Fidelity & Casualty Co. of New York v. Watts Realty Co.
Docket: Civ. 5654
Court: Court of Civil Appeals of Alabama; December 2, 1986; Alabama; State Appellate Court
A suit was filed for a declaration of coverage under an insurance policy, with the trial court ruling in favor of the insured, a real estate company. The insurer appealed, claiming three errors: (1) the court misinterpreted the real estate agent endorsement as ambiguous; (2) it improperly allowed policy reformation; and (3) it incorrectly ruled that the insurer was estopped from denying coverage. The appellate court upheld the trial court's decision, affirming the requirement for the insurer to defend the insured in a wrongful death action, which the court found covered by the policy. It also affirmed the award of damages for the insured's legal fees incurred in that defense. The court noted a presumption favoring the trial court's findings in ore tenus proceedings, which can only be disturbed if unsupported by credible evidence or plainly erroneous. The insured had sought a new comprehensive business liability policy, intending to maintain coverage similar to their previous policy. Discussions between the insured and the insurer's agent indicated a mutual understanding that the new policy would provide the same coverage as the prior one, which included an amendment allowing coverage for construction and maintenance work performed by the insured. However, while the new policy included a real estate agent endorsement like the old one, it lacked the amendment permitting the specified coverage, although it did offer separate categories of coverage for Independent Contractors and Completed Operations, for which premiums were paid. The accident in question occurred on premises managed by the insured, leading to a lawsuit for deaths and injuries. The insurer's agent believed the new policy covered the incident since repairs were being made to the electrical system by an independent contractor. The trial court ruled in favor of the insured, citing ambiguity in the policy endorsement regarding coverage for independent contractor work. The court found that both parties intended for the policies to cover Watts' operations, including the claims arising from the incident. It noted that Watts had specifically requested this coverage, which Fidelity agreed to and charged a separate premium for, thus estopping Fidelity from denying coverage. The court emphasized that exceptions to coverage should be interpreted narrowly in favor of the insured, reflecting a judicial tendency to protect less powerful parties in insurance contracts. The trial court's findings on ambiguity and the application of estoppel were supported by the record, leading to the affirmation of the judgment in favor of the insured.