11th Circuit Affirms Coverage for Ongoing “Work” Under Plain Reading of RPL “Completed Work” Exclusion
April 4, 2017
The 11th Circuit rejected the efforts of Liberty Surplus Insurance Corporation (“Liberty”) to avoid its obligation to Norfolk Southern Railway Company (“Norfolk Southern”) under the insuring agreement of its Railroad Protective Liability (“RPL”) policy. The court affirmed the Middle District of Georgia’s holdings that the policy’s Completed Work Exclusion does not eliminate Liberty’s coverage obligation for Norfolk Southern liabilities arising out of ongoing, continuous vegetation monitoring and control work performed for Norfolk Southern by a vegetation contractor, NaturChem, Inc. (“NaturChem”).
The case, Liberty Surplus Ins. Corp. v. Norfolk Southern Railway Co., No. 7:14-cv-00142-HL (11th Cir., Apr. 4, 2017), involved Norfolk Southern’s coverage claim as a result of liability for bodily injury arising out of an accident at a railroad crossing on June 11, 2011. The motorist in the underlying tort suit alleged, among other things, that overgrown vegetation at a Norfolk Southern crossing impaired her ability to see an oncoming train, which struck her vehicle as she attempted to cross the tracks. The motorist sued both Norfolk Southern and its vegetation control contractor, NaturChem, which had contracted to “be responsible for maintenance of [Norfolk Southern’s] crossing[s]” and “monitor each of the crossings and perform required maintenance as often as necessary to maintain the crossing appropriately.” NaturChem had last performed maintenance spraying at the crossing on March 3, 2011—90 days prior to the collision. The vegetation control contract also required NaturChem to procure insurance coverage on behalf of Norfolk Southern, which it did by purchasing an RPL policy from Liberty.
Liberty brought a declaratory judgment action against Norfolk Southern seeking a declaration of no coverage for the underlying tort suit. The parties brought cross-motions for summary judgment, and the District Court, the Honorable Hugh Lawson, granted judgment in favor of Norfolk Southern while denying Liberty’s motion.
Liberty’s only issue on appeal was whether the Completed Work Exclusion applied to oust Norfolk Southern from coverage promised by the policy’s insuring agreement. The Liberty policy defined coverage for “Completed Work” as:
“Bodily injury” or “property damage” occurring after the “work” is completed. The work will be deemed completed at the earliest of the following times:
(1) When all the “work” called for in the “contractor’s” contract has been completed.
(2) When all the “work” to be done at the “job location” has been completed.
(3) When that part of the “work” done at the “job location” has been put to its intended use by you, the governmental authority or other contracting party.
Liberty argued that coverage was unavailable because the relevant “work” for purposes of interpreting sub-parts (2) and (3) of the exclusion was defined differently than for the initial subpart; Liberty argued that the appropriate work to consider was the single instance of NaturChem’s herbicide application on March 3, 2011 – even though that herbicide application did not give rise to the accident, the subsequent overgrowth of vegetation did. The Court of Appeals disagreed based on the plain language of the exclusion and affirmed the district court’s holding, describing Liberty’s argument as a “strained and unnatural construction of the Completed Work Exclusion.” It found that the RPL policy defined “work” in reference to the vegetation control agreement, which described “an ongoing and continuous maintenance and monitoring obligation, rather than a contract for a series of limited and discrete tasks.” The Court of Appeals also emphasized that “all three subsections [of the Completed Work Exclusion] set out the term ‘work’ on its own, bounded in its own quotation marks and without any means of distinguishing one subdivision’s ‘concept’ of ‘work’ from any other.” Moreover, the decision noted that “Liberty could have qualified the term ‘work’ in sub-provisions (1), (2), and (3) with the parenthetical ‘(other than monitoring),’ but Liberty did not do so.” The court thus held that the “work” referred to in the exclusion was the same “work” referred to in the policy, generally, and that Liberty “must now live with the consequences of its chosen language.” The Court of Appeals confirmed that the relevant work for purposes of interpreting Liberty’s RPL “Completed Work Exclusion” was the monitoring work allegedly giving rise to the injury. Because the monitoring work was continuous and therefore not completed, the exclusion did not apply (and Norfolk Southern therefor is entitled to coverage under Liberty’s policy for the underlying collision claim).
Liberty Surplus Ins. Corp. v. Norfolk Southern Railway Co., No. 7:14-cv-00142-HL (11th Cir., Apr. 4, 2017)