This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).




Scott Ploetz, et al.,



Beaver Builders Supply, Inc., et al.,


Heritage Mutual Insurance Company, garnishee,


Western National Insurance Group, garnishee,


Filed December 15, 1998


Crippen, Judge

Winona County District Court

File No. C2941909

Charles A. Bird, Jason L. Schmickle, 305 Ironwood Square, 300 Third Avenue S.E., Rochester, MN 55904 (for appellants)

Patrick J. Sweeney, Spence, Ricke & Thurmer, 600 Degree of Honor Building, 325 Cedar Street, St. Paul, MN 55101 (for respondent Heritage Mutual)

John P. Buckley, 5350 West 78th Street, Minneapolis, MN 55439 (for respondent Western National)

Considered and decided by Crippen, Presiding Judge, Willis, Judge, and Foley, Judge.[*]



This appeal requires an examination of insurance policies to determine whether they provide coverage for either defendants Tod Kieffer or Beaver Builders Supply, Inc., the builder and the materials supplier of a home constructed for appellants Scott and Shari Ploetz. We affirm the trial court's conclusions that (a) the builder's fault does not come within the definition of "occurrence" in his comprehensive general liability policy; and (b) the supplier's negligence comes within the language of an exclusion in its CGL policy.


Appellants sued both Tod Kieffer and Beaver Builders Supply after their new log home posed such problems of sagging floors and threat of collapse that it allegedly became uninhabitable. In Miller-Shugart agreements, Kieffer confessed to a $9,000 share of the fault ($5,000 to be paid personally by Kieffer), and Beaver Builders Supply confessed to a $92,500 share to be paid from its CGL policy.

Appellants, having obtained judgments on these agreements, filed a garnishment action against respondent Western National Insurance Group, which wrote a CGL policy for Kieffer, and respondent Heritage Mutual Insurance Company, which wrote a CGL for Beaver Builders Supply.

This appeal arises from the trial court's determination that appellants failed to show probable cause to believe either insurer was liable and that appellants were thus not entitled to file supplemental complaints under Minn. Stat. § 571.75. The trial court concluded: (a) that Kieffer had no coverage both because there was no "occurrence" within the meaning of his CGL policy and because certain exclusions in his CGL policy precluded coverage; and (b) that Beaver Builders Supply had no coverage because of exclusions in its policy. Although the court determined that there was a triable case as to whether the negligence of the supplier was an "occurrence" under the Heritage Mutual policy, the court found that exclusion j(5) nevertheless precludes coverage. Exclusion j(5) eliminates coverage for damage to real property that arises out of the insured's operations on that property.


"The interpretation and construction of an insurance policy is a matter of law," and a reviewing court may determine de novo whether the district court "properly interpreted and applied the law to the facts presented." State Farm Mut. Auto. Ins. Co. v. Budget Rent-A-Car Sys., Inc., 359 N.W.2d 673, 675-76 (Minn. App. 1984). Insurance policy exclusions must be considered in determining coverage, but exclusions are strictly construed against the insurer. CPT Corp. v. St. Paul Fire & Marine Ins. Co., 515 N.W.2d 747, 750 (Minn. App. 1994), review denied (Minn. July 27, 1994). Motions pursuant to Minn. Stat. § 571.75, subd. 4, for leave to file supplemental complaints must be granted if probable cause is shown that the garnishee will be liable for the judgment debt. Minn. Stat. § 571.75, subd. 4 (1996); Rohrer v. Rick, 529 N.W.2d 406, 407 (Minn. App. 1995). A finding of probable cause in an insurance case "depends on whether the evidence shows probable grounds for believing that the garnishee might be held liable under the policy." Poor Richards, Inc. v. Chas. Olson & Sons & Wheel Serv. Co., 380 N.W.2d 225, 227 (Minn. App. 1986) (citation omitted). Probable cause is defined as "some showing by evidence which fairly and reasonably tends to show the existence of the facts alleged." Id. (citation omitted).

The Western National Policy

The relevant portion of Kieffer's policy with Western National states that the insurance company will pay only damages "caused by an occurrence." An occurrence is "an accident" resulting in damage "neither expected nor intended from the standpoint of the insured."

Appellants do not dispute that intentional conduct would preclude coverage but contend that their allegations of negligence fall within the definition of occurrence. The trial court, relying on Ebenezer Soc'y v. Dryvit Sys., Inc., 453 N.W.2d 545, 548 (Minn. App. 1990), has correctly reasoned that this situation, like the one in Ebenezer, involved a situation where the negligence claims were disguised breach of contract claims. Because of this, Kieffer's conduct in the construction of appellant's home cannot be viewed as an occurrence within the meaning of Kieffer's CGL policy with Western National. Appellants assert that they, not defendant Kieffer, acted as general contractors with control over all aspects of construction, distinguishing Kieffer's role from that of general contractors sued in other construction cases. See Knutson Constr. Co. v. St. Paul Fire & Marine Ins. Co., 396 N.W.2d 229, 234-35 (holding that general contractor, not insurance company, bore risk of loss). Although the record permits the observation that Kieffer technically was not identified as a general contractor, it is evident that he was in control of the risks related to appellants' claims.

There being no covered occurrence under the Western National policy, we decline to address the additional question of whether exclusions apply.

The Heritage Mutual Policy

Unlike Kieffer, Beaver Builders Supply had no contractual relationship with the owners. To support their negligence theory, appellants allege that the supplier was liable because it had furnished advice that the support trusses for the building would be placed at 24-inch intervals but then furnished trusses that were designed for construction in which they should have been placed at no more than 19.2 inch intervals. The trial court correctly determined that these allegations are supported by evidence establishing probable cause for a determination that there was a covered occurrence.

Heritage Mutual claimed, and the trial court agreed, that its coverage was precluded by an exclusion in its CGL policy with Beaver Builders Supply regarding operations on real property. Exclusion j(5) excludes coverage for

[t]hat particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the property damage arises out of those operations.

Appellants contend that neither Beaver Builders Supply nor its subcontractors performed any operations on real property and that their operations were confined exclusively to the making and delivery of trusses. To the contrary, appellants' accusations of Beaver Builders Supply's negligent conduct are principally with respect to its involvement in the construction of the home. More particularly, their allegations concern Beaver's involvement in the placement of the trusses. Evidence indicates that Beaver provided too few trusses for less than two-foot spacing and furnished a building drawing that showed trusses at 24-inch intervals.[1] These assertions of fault by Beaver Builders involve accusation of operations on appellants' real property, their home.

Having found that exclusion j(5) of the Heritage policy applies to the circumstances of appellants' claims against Beaver, we decline to examine other exclusions also asserted by the insurer.


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

[1] Appellant also showed evidence that Beaver Builders Supply negligently designed construction of the home such that it could not be supported by trusses at 24 inches and perhaps even if placed at 19.2 inches. Also, the record includes evidence that Beaver Builders Supply, although told to furnish trusses for 24-inch construction, provided trusses needing 19.2-inch construction.