author: MAX N. TOBIAS, JR., Judge.

text:
    STEWART INTERIOR CONTRACTORS, L.L.C. v. METALPRO INDUSTRIES, L.L.C.
    No. 2007-CA-0251.
    Court of Appeal of Louisiana, Fourth Circuit.
    Oct. 10, 2007.

      Charles K. Chauvin, Thomas E. Loehn, Boggs, Loehn & Rodrigue, Metairie, LA, for Stewart Interior Contractors, L.L.C.
    Glenn D. Price, Jr., Michael D. Peytavin, Gaudry Ranson Higgins & Gremillion, L.L.C., Gretna, LA, for Nautilus Insurance Company.
    Bryan C. Reuter, Thomas P. Owen, Jr., Melissa Vanderbrook Beaugh, Stanley, Flanagan & Reuter, L.L.C., New Orleans, LA, for MetalPro Industries, L.L.C.
    (Court Composed of Judge MICHAEL E. KIRBY, Judge MAX N. TOBIAS, JR., and Judge ROLAND L. BELSOME).
   MAX N. TOBIAS, JR., Judge.

|,MetalPro Industries, L.L.C. (“Metal-Pro”), and Stewart Interior Contractors, L.L.C. (“Stewart”), appeal from the trial court’s grant of summary judgment in favor of Nautilus Insurance Company (“Nautilus”), finding the commercial general liability policy issued by Nautilus to MetalPro may afford coverage for some, but not all, of the damages claimed by Stewart. For the reasons that follow, we affirm the trial court’s granting of summary judgment in part, reverse in part, and remand the matter to the trial court for further proceedings consistent with this opinion.

I. FACTS AND PROCEDURAL HISTORY

Stewart was subcontracted by Gootee Construction, a general contractor, to install metal stud framing and gypsum wall board (sheetrock) panels in connection with the construction of a new administrative building on the campus of the University of New Orleans (“UNO”). Thereafter, Stewart subcontracted with MetalPro for the manufacture, fabrication, and delivery of steel studs to the construction site to be used by Stewart for the sheetrock installation in the new building. The steel studs formed the framing for the sheetrock built into the construction project: At the time of manufacture, delivery, and installation, | ¡.MetalPro had in force a commercial general liability (“CGL”) insurance policy issued by Nautilus.

Following delivery and subsequent installation of the steel studs, Stewart was notified that drywall screws were pulling through the sheetrock on the third and fourth floors of the building. Stewart further learned of damage to the gypsum wall board panels, tape and joint compound, interior paint finishes, vinyl base boards, and the carpet on the third and fourth floors (hereinafter referred to as the “sheetrock job”), allegedly caused by use of the steel studs. Investigation performed by Stewart revealed- that the steel studs manufactured and supplied by Met-alPro did not meet generally accepted specifications and tolerances required by the industry and, additionally, failed to meet the UNO construction project specifications. As a result, Stewart filed the instant action against MetalPro and Nautilus, as its insurer, seeking to recover damages caused by the alleged defective steel studs under the Louisiana Products Liability Act (“LPLA”), for breach of contract, and in redhibition.

In response to Stewart’s Petition for Damages, MetalPro filed exceptions of improper venue, prescription, and no cause of action. These exceptions were never heard, and MetalPro has not yet filed an answer. Nautilus timely filed its own exception of improper venue and subsequent answer to Stewart’s petition. Nautilus’ exception for improper venue was also never heard. Thereafter, Nautilus moved for summary judgment, admitting it provided a CGL insurance policy to MetalPro covering the time period at issue, but claiming its policy excludes from coverage the property damage Stewart alleges was caused by the steel studs in this case. After a hearing, the trial court granted the motion for summary judgment Land dismissed all claims against Nautilus. No written reasons were assigned. This appeal followed.

As a threshold issue, we must decide whether the trial court’s consideration and ruling on Nautilus’ motion for summary judgment prior to hearing and rendering judgment on pending exceptions of improper venue, prescription, and no cause of action, was procedurally “premature,” and manifestly erroneous as asserted by Metal-Pro. We find, under the facts of this case, it was not.

The crux of MetalPro’s argument, relying on Peterson v. Hanson, 03-1448 (La. App. 1 Cir. 9/17/04), 897 So.2d 32, is that if, in fact, venue is improper in Orleans Parish, the trial court’s granting of Nautilus’ summary judgment motion is null and void. MetalPro’s reliance on Peterson for this proposition is misplaced. In Peterson, the defendants raised an exception of improper venue to plaintiffs action for a preliminary injunction. After sustaining the defendants’ venue exception and transferring the matter to a parish of proper venue, the trial court then proceeded to rule on the merits of the case. In vacating that portion of the judgment denying plaintiffs application for preliminary injunction, the appellate court held that once the trial court sustained the defendant’s venue exception it thereafter lacked jurisdiction to rule on the merits of the case and, therefore, that portion of the judgment denying the injunction was null. Id., p. 4, 897 So.2d at 34.

Unlike Peterson, in the case sub judice, venue has never been declared improper, nor was the matter transferred to another parish. Thus, at the time the trial court considered, and thereafter granted, Nautilus’ summary judgment motion, it properly exercised jurisdiction over Nautilus in this action. Specifically, La. C.C.P. art. 966 A(1) provides that a plaintiffs motion for summary judgment may be made at any time after an answer has been filed. The defendant’s motion, however, may be made at any time. Accordingly, while a court must rule on pending declinatory exceptions prior to ruling on a plaintiffs motion for summary judgment when the defendant has not yet filed an answer, there is nothing in our Code of Civil Procedure that prevents a court from entertaining a defendant’s summary judgment motion brought at any time during the course of the proceedings, even prior to ruling on a defendant’s previously filed declinatory exception of improper venue. La. C.C.P. art. 966 A(1). See Williams v. Montegut, 99-2119 (La.App. 4 Cir. 2/2/00), 752 So.2d 329.

MetalPro next argues that, by granting Nautilus’ summary judgment motion dismissing Nautilus from this suit pri- or to ruling on MetalPro’s pending declina-tory exceptions, MetalPro’s substantive rights have been adversely affected even though it has never made a voluntary appearance in this action. Again, MetalPro’s argument rings hollow. Louisiana law is clear that waiver of venue by one defendant does not preclude another defendant from objecting to venue, as a “waiver of venue does not make improper venue proper.” See Spott v. Otis Elevator Company, 601 So.2d 1355, 1360 (La.1992); Habig v. Popeye’s, Inc., 553 So.2d 963, 966-67 (La.App. 4 Cir.1989). Therefore, assuming venue in this action is improper in Orleans Parish as to MetalPro, to the extent Nautilus’ waived venue as to itself, this does not make venue proper as to MetalPro, and MetalPro is free to set the hearing on its declinatory exceptions filed over two years ago. MetalPro has had ample time to seek a ruling on its declinatory exceptions, but has failed to do so. Even though Metal-Pro has asserted it has been “prejudiced” by the trial court’s alleged premature granting of Nautilus’ summary judgment motion — other than the obvious determination of no coverage under its CGL policy— it has failed to set forth any showing of prejudice. As nothing in Louisiana law prohibits a defendant from waiving venue as to itself, and because our Code of Civil Procedure specially allows a defendant to proceed with a motion- for summary judgment “at any time,”- MetalPro has failed to establish the trial court erred when it ruled on Nautilus’ motion for summary judgment prior to rendering judgment on the declinatory exceptions in this case. This assignment of error is without merit.

We now proceed to review the correctness of the trial court’s ruling granting Nautilus’ summary judgment motion and finding that, as a matter of law, the Nautilus policy issued to MetalPro precludes coverage for all of the damages asserted against it by Stewart. We review a grant of summary judgment de novo applying the same standard as the trial court. Supreme Services and Specialty Company, Inc. v. Sonny Greer, Inc., 06-1827 (La.5/22/07), 958 So.2d 634.

II. SUMMARY JUDGMENT

A summary judgment may be rendered on the issue of insurance coverage alone, although a genuine issue as to liability or the amount of damages exists. See La. C.C.P. art. 966 E; Leflore v. Coburn, 95-0690 (La.App. 4 Cir. 12/28/95), 665 So.2d 1323. A summary judgment declaring a lack of coverage under an insurance policy may not be rendered unless no reasonable interpretation of the policy, when applied to the undisputed material facts shown by the evidence supporting the motion, exists under which coverage could be afforded. Reynolds v. Select Properties, Ltd., 93-1480 (La.4/11/94), 634 So.2d 1180, 1183. An insurer seeking to avoid coverage through summary judgment must prove that some exclusion applies to preclude coverage. McMath Const. Co., Inc. v. Dupuy, 03-1413, p. 4 (La.App. 1 Cir. 11/17/04), 897 So.2d 677, 681.

An insurance policy is a conventional obligation that constitutes the law between the insured and the insurer, and the agreement governs the nature of their relationship. See La. C.C. art. 1983. Moreover, an insurance policy is a contract, which must be construed employing the general rules of interpretation of contracts. Supreme Services, supra at p. 5, 958 So.2d at 638; Reynolds, 634 So.2d at 1183; La. C.C. arts. 2045-2057. If the insurance policy’s language clearly expresses the parties’ intent and does not violate a statute or public policy, the policy must be enforced as written. See La. C.C. art. 2046; Rando v. Top Notch Properties, L.L.C., 03-1800 (La.App. 4 Cir. 6/2/04), 879 So.2d 821. Courts are not at liberty to alter the terms of insurance policies that are unambiguous. Edwards v. Daugherty, 03-2103 (La.10/1/04), 883 So.2d 932. However, if any doubt or ambiguity exists as to the meaning of a provision in an insurance policy, it must be construed in favor of the insured and against the insurer. See La. C.C. art. 2056. When the ambiguity relates to an exclusionary clause, the law requires that the contract be interpreted liberally in favor of coverage. Borden, Inc. v. Howard Trucking Co., Inc., 454 So.2d 1081, 1090 (La.1983); Williamson v. Historic Hurstville Ass’n, 556 So.2d 103, 107 (La.App. 4 Cir.1990).

17Liability insurance policies should be interpreted to effect, rather than to deny coverage. Yount v. Maisano, 627 So.2d 148, 151 (La.1993). However, it is well-settled that, absent a conflict with statutory provisions or public policy, insurers are entitled to limit their liability and to impose reasonable conditions upon the obligations they contractually assume. Supreme Services, supra at p. 6, 958 So.2d at 638-639; Reynolds, 634 So.2d at 1183; Marcus v. Hanover Insurance Co., Inc., 98-2040, p. 4 (La.6/4/99), 740 So.2d 603, 606. In these circumstances, unambiguous provisions limiting liability must be given effect. Supreme Services, supra at p. 6, 958 So.2d at 639. Only if the language can reasonably be read to have more than one reasonable meaning can the language be said to be ambiguous. Rando, supra at p. 3, 879 So.2d at 825. Whether a contract provision is ambiguous is a question of law. Pope v. Khalaileh, 05-0027, p. 5 (La.App. 4 Cir. 6/1/05), 905 So.2d 1149, 1152. Moreover, Nautilus bears the burden of proving that a loss falls within a policy exclusion. Blackburn v. National Union Fire Ins. Co., 00-2668, p. 6 (La.4/3/01), 784 So.2d 637, 641; Rando, supra at p. 3, 879 So.2d at 825.

Turning to the language of the Nautilus policy, we next determine whether, on the record before us, Stewart has alleged “property damage” so as to trigger the initial grant of coverage for MetalPro’s alleged liability under Nautilus’ CGL policy.

A. The “Property Damages” Alleged by Stewart

In its petition, Stewart avers that Metal-Pro manufactured and delivered steel studs for the UNO construction project that were defective because the studs failed to meet generally accepted specifications and tolerances required by the industry, as well as failed to meet the UNO construction project specifications. Stew-art posits several theories of recovery against MetalPro, including design, ^manufacture, and warning deficiencies under the LPLA, redhibition, and breach of contract. Specifically, Stewart alleges that, as a result of the defective steel studs, it suffered damages, including: the costs of the steel studs; installation, repair and removal costs; loss of income, profits, capital, and monies withheld under the contract; expert, engineering, and attorney’s fees; and costs associated with delays, in the construction project.

In addition to Stewart’s petition, the affidavit of Stewart’s president, Gordon Stewart, delineates additional damages occasioned to the third and fourth floors of the new UNO administrative building where MetalPro’s steel studs were used in their construction. These alleged damages include physical damage to the sheet-rock job.

B. The Nautilus CGL Policy

In general, a commercial general liability (“CGL”) insuring agreement, such as the CGL policy issued by Nautilus to Met-alPro, is a broad statement of coverage, and insurers limit their exposure to risk or liability for damages through a series of specific exclusions. We first determine whether the losses claimed by Stewart are covered by the language of the insuring agreement’s initial grant of coverage.

1. The Nautilus Insuring Agreement

The Nautilus policy issued to MetalPro states that the insurer “will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.” It further states that “[tjhis insurance applies to ‘bodily injury’ or ‘property damage’ only if: ... The ‘bodily injury’ or ‘property damage’ is caused by an ‘occurrence’ that takes place in the ‘coverage territory’... during the policy period.”

|aThe parties do not dispute that Metal-Pro’s liability to Stewart relative to the allegedly defective steel studs arises out of an “occurrence” within the “coverage territory” during the “policy period.” Hence, whether the insuring agreement provides coverage in this case hinges upon (1) whether Stewart’s claims for damages arise out of “property damage” as defined in the Nautilus policy and, if so, (2) whether Nautilus’ policy nevertheless contains one or more exclusions that explicitly eschews coverage for all of the claims made by Stewart against MetalPro.

The Nautilus policy defines “property damage,” in relevant part, as follows:

a. Physical damage to tangible property, including all resulting loss of use that property. All such losses of use shall be deemed to occur at the time of the physical injury that caused it; or
b. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the “occurrence” that caused it.

Nautilus characterizes Stewart’s claims against MetalPro as claims solely for economic losses, ie., breach of contract and redhibition damages due to the misrepresentation of the condition or quality of products. Nautilus argues claims for pure economic losses such as those alleged by Stewart are not “claims for damages arising out of ‘property damage’ as defined by the Nautilus policy,” and, therefore, coverage under the Nautilus insuring agreement is not triggered. Conversely, MetalPro and Stewart argue that the damages Stewart contends it sustained as a result of the defective studs represent a loss of property and constitute “property damage” as defined by the Nautilus policy. We agree with MetalPro and Stewart and find that, to the extent summary judgment was granted |inon the basis that Stewart failed to allege “property damage” triggering the initial grant of coverage under the Nautilus policy, the trial court erred.

If, as Nautilus contends, losses actionable for breach of contract or redhibition can never constitute “property damage” for purposes of the initial grant of coverage in a CGL policy, then the “impaired property” or other similar exclusions would be entirely superfluous and unnecessary. For example, the “impaired property” exclusion, discussed infra, eliminates coverage for an insured’s liability for property damage to the insured’s own work or product, and liability solely for loss of use attendant to the repair of it’s own defective work or product. If the insuring agreement never confers coverage for this type of liability as an original definitional matter, there would be no need to specifically exclude it.

The Lawyer and Harding cases relied upon by Nautilus are inapposite. In each case, the plaintiffs’ allegations for damages resulting from breach of contract and negligent misrepresentation arose out of the sale and purchase of real estate, not with a construction project, and were limited solely to economic damages (not “property damages”). Specifically, both the Lawyer and Harding plaintiffs claimed they did not get the home they bargained for because the sellers had misrepresented the condition of the homes at the time of purchase. Contrary to the allegations made by the plaintiffs in Lawyer and Harding, Stewart contends MetalPro’s failure to produce steel studs that met the contract specifications resulted, not only in economic losses due to the consequential loss of income and 1profits from the delay in the construction project, but in physical damages to tangible property; namely, to the sheetrock job.

Furthermore, we find that Nautilus’ reliance on Gaylord Chemical Corp. v. Pro-pump, Inc., 98-2367, (La.App. 1 Cir. 2/18/00), 753 So.2d 349, for the proposition that Stewart’s claims against MetalPro do not constitute claims for “property damage,” which would trigger coverage of the Nautilus policy, is likewise misplaced. In Gaylord, at issue was not whether “property damage” was sustained — as is the issue in the instant matter — but rather, whether the seller’s misrepresentation of the pump constituted “an occurrence” such that coverage was triggered. Moreover, Propump’s concession that its redhibition claims were not “covered” claims under its CGL policy, was not a concession that redhibition claims can never constitute “property damage” for purposes of triggering coverage under the insuring agreement as espoused by Nautilus herein. Rather, it was a recognition that purely redhibition, or claims solely for economic losses, are generally not covered by CGL policies because of policy exclusions restricting coverage for damages, such as the “work product” exclusion, and not on any inherent limitation in the general grant of coverage for “property damage” as required by the insuring agreement. Accordingly, Gaylord must not be read for the proposition that a loss actionable in contract or redhibition, rather than in tort, 112can never constitute “property damage” or an “occurrence” under a CGL policy for purposes of triggering coverage under the insuring agreement.

Stewart’s petition alleges claims for breach of contract, redhibition, and damages. The petition further prays for an award of general damages, special damages, expert fees, and attorney’s fees. A review of the record shows a dispute exists as to whether Stewart has alleged solely a contractual breach and redhibition action for economic losses, or whether Stewart alleges contractual breach, redhibition, in addition to other allegations of liability based in tort. As our case law presupposes that “[a] plaintiffs complaint against the insured is examined with the assumption that all the allegations are true,” we disagree with Nautilus and find that, in addition to economic losses, Stewart has sufficiently alleged that there may have been damage to property other than to the steel studs themselves, or incident to their removal and repair, thereby triggering coverage under the insuring agreement of the Nautilus CGL policy issued to Metal-Pro.

Having concluded Stewart’s claims for “property damage” trigger the initial grant of coverage under Nautilus’ insuring agreement does not end our inquiry. We must reverse the trial court’s grant of summary judgment in favor of Nautilus 1^unless coverage for Stewart’s property damage claims is precluded by one or more of the policy exclusions.

2. Policy Exclusions

The Nautilus policy contains several exclusions, three of which require our examination: exclusion (b), for contractually-assumed liabilities; exclusion (k), for property damages to the insured’s product; and exclusion (m), for property damage to impaired property or property that has not been physically injured. We examine the applicable policy provisions and exclusions to determine whether the trial court erred in finding that coverage for all of the damages asserted by Stewart is precluded as a matter of law, or whether coverage is protected by the policy’s products-completed operations hazard (“PCOH”) provision for at least some of the damages claimed.

a. Contractually-Assumed.

Liability Exclusion

In addition to damages, Stewart’s petition sets forth claims against MetalPro for redhibition and breach of contract. Nautilus avers that, in Louisiana, redhibition and breach of contract damages are excluded under CGL policies such as the CGL policy issued by Nautilus to Metal-Pro, and thus, no coverage exists for these claims as a matter of law. MetalPro and Stewart both argue that the Nautilus “contractual liability” exclusion is inapplicable to the facts and circumstances of this case because there has been no showing that MetalPro assumed liability under its contract or agreement with Stewart. We agree.

|uThe “contractual liability” exclusion denies coverage for claims arising out of:

b. “Bodily injury” or “property damage” for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages:
(1) That the insured would have in the absence of the contract or agreement; or
(2) Assumed in a contract or agreement that is an “insured contract”, provided the .:. “property damage” occurs subsequent to the execution of the contract or agreement.

The Nautilus policy defines “insured contract” as

9. “Insured Contract” means:
f. That part of any other contract or agreement pertaining to your business ... under which you assume the tort liability of another party to pay for “bodily injury” or “property damage” to a third person or organization. Tort liability means a liability that would be imposed in the absence of any contract or agreement.

This exclusion generally operates to deny coverage when the insured assumes responsibility for the conduct of a third party. See William Shelby McKenzie and H. Alston Johnson, III, Insurance Law and Practice § 189, 15 La. Civil Law Treatise (3rd Ed.2006). See also Broadmoor Anderson v. National Union Fire Insurance Company of Louisiana, 40,096, p. 12 (La.App. 2 Cir. 9/28/05), 912 So.2d 400, 407. As MetalPro is not being sued as the contractual indemnitor of a third party’s conduct, but rather for its own conduct, we conclude the exclusion is inapplicable in this case. Moreover, even if we were to find that the contractual liability exclusion were somehow applicable to situations in which the insured is being sued for its own conduct, the exclusion would not apply here. The record is devoid of any evidence of an indemnity or hold harmless agreement 11ñexisting between Stewart and MetalPro, and therefore, we hold that the “contractual liability” exclusion is inapplicable to the coverage issue presented in the instant case. Accordingly, to the extent the trial court’s grant of summary judgment in favor of Nautilus was based on a finding that the “contractual liability” exclusion precluded coverage for the claims asserted by Stewart, we find the trial court erred.

b. The Impaired Property Exclusion

Nautilus contends that coverage for the damages claimed by Stewart is further precluded by the “impaired property” ex-r elusion contained in its CGL policy. This exclusion denies coverage for claims arising out of:

m. “Property damage” to . “impaired property” or property that has not been physically injured arising out of:
(1) A defect, deficiency, inadequacy, or dangerous condition in “your product” or “your work”; or
(2) A delay or failure by you or anyone acting on your behalf to perform a contract or agreement in accordance with its terms.
This exclusion does not apply to the loss of use of other property arising out of sudden and accidental physical injury to “your product” or “your work” after it has been put to its intended use.

The Nautilus policy defines “impaired property,” in pertinent part, as “tangible property, other than ‘your product’ or ‘your work’, that cannot be used or is less useful because ... [i]t incorporates ‘your product’... that is known or thought to be defective ... if such property can be restored to use by ... [t]he repair ... or removal of ‘your product.’ ”

Specifically, Nautilus contends that Stewart’s claims, i.e., that MetalPro was supposed to provide steel studs that met contract specifications, but failed to do so l1ficausing Stewart to incur costs due to delay in completion of the UNO construction project while the repairs caused by the studs were undertaken, are for loss-of-use costs excluded by the “impaired property” exclusion. Nautilus’ contentions, however, are based on one, or both, of the following assumptions: (a) that property other than the steel studs, or attendant to their removal and/or repair, was not physically injured as a result of MetalPro’s failure to provide steel studs that met contract specifications, and/or (b) that all of the delay costs and loss of profits incurred by Stewart were due to delays associated with the removal and/or repair of Metal-Pro’s steel studs.

We find the “impaired property” exclusion to be clear and unambiguous. The exclusion precludes coverage for damage to property that has not been physically injured or for which only loss of use is sought. See North American Treatment Systems, Inc. v. Scottsdale Ins. Co., 05-0081, pp. 24-25 (La.App. 1 Cir. 8/23/06), 943 So.2d 429, 445-46; PCS Nitrogen Fertilizer, L.P. v. U.S. Filter/Arrowhead, Inc., 01-2577, p. 6 (La.App. 1 Cir. 11/8/02), 834 So.2d 456, 459. On the other hand, the exclusion does not apply where there is physical damage to property other than the insured’s work or product after the product has been put to its intended use. Gaylord, supra at p. 7, 753 So.2d at 355. See Lee R. Russ, et al., 9A Couch on Insurance § 129.21 (3rd ed.2006). See also Superior Steel, Inc. v. Bituminous Cas. Corp., 415 So.2d 354 (La.App. 1 Cir. 1982).

In the instant case, we find there remain genuine issues of material fact precluding summary judgment regarding the applicability of the “impaired property” exclusion. Nautilus’ contention that the only damages Stewart maintains it sustained arise out of property damage and loss of use related solely to the steel studs themselves, or consequences of having to go back and repair the steel studs, is not conclusively discernable from the record.

A review of the summary judgment evidence, particularly the affidavit of Stewart’s president, Gordon Stewart, reveals that Stewart has alleged physical damages to tangible property other than to the steel studs (ie., to the sheetrock job), and loss of use and profits resulting from the delay in completion of the UNO construction project in order to repair the damages to this other property. However, it is unclear from the record before us whether Stewart’s alleged damages to “other” property are, in fact, solely attendant to the removal and repair of the allegedly defective steel studs.

Consequently, we hold that, to the extent the evidence shows damages arising out of, or solely incidental to, the removal and/or repair of the allegedly defective steel studs, the Nautilus policy clearly ex-eludes coverage for these damages under the “impaired property” exclusion. But, to the extent Stewart has alleged and can prove damages for loss of use, and property damages caused by the steel studs that were occasioned to property other than the steel studs and unrelated to their removal and/or repair, then the “impaired property” exclusion does not apply to preclude coverage for these specific items of damages.

[ 18c. The “Products-Completed Operations Hazard” Provision and the “Your Product” Exclusion

MetalPro argues that coverage for Stewart’s property damage claims, or at least some of them, arising out of MetalPro’s steel studs is afforded by the Nautilus policy under the PCOH provision, which provides coverage for property damage arising out of an insured’s completed product or work performed away from the insured’s premises. Conversely, Nautilus avers that coverage for all of Stewart’s claims are precluded by the “your product” exclusion, which eliminates coverage for “property damage” to “your product” arising out of it or any part of it. 11 alternatively, MetalPro contends there is an inherent conflict existing between the “your product” exclusion and the PCOH provision that cannot be reconciled, thus creating an ambiguity in favor of coverage. See La. C.C. art. 2056.

In light of the Louisiana Supreme Court’s recent decision in Supreme Services and Specialty Co. v. Sonny Greer, Inc., 06-1827 (La.5/22/07), 958 So.2d 634, which interpreted policy provisions identical to the provisions presently before us, we hold that no inherent conflict between the PCOH provision and the “work product” exclusion exists so as to cause an ambiguity in the Nautilus policy. Instead, at issue in the case sub judice is whether, when applying both provisions, coverage for all of the damages alleged by Stewart is precluded under | Mthe Nautilus policy’s “work product” exclusion, or whether coverage for some of the damages alleged is protected by the policy’s PCOH provision.

In Supreme Services, the property owner sued its general contractor for breach of contract and warranties, seeking recovery for damages resulting from the general contractor’s alleged defective design and faulty construction of concrete slabs poured by its subcontractors on a construction project. The general contractor made demand against its CGL insurer seeking coverage for its liability to repair or replace the cracked concrete slabs. The CGL insurer moved for summary judgment arguing its policy’s “work product” exclusion expressly precluded coverage for improper construction by the insured’s own workers or any of its subcontractors. The trial court agreed and granted the insurer’s motion. On appeal, the court reversed finding the “work product” exclusion was inapplicable to the work performed by the subcontractors, and that the PCOH provision was ambiguous requiring an interpretation of the policy in favor of coverage. Supreme Services, supra at p. 3, 958 So.2d at 637. The Supreme Court granted writs to determine whether the policy afforded coverage for the faulty workmanship performed by, or on behalf of, the contractor, and to address the conflict, if any, between the policy’s PCOH provision and its “work product” exclusion. Id.

After reviewing both the “work product” exclusion and the PCOH provision, and conducting an analysis of existing Louisiana law addressing the same or similar provisions, the Supreme Court held there were no contradictions or |21 ambiguities in the language of these two policy provisions. In so holding, the Supreme Court stated:

Under the “work product” exclusion, the insured or its subcontractor becomes liable for damage to its work or its product caused by its faulty workmanship. Under the PCOH provision, damages other than the faulty work product or work itself, arising out of the faulty workmanship are covered by the policy. Stated differently, if a subcontractor’s faulty electrical work caused the building to burn down before completion, the “work product” exclusion would eliminate coverage for the faulty electrical work performed by the contractor or subcontractor. However, the operations hazard coverage applies not to the faulty work, but [to] damage arising out of the faulty work (fire damage) would not be excluded as it would be covered under the PCOH provision.

Supreme Services, supra at pp. 16-17, 958 So.2d at 645.

The claim involved in Supreme Services was limited exclusively to damages to the work product itself — the cracked concrete slab — not a claim for damages to other property arising out of the work or product and covered under the PCOH provision. Thus, the protection for the work performed by the contractor under the PCOH damage section of the CGL policy was not triggered and did not come into play. Consequently, the Supreme Services Court stated:

In other words, the PCOH provision only applies to those injuries [or damage] which might occur as a result of the damaged product. In the instant case there is no need to delineate the PCOH provision because there is no other product damaged or third person injured. Here, the only applicable provision is the “work product” exclusion, which applies to work performed by [the general contractor.]

Because the damages claimed in Supreme Services fell squarely within the “work product” exclusion precluding coverage for all the damages claimed, the | ^Supreme Court closely examined the “work product” exclusion and provided the following legal precepts concerning the basis of the exclusion and how and when the exclusion applies:

• The “work product” exclusion reflects the insurance industry’s intent to “avoid the possibility that coverage under a CGL policy will be used to repair and replace the insured’s defective products and faulty workmanship.”
• A CGL policy is not written to guarantee the quality of the insured’s work or product.
• The “exclusionary language in [the] liability policy makes it clear that damage to the product itself is excluded from coverage.”
• The CGL policy “excludes coverage for damage to property on which the [insured] ... worked” and further “excludes coverage to property that must be repaired or replaced because the [faulty] work performed by the [insured] was incorrectly performed.”
• “Louisiana courts have consistently held that a CGL policy containing the “work product” exclusion eliminates coverage for the costs of repairing or .replacing the insured’s own defective work or defective product.”
|¾3* While “repair and replacement costs for faulty work are excluded ... any damage to other property that may result is included.”

Thus, applying the above legal precepts to the allegations of damages made by Stewart against MetalPro herein, it is clear the Nautilus policy precludes coverage for Stewart’s claims for damages to MetalPro’s allegedly defective steel studs, all costs related to the replacement of the steel studs, and for any damage to property attendant to their removal and/or repair, including any loss of use or profits caused by the delay in completion of the UNO construction project during the removal and/or repair process.

Dissimilar to Supreme Services where the PCOH provision was deemed inapplicable to the property damage claims made against the insured, because we find the claims asserted herein by Stewart (ie., for damage to property other than to Metal-Pro’s allegedly defective steel studs), potentially trigger coverage under the protection of Nautilus’ PCOH provision, we analyze the provision.

PCOH coverage applies to property damage arising out of the insured’s product or work when all of the work in its contract is performed away from the insured’s premises and has been completed, even if the product or work may need some correction, repair, or replacement. William Shelby McKenzie and H. Alston Johnson, III, Insurance Law and Practice § 186, p. 370, in 15 Louisiana Civil Law Treatise (2nd Ed.1996). See also McMath, supra at p. 7, 897 So.2d at 682. The purpose of the PCOH provision is to afford coverage to insureds for liability ^arising out of damage occasioned to property other than to their own work or product when the insured’s work or product has been completed.

The PCOH provision is further explained by McKenzie and Johnson, as follows:

This provision can clearly be explained by this example:
Suppose an insured contracted to make and install a sign on a commercial building. After the work was completed, the sign fell due to defective installation, causing damage to the sign, the building’s canopy, a parked car, and also bodily injury to a pedestrian. The insurer covering the products-completed operations hazard would cover all claims except the contractor’s responsibility to repair and replace the sign, coverage for which would be excluded under the product and work exclusions.

Applying the above interpretation of the PCOH provision to the claims for damages asserted by Stewart contained in the record, protection of the PCOH provision is arguably triggered to afford coverage for at least some of the alleged property damage claims Stewart asserts against MetalPro. The PCOH protection includes coverage for property damage arising out of MetalPro’s product (i.e., the steel studs), when production and delivery of the product called for in the contract was complete (ie., upon MetalPro’s delivery of the steel studs to the construction site), and the work (use of the steel studs in the construction of the administration building) occurred away from MetalPro’s premises. Thus, to the extent the ^damages occasioned to the sheetrock job were damages to “other property” as defined in the Nautilus policy, and applicable case law cited herein interpreting it, protection and coverage under the PCOH provision is triggered providing coverage for these specific damages.

Accordingly, based on the record before us, and in accordance with the Supreme Court’s holding in Supreme Services, supra, we affirm the trial court’s grant of summary judgment finding that the Nautilus CGL policy’s “work product” exclusion unambiguously excludes coverage for the damages alleged by Stewart caused to MetalPro’s defective steel studs, the cost to replace the steel studs, and for any damage attendant to their repair and/or removal. We further conclude, however, that the trial court erred in its grant of summary judgment in favor of Nautilus, excluding coverage for all of Stewart’s alleged property damage claims. We find there remain genuine issues of material fact precluding summary judgment determination as to whether all, or any, of the damages alleged by Stewart occasioned to the sheetrock job trigger protection of the PCOH provision, and which of these damages, if any, are precluded by the “work product” exclusion. Therefore, we reverse the trial court’s ruling as to these alleged damages and remand the matter for consideration of additional evidence in accordance with the Supreme Court’s holding in Supreme Services and in accordance with the findings and conclusions of law set forth in this opinion.

On remand, if Stewart is able to adduce evidence proving its alleged damages were not attendant to or caused solely as a result of the removal and repair of Metal-Pro’s allegedly defective steel studs, then the Nautilus policy [^provides coverage under the PCOH provision as delineated above for these damages. To the extent, however, the evidence presented on remand establishes that Stewart’s alleged damages were caused exclusively as a result of or during the removal and repair of the steel studs, then the Nautilus policy unambiguously precludes coverage under the “work product” exclusion, and summary judgment excluding all damages from coverage under the Nautilus policy at that time would be appropriate.

C. Stewart’s Claims Under the Louisiana Products Liability Act And For General Damages

In its original motion for summary judgment, and again in its appellee brief, Nautilus contends that Stewart cannot maintain an action under the LPLA for its claims due to deficiencies in design, manufacture, and warning relating to Metal-Pro’s steel studs, as these claims are solely for economic losses that do not fall within the Act’s definition of “damage.” Specifically, Nautilus contends, once again, that Stewart seeks recovery for claims limited solely to redhibition and breach of contract, which “damages” are not com-pensable under the LPLA, and are general damages recoverable arising out of purely economic losses. Nautilus continues to ignore the record evidence, which shows that Stewart’s allegations of damages sustained are, arguably, not limited to damages arising solely out of economic losses, as addressed at length herein.

Stewart maintains that, contrary to Nautilus’ contentions, it has asserted a valid claim against MetalPro under the LPLA for damages to property other than to MetalPro’s defective product and not limited to solely economic losses, providing another basis for recovery under the Nautilus policy. MetalPro asserts that the issue of whether Stewart has alleged valid claims for recovery under the LPLA or for general damages is irrelevant to the tissue of coverage under the Nautilus policy upon which the trial court granted summary judgment. We agree.

Based on our review of the record evidence, we find that Stewart has sufficiently alleged physical damage to property other than to MetalPro’s steel studs alone and, as such, Stewart’s request for recovery in this case is not limited to recovery for purely economic losses. Consequently, Stewart’s allegations are sufficient to maintain an action against Metal-Pro for damages under the LPLA. The same reasoning holds true for Stewart’s claims for general damages. Accordingly, to the extent the trial court’s grant of summary judgment rested on a finding that, based on Stewart’s allegations for damages to property resulting from the use of MetalPro’s defective steel studs in a construction project, Stewart cannot maintain an action under the LPLA or for general damages; further, Stewart’s potential recovery based on these allegations is limited solely to economic losses in red-hibition and for breach of contract, we find that the trial court erred.

CONCLUSION

We find the trial court did not err in its consideration and ruling upon Nautilus’ summary judgment motion prior to rendering judgment on MetalPro’s declinatory exceptions, which MetalPro has not waived and may still set for hearing.

We further find that MetalPro and Stewart have adduced sufficient summary judgment evidence to show that Stewart’s pleadings contain allegations of “property damage” caused by an occurrence during the policy period, thereby triggering the initial grant of coverage under the Nautilus insuring agreement. This 12Sshifted the burden to Nautilus to show that one or more of its policy exclusions apply to unambiguously preclude coverage for all of the claims asserted by Stewart. We find that Nautilus has only partially carried its burden.

Accordingly, we (1) affirm the trial court’s granting of summary judgment finding that the Nautilus CGL policy precludes coverage for those claims asserted by Stewart seeking damages related solely to the costs of MetalPro’s steel studs, the costs to replace the steel studs, the costs to remove and repair the steel studs, for all costs arising out of the repair of damages to property necessitated by the repair and removal of the steel studs, the loss of use, income, profits, and fees, et cetera related to the delay in completion of the construction project necessitated by the need to remove and repair the steel studs and perform repairs to property damaged during the removal and repair process; (2) reverse the trial court’s grant of summary judgment to the extent the court found there existed no genuine issue of material fact regarding whether the Nautilus policy unambiguously excluded coverage for all of Stewart’s claims of damage, including damage to the gypsum wall board panels, tape and joint compound applied to the gypsum wall board panels, paint finishes, carpet and carpet base, and vinyl base boards occasioned to the third and fourth floors of the UNO administration building; and (3) remand the matter to the trial court for further proceedings in accordance with this opinion for purposes of admitting and considering evidence regarding the “causation” and exact nature of the alleged damage to property other than the steel studs or incident to their removal and repair (ie., were these damages caused by the steel studs during their removal and repair process and, thus, precluded from coverage under the “your product” and/or “impaired property” exclusions; or caused after the steel studs were incorporated into the construction, but pri- or, or unrelated, to thej^removal and repair process and, thus, protected by the PCOH provision; or some combination of both resulting in some damages claimed being covered and some damages claimed being excluded from coverage).

For the foregoing reasons, we further hold that Stewart has alleged damages to property sufficient to maintain an action under the Louisiana Products Liability Act and for general damages in this case.

AFFIRMED IN PART, REVERSED IN PART; REMANDED.

      . While Nautilus timely excepted to venue in Orleans Parish, nothing in Louisiana law prohibits a defendant from moving forward with a motion for summary judgment, which can be filed at any time in accordance with La. C.C.P. 966 A(l), prior to a ruling on its timely filed venue exception.

      . The Montegut case is factually and procedurally distinguishable from the instant case. In Montegut, having affirmed that venue was proper in St. John the Baptist Parish, this court pretermitted any discussion as to whether it was proper to hear defendant's venue exception in priority to plaintiff’s motion for summary judgment; however, it was obvious in that case that the plaintiff prematurely filed a motion for summary judgment since the defendant had not yet filed an answer as is required by La. C.C.P. art. 966.

      .By the filing of a Statement of Facts Which Are Not in Dispute and proceeding with the hearing on its Motion for Summary Judgment, actions that are arguably tantamount to proceeding to a trial on the merits of the case, Nautilus effectively waived its objection to venue in this case.

      . At no point does MetalPro concede that the steel studs it manufactured and delivered to Stewart for use in the UNO construction project were defective.

      . Lawyer v. Kountz, 97-2701 (La.App. 4 Cir. 7/29/98), 716 So.2d 493 (action for redhibition based on hidden defects does not constitute “property damage” as contemplated by the terms of the homeowners policy); Harding v. Wang, 98-1865 (La.App. 4 Cir. 2/3/99), 729 So.2d 9 (purchaser's pecuniary damages as a result of the purchase of property with hidden defects was not “property damage” within the meaning of the seller’s liability policy).

      . The Gaylord court held that no coverage existed under a CGL policy for an action against a seller to recover for negligent misrepresentation of a product, in addition to rescission of sale, refund of purchase price, and lost profits incurred due to the failure of the product to perform.

      . The Gaylord court noted that Propump's concession as to its redhibition claim was consistent with "jurisprudence interpreting similar commercial general liability policies, holding that these unambiguously exclude coverage for damage to the work or product itself or for repair or replacement of the insured’s defective work or product.” Gaylord, supra at p. 5, 753 So.2d at 353 n. 5.

      .Under La. C.C.P. art. 852, the pleadings allowed in civil actions include "petitions, exceptions, written motions and answers.” See Grimaldi Mechanical, L.L.C. v. The Gray Insurance Company, 05-0695, p. 9 (La.App. 4 Cir. 6/2/06), 933 So.2d 887, 892. Also, La. C.C.P. art. 1154 provides that amendments to the pleadings in order to conform to the evidence are proper.

      . Grimaldi, supra at p. 20, 933 So.2d at 897-898; Bryant v. Motwani, 96-1351, p. 8 (La. App. 4 Cir. 10/30/96), 683 So.2d 880, 884.

      . See also Korossy v. Sunrise Homes, Inc., 94-473 (La App. 5 Cir. 3/15/95), 653 So.2d 1215, wherein the owners of homes damaged by excessive differential settlement of foundations sued in redhibition due to faulty construction and defective materials. The insured sought a determination of coverage under its CGL policy. The court determined that the allegations of damage for faulty workmanship was “property damage caused by an occurrence” for purposes of triggering coverage under the CGL's insuring agreement.

      .In its brief, Nautilus cites the case of Castigliola v. Department of Community Development, 538 So.2d 1139 (La.App. 5 Cir.1989) for support of its position that coverage is precluded by the "contractual liability” exclusion; however, while that case relied on other exclusions to deny coverage under the insured's CGL policy, the "contractual liability” exclusion was not even mentioned.

      . Each of the cases cited by Nautilus in its original memorandum in support of its summary judgment motion and in its appellee brief involve cases where the recovery sought was for loss of use and/or profits resulting from the insured’s failure to either perform a contractual obligation timely or its failure to perform in accordance with the contract specifications. None of the cases relied upon by Nautilus involved loss of use and/or loss of profits arising out of physical damage occasioned to tangible property other than the insured's product. See Williamson v. Alewine, 417 So.2d 64 (La.App. 3 Cir.l982)(coverage precluded for customer’s suit against auto garage and its CGL insurer for costs of fixing faulty repairs performed by insured and loss of profits due to delay in repairs); Cute-Togs of New Orleans v. Louisiana Health Serv. & Indemn. Co., 386 So.2d 87 (La.1980)(coverage precluded under CGL policy for loss of profits incurred due to insured’s failure to timely perform a contractual obligation); PCS Nitrogen Fertilizer, L.P. v. U.S. Filter/Arrowhead, Inc., 01-2577 (La.App. 1 Cir. 11/8/02), 834 So.2d 456 (no coverage under CGL policy for loss of profits resulting from insured’s failure to furnish a water supply system in conformity with contract specifications).

      . The Nautilus policy’s Declarations Page (form SI50 (11-97)) indicates MetalPro purchased PCOH protection with a $1,000,000.00 aggregate limit. The Declaration Page refers to form S902 (12-98) for a schedule of forms and endorsement liability applying “to this Coverage Part and made part of this policy.” Looking at form S902 (12-98), it is clear that the PCOH exclusion (form CG2104 (11-85)) was not made a part of the Nautilus policy. The Nautilus policy issued to MetalPro, therefore, contains PCOH protection, which provides in pertinent part:
      a. Includes all “bodily injury” and "property damage” occurring away from premises you own or rent and arising out of "your product” or "your work” except:
      (1) Products that are still in your possession; or
      (2) Work that has not yet been completed or abandoned. However, "your work” will be deemed completed at the earliest of the following times:
      (a) When all of the work called for in your contract has been completed.
      (b) When all of the work to be done at the job site has been completed if your contract calls for work at more than one job site.
      (c) When that part of the work done at a job site has been put to its intended use by any person or organization other than another contractor or subcontractor working on the same project.
      Work that may need service, maintenance, correction, repair or replacement, but which is otherwise complete, will be treated as completed.
      b. Does not include "bodily injury” or "property damage” arising out of:
      (1) The transportation of property, unless the injury or damage arises out of a condition in or on a vehicle not owned or operated by you, and that condition was created by the "loading or unloading” of that vehicle by any insured;
      (2) The existence of tools, uninstalled equipment or abandoned or unused materials;
      (3) Products or operations for which the classification, listed in the Declarations or in a policy schedule, states that products-completed operations are subject to the General Aggregate Limit.

      . The policy defines "your product” as
      (1) Any goods or products, other than real property, manufactured, sold, handled, distributed or disposed of by:
      (a) You;
      (b) Others trading under your name; or
      (c) A person or organization whose business or assets your have acquired; and
      (2) Containers (other than vehicles), materials, parts or equipment furnished in connection with such goods or products.
      "Your product” further includes "warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of "your product”; and the providing or failure to provide warnings or instructions.

      . The “your product” and "work product” exclusions are often referred to collectively as the "work product” exclusions. Louisiana Civil Law Treatise: Insurance Law and Practice § 197 (1996). Although the "work” and "product” exclusions are actually two separate exclusions, they are often discussed together since some policy forms incorporate them into a single exclusion (a "work product” exclusion), and they address similar concepts. North American Treatment Systems, Inc. v. Scottsdale Ins. Co., 05-0081, p. 22 (La.App. 1 Cir. 8/23/06), 943 So.2d 429, 444-45. The primary purpose of the "work” exclusion is to preclude liability coverage for an insured's own faulty workmanship, while the "product” exclusion serves the similar purpose of precluding coverage for damage to the insured’s own defective product. See Lee R. Russ, et al., 9A Couch on Insurance § 129.19 (3rd ed.2006).

      . In Supreme Services, the Supreme Court was presented with an alleged conflict between the policy’s PCOH provision and its "your work” exclusion, rather than the "your product” exclusion that is at issue in the instant case. However, as previously stated, the "your work” and "your product” exclusions are generally dealt with collectively as the "work product” exclusions, which is how the Supreme Court addressed them in Supreme Services. Consequently, we, too, address the exclusions collectively as the “work product” exclusions.

      . The PCOH provision, "your product” and "your work” exclusions contained in the CGL policy at issue and interpreted by the Supreme Court in Supreme Services are identical to the applicable provisions found in the Nautilus policy.

      . Significantly, unlike the allegations made by Stewart in the record of the instant case, the property owner made no allegations, nor presented any evidence, of damages sustained to property except to the work product itself, i.e. the cracked concrete slabs.

      . Id.

        . Supreme Services, supra at p. 10, 958 So.2d at 641. See also William Shelby McKenzie and H. Alston Johnson, III, Insurance Law and Practice § 186, pp. 512-521 and§ 195, at pp. 554-562 in 15 La. Civil Law Treatise (3rd Ed.2006).

      . Supreme Services, supra atp. 10, 958 So.2d at 641, citing McMath Constr. Co., Inc. v. Dupuy, 03-1413, p. 7 (La.App. 1 Cir. 11/17/04), 897 So.2d 677, 682.

      . Supreme Services, supra at p. 10, 958 So.2d at 641.

      . Supreme Services, supra atp. 11, 958 So.2d at 642. See also Vintage Contracting, L.L.C. v. Dixie Building Material Company, Inc., 03-422 (La.App. 5 Cir. 9/16/03), 858 So.2d 22.

      . Supreme Services, supra at p. 14, 958 So.2d at 643. This is based on the principle that CGL policies are not intended to serve as performance bonds. McMath, supra at p. 7, 897 So.2d at 682. The jurisprudence has further interpreted the "work product” provisions to exclude consequential damages directly resulting from defective products, such as costs incurred as a result of the delay in a construction project during the repair and replacement process. Id. supra at p. 7, 897 So.2d at 682-83; Gaylord, supra at pp. 8-10, 753 So.2d at 355-56. In McMath, the evidence showed damage solely to the insured's work or product and no physical damage to the contractor's property, thus the PCOH was not triggered to afford coverage. Similarly, in Gaylord, supra, the insured misrepresented the performance of a pump it manufactured. The pump's failure to perform to specification rendered it useless. As in McMath, Gaylord did not allege or show damage to any property other than the lost profits, expenses, fees, and costs incurred due to the pump’s failure to perform as represented. While the "work product” exclusions unambiguously precluded coverage for the damages caused in McMath and Gaylord, both courts acknowledged that "damage to property other than the insured’s work or product may not be unambiguously excluded under the [PCOH and "work product” provisions]”. McMath, supra at p. 7, 897 So.2d at 683; Gaylord, supra atp. 9, 753 So.2d at 355-56.

        .Supreme Services, supra at p. 14, 958 So.2d at 643.

      . Supreme Services, supra at p. 15, 958 So.2d at 644 (citing McKenzie and Johnson, fn. 34, p. 521).

      . The record reveals MetalPro contracted with Stewart to manufacture and supply steel studs to be used for installation of sheetrock in the UNO construction project. After Met-alPro completed production of the steel studs and delivered them to the construction site, the studs were used by Stewart to frame and install the sheetrock. Thereafter, Stewart was notified that MetalPro’s steel studs were pulling away from the sheetrock on the third and fourth floors of the UNO building causing damage to the sheetrock job.


source: Caselaw Access Project

author: LEON A. CANNIZZARO, JR., Judge.

license: Public Domain

text:
    Katheryn Aronson, Wife of/and Mark BEST v. STATE FARM FIRE AND CASUALTY COMPANY.
    No. 2007-CA-0573.
    Court of Appeal of Louisiana, Fourth Circuit.
    Oct. 10, 2007.

      Laurence E. Best, Mark E. Best, Best Koeppel, New Orleans, LA, for Plaintiffs/Appellants, Katheryn Aronson and Mark Best.
    James R. Nieset, Jr., Nicholas C. Gristi-na, Hoy R. Hughes, Porteous, Hainkel & Johnson, LLP, New Orleans, LA, for Defendant/Appellant, State Farm Fire and Casualty Company.
    (Court composed of Judge DENNIS R. BAGNERIS, SR., Judge MAX N. TOBIAS, JR., Judge DAVID S. GORBATY, Judge EDWIN A. LOMBARD, Judge LEON A. CANNIZZARO, Jr.).
   LEON A. CANNIZZARO, JR., Judge.

| T This case involves a claim made by Katheryn Aronson Best and her husband, Mark Best, (the “Bests”) under a renter’s insurance policy (the “Renter’s Policy”) issued to them by State Farm Fire and Casualty Company (“State Farm”). State Farm denied coverage under the Renter’s Policy, and the Bests filed suit to enforce it. The trial court rendered judgment in favor of the Bests in the amount of the limits on the Renter’s Policy and also assessed statutory penalties against State Farm. State Farm is appealing the judgment against it, and the Bests are appealing the amount of the penalty awarded to them.

FACTS AND PROCEDURAL HISTORY

Prior to Hurricane Katrina the Bests lived in one side of a two-story duplex located in the Lakeview area of New Orleans (the “Apartment”). The duplex was owned by Mrs. Best’s mother, Judith Al-lain. Both sides of the duplex had two stories. During Hurricane Katrina, the first story of the duplex was flooded on both sides. The hurricane also caused damage to the second story of the duplex on both sides as well as to the contents of the Apartment.

jgThe Renter’s Policy covered damage caused “when the direct force of wind ... damages the building causing an opening in a roof or wall and the rain, ... enters through this opening.” Excluded losses included those caused by water damage, including flood and overflow of a body of water, whether or not driven by wind.

Mrs. Allain’s ownership interest in the duplex was insured under an owner’s insurance policy that had been issued to her by State Farm (the “Owner’s Policy”). The Owner’s Policy insured against damage caused by various perils. However, the Owner’s Policy, like the Renter’s Policy, did not cover damage caused by flooding.

Mrs. Allain made a claim under the Owner’s Policy for the damage that was caused to the second story of her duplex. The Bests later made a claim under their Renter’s Policy for the damage to the contents of the Apartment. Neither Mrs. Al-lain nor the Bests made any claims for damage to the first story of the duplex or to its contents, because both Mrs. Allain and the Bests acknowledged that the damage to the first story was caused by flooding and that flooding was an excluded peril under both the Owner’s Policy and the Renter’s Policy.

Mrs. Allain’s claim for damages was paid by State Farm based on State Farm’s determination that the damage to the second story of the duplex was caused by wind, not by flooding. The Bests’ claim for damages was denied by State Farm on the grounds that State Farm had determined that the damage to the contents of the Apartment was caused by flooding, not by wind.

^Different adjusters had been assigned by State Farm to adjust the claims under the Owner’s Policy and under the Renter’s Policy. After the Bests learned that Mrs. Allain had been paid by State Farm for the damage to the second story of the duplex that she incurred as the owner of the property, they contacted their adjuster at State Farm and sought a reconsideration of their claim. The Bests notified their adjuster of the discrepancy between the determination of the adjuster under the Owner’s Policy and their adjuster’s determination regarding the cause of damage to the second story of the duplex. The Bests’ adjuster again denied their claim.

The Bests then filed the instant suit. A trial was held before the trial court judge, and she found that State Farm was liable under the Renter’s Policy. At the trial, the Bests presented evidence to show that the damage to the contents of the Apartment was caused by wind rather than by flooding. They also presented evidence of the value of the contents, including a full length mink coat, that were damaged. In her judgment, the trial court judge ordered State Farm to pay to the Bests under the Renter’s Policy the $20,000.00 policy limit for the contents of the Apartment and the $5,000.00 policy limit under a fur endorsement to the policy. The trial court also awarded penalties to the Bests under La. R.S. 22:658 for State Farm’s arbitrary and capricious failure to pay the Bests’ claim within thirty days after satisfactory proof of their loss was presented to State Farm.

DISCUSSION

Both the Bests and State Farm appealed different aspects of the trial court’s judgment. State Farm appealed the finding of coverage under the Renter’s Policy, and the Bests appealed the amount of the penalty that they were awarded under La. R.S. 22:658.

|4Standard of Review

In Rosell v. ESCO, 549 So.2d 840 (La. 1989), the Louisiana Supreme Court discussed the scope of the appellate court’s review of a trial court’s findings of fact as follows:

It is well settled that a court of appeal may not set aside a trial court’s or a jury’s finding of fact in the absence of “manifest error” or unless it is “clearly wrong,” and where there is conflict in the testimony, reasonable evaluations of credibility and reasonable inferences of fact should not be disturbed upon review, even though the appellate court may feel that its own evaluations and inferences are as reasonable.... Where there are two permissible views of the evidence, the factfinder’s choice between them cannot be manifestly erroneous or clearly wrong....
When findings are based on determinations regarding the credibility of witnesses, the manifest error-clearly wrong standard demands great deference to the trier of fact’s findings; for only the factfinder can be aware of the variations in demeanor and tone of voice that bear so heavily on the listener’s understanding and belief in what is said.

Id. at 844. See also Stobart v. State, Through Dep’t of Transp. and Dev., 617 So.2d 880, 882 (La.1993); Harvey v. Cole, 00-1849, pp. 2-3 (La.App. 4 Cir. 1/23/02), 808 So.2d 771, 775-76.

Where the trier of fact, however, has not applied the correct law in arriving at its conclusions, the standard of review that this Court must use is different. In the Rosell case, the Supreme Court stated:

Nevertheless, when the court of appeal finds that a reversible error of law or manifest error of material fact was made in the trial court, it is required to redetermine the facts de novo from the entire record and render a judgment on the merits,

549 So.2d at 844, n. 2.

IsAssignments of Error

State Farm Assignment of Error No. 1: The trial court erred by awarding the Bests the policy limits under the Renter’s Policy, because the Bests failed to meet their burden of proving that damage to their personal property was caused by a peril covered by the Renter’s Policy.

In Camere v. Triangle Auto Service, 340 So.2d 665, 666 (La.App. 4 Cir.1976), this Court stated that “[i]n an action on an insurance contract the plaintiff has the burden of pleading and proving that his claim falls within the general policy, while the insurer has the burden of proving exclusions from coverage.” See also Davidson v. United Fire & Cas. Co., 576 So.2d 586, 590 (La.App. 4 Cir.1991). In Couch on Insurance 3d, § 153:17, the burden of proof for claims under insurance policies, such as the Renter’s Policy, that involve exclusions for losses caused by water, whether or not driven by wind, was discussed as follows:

Policies typically contain a provision excluding loss caused by water whether driven by wind or not, unless the insured property first sustains actual damage by direct force of wind, and water enters the property through openings made by direct action of the wind. This exclusion is considered clear and unambiguous and will be enforced according to its terms. Thus, both wind-created openings and the passage of rain through those openings into the damaged property are conditions precedent to recovery.
In order to satisfy the aforementioned conditions, the insured need not establish that the wind actually created a hole in the structure, but instead must only demonstrate that the direct force of the wind created an opening in the building through which water entered. Thus, in accord with general rules of proximate cause, water entering a structure through a breach caused by the impact of a wind-blown object qualifies as damage by wind, bringing the loss under the policy coverage.

(Footnotes omitted.)

|fiIn the instant case, Mr. Best testified at the trial regarding the height to which the flood waters rose in the duplex. He testified that there were lines of discoloration indicating the height of the flood waters that inundated the first story of the duplex. He testified that the lines of discoloration indicated that the flood waters rose to the second step from the top of the stairway leading from the first story to the second story of the Apartment. He also testified that although the floor of the first story of the duplex was covered with mud and debris, there was no sediment of any type on the carpeting and the tile floor of the bathroom on the second story of the Apartment. Additionally, Mr. Best said that furniture and other objects on the first story of the Apartment floated away from their original locations, but everything on the second story remained in place.

Mr. Best measured the height of the water lines on the outside of the houses adjacent to the duplex. He testified that the water lines on the neighboring properties were below the maximum height of the first story of the duplex, but he also acknowledged that he did not know the elevations of the neighboring properties and that the measurements were made more than a year after Hurricane Katrina.

Mr. Best further testified that although there were water stains only on certain parts of the second-story ceiling of the duplex, there was a split in the ceding. Although he did not witness rain water from Hurricane Katrina entering the duplex, he did know that there was water on the floor of the second story of the Apartment.

|7Mr. Best also testified that the mold line on the walls of the second story of the Apartment was uneven, that the water damage to the furniture on the second story rose to varying levels on the legs of the furniture, and that the carpet was wet but not soiled with mud and sediment as was the floor of the first story of the duplex. For these reasons, he believed that rain water from Hurricane Katrina came in through the roof of the duplex and soaked the second story carpets. The moisture in the carpets then wicked into the furnishings on the second story.

Mrs. Allain also testified at the trial regarding the condition of both sides of the duplex after Hurricane Katrina. She described the condition of the first story of the duplex. She stated that on the floor of the first story there were about four inches of sludge and that the furniture and appliances located on the first story had floated away from their original locations. In contrast, the carpeting on the floor of the second story was clean except for the footprints caused by people walking on the wet carpets. She also described large areas of mold growing on the ceilings and on the walls of the second story of the duplex. Mrs. Allain stated that she observed cracks in the sheetrock in the ceiling, including cracks where the sheetrock tape was peeling from the joints of the sheet-rock. She also testified that a new roof had been installed on the duplex just prior to Hurricane Katrina and that she saw ceiling damage in virtually every room on the second story of the duplex.

Mrs. Allain further testified that the flooring of the bathrooms on the second story did not have any sediment of the type that was on the floors of the first story. She also said that there were no water marks, just mold, on the walls of the second story. Further, Mrs. Allain stated that she was paid about $61,000.00 by State Farm for the damage to the second story of the duplex, including the damage to the lsceilings, walls, doors, carpet, and baseboards. There was never any communication from State Farm to Mrs. Allain questioning whether the damage to the second story was caused by anything other than the type of wind damage that was covered under the Owner’s Policy.

Finally, Mrs. Allain testified that she thought that there were two adjusters who were sent by State Farm to investigate her claim under the Owner’s Policy. No one from State Farm ever contacted her in connection with the claim under the Renter’s Policy.

Mr. James S. Gentham, one of the two claims adjusters assigned to handle Mrs. Allain’s claim under the Owner’s Policy, testified at the trial. He confirmed that State Farm had initially paid Mrs. Allain $31,000.00 under the Owner’s Policy for the damages that she, as owner of the duplex, suffered with respect to its second story. He further confirmed that Mrs. Allain had received an additional payment in the amount of $30,000.00 after a re-inspection of the damage. Mr. Gentham also testified that he inspected the roof of the duplex and that he found a hole in the roof. Also, a vent pipe had been knocked off of the roof, and that resulted in another opening in the roof.

Additionally, Mr. Gentham testified that it was his impression that the water that entered the second story of the duplex entered through the hole in the roof. He further stated that water could have also entered the second story through an area of missing roof shingles that he had identified. Mr. Gentham also said that water can travel beyond its original entry point when it enters through a hole in a roof. Finally, Mr. Gentham confirmed that it was his opinion as the adjuster of Mrs. Allain’s claim under the Owner’s Policy that the cause of the damage to the second 1 ¡¡story of the duplex was water intrusion through the areas of the roof that had been damaged.

After Mr. Gentham testified, Maria P. Gore, the second adjuster for Mrs. Allain’s claim under the Owner’s Policy, testified. She said that she went to re-inspect the second story of the duplex twice and that the re-inspection resulted in State Farm making a second payment to Mrs. Allain on her claim. She stated that the payment was made for wind damage.

Ms. Gore further said that the first story of the duplex was damaged by flooding. She also testified that the ceiling wood on the first story had been wet and that there was corrosion on electrical outlets near the ceiling that she believed to be the result of contamination with salt water from the flooding that had occurred. The electrical outlets were two to three inches below the flooring of the second story of the duplex. Ms. Gore also confirmed that when a re-inspection is conducted in connection with a disputed claim under a State Farm insurance policy, the amount awarded to the insured can stay the same or be increased, but it cannot be decreased.

Micah Joseph Taranto, the adjuster for the Bests’ claim under the Renter’s Policy, testified at the trial. Prior to Hurricane Katrina, he had been a towboat pilot, and he had no prior experience in insurance adjusting. He did, however, attend a week long class in insurance adjusting prior to working on Hurricane Katrina claims.

110Mr. Taranto testified that he went one time to the Apartment. Although Mr. Taranto stated that the floodwaters reached the soffit of the first story, in his deposition he had testified that he never made a complete height measurement of the flood line. He also confirmed in his trial testimony that at his deposition he said that the water line was a foot to a foot and a half high on the second story. Mr. Taranto further testified at the trial that when he was notified by the Bests of the discrepancy between the findings of the adjusters for Mrs. Allain’s claim under the Owner’s Policy and his findings, he did nothing to resolve the discrepancy. He could not recall whether or not he made any effort to determine whether water dripped on any of the furnishings or other contents of the second story of the Apartment.

One admission that Mr. Taranto made at the trial was that the nature and extent of the sheetrock damage on the Apartment’s second story ceiling were sufficient to indicate that water not only came through the roof but also damaged the sheetrock. Another of Mr. Taranto’s admissions was that he made no effort to examine the roof of the duplex for the presence of holes. He also admitted that although he thought that the floodwaters rose one to one and a half feet in the second story of the Apartment, there was no evidence that anything on the second story had floated in the water. Further, he testified that there was no muddy sediment on the floor of the second story of the duplex as there was on the floor of the first story.

Although Mr. Taranto had stated that the flood waters were one to one and a half feet high on the second story of the Apartment, he admitted that photos introduced into evidence showed that the water stain on a leg of a piece of furniture |1Twas only four or five inches high. He said that he had not measured anything when he visited the Apartment and that he did not have a tape measure with him then. Finally, Mr. Taranto agreed that the facts and circumstances that he observed did not indicate the presence of flooding in the second story of the Apartment.

When he testified regarding the Bests’ notification that the adjusters for Mrs. Al-lain’s Owner Policy had reached the conclusion that the damage to the second story of the duplex was caused by wind, not flooding, he said that he contacted his supervisor. Nevertheless, he was not aware that the supervisor ever consulted with the adjusters for Mrs. Allain’s claim. The supervisor simply told Mr. Taranto that nothing further needed to be done with the Bests’ claim and that he should again deny it.

Mr. Taranto further testified that the waterlines on the furniture in the second story of the Apartment indicated flooding. He then stated that he had no doubt that flood water protruded into the second story of the Apartment, although that statement contradicted some of his previous testimony.

In the instant case there were two different sets of facts presented to the trial court. According to the testimony of Mr. Gentham and Ms. Gore, the damage to the second story of the duplex was the result of wind damage. Mr. Best and Mrs. Allain also testified as to facts from which one could conclude that the damage to the second story was the result of wind damage. Mr. Taranto testified that the damage to the second story of the duplex was the result of flooding, but, according to the trial court judge, his testimony was inconsistent. In finding in favor of the Bests on the issue of coverage under the Renter’s Policy, she clearly believed the testimony of Mr. Gentham, Ms. Gore, Mr. Best, and Mrs. Allain over the h2testimony of Mr. Taranto. Because her findings of fact regarding whether wind or flooding damaged the second story of the duplex were a matter of credibility of the witnesses, we must defer to her findings. There was clearly sufficient evidence presented at the trial for the trial court judge to make a factual finding that the source of the damage to the Apartment was caused by wind and not by flooding.

We find that the Bests proved their case against State Farm by a preponderance of the evidence. This assignment of error is without merit.

State Farm Assignment of Error No. 2: The trial court erred in awarding penalties against State Farm under La. R.S. 22:658 when the Bests did not specifically plead a claim under that statute.

State Farm contends that to receive an award of penalties under La. R.S. 22:658, the statute must be specifically pled in the petition seeking to enforce payment under an insurance policy. La. R.S. 22:658, as in effect prior to August 15, 2006, provided in relevant part:

A. (1) All insurers issuing any type of contract, other than ... [life insurance and health and accident policies], shall pay the amount of any claim due any insured within thirty days after receipt of satisfactory proofs of loss from the insured or any party in interest.
(4) All insurers shall make a written offer to settle any property damage claim, including a third-party claim, within thirty days after receipt of satisfactory proofs of loss of that claim.
B. (1) Failure to make such payment within thirty days after receipt of such satisfactory written proofs and demand therefor or failure to make a written offer to settle any property damage claim, including a third-party claim, within thirty days after receipt of satisfactory proofs of loss of that claim ... when such failure is found to be arbitrary, capricious, or without probable cause, shall subject the insurer to a penalty, in addition to the |1samount of the loss, of twenty-five percent damages on the amount found to be due from the insurer to the insured, or one thousand dollars, whichever is greater, payable to the insured, or to any of said employees, or in the event a partial payment or tender has been made, twenty-five percent of the difference between the amount paid or tendered and the amount found to be due.

(Emphasis added). Effective August 15, 2006, La. R.S. 22:658(B) was amended to provide for a fifty percent, rather than a twenty-five percent penalty, and to provide for reasonable attorney’s fees and costs.

In Rousseau, v. State Farm Mutual Automobile Insurance Co., 97-2333 (La.App. 4 Cir. 11/26/97), 703 So.2d 180, this Court found that to state a cause of action for statutory penalties under La. R.S. 22:658, it was not necessary to track the language of the statute. This Court stated as follows:

Relator contends that the petition is defective because it does not contain allegations tracking the statutory language in R.S. 22:658 or R.S. 22:1220. This argument is without merit. A petition need not allege the law, only the facts, and if those facts taken as true provide a basis for a legal remedy the petition states a cause of action.

97-2333, p. 3, 703 So.2d at 182.

The petition in the instant case alleged that State Farm’s refusal to pay the Bests’ claim under the Renter’s Policy was “arbitrary, capricious and without probable cause.” The petition further stated that State Farm was “in breach of its duty of good faith and fair dealing to [sic] insured.” Therefore, we find that the petition alleges sufficient facts, which, if true, state a cause of action under La. R.S. 22:658. This assignment of error is without merit.

State Farm Assignment of Error No. 3: The trial court erred by awarding penalties under La. R.S. 22:658, because the Bests failed to prove that State Farm’s denial of their claim ivas arbitrary, capricious, or without probable cause.

| uState Farm further claims that the Bests failed to prove that State Farm’s failure to pay their claim was arbitrary and capricious and without probable cause. In Reed v. State Farm Mutual Automobile Insurance Co., 03-0107 (La.10/21/03), 857 So.2d 1012, the Louisiana Supreme Court stated that “[w]hether or not a refusal to pay [an insurance claim] is, arbitrary, capricious, or without probable cause depends on the facts known to the insurer at the time of its action ....” 03-0107, p. 14, 857 So.2d at 1021. Further the court stated that “[b]ecause the question is essentially a factual issue, the trial court’s finding should not be disturbed on appeal absent manifest error.” Id. See also Scott v. Insurance Co. of North America, 485 So.2d 50, 52 (La.1986).

In the instant ease the trial court found that State Farm’s conduct was not improper when the Bests’ claim was initially denied. The trial court did find, however, that after State Farm was notified of the findings of the claims adjusters for the Owner’s Policy, the actions of State Farm were arbitrary and capricious. The trial court judge stated that rather than reinspecting the Apartment or reviewing the claims file for the Owner’s Policy, State Farm simply denied the Best’s claim a second time. The trial court judge found this inaction to be arbitrary and capricious. Because there is ample support for this factual finding, we do not find it to be manifestly erroneous or clearly wrong. Thus, we cannot disturb it on appeal. Ro-sell, 549 So.2d at 844. This assignment of error is without merit.

Bests Assignment of Error: The trial court erred in finding that the 2006 amendments to La. R.S. 22:658 were not applicable to their claims.

The Bests contend that although the 2006 amendments to La. R.S. 22:658 are not retroactive, the amendments are nevertheless applicable to their claim. Their contention is based on their assertion that State Farm’s bad faith conduct | ^extended beyond the August 15, 2006 effective date of the amendments. They particularly contend that State Farm’s failure to pay their claim within thirty days after Mr. Best had provided to State Farm the measurements of the water lines on the properties adjacent to the duplex was an arbitrary and capricious failure to pay their claim and that the failure occurred after the effective date of the 2006 amendments.

The petition in the instant case alleged that on or before January 3, 2006, the Bests submitted satisfactory proof of their loss to State Farm and that on January 3, 2006, they were notified by State Farm that the damage to the Apartment was caused by flood, not by wind. In a letter dated January 12, 2006, the Bests notified State Farm in writing that in connection with Mrs. Allain’s claim under the Owner’s Policy, State Farm had determined that the second story of the duplex was damaged by wind and not by flooding. Mr. Taranto replied to the letter dated January 12, in a letter dated January 25, 2006. In the January 25 letter Mr. Taranto stated that State Farm’s determination regarding the cause of damage to the second story of the Apartment remained the same. State Farm maintained its position that flooding caused the damage to the second story of the Apartment even though State Farm had previously determined in connection with the Owner’s Policy that the damage was caused by wind.

The trial court judge specifically found that there was no bad faith on the part of State Farm under the Renter’s Policy regarding the original determination by State Farm of the cause of damage to the Apartment. The trial court judge did, however, find that State Farm acted in bad faith and that its actions were arbitrary and capricious when it failed to further investigate the Bests’ claim after State hfiFarm became aware that it had determined that the damages caused to the duplex, for purposes of the Owner’s Policy, were caused by wind, not flooding. The trial court judge was of the opinion that State Farm acted in bad faith and in an arbitrary and capricious manner in not even attempting to reconcile the contradictory determinations made with respect to the cause of the damage to the duplex.

In McDuffie v. ACandS, Inc., 00-2745, p. 4 (La.App. 4 Cir. 2/14/01), 781 So.2d 623, 625, this Court held that “[t]he law in effect at the time appellants’ cause of action arose is the law which is applied to their case.” In the instant case the trial court judge found that the cause of action under La. R.S. 22:658 arose when State Farm failed to pay the Bests’ claim within thirty days after the Bests’ had provided State Farm with notice that State Farm had paid Mrs. Allain under the Owner’s Policy, because State Farm found that the damage to the duplex was caused by wind, not by flooding. We agree with this finding. Even though State Farm’s failure to pay the Bests’ claim extended beyond the effective date of the 2006 amendments to La. R.S. 22:658, them cause of action arose prior to the effective date.

At least one other Louisiana appellate court has specifically considered when amendments to La. R.S. 22:658 and a very similar statute, La. R.S. 22:1220, are applicable in particular fact situations. In Geraci v. Byrne, 06-58 (La.App. 5 Cir. 6/28/06), 934 So.2d 263, writ denied, 06-1850 (La.11/9/06), 941 So.2d 42, the Louisiana Fifth Circuit Court of Appeal was presented with a situation in which the insurer was notified in April of 2003, of the plaintiffs claims under a policy that included uninsured motorist coverage. In July of 2003, the claims adjuster for the insurer was presented with documentation of the loss. Effective August 15,1172003, La. R.S. 22:658 was amended to eliminate the provision requiring the payment of attorney’s fees in the event of an arbitrary and capricious failure to pay a covered insurance claim. No offer to settle the insurance claim was ever forthcoming.

The Fifth Circuit held in Geraci that the cause of action for the insurer’s arbitrary and capricious refusal to settle the insurance claim arose prior to August 15, 2003. Therefore, the version of La. R.S. 22:658 that was in effect at the time that the cause of action arose was applicable, and the plaintiff was entitled to attorney’s fees.

Based on the foregoing discussion and on the principle that penal statutes, such as La. R.S. 22:658, are to be strictly construed, we find that the Bests are not entitled to the increased penalty provided by the 2006 amendments to La. R.S. 22:658. This assignment of error is without merit.

DECREE

The trial court’s factual findings were not manifestly erroneous or clearly wrong, and the trial court correctly applied the applicable law. The judgment of the trial court is affirmed.

AFFIRMED.

      . Because of the dark color of the brick on the outside of the duplex where he resided, Mr. Best could not determine its water line.

      . Mr. Taranto’s name is spelled in various ways throughout the record, but we will use this spelling throughout this opinion, because this is the way that his name was spelled in correspondence that he signed.

      . See, e.g., State Farm Mut. Auto. Ins. Co., 03-0107, pp. 12-13 (La. 10/21/03), 857 So.2d 1012, 1020; Johnson v. Misirci, 06-1136, p. 10 (La.App. 4 Cir. 3/28/07), 955 So.2d 715, 721-22, writ denied, 07-0849 (La.6/15/07), 958 So.2d 1194.


author: DAVID S. GORBATY, Judge.

text:
    Terrance McGUIRE, et al. v. AMERICAN SOUTHERN HOME INSURANCE COMPANY.
    No. 2007-CA-0810.
    Court of Appeal of Louisiana, Fourth Circuit.
    Oct. 10, 2007.

      T. Gregory Schafer, Schafer & Schafer, New Orleans, LA, for Plaintiff/Appellant.
    Matthew A. Woolf, Baker Donelson Bearman Caldwell <& Berkowitz, PC, New Orleans, LA, for Defendant/Appellee.
    (Court composed of Chief Judge JOAN BERNARD ARMSTRONG, Judge PATRICIA RIVET MURRAY, Judge MAX N. TOBIAS JR., Judge DAVID S. GORBATY, Judge ROLAND L. BELSOME).
   DAVID S. GORBATY, Judge.

_[¿This appeal involves the denial of a property insurance claim arising out of Hurricane Katrina. The plaintiffs, Terrance and Hyacinth McGuire (“the McGuires”), appeal the trial court’s granting of a motion for summary judgment in favor of the defendant, American Southern Home Insurance Company (“American Southern”). For the reasons that follow, we affirm.

FACTS AND PROCEDURAL HISTORY:

The McGuires are the owners of a piece of property located at 2200 Pauger Street in New Orleans, Louisiana. In July of 2005, American Southern issued an insurance policy for the vacant building located on the property. On or about August 29, 2005, the building sustained wind damage from Hurricane Katrina. American Southern denied the McGuires’ insurance claim on the basis that the policy excluded coverage for wind damage.

The McGuires filed the instant lawsuit against American Southern and against Lopez and Lopez Insurance, L.L.C. (“Lopez”), the agency which sold the Impolicy to the McGuires. In response, American Southern filed a motion for summary judgment seeking dismissal of the McGuires’ claims. The trial court granted American Southern’s motion for summary judgment on March 15, 2007, finding: “the policy of insurance issued to Plaintiffs by Defendants is clear and unambiguous in its exclusion of windstorm coverage, and further finding that there is no coverage under said policy for the damages allegedly sustained by Plaintiffs.... ” On appeal, the McGuires assert that trial court erred in finding that the policy unambiguously excluded coverage for wind damage.

DISCUSSION:

The law applicable to the review of a grant or denial of a motion for summary judgment, and to the proper interpretation of an insurance policy, was recently discussed by the Louisiana Supreme Court in Bonin v. Westport Ins. Corp., 2005-886 (La.5/17/06), 930 So.2d 906, as follows:

A motion for summary judgment will be granted if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to material fact and that mover is entitled to judgment as a matter of law. La. C.C.P. art. 966(B). This court reviews a grant or denial of a motion for summary judgment de novo, Schroeder v. Board of Supervisors of Louisiana State University, 591 So.2d 342, 345 (La. 1991). Thus, this court asks the same questions as does the trial court in determining whether summary judgment is appropriate: whether there is any genuine issue of material fact, and whether the mover is entitled to judgment as a matter of law. Robinson v. Heard, 01-1697, pp. 3-4 (La.2/26/02), 809 So.2d 943, 945.
Interpretation of an insurance policy usually involves a legal question which can be resolved properly in the framework of a motion for summary judgment. Robinson, 01-1697 at p. 4, 809 So.2d at 945. An insurance policy is a contract between the parties and should be construed using the general rules of interpretation of contracts set | aforth in the Civil Code. Cadwallader v. Allstate Ins. Co., 02-1637, p. 3 (La.6/27/03), 848 So.2d 577, 580; Louisiana Ins. Guar. Ass’n v. Interstate Fire Casualty Co., 93-0911, p. 5 (La.1/14/94), 630 So.2d 759, 763. The judicial responsibility in interpreting insurance contracts is to determine the parties’ common intent. La. C.C. art.2045; Louisiana Ins. Guar. Ass’n, 93-0911 at p. 5, 630 So.2d' at 763; Garcia v. St. Bernard Parish School Board, 576 So.2d 975, 976 (La.1991). Words and phrases used in an insurance policy are to be construed using their plain, ordinary and generally prevailing meaning, unless the words have acquired a technical meaning. La. C.C. art.2047; Cadwallader, 02-1637 at p. 3, 848 So.2d at 580; Carbon v. Allstate Ins. Co., 97-3085, p. 4 (La.10/20/98), 719 So.2d 437, 439.
An insurance policy should not be interpreted in an unreasonable or a strained manner so as to enlarge or to restrict its provisions beyond what is reasonably contemplated by its terms or so as to achieve an absurd conclusion. Carrier v. Reliance Ins. Co., 99-2573, pp. 11-12 (La.4/11/00), 759 So.2d 37, 43 (quoting Louisiana Ins. Guar. Ass’n, 93-0911 at p. 5, 630 So.2d at 763). Unless a policy conflicts with statutory provisions or public policy, it may limit an insurer’s liability and impose and enforce reasonable conditions upon the policy obligations the insurer contractually assumes. Carbon, 97-3085 at p. 5, 719 So.2d at 440; Louisiana Ins. Guar. Ass’n, 93-0911 at p. 6, 630 So.2d at 763. If after applying the other general rules of construction an ambiguity remains, the ambiguous contractual provision is to be construed against the insurer and in favor of coverage. Cadwallader, 02-1637 at p. 3, 848 So.2d at 580; Carrier, 99-2573 at p. 12, 759 So.2d at 43-44. Under this rule of strict construction, equivocal provisions seeking to narrow an insurer’s obligation are strictly construed against the insurer. Louisiana Ins. Guar. Ass’n, 93-0911 at p. 6, 630 So.2d at 764; Garcia, 576 So.2d at 976. That strict construction principle, however, is subject to exceptions. Cadwallader, 02-1637 at p. 3, 848 So.2d at 580; Carrier, 99-2573 at p. 12, 759 So.2d at 43-44. One of these exceptions is that the strict construction rule applies only if the ambiguous policy provision is susceptible to two or more reasonable interpretations. Cadwallader, 02-1637 at p. 3, 848 So.2d at 580; Carrier, 99-2573 at p. 12, 759 So.2d at 43-44. For the rule of strict construction to apply, the insurance policy must be not only susceptible to two or more interpretations, but each of the alternative interpretations must be reasonable. Cadwallader, 02-1637 at p. 3, 848 So.2d at 580; Carrier, 99-2573 at p. 12, 759 So.2d at 43-44.

Bonin, 05-0886 at p. 4-6, 930 So.2d at 910-911. See also Huggins v. Gerry Lane Enterprises, Inc., 2006-2816, 2006-2843, pp. 2-3 (La.5/22/07), 957 So.2d 127, 128-129.

In the present case, it is undisputed that the policy provides a wind damage exclusion on three separate pages, as follows: 1) The Declarations Page states in all capital letters: “* *THIS POLICY DOES NOT INCLUDE COVERAGE FOR WINDSTORM OR HAIL* * 2) Endorsement DE105, entitled “WIND-

STORM OR HAIL EXCLUSION,” states: “For a premium credit, we do not insure for loss caused directly or indirectly from windstorm or hail.”; 3) Endorsement 72047 states in bold and large print:

IMPORTANT NOTICE — PLEASE READ CAREFULLY THIS POLICY DOES NOT INCLUDE COVERAGE FOR WINDSTORM OR HAIL.

The McGuires first assert that ambiguity is created when the Declarations Page is read in conjunction with Endorsement DE105. More specifically, they argue that Endorsement DE105 provides “for a premium credit” wind damage is not covered, but the Declarations Page does not reflect whether the credit was actually received, thereby creating a conflict. We disagree. The language contained in the Declarations Page and Endorsement DE105 is not conflicting. The fact that the Declarations Page does not contain an itemization of the premium credit does not create ambiguity. As American Southern contends, there was no legal obligation to indicate on the Declarations Page what the premium would have Rbeen if wind coverage existed, and then show the mathematical subtraction for the credit. The fact remains that the McGuires were not charged for wind coverage.

It is also quite clear that Endorsement 72047 excludes coverage for wind damage without any reference to the premium credit. The McGuires do not argue, nor do we find, that Endorsement 72047 conflicts with any other provision of the policy. Moreover, it is unreasonable to suggest that these endorsements were attached to the policy but were somehow inapplicable or ineffective. As provided by La. C.C. art.2050, “[E]ach provision of a contract must be interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole.” In this case, the endorsements, when read in conjunction with the policy as a whole, clearly exclude coverage for wind damage.

Finally, the McGuires submit that the Declarations Page is ambiguous because the double asterisks placed on either side of the statement: “* *THIS POLICY DOES NOT INCLUDE COVERAGE FOR WINDSTORM OR HAIL* *” are confusing because they do not appear anywhere within the description of the coverages provided. The McGuires argue that in light of the absence of asterisks within the section setting forth the coverage afforded, an insured could reasonably assume that the coverage provided was not subject to the wind exclusion. American Southern counters that the asterisks serve only to emphasize the text between them, and that is why there is no corresponding demarcation elsewhere on the Declarations Page. Moreover, American Southern | ¡^asserts that the statement on the Declarations Page clearly alerts the insured that nowhere in the policy is there coverage for wind damage.

After a thorough reading of the Declarations Page, we do not find that the asterisks create ambiguity. As the Supreme Court stated in Cadwallader, 02-1637 at pp. 3-4, 848 So.2d at 580, “the rules of construction do not authorize a perversion of the words or the exercise of inventive powers to create an ambiguity where none exists.” Applying the' established rules of construction, we conclude that the argument set forth by the McGuires is not a reasonable interpretation of the policy.

CONCLUSION:

For the foregoing reasons, we agree with the results reached by the trial court. Accordingly, the judgment granting the motion for summary judgment in favor of American Southern is affirmed.

AFFIRMED.

      . As stated by affidavit, American Southern does not provide windstorm coverage for vacant properties in Orleans Parish.

      . Lopez is not involved in this appeal.