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Oxner v. Montgomery8/1/2001
Maryland Casualty Company and Ohio Casualty Insurance Company applied to this court for supervisory review of a trial court ruling denying their motions for summary judgment on the issue of insurance coverage to the defendants, Leroy Alvin Montgomery and Janet Sojka Montgomery. This matter arises from the sale of an allegedly defective house to the plaintiffs, Jim Henry Oxner and Deborah Cole Oxner. Certiorari was granted by this court and the matter was docketed for decision. For the following reasons, we reverse.
FACTS
In late 1994 and early 1995, the Montgomerys built a house in Shreveport, Louisiana. They were the general contractors on the project and had commercial/comprehensive general liability (CGL) insurance with Maryland Casualty Company (Maryland) from June 20, 1994 until June 20, 1995, and with Ohio Casualty Insurance Company (Ohio) from June 14, 1995 and thereafter. After completion, the Montgomerys moved into the house and lived there until they sold it to the Oxners on February 24, 1997. Prior to the sale, the Oxners noted numerous items about the house that required repair, including more than 100 cracked tiles in the den, day room and kitchen. The Oxners contended that the Montgomerys agreed to repair these items. Following the sale, the Oxners noted numerous other problems including a cracked slab, cracks in the sheetrock walls, leaking windows, patio doors that did not fit, an unstable foundation, a cracked kitchen cabinet door and loose siding. The plaintiffs contended that these problems were covered by the New Home Warranty Act of La. R.S. 9:3141, et seq., and that the Montgomerys failed to remedy the problems after being given notice.
The Oxners filed suit against the Montgomerys on February 19, 1998, claiming that the old problems were not fixed and that the defendants failed to address the new problems. The Oxners contended that these problems were caused by an unstable foundation. They alleged that the Montgomerys failed to consult an engineer and failed to adequately test and stabilize the soil prior to pouring the slab. They sought to recover the cost of repairs, attorney fees and court costs, or in the alternative, rescission of the sale or a reduction in the price. Their petition was subsequently supplemented and amended to add Maryland and Ohio. They asserted that Maryland had in effect a policy of CGL insurance to Janet Montgomery d/b/a Montgomery and Associates during the construction of the house and Ohio issued a CGL insurance policy to the Montgomerys from June 14, 1995 and thereafter.
On August 7, 2000, Maryland filed a motion for summary and declaratory judgment, denying coverage. The company claimed that there was no "occurrence" as defined under the terms of the policy, no property damage during the policy period and, that if there was, because the Montgomerys lived in the house prior to selling it, the "premises alienated" exclusion bars coverage of the plaintiffs' claims.
On September 21, 2000, Ohio filed a motion for summary judgment, noting that it provided a policy of CGL insurance to the defendants from June 14, 1995 and thereafter. The company asserts that there is also a "premises alienated" clause in their contract of insurance that excludes coverage of the plaintiffs' claims.
The Oxners filed an opposition to the motions for summary judgment. In support of their opposition, the plaintiffs submitted the report of an engineer stating that the house had foundation problems caused by its construction on highly plastic clay soil that was not stabilized. The plaintiffs asserted that a construction defect is an occurrence for purposes of insurance coverage. Because the faulty foundation was cons
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