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Drury Co. v. Missouri United Sch. Ins. Counsel

Court of Appeals of Missouri, Eastern District, Third Division

March 25, 2014

DRURY COMPANY, Respondent/Cross-Appellant,

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Appeal from the Circuit Court of Cape Girardeau County. Honorable Benjamin F. Lewis.

Stefan J. Glynias, Lawrence J. Wadsack (Co-Counsel) St. Louis, MO, for appellant.

Willard D. McCarter, Edward V. Crites (Co-Counsel), Clayton, MO, for respondent.

Angela Quigless, Judge. Mary K. Hoff, P.J., and Kurt S. Odenwald, J., Concurs.


Angela Quigless, Judge.

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Missouri United School Insurance Counsel (" MUSIC" ) appeals the judgment of the Circuit Court of Cape Girardeau County in favor of Drury Company (" Drury" ) on its claims for breach of contract and vexatious refusal to pay pursuant to sections 375.296 and 375.420.[1] Drury's claims arose out of its work as a subcontractor on a construction project for Jackson R-2 School District (the " School District" ) and MUSIC's denial of Drury's claim under an insurance policy MUSIC issued to the School District.

MUSIC argues the trial court erred in: (1) granting Drury's motion for summary judgment because Drury's loss is excluded from coverage under the policy; (2) granting summary judgment for Drury based on the " ensuing loss" clause in the policy's faulty workmanship exclusion; (3) awarding damages, including attorneys' fees, to Drury under the vexatious refusal to pay statutes; (4) denying MUSIC's motion to dismiss Drury's claims for lack of standing; and (5) denying MUSIC's motion for continuance of the hearing on Drury's motion for summary judgment until after substantive depositions were taken in the case. Drury cross-appeals, asserting the trial court erred in dismissing its claim against the School District for breach of contract. We affirm.


The record reveals the following undisputed facts: In 2006, the School District entered into a contract (the " prime contract" ) with general contractor Penzel Construction Company, Inc. (" Penzel" ) for an addition to the School District's high

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school campus. The prime contract obligated the School District to purchase and maintain " property insurance written on a builder's risk 'all-risk' or equivalent policy form" that " shall include interests of the Owner, the Contractor, Subcontractors and Sub-subcontractors in the Project."

Penzel and Drury entered into a subcontract, under which Drury was the subcontractor responsible for installing a cementitious roof deck known as Tectum as part of the School District's construction project. The prime contract between the School District and Penzel was incorporated by reference into the subcontract.

The School District obtained an insurance policy from MUSIC that provides " basic property coverages" as well as " special property coverages" including " automatic builder's risk." The policy states: " Where required by contract, this insurance shall include the interests of the Member [School District], the Contractor, all Subcontractors and Sub-subcontractors." The policy covers " all risks of direct physical loss . . . to the property covered from any external cause except as hereinafter excluded." The policy provides: " PERILS EXCLUDED: MUSIC does not cover loss due to . . . faulty workmanship or materials, unless loss by a peril not otherwise excluded in this Document ensues and then MUSIC shall be liable only for such ensuing loss."

In October 2007, Drury began installing the Tectum on the project's roof. Rain and other precipitation, including ice storms, occurred over the next several months, and the Tectum suffered moisture damage. Drury submitted a claim to MUSIC under the School District's policy for the damage to the Tectum. MUSIC denied the claim on the basis that the damage was excluded from coverage under the faulty workmanship provision, among others.

Drury filed a petition against multiple defendants. In one count, Drury alleged that MUSIC breached the insurance contract by denying Drury's claim. In a second count against MUSIC, Drury asserted a vexatious refusal to pay claim under section 375.296 and sought statutory penalties, interest, and attorneys' fees. Drury also asserted a breach of contract claim against the School District, alleging the School District breached its obligation under the prime contract to obtain insurance protecting Drury's interest in the project as a subcontractor.[2]

MUSIC moved to dismiss Drury's two claims against it. The School District filed a separate motion to dismiss Drury's claim against the School District. The trial court denied MUSIC's motion to dismiss but granted the School District's motion to dismiss.

Drury moved for summary judgment on its claims against MUSIC. MUSIC opposed the motion on the grounds that Drury was not an insured under the policy and even if it were, the claim was excluded under various provisions, including the faulty workmanship exclusion. With regard to its faulty workmanship argument, MUSIC acknowledged that Drury attempted to protect the Tectum from the weather by covering it but claimed that Drury's actions were inadequate. MUSIC also asserted that both the project architect and the engineer MUSIC hired to investigate the claim determined that Drury's faulty workmanship caused the loss.

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After MUSIC filed its response to the motion for summary judgment, Drury moved to strike MUSIC's exhibits, which supported MUSIC's faulty workmanship argument. MUSIC responded by filing a motion requesting a continuance to conduct depositions if the court decided to strike MUSIC's exhibits. The trial court did ...

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