Nova Casualty Insurance Company provided a Commercial General Liability policy to Flagg, owner of Able Construction Company. Nova denied a claim filed by Able and secured a summary judgment that their policy did not cover a claim alleging fraud and misrepresentation.

Able Construction was sued by Killpack and Edmonds, who bought a home built by Able. Killpack and Edmonds had Able build a home in the Apple Ridge Subdivision in Utah county. The purchasers were assured by Able, who previously owned other lots in the Apple Ridge Subdivision and was familiar with the restrictive covenants, that Killpack and Edmonds would be allowed to run their psychotherapy business out of their home.

Killpack and Edmonds sued Able after the Apple Ridge Subdivision had a cease and desist order issued against their business, claiming that the business violated the subdivision's covenants. Able requested coverage against their claim from Nova. Nova denied the claim on the belief that the claim did not involve an eligible occurrence. In Nova's opinion, since Able participated in drafting Apple Ridge's restrictive covenants, he was in position to fully realize that the claimants' psychotherapy business would not be a permitted activity; but chose not to reveal this fact. Therefore, this represented an intentional act and was excluded by the CGL policy. Nova filed for a summary judgment which was granted by the trial court and was appealed by Able.

The appellate court considered whether coverage existed under Coverage A, Coverage B or Coverage C of the CGL. The higher court reviewed the insuring agreements of all three coverage parts and, in its opinion, found no coverage for the claim made against Able. The higher court thereby ruled in favor of Nova without addressing the trial court's decision, since the lower court based its decision on the policy exclusion, not the insuring agreements.

Nova Casualty Company, Plantiff-appellee v. Able Construction Incorporated, et al., Defendants-Appellants, UtahSCt. No. 970594. Filed July 20, 1999 Affirmed. CCH 1999 Fire and Casualty Cases, Paragraph 7154.