Erie Insurance Exchange v. Gary H. Maxwell

11/15/2017

IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

September 7, 2017 Session

ERIE INSURANCE EXCHANGE V. GARY H. MAXWELL, ET AL.

Appeal from the Chancery Court for Putnam County

No. 2016-14 Ronald Thurman, Chancellor

No. M2017-00193-COA-R9-CV

Erie Insurance Exchange (“Erie”) commenced this declaratory judgment action seeking a

declaration that Erie has no duty to defend its insureds in a separate action because the

policies of insurance issued to its insureds provided no coverage for the claims asserted in

that action. The insureds are the defendants in a separate action in which the buyers of the

insureds’ home allege that the insureds made negligent misrepresentations concerning the

property’s propensity to flood. The buyers sought to recover damages they sustained

from flooding that occurred after the sale. Following discovery, Erie filed a motion for

summary judgment on the ground that the “negligence” and “negligent

misrepresentation” claims asserted against its insureds do not contain any allegations that

constitute an “occurrence” as that term is defined in the policies; therefore, there is no

coverage and no duty to defend the insureds. The trial court denied the motion, and this

appeal followed. We have determined that the “negligence” and “negligent

misrepresentation” claims asserted against Erie’s insureds do not arise from an

“occurrence” as that term is defined in the insurance policies; therefore, there is no

coverage, and Erie has no duty to defend the insureds in the other action. For these

reasons, we reverse the judgment of the trial court and remand with instructions to enter

summary judgment in favor of Erie.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court

Reversed and Remanded

FRANK G. CLEMENT JR., P.J., M.S. delivered the opinion of the Court, in which RICHARD

R. DINKINS and W. NEAL MCBRAYER, JJ., joined.

Parks T. Chastain and Ashley E. Geno, Nashville, Tennessee, for the appellant, Erie

Insurance Exchange.

Patrick Shea Callahan, Cookeville, Tennessee, for the appellees, Gary H. Maxwell and

Lucretia H. Maxwell.

OPINION

On January 25, 2016, Erie Insurance Exchange (“Erie”) commenced this action for

declaratory judgment that it has no duty to defend or indemnify Gary and Lucretia

Maxwell in an action brought against the Maxwells by Paul and Barbara Chapman.

The dispute between the Maxwells and Chapmans arises from the Chapmans’

purchase of the Maxwells’ residential property on March 7, 2014. Prior to the sale, the

Maxwells completed a residential property disclosure in which they allegedly

misrepresented the propensity of the property to flood and the city’s corrective action to

mitigate that propensity. Five months after the Chapmans purchased the property from

the Maxwells, the residence sustained damage as a result of two floods within three days.

In the civil action that followed, the Chapmans alleged that they relied on the Maxwells’

representations regarding the propensity for flooding and that they sustained property

damage as a result of, inter alia, the Maxwells’ negligence and negligent

misrepresentations. The Chapmans asserted six claims but only two of those claims are at

issue in this appeal, that of negligence and negligent misrepresentation.

The Chapmans’ negligence claim against the Maxwells states:

25. The Defendants had a duty to advise Plaintiffs of the defects and

problems with the property relative to the flooding that occurs at 609

Denton Avenue, Cookeville, Tennessee.

26. The Defendants breached this duty by failing to advise the Plaintiffs of

the defects and problems with the flooding of the property prior to their

purchase of the property on March 7, 2014. The Defendants knew, or

should have known, that the representations set forth above were incorrect

or false.

27. As a result of the negligence of the Defendants Gary H. Maxwell and

wife Lucretia H. Maxwell, the Plaintiffs have sustained substantial

damages.

The Chapmans’ negligent misrepresentation claim against the Maxwells states:

29. Defendants had a duty to advise the Plaintiffs of the defects and

problems with flooding of the property prior to their purchase of the

property on March 7, 2014.

30. The Defendants made representations to the prospective purchasers

in an effort to induce them into entering into a contract for the sale of real

estate which is the subject matter of this litigation.

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31. The representations made by the Defendants were false. The

Plaintiffs relied upon the negligent misrepresentations of the Defendants

and purchased the property from them.

32. As a result of the negligent misrepresentation and fraudulent

inducement by the Defendants, the Plaintiffs sustained substantial damages.

The Maxwells notified Erie of the lawsuit and insisted that Erie had a duty to

defend and indemnify them based on two policies Erie had issued to the Maxwells.

Thereafter, Erie commenced this action in which they sought a declaratory judgment that

the policies of insurance it issued to the Maxwells provided no coverage for the claims

asserted in the lawsuit filed against them by the Chapmans in the Chancery Court for

Putnam County, Tennessee;1 therefore, Erie has no duty to defend the Maxwells in that

action.

Erie subsequently filed a Motion for Summary Judgment based on the ground that

the undisputed facts established that neither policy provided any coverage for the

allegations in the Chapman lawsuit. In pertinent part, Erie contended that none of the

claims asserted in the Chapman Complaint contained an allegation constituting an

“occurrence” as that term was defined by either policy or applicable law; therefore, the

policies provided no coverage for the claims asserted.

The trial court agreed with Erie on four of the six claims that were at issue but

denied the motion as it pertained to the claims based on negligence and negligent

misrepresentation. The order that followed read in pertinent part:

1. Erie Insurance Exchange’s (“Erie”) Motion for Summary Judgment is

granted as it relates to allegations of intentional acts. In other words, Erie is

under no duty to defend or indemnify Gary and Lucretia Maxwell (the

“Maxwells”) against Paul and Barbara Chapman’s (the “Chapmans”)

claims of 1) Violation of the Tennessee Residential Property Disclosure

Act, 2) Concealment, 3) Fraud and Intentional Misrepresentation, and 4)

Breach of Contract, alleged as causes of action against Gary and Lucretia

Maxwell in the underlying case styled Paul J. Chapman, et ux Barbara J.

Chapman v. Gary H. Maxwell, et ux Lucretia H. Maxwell, No. 2015CV17,

Chancery Court for Putnam County, Tennessee.

2. Erie’s Motion for Summary Judgment is denied as it relates to

allegations of “Negligence” and “Negligent Misrepresentation”. This Court

finds the issue is not ripe at this time because a question of fact exists with

1

Case No. 2015CV17

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regard to Erie’s duty to indemnify. Erie has a duty to defend with regard to

allegations of “negligence” and “negligent misrepresentation”.

Erie then filed a Motion for Permission to File an Interlocutory Appeal pursuant to

Tenn. R. App. P. 9 to appeal the denial of its motion for summary judgment concerning

the “negligence” and “negligent misrepresentation” claims. The trial court granted Erie’s

motion, and this court granted Erie’s Application for Permission to Appeal.

STANDARD OF REVIEW

This court reviews a trial court’s decision on a motion for summary judgment de

novo without a presumption of correctness. Rye v. Women’s Care Ctr. of Memphis,

MPLLC, 477 S.W.3d 235, 250 (Tenn. 2015) (citing Bain v. Wells, 936 S.W.2d 618, 622

(Tenn. 1997)). Accordingly, this court must make a fresh determination of whether the

requirements of Tenn. R. Civ. P. 56 have been satisfied. Id.; Hunter v. Brown, 955

S.W.2d 49, 50-51 (Tenn. 1997). In so doing, we consider the evidence in the light most

favorable to the non-moving party and draw all reasonable inferences in that party’s

favor. Godfrey v. Ruiz, 90 S.W.3d 692, 695 (Tenn. 2002).

Summary judgment should be granted when “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 any material fact and that the moving party is entitled to a

judgment as a matter of law.” Tenn. R. Civ. P. 56.04. In this case, there are no disputed

facts. “[I]ssues regarding an insurer’s duty to defend are matters of law.” Travelers

Indem. Co. of Am. v. Moore & Assocs., 216 S.W.3d 302, 305 (Tenn. 2007) (citing

Standard Fire Ins. Co. v. Chester-O’Donley & Assocs. Inc., 972 S.W.2d 1, 6 (Tenn. Ct.

App. 1998)). Our review of a trial court’s determinations on issues of law is de novo,

without any presumption of correctness. Lind v. Beaman Dodge, Inc., 356 S.W.3d 889,

895 (Tenn. 2011).

ANALYSIS

Erie raises two issues on appeal.2 We have determined that the dispositive issue is

whether the Chapmans’ claims against Erie’s insureds for “negligence” and “negligent

misrepresentation” arising from alleged misrepresentations made in the sale of a home

2

The issues as stated by Erie in its appellant’s brief read:

I. Whether the Trial Court erred in misapplying the “duty to defend” analysis?

II. Whether the Trial Court erred in holding Erie had a duty to defend when there is

conflicting law (none in Tennessee) on the issue of whether “negligence” and “negligent

misrepresentation” arising from misrepresentation made in the sale of a home constitutes

an “occurrence” or “property damage”?

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state a claim of “property damage caused by an occurrence,” as those terms are defined

in the insurance policies Erie issued to the Maxwells.

In determining whether an insurer has a duty to defend, we are to rely solely on

the allegations contained in the underlying complaint. St. Paul Fire & Marine Co. v.

Torpoco, 879 S.W.2d 831, 835 (Tenn. 1994) (citing American Policyholders’ Ins. Co. v.

Cumberland Cold Storage Co., 373 A.2d 247 (Me. 1977)). The insurer’s duty to defend

is triggered when the underlying complaint alleges damages that are within the risk

covered by the insurance contract and for which there is a potential basis for recovery. Id.

This duty “arises if even one of the allegations is covered by the policy.” Travelers, 216

S.W.3d at 305 (Tenn. 2007). Furthermore, if there is any doubt as to whether the claimant

has stated a cause of action within the coverage of the policy, it is resolved in favor of the

insured. Id. (citing Dempster Bros., Inc. v. U.S. Fid. & Guar. Co., 388 S.W.2d 153, 156

(Tenn. Ct. App. 1964)).

When interpreting insurance contracts, we apply the “same rules of construction

used to interpret other contracts.” Travelers, 216 S.W.3d at 305-6 (citing McKimm v.

Bell, 790 S.W.2d 526, 527 (Tenn. 1990)). Insurance contracts “must be interpreted fairly

and reasonably, giving the language its usual and ordinary meaning.” Id. at 306. (quoting

Naifeh v. Valley Forge Life Ins. Co., 204 S.W.3d 758, 768 (Tenn. 2006)). Furthermore,

insurance contracts are to be construed reasonably and logically as a whole. Id.

Applying these principles, we have determined that Erie does not have a duty to

defend the Maxwells against the claim of negligence or negligent misrepresentation

because the alleged misrepresentations did not cause the damage to the property. To

understand this conclusion, we must review the policies at issue. Erie issued two policies

to the Maxwells: a Home Protector Policy3 and a Personal Catastrophe Liability Policy.4

The Home Protector Policy states:

We will pay all sums up to the amount shown on the Declarations which

anyone we protect becomes legally obligated to pay as damages because of

bodily injury or property damage caused by an occurrence during the

policy period. We will pay for only bodily injury or property damage

covered by this policy.

This policy defines “occurrence” as “an accident, including continuous or repeated

exposure to the same general harmful conditions.” Similar to the Home Protector Policy,

the Personal Catastrophe Liability Policy covers “property damage resulting from an

3

This policy covered the period of September 29, 2013 to September 29, 2014.

4

This policy covered the period of February 10, 2015 to February 10, 2016.

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occurrence.” Also, like the Home Protector Policy, the Personal Catastrophe Liability

Policy defines “occurrence” as “an accident . . . which results in . . . property damage.”

Therefore, for a claim to be covered under either policy, the claim must arise from “an

accident . . . which results in . . . property damage.”5 Neither policy defines “accident”;

however, our courts have defined “accident” as an unintentional act.6 While in certain

situations a negligent act may also be an accident, the two terms are not necessarily

synonymous. Gassaway v. Travelers Ins. Co., 439 S.W.2d 605, 607 (Tenn. 1969). “The

nature of the action . . . whether it be tort, contract or otherwise, may be a factor in

determining if there has been an accident under a given factual situation. . . .” Id.

The Chapmans’ complaint clearly states a claim of negligence and a claim of

negligent misrepresentation concerning the propensity of the property to flood; however,

for there to be coverage the claims must allege that the Chapmans sustained property

damage that was caused by an “occurrence,” as that term is defined in the policies.

Under both Erie policies, “property damage” is only covered if the damage is caused by

an “occurrence.” “Occurrence” is defined by the policies as “an accident, including

continuous or repeated exposure to the same general harmful conditions.” By reading the

Chapmans’ complaint in pari materia, it is apparent the property damage sustained by the

Chapmans was caused by flooding, not by the alleged misrepresentation of the Maxwells.

Thus, the occurrence that caused the property damage was flooding, not

misrepresentations by the Maxwells.

Although we have found no Tennessee authority that addresses this narrow issue,

our conclusion is supported by cases Erie relies on from other jurisdictions where most

5

Property damage is defined in both policies and while the definitions are somewhat different,

the differences have no bearing on the issues on appeal. The Personal Catastrophe Liability Policy defines

“property damage” as “injury to or destruction of tangible property including loss of its use, but not the

decrease in value of the tangible property due to the damage.” The Home Protector Policy defines

“property damage” as:

1. Physical injury to or destruction of tangible property, including loss of its use.

All such loss of use shall be deemed to occur at the time of the physical injury

that caused it.

2. Loss of use of tangible property which is not physically injured or destroyed. All

such loss of use shall be deemed to occur at the time of the occurrence.

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In Gassaway, 439 S.W.2d at 608, the court stated that “accident” “should be interpreted in its

ordinary and popular sense.” It defined the term as “an event not reasonably to be foreseen, unexpected

and fortuitous.” Id. The Court acknowledged that this definition of “accident” is problematic because

foreseeability is an element of negligence. Travelers, 216 S.W.3d at 308. Holding that a negligent act

does not constitute an “accident,” because the consequences of a negligent act are, by definition,

foreseeable, is inconsistent with the Court’s previous holding that a negligent act can be an accident. Id.

Merriam-Webster defines “accident” as “an unforeseen and unplanned event or circumstance” or “lack of

intention or necessity.”

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courts hold that a claim for negligent misrepresentation arising from the sale of property

is not considered an “occurrence.”7 We will discuss seven of the cases from other

jurisdictions.

The Texas Court of Appeals considered facts similar to those here in State Farm

Lloyds v. Kessler, 932 S.W.2d 732 (Tex. App. 1996). As is the case here, the

homeowners’ insurer sought a declaration that it had no duty to defend its insureds

against claims by the buyers of the insureds’ home who alleged the insureds

misrepresented that the home had no foundational or drainage problems. State Farm, 932

S.W.2d at 734. And as Erie is doing here, the insurer contended that the allegations did

not constitute any claim for damages caused by “an occurrence” or loss. Id. The Kessler

court agreed with the insurer, explaining that the damages were not “property damages.”

Id. at 738. The court also held that “[e]ven if the damages alleged were property

damages, which they are not, they did not result from an occurrence or loss.” Id. In

pertinent part, the Kessler court explained:

The Kesslers’ homeowner’s policy requires that the property damages be

caused by an occurrence. The policy defines occurrence as “an accident,

including exposure to conditions, which results in property damage during

the policy period.” The umbrella policy requires that a loss cause the

property damage. The policy defines loss as “an accident that results in . . .

property damage during the policy period. This includes injurious exposure

to conditions.” Because neither an accident nor exposure to conditions

caused the damages alleged by the Fannings, no occurrence or loss

happened. Therefore, the policies do not cover the damages sought by the

Fannings.

Id.

The Kessler court also relied on reasoning in Houston Petroleum Co. v. Highlands

Ins. Co., 830 S.W.2d 153 (Tex. App. 1990), and Safeco Ins. Co. of America v. Andrews,

915 F.2d 500 (9th Cir. 1990). The Houston court held that misrepresentations and failures

to disclose are not conditions that a person or property can be exposed to under the

7

The cases Erie cites in its appellant’s brief that held as such include: Nat’l Fire Ins. of Hartford

v. C. Hodges & Associates, PLLC, 825 F. Supp. 2d 792, 797-98 (W.D. Tex. 2011); State Farm Lloyds v.

Kessler, 932 S.W.2d 732 (Tex. App. 1996), writ denied (June 12, 1997); Augenblick v. Nationwide Ins.

Co., No. CIV. A. 99-3419, 1999 WL 975118 (E.D. Pa. Oct. 8, 1999); Aluise v. Nationwide Mut. Fire Ins.

Co., 625 S.E.2d 260, 268-69 (2005); see also 21st Century N. Am. Ins. Co. v. Wolfington, 892 F. Supp. 2d

692, 699 (E.D. Pa. 2012) (citing State Farm Fire and Cas. Co. v. Brewer, 914 F.Supp. 140, 142 (S.D.

Miss. 1996) (noting the law is “‘virtually unanimous’ that damages flowing from misrepresentation in

home sales ‘have no basis in property damage’ but are ‘economic and contractual in nature and as such do

not fall within the scope of coverage’ of typical homeowners’ insurance policy”)).

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policies. Houston, 830 S.W.2d at 156. “We hold that exposure to ‘fraudulent promises,

false representations, and untrue statements’ does not, as a matter of law, fall within the

plain meaning of the definition of ‘occurrence.’” Id.

In Safeco Ins. Co. of America v. Andrews, a seller’s misrepresentations about the

condition or defects of the property to be sold were held not to fall within the definition

of occurrence. Safeco, 915 F.2d at 502. In the underlying case giving rise to Safeco’s

declaratory judgment action, the plaintiff, Kandace Kuehl, was seeking damages for

Andrews’s alleged negligence in failing to inspect and inform Kuehl of defects in the

property and for misrepresentation “materially affecting the value or desirability” of the

property. Id. at 501 The Safeco court held that

Kuehl’s claims do not expose Andrews to liability for any damage to

tangible property, but rather for economic loss resulting from Andrews’s

alleged failure to discover and disclose facts relevant to the property’s value

and desirability. Such harm is outside the scope of the policy. See Allstate

Insurance Co. v. Miller, 743 F.Supp. 723 (N.D. Cal. 1990). Although the

defective condition of the property is an element of Kuehl’s claims, the

defects cannot, even when interpreting the policy broadly, be considered

the cause of Kuehl’s damages. The cause of the damage was Andrews’s

alleged misrepresentations, which are not an “occurrence” or a “peril

insured against” under the terms of the policy. There is, therefore, no

potential for liability that arguably comes within the scope of the insurance

coverage provided by Safeco.

Id. at 502. (emphasis added). The same conclusion was reached in Nat’l Fire Ins. of

Hartford v. C. Hodges & Associates, PLLC, 825 F. Supp. 2d 792, 797-98 (W.D. Tex.

2011), where the court found a developer’s allegedly negligent misrepresentations to

purportedly induce tenants to sign leases were not an “occurrence” as that term was

defined by the policies in question.

The Supreme Court of Appeals of West Virginia came to a similar conclusion in

Aluise v. Nationwide Mut. Fire Ins. Co., 625 S.E.2d 260 (2005). The Supreme Court of

Appeals of West Virginia found absent policy language to the contrary, a homeowner’s

policy defining an “occurrence” as “bodily injury or property damage resulting from an

accident” does not provide coverage for an insured homeowner who is sued by a home

buyer for economic loss caused because the insured negligently or intentionally failing to

disclose defects in the home. Id. at 269. This conclusion was based in part on the

following:

It has been recognized that courts “are virtually unanimous in their holdings

that damages flowing from misrepresentation and/or fraud have no basis

[as] property damage; rather, the only cognizable damages from such torts

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are economic and contractual in nature and as such do not fall within the

scope of coverage afforded by [homeowners] policies[.]” State Farm Fire

and Cas. Co. v. Brewer, 914 F. Supp. 140, 142 (S.D. Miss.1996) (citing

Safeco Ins. Co. of America v. Andrews, 915 F.2d 500 (9th Cir.1990)).

Accord Allstate Ins. Co. v. Morgan, 806 F.Supp. 1460 (N.D.Cal.1992);

Allstate Ins. Co. v. Chaney, 804 F.Supp. 1219 (N.D. Cal.1992); Allstate Ins.

Co. v. Hansten, 765 F.Supp. 614 (N.D. Cal.1991); State Farm Fire and

Cas. Co. v. Gwin, 658 So.2d 426 (Ala. 1995); Devin v. United Servs. Auto.

Assoc., 6 Cal.App.4th 1149, 8 Cal.Rptr.2d 263 (1992); Dixon v. National

Am. Ins. Co., 411 N.W.2d 32 (Minn. App. 1987); Qualman v. Bruckmoser,

163 Wis.2d 361, 471 N.W.2d 282 (1991).

Aluise at 268.

The reasoning and holding in Augenblick v. Nationwide Ins. Co., No. CIV. A. 99-

3419, 1999 WL 975118 (E.D. Pa. Oct. 8, 1999), also supports our conclusion that the

Maxwells’ alleged misrepresentations do not constitute an occurrence as the term is

defined in the Erie policy. In Augenblick, the insured sought to compel Nationwide to

defend and indemnify her in a suit that arose from the sale of her home. Id. at *1. As is

the case before us in this appeal, in Augenblick, the insured had sold real property to

buyers, who subsequently sued the insured claiming that she concealed defects in the

property and misrepresented its true condition. Id. The buyers sued the insured under

several theories, including negligent misrepresentation premised upon the buyers’

allegations that the insured’s false representations about the property were negligently

made and her failure to disclose material defects constituted negligent conduct. Id. The

Eastern District of Pennsylvania ruled upon a declaratory judgment action that the

question really is “whether a negligent misrepresentation made by a seller to a buyer

qualifies as an ‘occurrence.’” Id. at *4. The Augenblick court’s analysis of that question is

as follows:

It appears at first glance that a suit alleging negligent misrepresentation is

not the kind of contingency for which one purchases a homeowner’s

insurance policy. A homeowner’s policy is usually purchased as protection

against chance events that cause bodily injury to the insured or another

party, or property damage to the insured home.

Plaintiff argues that liability insurance may be triggered by allegations of

negligent misrepresentation. This Court accepts the Plaintiff’s contention

that there is a difference between fraudulent misrepresentation and

negligent misrepresentation under Pennsylvania law. See, Kerrigan v.

Villei, 22 F.Supp. 419 (E.D.Pa.1998). While that distinction may be

important for the Migachevs when proving their case, its importance is

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diminished in the context of determining whether the misrepresentation is

an ‘accident’.

Essentially, this Court finds that Nationwide has no obligation to defend

Ms. Augenblick based on a charge of Negligent Misrepresentation because

any damage arises out of a breach of contract, not from an accident. Ms.

Augenblick entered a contract that required her to present to the Migachevs

a reasonably sound house. According to the Underlying Complaint, she

either intentionally or negligently failed to do this. In other words, she

breached the contract. The purpose and intent of an insurance policy is to

protect the insured from liability for essentially accidental injury to the

person or property of another rather than coverage for disputes between

parties to a contractual undertaking. See, Redevelopment Authority of

Cambria County v. Intern. Ins. Co., 685 A.2d 581, 588 (Pa. Super. 1996).

Ms. Augenblick is attempting to convert her insurance policy into a

performance bond that not only protects her from liability for damages

directly arising from the home, but also from contracts she enters to dispose

of the property. Such coverage cannot be reasonably expected by the

insured. See, Cambria County, 454 Pa. Super. at 591.

The Migachevs’ suit does not refer to the actual structural damage of the

property, but to the economic loss caused by the intentional or negligent

misrepresentations of Ms. Augenblick. The contract required truthful

representations by Ms. Augenblick. If she failed to comply with the terms

of this contract, whether intentionally or negligently, she may have

breached the contract. The fact that she may have breached the contract

only through negligence does not transform this case into a tort action for

damage while Ms. Augenblick owned the property. See, Snyder Heating

Co. Inc. v. PMA Ins. Co., 715 A.2d 483 (Pa. Super. 1998).

Augenblick, 1999 WL 975118, at *4-5.

As the Augenblick court noted, a homeowner’s policy is purchased to protect

against chance events that cause property damage to the home or bodily injury to the

insured or a third party. Therefore, it is fair to conclude that an action alleging negligent

misrepresentation is not the sort of contingency for which one purchases a homeowner’s

policy.

We are also persuaded by the reasoning of the Louisiana Court of Appeal in

Lawyer v. Kountz, the facts of which are also similar to the case at bar, which opined that

“[t]o find coverage existed in this case would be to find that based on an act of sale, a

homeowner’s insurer becomes the warrantor of the condition of the insured property.

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This is not the type of coverage which is contemplated by these homeowner’s policies . . .

.” Lawyer v. Kountz, 716 So.2d 493, 498 (Louis Ct. App. 1998).

We acknowledge, as the Maxwells correctly note in their brief, that there are

jurisdictions that differ with the above holdings; however, we have concluded that the

decisions from those jurisdictions are distinguishable and unpersuasive. The cases in

which the Maxwells rely opine that negligent misrepresentation is an accident within the

meaning of a liability insurance policy. Here, we are not determining whether negligent

misrepresentation is an accident but rather, whether the alleged misrepresentations by the

Maxwells caused the damage to the property. We have determined the misrepresentations

did not cause the damage; therefore, the cases the Maxwells cite are unpersuasive.

For the foregoing reasons, we hold that the Chapmans’ complaint does not state a

claim for property damage that resulted from an occurrence as that term is defined in the

Erie policies. Therefore, the Maxwells have no coverage under the Erie Policies for the

claims asserted against them by the Chapmans, and as a result, Erie owes no duty to

defend or indemnify the Maxwells in that action. We, therefore, reverse the judgment of

the trial court as it pertains to the claims of “negligence” and “negligent

misrepresentation” and remand with instructions for the trial court to enter summary

judgment in favor of Erie, finding Erie is under no duty to defend the Maxwells against

the Chapmans’ claims for “negligence” and “negligent misrepresentation.”

IN CONCLUSION

Accordingly, the judgment of the trial court is reversed, and this case is remanded

for further proceedings consistent with this opinion. Costs of appeal are assessed against

the appellees, Gary H. Maxwell and Lucretia H. Maxwell.

________________________________

FRANK G. CLEMENT JR., P.J., M.S.

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