Supreme Services and Specialty Co., Inc. v. Sonny Greer, Inc.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

04-1400

SUPREME SERVICES AND SPECIALTY CO., INC.

VERSUS

SONNY GREER, INC., ET AL.

**********

APPEAL FROM THE
SIXTEENTH JUDICIAL DISTRICT COURT
PARISH OF IBERIA, NO. 96527-E
HONORABLE KEITH RAYNE JULES COMEAUX, DISTRICT JUDGE

**********

ULYSSES GENE THIBODEAUX
CHIEF JUDGE

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Court composed of Ulysses Gene Thibodeaux, Chief Judge, Jimmie C. Peters, and J.
David Painter, Judges.

REVERSED AND RENDERED.

Richard D. Chappuis, Jr.
Voorhies & Labbe
P. O. Box 3527
Lafayette, LA 70502-3527
Telephone: (337) 232-9700
COUNSEL FOR:
Defendant/Appellee - Melvin J. Oubre

David W. Groner
P. O. Box 9207
New Iberia, La 70562-9207
Telephone: (337) 364-3629
COUNSEL FOR:
Defendants/Appellants - Sonny Greer, Inc. and Bridgette Greer

James Ryan, III
James Ryan III & Assoc., LLC
201 St. Charles Avenue - Suite 2530
New Orleans, LA 70170
Telephone: (504) 599-5990
COUNSEL FOR:
Defendants/Appellees - AXA Global Risk U.S. Insurance Co.

Cynthia J. Thomas
Galloway, Johnson, Tompkins, Burr & Smith
Three Sanctuary Boulevard - Suite 301
Mandeville, LA 70471
Telephone: (985) 674-6710
COUNSEL FOR:
Defendant/Appellee - Sonny Greer, Inc. d/b/a Sonny Greer
Construction Company, Inc.

William Lee Melancon
Melancon & Associates, L.L.C.
900 South College Drive - Suite 300
Lafayette, LA 70503
Telephone: (337) 233-8600
COUNSEL FOR:
Plaintiff/Appellee - Supreme Services and Specialty Co., Inc.

THIBODEAUX, Chief Judge.

Supreme Services and Specialty Co., Inc. sued Sonny Greer, Inc. to

recover for defective work on a construction project. Greer third-partied its

commercial general liability provider, AXA Global Risk U.S. Insurance Co., which

promptly filed a motion for summary judgment and asserted a lack of coverage.

Greer filed its own motion for summary judgment and contended that its insurance

policy provided coverage. The trial court determined that the insurance policy did not

cover the damages resulting from the alleged defective work-product of the contractor

and its subcontractors.

We reverse the judgments of the trial court and render. The

subcontractor exception to the work-product exclusion of the insurance contract

renders the exclusion inapplicable. Further, the commercial general liability policy

provides coverage under its “products-completed operations hazard” provision.

With regard to the motion to strike filed in this court, we decline to strike

the appellee brief of the insurer, but we will disregard any references and arguments

pertaining to the unpublished decision discussed in and attached to the insurer’s

appellee brief.

I.

ISSUES

We must decide whether the policy of insurance at issue herein provides

coverage for the work-product damages claimed by the plaintiff.

II.

FACTS AND PROCEDURAL HISTORY

Supreme Services and Specialty Company, Inc. (Supreme) contracted

with Sonny Greer, Inc., d/b/a Sonny Greer Construction Company, Inc. (Greer) in

December 1996, for the construction of a commercial building on a lot owned by

Supreme. Several subcontractors were involved in the construction project, and in

delivering and pouring the concrete for the slab of the building and for the parking

lot. Supreme complained of cracks in the concrete slab and parking lot soon after the

concrete was poured. Greer cut out a section of the cracked concrete slab and poured

a new slab in that section. Supreme continued to complain of cracks in the concrete

and drew up a warranty agreement, which Greer and its agents signed.

According to Greer, Supreme continued to complain about the cracks,

and Greer made several additional but unsuccessful attempts to satisfy Supreme. The

cracks continued to worsen. After completion of the construction project, Supreme

filed suit alleging breach of contract and breach of the warranty agreement. Greer

filed an answer and a third party demand against its insurer, AXA Global Risk U.S.

Insurance Company (AXA), pursuant to a commercial general liability (CGL) policy

issued to Greer.

AXA filed a motion for summary judgment alleging that the policy

specifically excluded coverage for damages arising out of Greer’s work-product.

Greer reconvened against AXA seeking a summary judgment declaration that the

AXA policy provided coverage for the claims made by Supreme against Greer. The

trial court granted AXA’s motion for summary judgment and denied Greer’s motion

for summary judgment. Greer filed this appeal. Greer also filed a motion to strike

the appellee brief of AXA wherein AXA attached and argued an unpublished opinion.

While several decisions have been previously rendered in this case by

another panel of this court,1 the only issues now before this panel are the trial court’s

1
In December of 2004, Supreme also appealed the trial court’s ruling in favor of AXA. AXA
filed a motion to dismiss the appeal alleging that Supreme had never added AXA as a defendant in
the main demand and therefore had no standing to appeal the ruling in favor of AXA.
By Judgment dated January 19, 2005, a panel of this court dismissed the appeal of Supreme.
Supreme filed an application for rehearing, alleging that it was error to grant AXA’s motion to

2

rulings on the motions for summary judgment and our decision on Greer’s motion to

strike the appellee brief of AXA. For the reasons set forth below, we reverse the trial

court’s judgments on the summary judgment issues. Additionally, while we decline

to strike the appellee brief of AXA, we will disregard any references and arguments

pertaining to the unpublished opinion.

III.

LAW AND DISCUSSION

Standard of Review

Appellate courts review grants of summary judgment de novo, using the

same criteria that govern the trial court’s consideration of whether summary judgment

is appropriate, that is, whether there is a genuine issue of material fact and whether

the mover is entitled to judgment as a matter of law. Ocean Energy, Inc. v.

Plaquemines Parish Gov’t, 04-66 (La. 7/6/04), 880 So.2d 1.

Motion to Strike

Greer contends that AXA has violated Rule 2-16.3 of the Uniform Rules

of the Courts of Appeal by arguing and attaching as an exhibit the unpublished

decision in Lafayette Consolidated Government v. Taylor Lumber & Treating, Inc.,

01-1069 (La.App. 3 Cir. 6/19/02). Greer alleges that AXA states that the case is

attached for informational purposes only and then proceeds to argue the legal theories

and conclusions in an attempt to persuade this panel to use the logic and reasoning

contained therein. Accordingly, Greer seeks to have AXA’s appellee brief stricken

dismiss Supreme’s appeal where Supreme had not had an opportunity to file its opposition to the
motion to dismiss.
On May 18, 2005, the panel granted the rehearing and considered the opposition filed by
Supreme.
By Judgment dated November 16, 2005, the panel again dismissed the appeal filed by
Supreme, finding that Supreme did not sue AXA and therefore had no standing to appeal the
summary judgment granted in favor of AXA.

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or, in the alternative, requests that we strike the portions of the brief which use the

logic set forth in the unpublished decision. The pertinent text of the Rules provide:

2-16.3. Publication and Citation

C. Opinions and dispositions marked “Not Designated
for Publication” shall not be cited, quoted, or referred to by
any counsel, or in any argument, brief, or other materials
presented to any court, except in continuing or related
litigation. Opinions marked “Not Designated for
Publication” shall be filed in the clerk’s office as public
records.

2-12.13. Non-conforming Briefs; Sanctions

Briefs not in compliance with these Rules may be
stricken in whole or in part by the court, and the delinquent
party or counsel of record may be ordered to file a new or
amended brief.

Pursuant to subpart (C) of Rule 2-16.3 above, unpublished opinions

and/or writ grants with orders should not be cited, quoted, or referred to, and

therefore will not be considered by this court. See Uniform Rules—Courts of Appeal,

Rule 2-16.3; and see State v. Williams, 02-1030 (La. 10/15/02), 830 So.2d 984.

However, sanctions are within our discretion pursuant to Rule 2-12.13, and we

decline to strike the appellee brief of AXA. We have made it a point not to read the

decision complained of, Lafayette Consolidated Government v. Taylor Lumber &

Treating, Inc., and shall not refer to it in any way. We will also disregard any

references or arguments pertaining to the decision in the brief filed by the third party

defendant, AXA.

Rulings of the Trial Court and Language in the AXA Policy

In its reasons for judgment in favor of AXA, the trial court stated as
follows:
The issue before the court is whether the “work
product” exclusions in the CGL policy exclude coverage to
Sonny Greer, Inc. The pertinent exclusion in the policy
reads as follows: Property damage to . . [.] (6) that
particular part of any property that must be restored,
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repaired or replaced because “your work” was incorrectly
performed on it. 19. “Your work” means: a. work or
operations performed by you or on your behalf; and b.
Material, parts or equipment furnished in connection with
such work or operations.

Upon review, the court concludes that the language
of the policy exclusion is clear and unambiguous. A clear
reading of the policy can give no other interpretation but
that should the plaintiff prevail against the defendant
because of faulty workmanship this particular exclusion
does exclude the particular work that was incorrectly
performed by Sonny Greer on this piece of property. The
court does not agree with the opposition argument which
asserts that Paragraph L under said subsection “Damage to
your Work” creates an ambiguity. The court does not find
such ambiguity.

We disagree. Based upon our de novo review of the record in this case,

we reverse the judgments of the trial court.

More specifically, the AXA policy provides in pertinent part as follows:

SECTION I - COVERAGES

COVERAGE A. BODILY INJURY AND PROPERTY
DAMAGE LIABILITY

1. Insuring Agreement.

a. We will pay those sums that the insured
becomes legally obligated to pay as damages
because of “bodily injury” or “property
damage” to which this insurance applies.

....

b. This insurance applies to “bodily injury” and
“property damage” only if:

(1) The “bodily injury” or “property
damage” is caused by an “occurrence”
that takes place in the “coverage
territory;” and

(2) The “bodily injury” or “property
damage” occurs during the policy
period.

....
5

2. Exclusions.

This insurance does not apply to:

....

j. Damage to Property

“Property damage” to:

(1) Property you own, rent or occupy;

....

(5) That particular part of real property
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 operations;
or

(6) That particular part of any property
that must be restored, repaired or
replaced because “your work” was
incorrectly performed on it.

....

Paragraph (6) of this exclusion does
not apply to “property damage”
included in the “products-completed
operations hazard.”
(Emphasis added.)

k. Damage to Your Product

“Property damage” to “your product”
arising out of it or any part of it.

l. Damage to Your Work

“Property damage” to “your work”
arising out of it or any part of it and
included in the “products-completed
operations hazard.”

This exclusion does not apply if the
damaged work or the work out of
which the damage arises was

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performed on your behalf by a
subcontractor.
(Emphasis added.)

SECTION V – DEFINITIONS

....

14. [“Products-completed operations hazard”]

a. “Products-completed operations
hazard” includes all “bodily injury”
and “property damage” occurring away
from premises you own or rent and
arising out of “your product” or “your
work” except:

(1) Products that are still in your
physical possession; or

(2) Work that has not yet been
completed or abandoned.

b. “Your work” will be deemed
completed at the earliest of the
following times:

(1) When all of the work called for in
your contract has been completed.

(2) When all of the work to be done at
the site has been completed if your
contract calls for work at more than
one site.

(3) When that part of the work done at
a job site has been put to its intended
use by any person or organization other
than another contractor or
subcontractor working on the same
project.

Work that may need service, maintenance,
correction, repair or replacement, but which is
otherwise complete, will be treated as
completed.

c. This hazard does not include “bodily
injury” or “property damage” arising
out of:

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(1) The transportation of property . . . .

(2) The existence of tools . . . .

(3) Products or operations for which
the classification in this Coverage Part
or in our manual of rules includes
products or completed operations.

15. “Property damage” means:

a. Physical injury to tangible property,
including all resulting loss of use of
that property. All such loss of use shall
be deemed to occur at the time of the
physical injury that caused it; or

b. Loss of use of tangible property that is
not physically injured. All such loss of
use shall be deemed to occur at the
time of the “occurrence[”] that caused
it.

....

17. “Your product” means:

a. Any goods or products, other than real
property, manufactured, sold,
distributed or disposed of by:

(1) You;

(2) Others trading under your name; or

(3) A person or organization whose
business or assets you have acquired;
and

b. Containers (other than vehicles),
materials, parts or equipment furnished
in connection with such goods or
products.

“Your product” includes:

a. Warranties or representations made at
any time with respect to the fitness,
quality, durability, performance or use
of “your product;” and

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b. The providing of or failure to provide
warnings or instructions.

....

19. “Your work” means:

a. Work or operations performed by you
or on your behalf; and

b. Materials, parts or equipment furnished
in connection with such work or
operations.

“Your work” includes:

a. Warranties or representations made at
any time with respect to the fitness,
quality, durability, performance or use
of “your work;” and

b. The providing of or failure to provide
warnings or instructions.

Subcontractor Exception to Work-Product Exclusion

AXA asserts that the above Exclusions in Section I – Coverages, at 2 j,

k, and l apply, and that the policy does not cover the work-product of Greer and his

subcontractors. AXA relies heavily on Vintage Contracting, L.L.C. v. Dixie Building

Material Company, Inc., 03-422 (La.App. 5 Cir. 9/16/03), 858 So.2d 22, which held

that almost identical exclusions prohibited coverage. As a threshold matter, we note

that Vintage has only persuasive potential rather than precedential value as we are not

obliged to follow jurisprudence of other appellate circuits. Moreover, as argued at

the hearing on the motions for summary judgment, the Vintage court did not address

the second paragraph of part “l” even though it appears in the opinion. The second

paragraph of part “l” states that the work-product exclusion does not apply to work

done by subcontractors on behalf of the insured. Therefore, it constitutes an

exception to the work-product exclusion, and it creates a conflict with part 2 j(5),

9

which purports to exclude coverage for the work-product of subcontractors as well

as the insured.

In Iberia Parish School Board v. Sandifer & Son Const. Company, Inc.,

1998-319 (La.App. 3 Cir. 10/28/98), 721 So.2d 1021, a panel of this court reversed

summary judgment in favor of the insurer where the policy at issue contained

identical language as the AXA policy herein. There, in a landowner’s action against

a general contractor to recover for a leaking roof, the contractor third-partied the

subcontractor and his CGL provider. The subcontractor policyholder had also

subcontracted the actual installation of the roof. Therefore, one of the primary issues

in Iberia Parish School Board was the exception to the exclusion for subcontractor

work-product in part “l.” After quoting the language in part “l” in full, the panel

articulated as follows:

The plain language of this exception to the exclusion
renders the exclusion inapplicable when “the damaged
work or the work out of which the damage arises was
performed on your behalf by a subcontractor.”

Id. at 1025.

After finding that the work-product exclusions did not apply on the

summary judgment facts of that case, the Iberia Parish School Board panel

referenced generally other exclusions argued by the insurer and stated that “if there

are other exclusions that are arguably applicable, they would raise questions of

ambiguity because there would be conflict between them and the work-product

exclusion exception found in SECTION I--COVERAGE A(2)(l ).” Id. at 1026.

Accordingly, we find that the subcontractor exception to the work-

product exclusion in part “l” herein renders the exclusion in the AXA policy

inapplicable. To the extent that other language conflicts with the exception, the

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ambiguity created by the conflict also leads to a finding that the work-product of each

subcontractor of Greer is covered under the policy.

Insured’s Work-Product and Products-Completed Operations Hazard

Greer argues that the policy also provides coverage under the “products-

completed operations hazard” provision of the policy. We agree. Greer asserts that

the policy’s declaration page has a line item under “LIMITS OF INSURANCE,”

entitled “Products-Completed Operations Aggregate Limit,” that Greer paid a

proportionate part of the premium for this coverage, and that the coverage applies in

this case. We note that the work-product exclusion contained in Section I, part 2 j(6)

contains another exception to the work-product exclusion. In a final paragraph it

states that the exclusion from coverage in paragraph (6), for property that must be

restored, repaired or replaced due to the incorrectly performed work of the insured,

does not apply to “property damage” included in the “products-completed

operations hazard.”

Accordingly, under Section V–Definitions, No. 14, “products-completed

operations hazard” means property damage occurring away from the insured’s

premises and arising out of the insured’s completed work-product. Greer argues that

the policy language interpreted in light of the line item contained in the declaration

page should be construed to provide coverage. In support of his position, Greer cites

Mike Hooks, Inc. v. JACO Services, Inc., 95-1485 (La.App. 3 Cir. 5/8/96), 674 So.2d

1125, writ denied, 96-1924 (La. 11/1/96), 681 So.2d 1264.

In the Mike Hooks case, the CGL policy at issue again contained almost

identical language as that found in the AXA policy herein. There, a dredging

company brought suit against an engine repair contractor and its CGL insurer to

recover for the contractor’s alleged failure to properly perform the work. The trial

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court granted summary judgment in favor of the insurer based upon work-product

exclusions. This court reversed, holding that the policy was ambiguous as to the

coverage for products completed operations and therefore had to be construed in

favor of coverage. After quoting identical language from the Hooks policy that we

cite above in the AXA policy issued to Greer, the panel in Mike Hooks stated as

follows:

The policy at issue provides, under the “Limits of
Insurance” section on the declarations page, that
Acceptance will pay those sums that JACO becomes
legally obligated to pay as damages resulting from bodily
injury or property damage with a $1,000,000.00 general
aggregate limit (other than products-completed operations),
as well as $1,000,000.00 products-completed operations
aggregate limit. It also provides for a $1,000,000.00 limit
for each occurrence.

Acceptance contends that exclusion 2(l) precludes
coverage for the harm complained of by Hooks. Exclusion
2(l) provides as follows:

2. Exclusions.

This insurance does not apply to:

******

1. Damage to Your Work

“Property damage” to “your work” arising out
of it or any part of it and included in the
“products completed operation hazard[.]”

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.

....

The policy at issue here, similar to that found in
Kidd [v. Logan M. Killen, Inc., 93 1322 (La.App. 1 Cir.
5/20/94), 640 So.2d 616], clearly provides $1,000.000.00
[sic] in coverage for products-completed operations and
then attempts to exclude coverage for this in exclusion
2(1). Aside from the entry in the definition section of the
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policy for products-completed operations hazard, the only
reference made to products-completed operations coverage
is in exclusion 2(l). We are unable to find an unambiguous
provision in this policy addressing what the
products-completed operations coverage, as found on the
declarations page, encompasses. As such, we find that the
portions of the policy covering products-completed
operations to be ambiguous. Therefore, we are constrained
to interpret these terms in a light favoring coverage.

Id. at 1126-28.

In Iberia Parish School Board, 721 So.2d 1021, the policy at issue also

contained identical language with regard to “products-completed operations hazard”

coverage and with regard to accidents and occurrences, as the AXA policy herein.

The panel determined that the leaks in the roof, due to defective workmanship and

materials, constituted an “accident” and therefore an “occurrence.” With regard to

identical exclusions and “products-completed operations hazard” coverage, the panel

articulated as follows:

[In] Kidd v. Logan M. Killen, Inc., 93-1322, p. 10
(La.App. 1 Cir. 5/20/94); 640 So.2d 616, 622, the first
circuit recognized that numerous cases hold that “a liability
policy with a work product exclusionary clause does not
provide coverage to the insured for repair or replacement
of the contractor’s own defective work or defective
product.” The first circuit then recognized that none of the
policies in those cases contained coverage for
products-completed operations. Since the court was unable
to determine from the incomplete record which provisions
in the policy before it addressed the products-completed
operations coverage, it reversed the granting of the motion
for summary judgment.

Id. at 1024. Finding that the policies at issue contained products-completed

operations coverage, that a premium was paid for products-completed operations

coverage, and that there were limits provided for it, the panel stated:

Products-completed operations coverage has been
explained generally as follows:

Any insured who manufactured, sold, handled
or distributed goods or products was exposed
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to the products hazard, which is [sic] risk of
liability arising out of products after they
have left the hands of the insured. The
completed operations hazard refers to the
insured’s exposure to liability arising out of
completed work performed away from his
premises.

[William S.] McKenzie and [H. Alston] Johnson, [III,
Insurance Law and Practice § 183, p. 379, in 15 Louisiana
Civil Law Treatise (1996)].

Id. at 1024-25.

In Iberia Parish School Board, after citing language identical to that in

the AXA policy defining “products completed operations hazard,” the panel found

that the work-product exclusions applied to products-completed operations coverage

but did not apply where there were exceptions to the exclusions. The court focused

on exclusions “k” and “l” and particularly on the subcontractor exception in exclusion

“l,” which was primarily at issue in that case. However, there were references to

other exclusions and the ambiguity that would be created if the other exclusions

conflicted with the exception to the exclusion for subcontractor work-product.

In the present case, we find that there is again an exception to a work-

product exclusion in 2 j(6), which states as follows:

This insurance does not apply to:

(6) That particular part of any property that
must be restored, repaired or replaced because
“your work” was incorrectly performed on it.

....

Paragraph (6) of this exclusion does not
apply to “property damage” included in the
products-completed operations hazard[.]”

(Emphasis added.)

We find that the exception renders the exclusion void as to the work-

product of the insured with regard to property damage included in the “products-
14

completed operations hazard” provision. We further find that Greer paid a premium

for and purchased “products-completed operations hazard” coverage, that the section

relating to “products-completed operations hazard” coverage is ambiguous as found

in Mike Hooks, and that the AXA policy therefore must be interpreted in favor of

coverage for the work-product of the insured, Sonny Greer, Inc.

IV.

CONCLUSION

Based upon the foregoing, we decline to strike the appellee brief of

AXA, but disregard any references or arguments pertaining to the unpublished

decision cited by AXA and attached as an exhibit. We further reverse the judgments

of the trial court granting summary judgment to AXA and denying summary

judgment to Sonny Greer, Inc. We find that, under the facts of this case, the AXA

policy at issue herein provides coverage for the work-product of the insured, Sonny

Greer, Inc., and provides coverage for the work-product of the subcontractors of

Sonny Greer, Inc. as well.

REVERSED AND RENDERED.

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