Court of Appeals of Missouri, Southern District, First Division
FROM THE CIRCUIT COURT OF BUTLER COUNTY Honorable Michael M.
Mutual Insurance Company ("Insurer") appeals the
judgment that awarded Douglas Davies and Lynette Davies
("Homeowners") $255,594 plus interest after a
consolidated trial of Homeowners' equitable garnishment
action and Insurer's petition for declaratory judgment.
See sections 379.200 and 527.010. Homeowners' equitable garnishment
claim was based upon a judgment they had obtained against the
Estate of Keith Broege ("Builder") in a jury trial
of a breach of implied warranty of habitability claim based
upon defects in a new house Homeowners had purchased from
Builder ("the warranty trial"). We affirmed that
judgment on appeal in Davies v. Estate of Broege,
410 S.W.3d 303, 304 (Mo. App. S.D. 2013).
equitable garnishment petition claimed that their "loss
rests on an occurrence for which [Builder] was insured by
[Insurer]." Conversely, Insurer sought a judgment
declaring that it "owe[d] no duty to indemnify any
portion of the" warranty trial judgment because there
had been "no 'occurrence'" under
Insurer's insurance contract with Builder ("the
policy"). After "[a]ll issues and claims" had
been submitted "upon the pleadings, briefings, exhibits
and argument[s] of counsel[,]" the trial court found
that the policy provided coverage because "[t]he failure
of [Builder] to construct the house in such a manner that it
did not consistently flood when it rained constitute[d] an
occurrence" under the policy.
three points, Insurer claims the judgment was erroneous as a
matter of law because: (1) Builder's breach of the
implied warranty of habitability "was not an
'occurrence'"; (2) "there was no
'property damage'"; and (3) "coverage was
excluded" under the terms of the policy. Because the
warranty trial did not establish as a matter of law that what
Homeowners suffered constituted an "occurrence"
under the policy, we find a portion of Insurer's first
point to have merit. The judgment is reversed, and the case
is remanded for further proceedings consistent with this
Principles of Review and Governing Law
When reviewing a court-tried case, we view all evidence and
inferences in the light most favorable to the judgment and
disregard all contrary evidence and inferences. Ortmann
v. Dace Homes Inc., 86 S.W.3d 86, 88 (Mo.App. E.D.2002).
However, where the facts are derived solely from written
documents such as pleadings, stipulations, exhibits, and
depositions, we decide only whether the trial court drew the
proper legal conclusions from the facts stipulated. Glass
v. Missouri Property Ins. Placement Facility, 912 S.W.2d
653, 656 (Mo.App. S.D.1995). . . . Finally, even where the
facts are derived from stipulated exhibits and agreements, we
must accept the evidence and inferences favorable to the
prevailing party and disregard all contrary evidence.
Gen. Motors Acceptance Corp. v. The Windsor Grp.,
Inc., 103 S.W.3d 794, 796–97 (Mo. App. E.D. 2003)
The interpretation of an insurance policy is an issue of law,
subject to de novo review. Mendenhall v.
Property and Casualty Ins. Co. of Hartford, 375 S.W.3d
90, 92 (Mo. banc 2012). "[I]n construing the terms of an
insurance policy, this Court applies the meaning which would
be attached by an ordinary person of average understanding if
purchasing insurance...." Ritchie v. Allied Prop.
& Cas. Ins. Co., 307 S.W.3d 132, 135 (Mo. banc
2009). The general rule in interpreting insurance contracts
is to give the language of the policy its plain meaning.
Gavan v. Bituminous Cas. Corp., 242 S.W.3d 718, 720
(Mo. banc 2008). If language in an insurance policy is
ambiguous, this Court resolves the ambiguity against the
insurer-drafter. Mendenhall, 375 S.W.3d at 92;
Krombach v. Mayflower Ins. Co., Ltd., 827 S.W.2d
208, 211 (Mo. banc 1992). An ambiguity exists only when a
phrase is "'reasonably open to different
constructions.'" Mendenhall, 375 S.W.3d at
Allen v. Cont'l W. Ins. Co., 436 S.W.3d 548,
553–54 (Mo. banc 2014).
establish an equitable garnishment claim, the plaintiff must
prove that he obtained a judgment in his favor against the
insurance company's insured, the policy was in effect
when the incident occurred and that the injury is covered by
the insurance policy." Kotini v. Century Sur.
Co., 411 S.W.3d 374, 377 (Mo. App. E.D. 2013). The
plaintiff bears "the burden of showing by substantial
evidence that the claim falls within the coverage provided by
the insurance contract." Id. at 378.
and Procedural History
summary of the facts is drawn from the materials submitted to
the trial court on the date set for trial. We therefore "'accept the
evidence and inferences favorable to'" Homeowners,
Gen. Motors, 103 S.W.3d at 797, looking only to see
if "the trial court drew the proper legal
conclusions[.]" Id. (quotation omitted).
2008 and early 2009, Homeowners purchased and moved into a
new house built by Builder. "Shortly after moving in,
they noticed water accumulation in the lower level. Repeated
water intrusions over the following months caused a host of
problems, including foul smells, soaked carpeting, wall
damage, and mold and mushroom growth. [Builder] eventually
sent crews to clean the house after every hard rain."
Davies, 410 S.W.3d at 304. During the warranty
trial, Homeowners took "the position that the
problem's cause remained unknown[.]" Id.
The jury found that "the house was not fit for" the
use for which it was purchased. "[W]ithin a reasonable
time after [Homeowners] knew or should have known the [house]
was not fit for such use, [Homeowners] gave [Builder] notice
thereof, and . . . as a direct result of the house being
unfit for such use, [Homeowners] were damaged." The jury
"assess[ed] the damages of [Homeowners] at
action for equitable garnishment and Insurer's action for
declaratory judgment followed the entry of the judgment in
the warranty trial, and those separate actions were
consolidated for trial. Both claims relied upon the policy,
which provided "COMMERCIAL LIABILITY
COVERAGE" to Builder. The following provisions
of the policy are relevant to Insurer's claims on appeal:
. . . ...