Transcontinental Ins. Co. v. R. Larry Phillips

FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
APRIL 26, 2010
JOHN LEY
CLERK
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 09-15556
Non-Argument Calendar
________________________
D.C. Docket No. 06-00044-CV-WLS-4
TRANSCONTINENTAL INSURANCE COMPANY,
CONTINENTAL CASUALTY COMPANY,
TRANSPORTATION INSURANCE COMPANY,
Plaintiffs-Counter-
Defendant-Appellee,
versus
R. LARRY PHILLIPS CONSTRUCTION COMPANY, INC.,
Defendant-Counter-
Claimant-Appellant,
KMAR INVESTMENTS, LLLP,
RIVERTOWN FORD, INC., et al.,
Defendant-Counter-Claimant.
________________________
Appeal from the United States District Court
for the Middle District of Georgia
________________________
(April 26, 2010)

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Before BLACK, PRYOR, and COX, Circuit Judges.
PER CURIAM:
Transcontinental Insurance Company, Continental Casualty Company, and
Transportation Insurance Company (the “Insurers”) sought a declaratory judgment
that they had no obligation to indemnify or provide a defense to R. Larry Phillips
Construction Company, Inc. in connection with two lawsuits filed by George C.
Woodruff, Jr. against Phillips: one in 2004 and one in 2005. The Insurers and
Phillips filed cross-motions for summary judgment. The district court granted the
Insurers’ motion and denied Phillips’ motion. Phillips appeals.
Phillips contracted with Woodruff to act as the general contractor in
constructing the Lakes III Apartments for Woodruff, which consisted of five
apartment buildings. After the completion of one of the buildings, Phillips learned
of a crack in the slab. Because of the crack and other problems associated with the
construction of Lakes III, Woodruff sued Phillips in 2004 in the state court of
Muscogee County, Georgia, alleging “that the footings, walls, floors and other
structures at the Lakes III complex have failed.” (R.12-126 at 13.) In 2005,
Woodruff filed a second lawsuit in the state court of Muscogee County, alleging that
Phillips “breached its contract and negligently constructed screened porches at Lakes
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III without proper flashing or other water protection, which caused water to leak into
buildings, resulting in rot and other damage.” (Id. at 16-17.)
In the district court declaratory action brought by the Insurers, Phillips asserted
that the Insurers had a duty to provide it with a defense and/or to indemnify it in the
Woodruff lawsuits. The Insurers responded with four reasons why coverage was
excluded by the insurance contracts. The district court agreed with the Insurers first
reason in support of summary judgment: that “no ‘property damage’ had been caused
by an ‘occurrence.’” (R.12-126 at 26.)
In addition, Phillips argued that the Insurers waived their right to seek the
declaratory action, because the Insurers’ Reservation of Rights letters regarding the
two lawsuits were ineffective. In response, the Insurers argued that their Reservation
of Rights letters were indeed adequate to preserve their rights. The district court
agreed with the Insurers. Regarding the 2004 lawsuit, the court found that “the
November 7, 2001 Reservation of Rights letter [was] applicable to the 2004 Lawsuit,
and further finds that the Plaintiffs are not estopped from seeking a declaratory
judgment regarding coverage of the 2004 Lawsuit.” (R.12-126 at 24.) With respect
to the 2005 lawsuit, the district court found that the Insurers “sufficiently reserved
their rights . . . [and] are not estopped from seeking a declaratory judgment regarding
coverage of the 2005 lawsuit.” (R.12-126 at 26.)
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On appeal, Phillips argues that the district court erred by holding that the
damage at issue was not covered by the policy. Phillips also contends that the
Insurers’ Reservation of Rights letters regarding the two lawsuits were ineffective,
and therefore estop the Insurers from denying coverage or seeking declaratory
judgment.
We conclude that the district court properly granted the Insurers summary
judgment and properly denied Phillips summary judgment for the reasons stated in
the court’s well-reasoned opinion. (R.12-126.)
AFFIRMED.
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