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Cowart v. Nautilus Insurance Co.

United States District Court, S.D. Georgia, Savannah Division

January 17, 2019

DELMA COWART, Plaintiff,



         This declaratory judgment matter is before the Court on Defendant Nautilus Insurance Company's Motion for Summary Judgment. (Doc. 18.) The Motion has been heavily briefed and is ripe for review: Plaintiff Delma Cowart and Defendant Audrey Manes each filed a Response, (docs. 26, 27); Defendant Nautilus Insurance Company (“Nautilus”) filed a Reply, (doc. 28); Plaintiff filed a Surreply, (doc. 29); and Nautilus filed a Response to the Surreply, (doc. 34). The parties' pleadings, and indeed this entire case, center on an insurance policy between Defendant Nautilus, the insurer, and Plaintiff Cowart, the insured. The parties dispute whether the policy requires Nautilus to provide Cowart a defense to a state court construction lawsuit brought against Cowart by Defendant Manes. For the reasons set forth below, the Court finds that Nautilus has no duty to defend, much less indemnify, Cowart as to Manes's claims. Thus, the Court GRANTS Nautilus's Motion for Summary Judgment. (Doc. 18.) Additionally, the Court ORDERS Plaintiff Cowart to show cause, in writing, within fourteen (14) days from the date of this Order why the Court should not dismiss all claims against Defendant Manes in this action.


         The following facts are not in dispute:

         I. The Project

         In 2015, Defendant Manes hired Plaintiff Cowart to construct a pool, hot tub, and deck in her backyard. (Doc. 26-1, p. 4.) Despite being aware that Chatham County required certain permits to be obtained for this kind of work and that the county would likely issue a “stop work” order if it discovered such work was being done without proper permits, Cowart neglected to obtain any permits before proceeding with construction. (Id.) He also neglected to request any of the required inspections by the county of the work as it progressed. (Id. at p. 14.) On August 31, 2015, after Cowart had excavated a hole for the pool, installed a steel support, poured concrete for the pool shell, poured cement steps into the pool, and installed some tiles in the pool, the Chatham County Building Safety Department issued a “Stop Work Order” due to the lack of permitting for the project and delivered the order to the work site. (Id. at p. 7.) At this point in time, Manes had tendered $40, 000 to Cowart for the work, and the parties anticipated that she would tender an additional $20, 000 to $50, 000 by the time the project was completed. (Id. at pp. 5, 7.) The project was about 80% complete. (Id. at p. 10.)

         According to her own testimony, around the same time that the order was issued, Manes became concerned with the quality of Cowart's work on the pool. (Id. at p. 8.) Manes told Cowart she did not want him to do any further work on the project. (Id. at pp. 9-10.) She had an attorney send Cowart a letter demanding that he return the funds that she had tendered to him because, she claimed, the work he had partially performed had not been done in a “safe, good and workmanlike manner and [was] defective, ” and because he had failed to obtain a permit prior to beginning the work. (Id. at p. 11.) The letter outlined the specific types of defects, in addition to the lack of permitting, that Manes contended existed with regard to the pool. (Id. at p. 12.) These defects included insufficient thickness and composition of the shell of the pool, improper bonding of the pool, insufficient drainage for the pool, improperly installed lighting in the pool, and crooked and unsafe steps. (Doc. 26-1, p. 12.)

         II. Relevant Terms of the Insurance Policy

         At the time he performed the pool construction work for Defendant Manes, Plaintiff Cowart, d/b/a Structures Unlimited, was insured by Nautilus policy number NN524632 (hereinafter the “Policy”). The Insuring Agreement of the Policy provides, in relevant part, as follows:

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. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury” or “property damage” to which this insurance does not apply.

(Doc. 18-5, p. 12.)

         The Policy defines “property damage” as:

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.

(Id. at pp. 25-26.) The Policy defines “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” (Id. at p. 25.)

         The Policy also contains exclusions that Nautilus seeks to rely upon in its Motion for Summary Judgment. Specifically, pursuant to exclusion (j), there is no coverage for “property damage” to:

. . . .
(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.”

(Id. at pp. 15-16.)

         The Policy defines “your work” as, among other things, “[w]ork or operations performed by [the insured] or on [the insured's] behalf.” (Id. at p. 26). The “products-completed operations hazard” includes “‘property damage' occurring away from premises [the insured] own[s] or rent[s] and arising out of . . . ‘[the insured's] work' except . . . [w]ork that has not yet been completed or abandoned.” (Id. at p. 25.)

         III. Pre-Litigation Demands

         Cowart forwarded Manes's demand letter to Defendant Nautilus. (Doc. 26-1, p. 22.) Nautilus thereafter sent Manes's counsel a letter stating that it had “concluded its investigation” and had determined there was no coverage for Manes's claim. (Id.; doc. 21-2, pp. 70-71.) Manes later sent Nautilus a letter reiterating her position that Cowart's failure to obtain permits and inspections required by the county constituted improper and defective work for which she was entitled to relief. (Doc. 21-1, pp. 50-51; doc. 26-1, p. 22.) She also advised Nautilus that “the County [would] not allow further work to be completed on the pool or the pool to be used without a certification from a licensed engineer confirming that the reinforcement and other components of the pool [had] been tested and are sufficient and properly installed.” (Doc. 21-1, p. 51.) She noted that the engineer she had retained to evaluate the pool was “unwilling to ...

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