (Mo. App. 1984). Policy provisions designed to restrict, limit, or impose exceptions or exemptions on insurance coverage will be strictly construed against the insurer. Universal Underwriters Ins. Co. v. Dean Johnson Ford, Inc., 905 S.W.2d 529, 533 (Mo. App. 1995). Unless an insurance contract is so clear in its meaning that as a matter of law it precludes a plaintiff's recovery, a motion for summary judgment based on the contract should be denied. Rice by Rice v. Fire Ins. Exchange, 897 S.W.2d 635, 637 (Mo. App. 1995). When interpreting an insurance policy, the court does not have authority to alter or rewrite the policy and cannot create ambiguity where none exists. Killian v. State Farm Fire & Cas. Co., 903 S.W.2d 215, 218 (Mo. App. 1995). Language of an insurance policy is ambiguous when it reasonably and fairly is open to different

constructions. Standard Artificial Limb, Inc. v Allianz Ins. Co., 895 S.W.2d 205, 209 (Mo. App. 1995). I. Mr. Schauf argues that the exclusion clause at issue did not apply because his actions at the time of the fire could not be classified as "performing operations." Instead, Mr. Schauf alleges that he was merely cleaning his painting equipment when he switched on the paint sprayer near flammable liquid resulting in a fire. Although no Missouri cases are directly on point, the Fifth Circuit case of Advance Elec., Inc. v. U.S. Fidelity & Guar. Co., 818 F.2d 378 (5th Cir. 1987), is nearly identical to the one presented and is instructive. A contractor, insured under a policy containing an exclusion clause similar to the one present in this case, was hired to rebuild an electric motor. This required the insured to heat varnish on the motor coils under a tarp; allow the motor to cool; remove the tarp; and then replace the motor housing. Id. In the cooling phase, however, when none of the insured's employees were present, the tarp ignited and caused extensive damage. Id. The insured argued that the damage had not resulted from the work of any of its employees, and, therefore, the exclusion clause did not prevent coverage. Id. The court, nevertheless, held that the "cooling phase" was an essential part of the insured's "operations" and fell within the exclusion provision. Id. Contrary to Mr. Schauf's interpretation, the language of the policy's exclusion clause intimates a much broader definition. "Performing operations" does not refer exclusively to the physical act for which the insured was contracted but also acts related to it. Mr. Schauf, himself, unequivocally stated that cleaning the painting equipment was a critical part of the job, one that had to be done immediately after the equipment was used. He acknowledged that he always cleans his equipment inside the house where he is working and that he includes cleaning as part of his bid for completing the job. By Mr. Schauf's own statement, he and his crew were performing work at the time the fire occurred. The phrase "performing operations," therefore encompasses cleaning equipment used in performing the job and invokes the exclusion clause. Point I is denied. II. Mr. Schauf next argues that even if the exclusion clause is applicable, it should apply only to damages incurred in the portion of the house in which he was actually working. Because Mr. Schauf was working on two rooms within the house at the time of the fire, he argues that he was only "performing operations" in these rooms, and, thus, the exclusion clause does not apply to damages caused by the fire to the remainder of the house. Columbia Mutual cites the New York decision of William Crawford, Inc. v. Traveler's Ins. Co., 838 F.

Supp. 157 (S.D.N.Y. 1993), aff'd by, 23 F.3d 663 (2nd Cir. 1994), in support of its position. The New York court's analysis of the similar case is helpful. In Crawford, a general contractor sought coverage for damages caused to an apartment it was renovating. Id. at 158. The apartment was damaged when a fan used by the contractor for drying plaster ignited. Id. The insurer denied liability based on an exclusion clause nearly identical to the one at issue here.(FN1) Id. The court in Crawford interpreted the exclusion to deny coverage for any damage sustained throughout the entire apartment and not solely to the area where the work was being performed at the time of the accident. Id. at 159. Other jurisdictions considering this issue have reached a result similar to that of Crawford. See e.g. Continental Graphic Servs., Inc. v. Continental Cas. Co., 681 F.2d 743 (11th Cir. 1982)(entire printing press excluded from coverage and not just the defective gear that caused the damage.); Utility Maintenance Contractors, Inc. v. West American Ins. Co., 19 Kan.App.2d 229, 866 P.2d 1093 (Kan. App. 1994)(holding that the entire area that equipment had to traverse to access the clog site was included within the "real property" exclusion); Goldsberry Operating Co., Inc. v. Cassity, Inc., 367 So.2d 133 (La. App. 1979)(the entire portion of the well that was traversed by the explosive gun was included within the property excluded and not just where the gun was supposed to detonate); Jet Line Servs., Inc. v. Amer. Employers Ins. Co., 404 Mass. 706, 537 N.E.2d 107 (Mass. 1989)(holding "that particular part...upon which operations are being performed" referred to entire tank which the insured had been retained to clean not merely bottom tank which it was cleaning at the moment of the explosion); Vinsant Elec. Contractors v. Aetna Cas. & Sur. Co., 530 S.W.2d 76 (Tenn. 1975)(the entire electrical switchboard constituted "that particular part" of the property upon which operations are being performed and were therefore excluded, and not just the portion upon which the electrician was actually working). Mr. Schauf contracted to paint the entire house and not just the two rooms where he had been working. Even though he was working in only two rooms of the house when the fire occurred that damaged the rooms and other parts of the house, he was, nevertheless, "performing operations" throughout the entire house. Mr. Schauf, therefore, is denied recovery for damages caused by the fire to any part of the house. Point II is denied. III. Lastly, Mr. Schauf argues, in the alternative, that the terms in the insurance contract are ambiguous and should be interpreted in a manner most favorable to the insured. While Missouri law gives deference to the insured in instances where the contract language can reasonably be interpreted to different constructions, "the

rule does not authorize a perversion of language, or the exercise of inventive powers for the purpose of creating an ambiguity where none exists." Giokaris v. Kincaid, 331 S.W.2d 633 (Mo. 1960). Mr. Schauf contends that "any reasonable insured would expect liability coverage under a liability policy for this occurrence." No specific ambiguity or contradiction within the contract that supports an alternative interpretation is presented, however. Furthermore, the "reasonable expectations" doctrine, which works to protect the interests of insurance policy beneficiaries, is not applicable where the insurance policy in question is unambiguous. Killian v. State Farm Fire & Cas. Co., 903 S.W.2d 215, 218 (Mo. App. 1995). Mr. Schauf is, therefore, not entitled to recover as the insurance policy is not ambiguous. Columbia established a right to judgment as a matter of law based on the applicability of the exclusion clause in the insurance policy. Point III is denied. CONCLUSION Mr. Schauf's response to Columbia's summary judgment motion failed to present substantial and essential facts to contradict Columbia Mutual's assertion that the exclusion clause denied Mr. Schauf from recovering. Mr. Schauf was unable to deny that he was working at the time of the fire; neither was he able to offer specific support for his claim that the contract was ambiguous as to the terms of coverage. Consequently, no genuine issue of material fact is presented. The trial court did not err in granting Columbia's motion for summary judgment. The judgment is affirmed. Footnotes: FN1. Crawford's insurance contract excluded from coverage: "property damage" to ... (5) That particular part of real prop-erty damage on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the "property damage" arises out of those opera-tions. Crawford, 838 F. Supp at 158. Separate Opinion: None This slip opinion is subject to revision and may not reflect the final opinion adopted by the Court.