{ "id": 11466777, "name": "WASHINGTON HOUSING AUTHORITY, Plaintiff v. NORTH CAROLINA HOUSING AUTHORITIES RISK RETENTION POOL, Defendant", "name_abbreviation": "Washington Housing Authority v. North Carolina Housing Authorities Risk Retention Pool", "decision_date": "1998-07-21", "docket_number": "No. COA97-877", "first_page": "279", "last_page": "286", "citations": [ { "type": "official", "cite": "130 N.C. App. 279" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "448 S.E.2d 530", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1994, "opinion_index": 0 }, { "cite": "337 N.C. 695", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2552715, 2552427, 2551467, 2551157, 2549500 ], "year": 1994, "opinion_index": 0, "case_paths": [ "/nc/337/0695-02", "/nc/337/0695-05", "/nc/337/0695-01", "/nc/337/0695-03", "/nc/337/0695-04" ] }, { "cite": "443 S.E.2d 93", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1994, "pin_cites": [ { "page": "95" } ], "opinion_index": 0 }, { "cite": "114 N.C. App. 760", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8527990 ], "year": 1994, "pin_cites": [ { "page": "763" } ], "opinion_index": 0, "case_paths": [ "/nc-app/114/0760-01" ] }, { "cite": "346 S.E.2d 134", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1986, "pin_cites": [ { "parenthetical": "Waste Management II" } ], "opinion_index": 0 }, { "cite": "316 N.C. 386", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4697093, 4703166 ], "year": 1986, "pin_cites": [ { "parenthetical": "Waste Management II" } ], "opinion_index": 0, "case_paths": [ "/nc/316/0386-02", "/nc/316/0386-01" ] }, { "cite": "310 So.2d 868", "category": "reporters:state_regional", "reporter": "So. 2d", "case_ids": [ 2548027, 9672039 ], "year": 1975, "opinion_index": 0, "case_paths": [ "/ala/294/0011-01", "/so2d/310/0868-01" ] }, { "cite": "294 Ala. 11", "category": "reporters:state", "reporter": "Ala.", "case_ids": [ 2548027 ], "year": 1975, "opinion_index": 0, "case_paths": [ "/ala/294/0011-01" ] }, { "cite": "177 W.Va. 734", "category": "reporters:state", "reporter": "W. Va.", "case_ids": [ 8580905 ], "weight": 2, "year": 1987, "opinion_index": 0, "case_paths": [ "/w-va/177/0734-01" ] }, { "cite": "414 A.2d 220", "category": "reporters:state_regional", "reporter": "A.2d", "case_ids": [ 11288445, 11288471 ], "year": 1980, "pin_cites": [ { "page": "226-7" } ], "opinion_index": 0, "case_paths": [ "/a2d/414/0220-01", "/a2d/414/0220-02" ] }, { "cite": "340 S.E.2d 374", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1986, "pin_cites": [ { "parenthetical": "Waste Management I" }, { "page": "379", "parenthetical": "Waste Management II" } ], "opinion_index": 0 }, { "cite": "315 N.C. 688", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4720126 ], "weight": 2, "year": 1986, "pin_cites": [ { "parenthetical": "Waste Management I" }, { "page": "695", "parenthetical": "Waste Management II" } ], "opinion_index": 0, "case_paths": [ "/nc/315/0688-01" ] }, { "cite": "323 S.E.2d 726", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1984, "pin_cites": [ { "page": "730" }, { "page": "730" }, { "page": "731" } ], "opinion_index": 0 }, { "cite": "72 N.C. App. 80", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8526239 ], "year": 1984, "pin_cites": [ { "page": "84" } ], "opinion_index": 0, "case_paths": [ "/nc-app/72/0080-01" ] }, { "cite": "N.C. Gen. Stat. \u00a7 58-23-10", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "weight": 2, "opinion_index": 0 }, { "cite": "378 S.E.2d 809", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1989, "opinion_index": 0 }, { "cite": "324 N.C. 342", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2487717, 2483120, 2483891, 2484408, 2486073 ], "year": 1989, "opinion_index": 0, "case_paths": [ "/nc/324/0342-01", "/nc/324/0342-03", "/nc/324/0342-04", "/nc/324/0342-02", "/nc/324/0342-05" ] }, { "cite": "374 S.E.2d 430", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1988, "opinion_index": 0 }, { "cite": "92 N.C. App. 313", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8526851 ], "year": 1988, "opinion_index": 0, "case_paths": [ "/nc-app/92/0313-01" ] }, { "cite": "321 S.E.2d 142", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1984, "opinion_index": 0 }, { "cite": "311 N.C. 761", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4682818, 4684868, 4680102, 4683471, 4687061 ], "year": 1984, "opinion_index": 0, "case_paths": [ "/nc/311/0761-03", "/nc/311/0761-01", "/nc/311/0761-04", "/nc/311/0761-02", "/nc/311/0761-05" ] }, { "cite": "314 S.E.2d 552", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1984, "pin_cites": [ { "page": "555" } ], "opinion_index": 0 }, { "cite": "68 N.C. App. 184", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8526849 ], "year": 1984, "pin_cites": [ { "page": "190" } ], "opinion_index": 0, "case_paths": [ "/nc-app/68/0184-01" ] }, { "cite": "341 S.E.2d 583", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1986, "opinion_index": 0 }, { "cite": "316 N.C. 196", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4694183, 4693516, 4701810, 4697592, 4704415 ], "year": 1986, "opinion_index": 0, "case_paths": [ "/nc/316/0196-04", "/nc/316/0196-02", "/nc/316/0196-01", "/nc/316/0196-03", "/nc/316/0196-05" ] }, { "cite": "337 S.E.2d 167", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 4, "year": 1985, "pin_cites": [ { "page": "169" }, { "page": "169" }, { "page": "169" } ], "opinion_index": 0 }, { "cite": "78 N.C. App. 418", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8521642 ], "year": 1985, "opinion_index": 0, "case_paths": [ "/nc-app/78/0418-01" ] } ], "analysis": { "cardinality": 706, "char_count": 16562, "ocr_confidence": 0.775, "pagerank": { "raw": 1.56652107030696e-07, "percentile": 0.6779121099338224 }, "sha256": "c5e075dedb73444815a6851fbe786e58ca7dcc39025341e85eb5d08f41eaf979", "simhash": "1:29205313446f1876", "word_count": 2565 }, "last_updated": "2023-07-14T19:24:27.441929+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges LEWIS and MARTIN, Mark D., concur." ], "parties": [ "WASHINGTON HOUSING AUTHORITY, Plaintiff v. NORTH CAROLINA HOUSING AUTHORITIES RISK RETENTION POOL, Defendant" ], "opinions": [ { "text": "MARTIN, John C., Judge.\nPlaintiff brought this action seeking a declaratory judgment determining defendant\u2019s obligations to provide coverage and a defense to litigation brought against plaintiff by Runyon Creek Limited Partnership (Runyon Creek). The underlying action arises out of a 10 October 1990 contract between plaintiff and Runyon Creek, in which plaintiff agreed to \u201cmanage and maintain\u201d a low-income apartment housing complex owned by Runyon Creek. Plaintiff managed the apartments for three years and terminated the contract on 31 October 1993. On 21 December 1994, Runyon Creek brought suit against plaintiff alleging several failures during the three year management period including property damage, negligent management of the apartments, managing the apartments without a real estate broker\u2019s license, and administering pesticides without a license.\nPlaintiff was a member of defendant North Carolina Housing Authorities Risk Retention Pool (NCHARRP), a local government risk pool formed pursuant to G.S. \u00a7 58-23-5 (1994), \u201cto pool retention of their risks for property losses and liability claims and to provide for the payment of such losses of or claims made against any member of the pool on a cooperative or contract basis with one another . . . .\u201d Upon institution of the Runyon Creek suit, plaintiff contacted defendant, contending it was entitled to coverage and a defense to the suit. Defendant initially declined coverage, but employed counsel to defend plaintiff subject to a reservation of rights. After reviewing information provided by Runyon Creek in discovery, defendant withdrew its defense of plaintiff.\nPlaintiff then brought this declaratory judgment action in which it sought to require defendant to provide a defense to the Runyon Creek suit. The trial court granted summary judgment for plaintiff, declaring that defendant provides coverage for plaintiff \u201cfor the claims presented in said underlying suit,\u201d and that defendant has a duty to defend the suit and a duty to pay on behalf of plaintiff \u201call sums which it may or shall become legally obligated to pay as damages in the [suit].\u201d Defendant appeals, contending it does not owe plaintiff a duty of defense to the Runyon Creek litigation. We affirm.\nIn construing the provisions of an insurance policy, any ambiguities in the policy must be resolved in favor of the insured, Southeast Airmotive Corp. v. U. S. Fire Ins. Co., 78 N.C. App. 418, 337 S.E.2d 167 (1985), disc. review denied, 316 N.C. 196, 341 S.E.2d 583 (1986), and, wherever possible, the policy will be interpreted in a manner \u201cwhich gives, but never takes away, coverage.\u201d Nationwide Mut. Fire Ins. Co. v. Allen, 68 N.C. App. 184, 190, 314 S.E.2d 552, 555, disc. review denied, 311 N.C. 761, 321 S.E.2d 142 (1984). Exclusionary clauses are not favored and are construed against the insurer, in favor of coverage. W & J Rives, Inc. v. Kemper Ins. Group, 92 N.C. App. 313, 374 S.E.2d 430 (1988), disc. review denied, 324 N.C. 342, 378 S.E.2d 809 (1989). This rule exists because the insurer prepares the policy and chooses the language. Southeast Airmotive at 420, 337 S.E.2d at 169.\nDefendant argues, however, that these standard rules of construction do not apply to the present situation because it is not a traditional insurance company and the policy at issue here is a local government risk pool policy, where \u201cthe member housing authorities themselves agreed on the policy document,\u201d rather than a standard commercial insurance policy. Thus, defendant argues, plaintiff was not \u201csold\u201d a policy of insurance; rather, it participated in establishing the terms and conditions of coverage within the pool. We reject defendant\u2019s argument.\nArticle 23 of Chapter 58 of the General Statutes authorizes the formation of local government risk pools. Under the statutory scheme, such a risk pool is operated by a board of trustees elected by its membership. N.C. Gen. Stat. \u00a7 58-23-10. This board of trustees, rather than the member housing authorities, establishes the terms and conditions of coverage within the pool. Id. Plaintiff had no opportunity to participate in the drafting of the language used in the NCHARRP coverage document; in fact, the coverage document adopted by defendant\u2019s board of trustees was the \u201cstandard ISO form\u201d for commercial liability coverage, which is the same commercial coverage sold by insurance companies to their customers. Therefore, we hold that policies or coverage documents issued by risk pools such as defendant to their members are subject to the same standard rules of construction as traditional insurance policies issued by insurance companies to their customers.\nTo determine whether an insurer has a duty to defend its insured, the court must \u201ccompare the complaint with the policy to see whether the allegations describe facts which appear to fall within the insurance coverage. The trial court generally must avoid going beyond the pleadings to ascertain the facts as they actually are, which determine ultimate liability.\u201d Waste Management of Carolinas, Inc. v. Peerless Ins. Co., 72 N.C. App. 80, 84, 323 S.E.2d 726, 730 (1984), reversed on other grounds, 315 N.C. 688, 340 S.E.2d 374 (1986) (Waste Management I). \u201c \u2018[T]he insured has a right to a defense whenever the allegations show a potential that liability will be established within the insurance coverage,\u2019 and the complaint contains \u2018no allegation of facts which would necessarily exclude coverage.\u2019 \u201d Id., quoting Travelers Indem. Co. v. Dingwell, 414 A.2d 220, 226-7 (Me. 1980). \u201c[W]here a complaint contains multiple theories of recovery, some covered by the policy and others excluded by it, the insurer still has a duty to defend.\u201d Id. at 85, 323 S.E.2d at 730.\nApplying the comparison test to the Runyon Creek complaint, we hold Runyon Creek\u2019s allegations fall within the coverage provided by defendant. The NCHARRP coverage document specifically covers property damage, including that resulting from \u201ccontractual property damage\u201d and \u201cpremises-operations.\u201d Property damage is defined under the policy as:\n(1) physical injury to or destruction of tangible property which occurs during the policy period, including the loss of use thereof at any time resulting therefrom, or (2) loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period.\nEach of Runyon Creek\u2019s claims allege property damage and seek relief for the physical injury which plaintiff allegedly caused the apartments. Runyon Creek asserts that the property damage to the apartments was caused by: (1) plaintiff\u2019s breach of contract, (2) negligence, (3) negligence per se for violations of the statutes regarding licensing for real estate agents and licensing for termite pest control applicators, and (4) unfair and deceptive trade practices (a claim which was subsequently voluntarily dismissed pursuant to a settlement agreement). Under the comparison test, Runyon Creek\u2019s property damage allegations fall within the coverage for \u201cContractual Property Damage\u201d in the policy.\nDefendant next asserts that coverage of Runyon Creek\u2019s claims was excluded pursuant to an exclusion in the NCHARRP coverage document which excluded from its coverage damage to \u201cproperty in the care, custody or control of the insured or as to which the insured is for any purpose exercising physical control.\u201d Defendant argues that because plaintiff had \u201ccare, custody or control\u201d of the Runyon Creek property which was damaged, the damage was not covered by the policy. We disagree.\nIn Southeast Airmotive, supra, a cargo plane owned by the plaintiff was carrying negotiable instruments belonging to Wachovia Bank. The plane crashed, damaging the negotiable instruments. The plaintiff was insured under a policy which contained a \u201ccare, custody or control\u201d exclusion. Defendant insurance company denied coverage for the loss of the instruments pursuant to this exclusion, and plaintiff sought a declaratory judgment requiring coverage. The trial court granted summary judgment for the plaintiff-insured and this Court affirmed, rejecting defendant-insurer\u2019s argument that the \u201ccare, custody and control\u201d exclusion applied. We held that an ambiguity existed where the policy contained a \u201ccare, custody or control\u201d exclusion, but elsewhere provided coverage for \u201cdamages because of injury to or destruction of property.\u201d Id. at 420, 337 S.E.2d at 169. Such an ambiguity must be construed in favor of the insured, since a reasonable person in the insured\u2019s position would have expected coverage:\nWhen language used in an insurance policy is ambiguous and is reasonably susceptible of differing constructions, it must be given the construction most favorable to the insured, since the insurance company prepared the policy and chose the language. The test in deciding whether the language is plain or ambiguous is what a reasonable person in the position of the insured would have understood it to mean, and not what the insurer intended. Exclusions from liability are not favored, and are to be strictly construed against the insurer. When the coverage provisions of a policy include a particular activity, but that activity is later excluded, the policy is ambiguous, and the apparent conflict between coverage and exclusion must be resolved in favor of the insured.\nId. at 420, 337 S.E.2d at 169.\nSimilarly, in the present case, the NCHARRP coverage document purports to provide coverage for property damage but subsequently seeks to exclude from such coverage property in the \u201ccare, custody or control\u201d of the insured. Following Southeast Airmotive, we must resolve this ambiguity in favor of plaintiff. Moreover, even if no ambiguity existed, we would decline to hold the exclusion applicable where, as here, the property was not in plaintiff\u2019s exclusive custody or control and others, such as tenants, were in possessory control of portions of the premises. See National Mutual Insurance Company v. McMahon & Sons, Inc., 177 W.Va. 734, 356 S.E.2d 488 (1987); Interstate Fire and Casualty Co. v. Baker, 294 Ala. 11, 310 So.2d 868 (1975).\nDefendant also contends the conduct alleged in the Runyon Creek complaint is not an \u201coccurrence\u201d as defined by the NCHARRP coverage document. To come within the coverage provided by the NCHARRP coverage document, the damage alleged by Runyon Creek must be caused by an \u201coccurrence,\u201d defined as \u201can accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured.\u201d \u201cOccurrence\u201d has been interpreted by our Supreme Court to include \u201cevents that are unexpected and unintended as viewed from the standpoint of the insured.\u201d Waste Management of Carolinas, Inc. v. Peerless Ins. Co., 315 N.C. 688, 695, 340 S.E.2d 374, 379, reh\u2019g denied, 316 N.C. 386, 346 S.E.2d 134 (1986) (Waste Management II). The test should be \u201ca subjective one, from the standpoint of the insured, and not an objective one asking whether the insured \u2018should have\u2019 expected the resulting damage,\u201d Waste Management I at 87, 323 S.E.2d at 731 (1984), i.e., whether the resulting damage was unexpected or unintended, not whether the act itself was unintended. An \u201cexpected or intended\u201d exclusion applies only \u201cif the resulting injury as well as the act were intentional.\u201d Nationwide Mut. Fire Ins. Co. v. Banks, 114 N.C. App. 760, 763, 443 S.E.2d 93, 95 (1994), disc. review denied, 337 N.C. 695, 448 S.E.2d 530 (1994).\nIn Waste Management II, supra, the plaintiff trash collector intentionally dumped waste materials into a landfill for several years, and the materials leached into the groundwater beneath it. The insurer refused coverage and argued on appeal, under the same definition of \u201coccurrence\u201d as in this case, that the intentional dumping did not constitute an \u201coccurrence.\u201d Id. The Supreme Court rejected this argument and said that it was not the intentional dumping, but the unintended, unexpected leaking into the groundwater which constituted an \u201coccurrence\u201d for the purpose of insurance coverage. Id.\nSimilarly, in this case, the damages alleged by Runyon Creek were caused by \u201coccurrences.\u201d Runyon Creek alleged that plaintiff caused serious damage to the apartments through \u201cfaulty\u201d repair of plumbing leaks which \u201cruined floors and walls,\u201d inadequate attempts at termite control which caused \u201ctermite infestations which have caused severe damage,\u201d and inadequate management of the grounds which resulted in \u201cundue and excessive accumulations of trash, debris and weeds.\u201d While plaintiffs actions taken in an attempt to manage and maintain the property with plumbing, pest control and grounds keeping were intentional, the resulting damage to the property occasioned thereby was not. Therefore, the conduct alleged by Runyon Creek constituted an \u201coccurrence\u201d under the policy. Thus, we hold the allegations of the Runyon Creek complaint came within the coverage provided by the policy and the trial court properly determined defendant had a duty to provide plaintiff with a defense to the Runyon Creek litigation.\nDefendant\u2019s remaining assignments of error have been resolved by a settlement agreement reached between plaintiff and defendant and we need not address them.\nThe judgment of the trial court is affirmed.\nAffirmed.\nJudges LEWIS and MARTIN, Mark D., concur.", "type": "majority", "author": "MARTIN, John C., Judge." } ], "attorneys": [ "Ward and Smith, P.A., by Kenneth R. Wooten, for plaintiff-appellee.", "Root & Root, P.L.L.C., by Allan P. Root, for defendant-appellant." ], "corrections": "", "head_matter": "WASHINGTON HOUSING AUTHORITY, Plaintiff v. NORTH CAROLINA HOUSING AUTHORITIES RISK RETENTION POOL, Defendant\nNo. COA97-877\n(Filed 21 July 1998)\n1. Insurance\u2014 construction of policy \u2014 local government risk pool\nPolicies or coverage documents issued to members by risk pools such as defendant (a local government risk pool) are subject to the same standard rules of construction as traditional insurance policies issued by insurance companies to their customers.\n2. Insurance\u2014 duty to defend \u2014 comparison test\nThe trial court correctly granted summary judgment for plaintiff in a declaratory judgment action to determine a right to a defense under a local government risk pool contract where the owner of a low-income housing complex managed by plaintiff, a member of the pool, brought an action which included allegations of property damage and negligent management. To determine whether an insurer has a duty to defend, the court must compare the complaint with the policy to see whether the allegations describe facts which appear to fall within the coverage; here, the coverage document specifically covers property damage including \u201ccontractual property damage\u201d and \u201cpremises-operations,\u201d and each of the claims alleges property damage and seeks relief for the physical injury which plaintiff allegedly caused.\n3. Insurance\u2014 property damage \u2014 exclusion\u2014custody or control of insured\nThe trial court correctly granted summary judgment for plaintiff in a declaratory judgment action to determine whether plaintiff has a right to a defense to an action alleging that plaintiff mismanaged a low-income housing complex. Although defendant-risk pool argues that the damage was not covered pursuant to an exclusion for property in the care, custody, or control of the insured, the coverage document purports to provide coverage for property damage but to exclude property in the care of the insured, an ambiguity resolved in favor of plaintiff. Moreover, the property was not in plaintiffs exclusive custody or control; others, such as tenants, were in possessory control of portions of the premises.\n4. Insurance\u2014 coverage \u2014 duty to defend \u2014 definition of occurrence\nThe trial court properly determined in a declaratory judgment action that defendant-risk pool had a duty to provide plaintiff-housing manager a defense to litigation by the owner of the low-income housing complex alleging negligent mismanagement and property damage. Although defendant contends that the alleged conduct was not an occurrence as defined in the coverage document because it was not an accident, \u201coccurrence\u201d has been interpreted to include unexpected and unintended events from the viewpoint of the insured. While plaintiffs attempts to manage and maintain the property with plumbing, pest control and grounds keeping were intentional, the resulting damage was not.\nAppeal by defendant from order entered 29 April 1997 by Judge Jerry R. Tillett in Beaufort County Superior Court. Heard in the Court of Appeals 26 February 1998.\nWard and Smith, P.A., by Kenneth R. Wooten, for plaintiff-appellee.\nRoot & Root, P.L.L.C., by Allan P. Root, for defendant-appellant." }, "file_name": "0279-01", "first_page_order": 311, "last_page_order": 318 }