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Commercial Property |
Utility Exclusion |
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Ambiguity |
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Mark and Sue
Gies, DBA Twin City Packing (TCP) was a meatpacking
business in Gering, Nebraska. Several TCP coolers and freezers operated off of
compressors powered by electricity from the City of Gering. On January 23,
1999, a broken aluminum jumper cable at a transformer substation several blocks
away from the TCP location caused a power outage. The outage damaged the
compressors. TCP submitted a claim for
$18,500 to its insurer, Union Insurance Co. (Union) after the city refused to
compensate TCP.
Union denied
the claim. It relied on an exclusion of losses due to "the failure of
power or other utility service supplied to the described premises, however
caused, if the failure occurs away from the described premises." The one
exception was when failure of power or other utility service resulted in a
Covered Cause of Loss. However, payment applied only for the loss or damage
caused by that Covered Cause of Loss.
TCP filed a
lawsuit against Union on February 13, 2002. The trial court determined that the
exception wording was ambiguous and therefore provided coverage for the damaged
compressors. TCP was awarded $8,000.
Union
appealed the verdict on the basis that the exclusion and exception were not
ambiguous and that the trial court misread the exception.
The
appellate court reviewed the case and the policy wording. It agreed with Union
that the exception wording could not be read separate from the exclusion and that,
when the exclusion and exception were read as a whole, no ambiguity existed.
The trial court ruling was reversed.
Mark Gies and Sue Gies, doing business
as Twin City Packing, also known as Twin City Pack, Appellees and
Cross-Appellants, v. City Of Gering, a municipal corporation, Appellee; Union
Insurance Co., a division of Continental Western Group, a Nebraska authorized
insurance company doing business in Nebraska, Appellant and Cross-Appellee, and
Scott Kerbel, doing business as Arctic Air
Refrigeration, Appellee. Nebraska Court of Appeals.
No. A-03-1112. Filed March 22, 2005.
Appeal from the District Court, Scotts Bluff County. Reversed and remanded with
directions. 2005 CCH Personal and Commercial Liability Cases.
Paragraph 48,023.