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ISLE OF PALMS PEST CONTROL v. MONTICELLO INS.12/12/1994
Pursuant to its general liability policy with Monticello Insurance Company (Monticello), Isle of Palms Pest Control Company, Inc. (Isle of Palms) brought a declaratory judgment action seeking to require Monticello to provide liability
I.
In connection with the sale of a home, Isle of Palms issued a termite inspection letter on January 23, 1990. The letter stated that there was no visible evidence of infestation in the home. The purchaser of the home (Purchaser) subsequently brought an action against Isle of Palms, claiming there was in fact infestation at the time of the report. In his complaint, the Purchaser alleged that Isle of Palms conducted its inspection in a negligent manner. The Purchaser also included allegations of fraud, breach of contract, unfair trade practices, conspiracy, negligent misrepresentation, and breach of warranty on the part of Isle of Palms in connection with Isle of Palms' failure to properly prepare the report.
Isle of Palms brought a declaratory judgment action, arguing that under the policy Monticello was obligated to defend and indemnify Isle of Palms in connection with the action by the Purchaser. Monticello contended that the policy did not provide coverage for the claim made against Isle of Palms by the Purchaser.
In its order, the court found that Isle of Palms "has proven the material allegations of its Complaint by the greater weight or the preponderance of the evidence and there is liability coverage provided in this instance." The court found that "there has been property damage that has been sustained in accordance with the general definitions of the . . . policy, thus affording [Isle of Palms] coverage in this instance."
II.
On appeal, Monticello contends there is no coverage and no duty to defend because Isle of Palms' negligence in issuing the termite letter does not constitute an occurrence covered under the policy. We disagree.
The policy at issue provides that Monticello will pay all damages Isle of Palms is legally obligated to pay as damages because of bodily injury or property damage caused by an occurrence. The policy defines an occurrence as "an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured."
Questions of coverage and the duty of a liability insurance company to defend a claim brought against its insured are determined by the allegations of the third party's complaint. C.D. Walters Constr. Co., Inc. v. Fireman's Ins. Co. of Newark, N.J., 281 S.C. 593, 316 S.E.2d 709 (Ct.App. 1984). If the underlying complaint creates a possibility of coverage under an insurance policy, the insurer is obligated to defend. Gordon-Gallup Realtors, Inc. v. Cincinnati Ins. Co., 274 S.C. 468, 265 S.E.2d 38 (1980). Here, the underlying complaint alleges that Isle of Palms negligently performed the inspection, because the property in fact was infested with termites. The complaint further alleges that, as a result of Isle of Palms' negligence, the Purchaser suffered damages, including costs of "repair and efforts to stop the damage." The complaint thus clearly alleges an accident (the negligent inspection) which caused property damage (termite damage). While the complaint also includes allegations of intentional conduct which would not be covered by the policy, the inclusion of some non-covered claims does not abrogate an insurer's duty to defend when a complaint raises claims covered by the policy. Accordingly, the trial court properly held that Monticello owes Isle of Palms a duty to defend against the Purchaser's claims.
Other jurisdictions have li
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