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Jones v. Insurance Co.

December 14, 1972

JONES, APPELLANT,
v.
INSURANCE COMPANY OF NORTH AMERICA, RESPONDENT



Appeal from Circuit Court, Klamath County. Donald A. W. Piper, Judge.

Sam A. McKeen, Klamath Falls, argued the cause and filed a brief for appellant.

Hugh B. Collins, Medford, argued the cause and filed a brief for respondent.

In Banc. McAllister, J.

Mcallister

This is a declaratory judgment proceeding to determine whether a liability policy issued by defendant to plaintiff protects her against a certain property damage claim. The trial court sustained a demurrer to plaintiff's complaint and when plaintiff failed to plead further entered a decree declaring that the claim was not covered by the policy. Plaintiff appeals. We reverse.

Plaintiff alleged that she was the lessee of the Earley Hotel in Klamath Falls and that the Earley Hotel was located above and in the same building as LaPointe's Women's Store. While defendant's liability policy was in force LaPointe's Women's Store suffered water damage to its ceiling, carpets and merchandise as a result of accidental flooding in the Earley Hotel. LaPointe's demanded that plaintiff pay for the damage and plaintiff called upon defendant to protect her under the policy. Defendant denied coverage.

The complaint alleged that the liability coverage was provided by the following provision of the policy:

"Coverage B -- Property Damage Liability: To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury to or destruction of property, including the loss of use thereof, caused by accident."

The complaint also alleged that the policy contained the following exclusion clause applying to Coverage B:

"Exclusion (j) Page 7, under Coverage B: To any of the following insofar as any of them occur on or from premises owned by or rented to the named insured and injure or destroy buildings or property therein: (1) The discharge, leakage or overflow of water or steam from plumbing, heating, * * *."

The sole issue in this case is whether plaintiff's liability for the damage to LaPointe's is excluded from coverage by the above provision.

This particular exclusion clause has been the subject of a series of New York cases. The first was B & H Management Corp. v. Hardware Mutual Cas. Co., 9 AD2d 533, 196 NYS2d 452 (1960), in which a standpipe on the first floor of the insured's premises leaked, flooding the insured's basement and causing water damage to adjoining premises. The insurance company denied coverage under an exclusion clause which is identical, insofar as material, to that involved in this case. The Appellate Division ...


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