The court agreed that the insurer had no potential liability under a policy where the insured allegedly concealed facts and made misrepresentations regarding the condition of the property it sold. State Farm Fire & Cas. Co. v. TFG Enterprises, LLC, 2021 Neb. LEXIS 27 (Neb. Feb. 19, 2021).
TFG sold a house to Jeffrey Barkhurst. Thereafter, Barkhurst filed suit alleging that TFG failed to disclose and actively concealed several defects, including water intrusion, the presence of mold, substandard repairs and structural issues. State Farm agreed to TFG defend under a reservation of rights. State Farm then filed a declaratory judgment action to determine its obligations under the policy.
State Farm relied upon various exclusions in the rental policy issued to TFG. The exclusions provided there would be no liability coverage for “property damage to property owned by an insured”; “property damage to property rented to, occupied or used by or in the care of the insured”; or “property damage to premises the insured sells. . . if the property damage arises out of these premises.”
In the underling lawsuit, TFG admitted none of the conditions or defects identified in the Barkhurst’s lawsuit existed when it bought the house. TFG further admitted that it used the house and the house was in its care and possession up until the time it was sold.
The lower court granted summary judgment to State Farm. Any negligent misrepresentation by TFG did not cause property damage. Nor was there an occurrence.
The Nebraska Supreme Court affirmed, but focused on the policy exclusions. To the extent that the underlying lawsuit was one for property damage to the house, it fell squarely within each of the exclusions. It was undisputed that the house was owned, in the care of, and then sold byTFG.
Given the plain language of the exclusions, State Farm had no potential liability from the underliyng lawsuit under the rental policy.