This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2004).







Western National Mutual Insurance Company,





George Barbes, et al.,



Big Wood Timber Frames, Inc.,




Filed June 20, 2006


Huspeni, Judge*



Ramsey County District Court

File No. C2-05-0889


John M. Bjorkman, Louise Dovre Bjorkman, Larson, King, LLP, 2800 Wells Fargo Place, 30 East 7th Street, St. Paul, MN 55101 (for respondent)


Eric J. Braaten, Nicklaus, Braaten & Hollenhorst, PLLC, 500 Pine Street North, Suite 200, Chaska, MN 55318 (for appellant)



            Considered and decided by Lansing, Presiding Judge; Willis, Judge; and Huspeni, Judge.

U N P U B L I S H E D   O P I N I O N


In challenging the award of summary judgment to respondent in this declaratory judgment action, appellant argues that the district court erred in limiting recovery under respondent’s insurance policy to $4,675.  Because we conclude that appellant had no coverage under the completed operations provisions of the policy, that damages caused by appellant’s faulty work were not covered by the policy, that damage to property of others incurred in repairing appellant’s faulty work were not occurrences under the policy, and that appellant is not entitled to attorney fees, we affirm. 


            George and Mary Barbes hired appellant Big Wood Timber Frames, Inc. to build their timber framed home.  Appellant, who specializes in supplying and constructing timber frames, provided and installed timber frames necessary to construct the home.  Appellant also installed insulating wall and roof panels, oak tongue-and-groove deck materials, and posts and beams in the basement, all of which were provided by George Barbes.  Appellant completed its work in May 1998 and in October 1998, the Barbeses accepted completion of appellant’s obligation.   

            Sometime in July 1999, the Barbeses began experiencing problems with their home.  The problems included gaps in the joints of the timber framing, ridges in the shingles on the roof, exterior walls that were out of plumb, and condensation problems on the ceiling.  The Barbeses alleged that these problems were caused by appellant’s use of freshly cut timbers to frame the house, and concluded that the timbers, after being used in the construction, dried and shrank, causing shrinkage of the house framing and movement in the roof. 

            An expert retained by the Barbeses confirmed their conclusions and also identified other problems resulting from appellant’s workmanship.  In order to remedy the problems, the expert recommended replacement of the wall panels, replacement of the timber floor beam in the lower level by jacking and bracing the home in order to level the floor, removal of the roof panels to correct the shingle ridges and gaps, and removal of the roof system to allow for correction of the framing problems.   

            Appellant argued that any roof problems were the result of the chimney being improperly tied into the roof, that the chimney was settling at a different rate than the rest of the home and preventing the roof from settling with the rest of the home, thus pulling the roof apart.  Appellant also argued that the expansion of the dry oak tongue-and-groove flooring as a result of excessive moisture contributed to the roof’s separation, and that the excessive moisture was a result of the failure of the Barbeses to properly protect the flooring before installation.    

The Barbeses demanded arbitration, and respondent Western National Mutual Insurance Company agreed to defend the claims on behalf of appellant.  The Barbeses claimed damages of $239,645.56 as a result of appellant’s design and construction defects.  Respondent acknowledged coverage for damage to other property caused by appellant’s faulty work, but denied coverage for any damages claimed for the repair or replacement of appellant’s own faulty work.  Because the Barbeses’ claims involved covered and non-covered damages, respondent reserved its right to challenge indemnity for any damages that might ultimately be awarded against appellant.   

            The arbitrator awarded $78,730.60, finding that appellant “breached its contract with [the Barbeses] by not performing its work in a workmanlike fashion, mostly by not adequately taking expected timber shrinkage into account.”  The award was reduced to reflect problems that had been caused by the chimney and was itemized to make it easier for the parties to resolve any dispute over insurance coverage.   

            Respondent insured appellant under three different policies: a comprehensive general liability policy effective January 26, 1998, to January 28, 1999 (1998 policy); a commercial general liability policy effective January 26, 1999, to January 26, 2000 (1999 policy); and a commercial general liability policy effective January 26, 2000, to January 26, 2001 (2000 policy).  All three policies provided coverage for property damage caused by an occurrence or accident, and all three excluded coverage for property damage to appellant’s own work.

            Pursuant to its obligation under the 2000 policy, respondent paid the portion of the arbitration award that pertained to damages to other property caused by appellant’s faulty work and obtained a partial satisfaction of judgment.  Appellant denied that the 2000 policy applied and argued that respondent’s obligations arose out of the 1998 policy.  Appellant argued in the alternative, that even under the 1999 and 2000 policies, respondent was obligated to pay the remainder of the award. 

Respondent brought a declaratory judgment action to determine the coverage issues, and both parties moved for summary judgment.  Appellant argued that respondent was responsible for the remainder of the arbitration award, with the exception of its deductible under the 1998 and 1999 policies, not the 2000 policy.  Respondent argued that it had fully discharged its obligation under the arbitration award.

The district court applied the actual-injury rule, found that coverage was invoked under the 1999 policy, and concluded that respondent was not obligated to pay for damages awarded for the repair or replacement of appellant’s own work.  The district court determined that the policy “excludes coverage for property damage to [appellant’s] work” and that “damages caused or necessitated by the repair or replacement of [appellant’s] work is not covered.”  In finding that damages caused or necessitated by repair or replacement were not covered, the district court reasoned these damages “occur[red] not [by] accidental means” and were not an occurrence as defined under the policy.  The district court also denied appellant’s request for attorney fees.  This appeal followed.


On appeal from summary judgment, our review is limited to determining whether there are any genuine issues of material fact and whether the trial court correctly applied the law.  Betlach v. Wayzata Condominium, 281 N.W.2d 328, 330 (Minn. 1979).  This court must “view the evidence in the light most favorable to the nonmoving party.”  Denelsbeck v. Wells Fargo & Co., 666 N.W.2d 339, 345 (Minn. 2003).  “[T]he party resisting summary judgment must do more than rest on mere averments.”  DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn. 1997).

Interpretation of the language of an insurance contract, as applied to the facts presented, is a question of law, which this court reviews de novo.  Iowa Kemper Ins. Co. v. Stone, 269 N.W.2d 885, 887 (Minn. 1978).  If a policy is unambiguous, this court must give the language its ordinary and usual meaning and not redraft the contract.  Simon v. Milwaukee Auto. Mut. Ins. Co., 262 Minn. 378, 385, 115 N.W.2d 40, 45 (1962).  If this court concludes the policy language is ambiguous, the ambiguity must be resolved in the insured’s favor.  Columbia Heights Motors, Inc. v. Allstate Ins. Co., 275 N.W.2d 32, 36 (Minn. 1979).


When, as here, the policy at issue provides occurrence-based liability coverage, Minnesota applies the “actual-injury” or “injury-in-fact” coverage-trigger rule to determine whether an occurrence activates insurance coverage.  In Re Silicone Implant Litig., 667 N.W.2d 405, 415 (Minn. 2003).  Under this rule, “the time of the occurrence is not the time the wrongful act was committed but the time the complaining party was actually damaged.”  Singsaas v. Diederich, 307 Minn. 153, 156, 238 N.W.2d 878, 880 (1976).  An occurrence takes place not when the policyholder engages in the wrongful act, “but the time the complaining party was actually damaged.”  Id.  “Thus, under the actual-injury trigger rule, only those policies in effect when the bodily injury or property damage occurred are triggered.”  Silicone, 667 N.W.2d at 415.  Consequently, if the damage occurs outside of the policy period, the policy does not provide coverage.  See Singsaas, 307 Minn. at 156, 238 N.W.2d at 880-81. 

To trigger a policy, “the insured must show that some damage occurred during the policy period.”  N. States Power Co. v. Fidelity & Cas. Co. of N.Y., 523 N.W.2d 657, 663 (Minn. 1994).  “For purposes of the actual-injury trigger theory, an injury can occur even though the injury is not ‘diagnosable,’ ‘compensable,’ or manifest during the policy period as long as it can be determined, even retroactively, that some injury did occur during the policy period.”  Silicone, 667 N.W.2d at 415.

The district court found that the Barbeses suffered actual injury when they noticed the problems with their home in 1999.  The district court determined that the Barbeses were not actually damaged during the 1998 policy period, and the 1999 policy applied.  Although appellant does not directly challenge application of any provision of the 1999 policy, it argues that because the arbitrator found that the timbers as installed caused damage and the damage continued during the building process, it must be the 1998 policy that applies.[1] 

Appellant cites the decision in Silicone to support its argument because “an injury can occur even though the injury is not ‘diagnosable,’ ‘compensable,’ or manifest during the policy period as long as it can be determined, even retroactively, that some injury did occur during the policy period.”  Silicone, 667 N.W.2d at 415.  There is scant support for appellant’s argument in Silicone, however.  The record reflects that the Barbeses began experiencing problems in July 1999.  It cannot be determined that “some injury did occur during the [1998] policy period.”  We see no error in the determination of the district court that the claims of the Barbeses were governed by the 1999 policy.   

Further, the language of the 1998 policy itself supports the district court’s determination that the 1999 policy applies.  The l998 policy states that physical damage must occur during the policy period.  Under Minnesota’s actual-injury rule, “the time of the occurrence is not the time the wrongful act was committed but the time the complaining party was actually damaged.”  Singsaas, 307 Minn. at 156, 238 N.W.2d at 880.  The Barbeses noticed problems in 1999, were actually damaged while the 1999 policy was in effect, and the district court had a sound basis for declaring coverage under the 1999 policy.    



Appellant next argues that the district court erred in determining that the amounts in the arbitrator’s award for repair and replacement of the insured’s own faulty work were not recoverable.  Appellant argues that the completed operations provisions of any of the three policies at issue here would provide coverage.[2]  We disagree and conclude that appellant attempts to invoke coverage under a provision that has no relevance to the facts of this case in order to avoid the consequences of an exclusion that is clearly applicable.  Exclusion k of the policy states that there is no coverage for “‘Property damage’ to ‘your product’ arising out of it or any part of it.”  

The type of exclusion stated in the policy in this case describes what is often referred to as the “business risk” doctrine; that is, an insured is not entitled to liability insurance coverage for the repair or replacement of its own faulty work.  See Bor-Son Bldg. Corp. v. Employer’s Commercial Union Ins. Co. of Am., 323 N.W.2d.58, 61-62 (Minn. 1982).  The business-risk doctrine prevents “the opportunity or incentive for the insured general contractor to be less than optimally diligent in . . . the performance of his contractual obligations to complete a project in a good workmanlike manner.”  Wanzek Constr., Inc. v. Employers Ins. of Wausau, 679 N.W.2d 322, 326 (Minn. 2004).  Without the business-risk doctrine, a contractor could perform unsatisfactory work, receive compensation for the work, and then be paid a second time by the insurance provider in order to fix the unsatisfactory work.  An observation of the court in Bor-Son is especially relevant here:

The insured, as a source of goods or services, may be liable as a matter of contract law to make good on products or work which is defective or otherwise unsuitable because it is lacking in some capacity.  This may even extend to an obligation to completely replace or rebuild the deficient product or work.  This liability, however, is not what the coverages in question are designed to protect against.


Bor-Son Bldg. Corp., 323 N.W.2d at 63.



The district court also determined that respondent was not responsible for damage caused or necessitated to the property of others by the repair and replacement of appellant’s own faulty work.  Initially, and importantly, the district court noted that any damage to property of others occurring while repairing and replacing appellant’s own faulty work did not occur by accidental means, but was intended, and therefore was not an occurrence as defined under the 1999 policy.  Once again, appellant attempts to invoke coverage for this type of damage by citing to the completed-operations provisions of the policy.  This attempt fails.  Caselaw also informs on the issue of damage to property of others incurred in the repair or replacement of appellant’s own faulty workmanship.  In Bright Wood Corp. v. Bankers Standard Ins. Co., 665 N.W.2d 544, 549 (Minn. App. 2003), this court construed policy provisions strikingly similar to those in the policy at issue here and concluded that excluding coverage for damage to property of others was “consistent with the general scope of the commercial general liability policy.  These policies are intended to cover damage arising out of an ‘occurrence,’ which is defined . . . as ‘an accident’ and damage ‘not expected or intended’ by the insured.” 

The analysis of this court in Bright Wood warrants the conclusion here that respondent is not responsible for damages caused or necessitated to the property of others by the repair and replacement of appellant’s own faulty workAs in Bright Wood, the damage to the Barbeses’ cupboard, countertops, carpet, plumbing, cabinets, electrical fixtures, and in-floor heating occurred because of repairs deliberately undertaken by appellant as a result of its faulty work.  The resulting damage to these items was not an accidental occurrence.



Finally, appellant argues that because it was required to defend against respondent’s complaint for declaratory relief, it is entitled to attorney fees.  “On review, this court will not reverse a trial court’s award or denial of attorney fees absent an abuse of discretion.”  Becker v. Alloy Hardfacing & Eng’g Co., 401 N.W.2d 655, 661 (Minn. 1987).  Appellant’s argument lacks merit. 

In Am. Standard Ins. Co. v. Le, the Minnesota Supreme Court held, “attorney fees are recoverable in a declaratory judgment action onlyif there is a breach of a contractual duty or statutory authority exists to support such a recovery.”  551 N.W.2d 923, 927 (Minn. 1996).  Here, respondent did not breach a contractual duty, nor does appellant argue so.  Respondent defended appellant during the arbitration hearing.  Although the district court found that appellant was entitled to a sum of $4,675 for consequential losses, there is nothing in the record to show that respondent breached any obligation it had under the insurance policy.  Also, there is no statutory authority entitling appellant to attorney fees.  The district court did not abuse its discretion when it did not award attorney fees to appellant.   


*  Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10. 

[1]  Although we address the merits of appellant’s contention that the 1998 policy applies, we conclude that because of the similarity of language in all three policies, our analyses and decisions on the remaining issues raised on appeal would be identical regardless of which policy is deemed applicable.

[2] Under the 1999 policy, products-completed operations hazard “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 . . . work that has not yet been completed or abandoned.”  The policy explains that “‘your work’ will be deemed completed at the earliest of the following times . . . when all the work called for in your contract has been completed . . . .”  The provision states “work that may need service, maintenance, correction, repair or replacement, but which is otherwise complete will be treated as complete.”  Here, although this provision may appear to provide coverage, the policy excludes coverage to property damage to “that part of any property that must be restored, repaired or replaced because ‘your work’ was incorrectly performed on it.”  (Emphasis added.)  Therefore, because appellant incorrectly constructed the home, the completed operations provision does not provide coverage to appellant.