                                RECOMMENDED FOR FULL-TEXT PUBLICATION
                                     Pursuant to Sixth Circuit Rule 206
                                             File Name: 05a0374p.06

                       UNITED STATES COURT OF APPEALS
                                        FOR THE SIXTH CIRCUIT
                                          _________________


                                                      X
                                Plaintiff-Appellant, -
 STATE FARM FIRE AND CASUALTY COMPANY,
                                                       -
                                                       -
                                                       -
                                                            No. 04-5823
          v.
                                                       ,
                                                        >
 JAMES MCGOWAN, individually and d/b/a JMAC            -
                                                       -
                             Defendants-Appellees. -
 ENTERPRISES, and LORI L. DUTTON,

                                                       -
                                                      N
                        Appeal from the United States District Court
                   for the Eastern District of Tennessee at Chattanooga.
                     No. 03-00258—Curtis L. Collier, District Judge.
                                            Argued: June 1, 2005
                                   Decided and Filed: August 31, 2005
      Before: BOGGS, Chief Judge; GILMAN, Circuit Judge; CLELAND, District Judge.*
                                             _________________
                                                  COUNSEL
ARGUED: Kenneth S. Williams, MADEWELL, JARED, HALFACRE & WILLIAMS, Cookeville,
Tennessee, for Appellant. Mollie A. Martin, DUNCAN & HATCHER, Chattanooga, Tennessee,
William R. Dearing, CHAMBLISS, BAHNER & STOPHEL, Chattanooga, Tennessee, for
Appellees. ON BRIEF: Kenneth S. Williams, James D. Madewell, MADEWELL, JARED,
HALFACRE & WILLIAMS, Cookeville, Tennessee, for Appellant. Mollie A. Martin, DUNCAN
& HATCHER, Chattanooga, Tennessee, William R. Dearing, CHAMBLISS, BAHNER &
STOPHEL, Chattanooga, Tennessee, for Appellees.
                                             _________________
                                                 OPINION
                                             _________________
        RONALD LEE GILMAN, Circuit Judge. This action concerns the coverage provided by
a property owner’s insurance policy issued by State Farm Fire and Casualty Company to James
McGowan, the former owner of an apartment building. State Farm filed a declaratory judgment
action in federal court regarding its defense obligations to McGowan in a Tennessee state-court
lawsuit filed by Lori L. Dutton. Dutton, who lived in one of the apartments with her four-year-old

        *
         The Honorable Robert H. Cleland, United States District Judge for the Eastern District of Michigan, sitting
by designation.


                                                         1
No. 04-5823          State Farm Fire and Casualty v. McGowan, et al.                            Page 2


daughter Amy, filed suit against McGowan after a rotting tree collapsed onto the apartment during
a thunderstorm, killing Amy. The district court held that State Farm was obligated to defend
McGowan in the underlying action under the terms of the policy. For the reasons set forth below,
we AFFIRM the judgment of the district court.
                                      I. BACKGROUND
        McGowan, individually and doing business as JMAC Enterprises, owned a four-unit
apartment building in Red Bank, Tennessee, in which Dutton and her daughter Amy lived. The
premises were insured under a policy issued by State Farm to McGowan. McGowan’s insurance
policy contained the following relevant provisions:
       BUSINESS LIABILITY
       We will pay those sums that the insured becomes legally obligated to pay as damages
       because of bodily injury, property damage, personal injury or advertising injury
       to which this insurance applies. No other obligation or liability to pay sums or
       perform acts or services is covered unless explicitly provided for under
       Supplementary Payments. This insurance applies only:
       1.     to bodily injury or property damage caused by an occurrence which takes
              place in the coverage territory during the policy period[.]
       ...
       RIGHT AND DUTY TO DEFEND
       We will have the right and duty to defend any claim or suit seeking damages payable
       under this policy even though the allegations of the suit may be groundless, false, or
       fraudulent. The amount we will pay for damages is limited as described in the
       Limits of Insurance.
       ...
       DEFINITIONS
       ...
       3.     bodily injury means bodily injury, sickness or disease sustained by a
              person, including death resulting from the bodily injury, sickness, or disease
              at any time;
       ...
       11.    occurrence means:
              a.    an accident, including continuous or repeated exposure to
                    substantially the same general harmful conditions which result in
                    bodily injury or property damage[.]
              ...
(Emphases in original.)
       McGowan sold the building to Mohammed Hakeem in May of 2001, but Dutton and Amy
continued to occupy their apartment after the sale. In September of 2001, McGowan canceled his
State Farm insurance policy. The cancellation was effective as of August 1, 2001.
No. 04-5823           State Farm Fire and Casualty v. McGowan, et al.                           Page 3


        During a thunderstorm in October of 2001, a decaying tree next to the building fell through
the roof of Dutton’s apartment, killing Amy. Dutton subsequently filed a lawsuit in state court to
recover damages against McGowan. Her complaint alleged that McGowan had been negligent
during the time that he owned the property by failing to correct the dangerous condition created by
the presence of the rotting tree, and that McGowan’s negligence caused or contributed to Amy’s
death.
        Upon learning of the lawsuit, McGowan demanded that State Farm defend and cover the
claims against him in the state-court action. State Farm refused. It also filed a declaratory judgment
action in the United States District Court for the Eastern District of Tennessee regarding its coverage
and defense obligations to McGowan. State Farm subsequently filed a motion for summary
judgment on the ground that the insurance policy at issue was an “occurrence” policy, and that
McGowan was not entitled to coverage because the occurrence that resulted in Amy Dutton’s death
did not take place during the policy period. McGowan filed a cross-motion for summary judgment,
arguing that the occurrence did in fact take place during the policy period. The district court denied
State Farm’s motion and granted McGowan’s, holding that State Farm had a duty under the policy
to defend McGowan in the underlying lawsuit. State Farm has timely appealed.
                                           II. ANALYSIS
A.      Standard of review
        We review a district court’s grant of summary judgment de novo. Minadeo v. ICI Paints,
398 F.3d 751, 756 (6th Cir. 2005). Summary judgment is proper where there exists no genuine issue
of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P.
56(c). In considering a motion for summary judgment, the court must construe all reasonable
inferences in favor of the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 587 (1986). The central issue is “whether the evidence presents a sufficient disagreement
to require submission to a jury or whether it is so one-sided that one party must prevail as a matter
of law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986).
B.     The district court did not err in concluding that McGowan’s alleged negligence was an
       occurrence that took place during the policy period
        With subject matter jurisdiction being based entirely upon diversity of citizenship, the parties
do not dispute that Tennessee law applies to this case. See Erie R.R. Co. v. Tompkins, 304 U.S. 64,
78 (1938). Tennessee caselaw requires that insurance policies be construed in the same manner as
any other contract. Am. Justice Ins. Reciprocal v. Hutchison, 15 S.W.3d 811, 814 (Tenn. 2000).
Although the language of the policy should be “understood in its plain, ordinary and popular sense,”
Bob Pearsall Motors, Inc. v. Regal Chrysler-Plymouth, Inc., 521 S.W.2d 578, 580 (Tenn. 1975), any
ambiguous language that purports to limit the coverage of the policy must be construed against the
insurance company and in favor of the insured. Hutchison, 15 S.W.3d at 815.
        An insurance company’s duty to defend its insured is largely determined by the allegations
in the complaint filed against the insured. St. Paul Fire & Marine Ins. Co. v. Torpoco, 879 S.W.2d
831, 835 (Tenn. 1994). If the allegations in the complaint “are within the risk insured against and
there is a potential basis for recovery,” the insurance company is obligated to defend its
policyholder. Id. The insurance policy in question in the present case is an “occurrence” policy.
See State ex rel. McReynolds v. United Physicians Ins. Risk Retention Group, 921 S.W.2d 176, 177
n.1 (Tenn. 1996) (“[A]n ‘occurrence policy’ is a policy in which the coverage is effective if the
negligent act or omitted act occurs within the policy period, regardless of the date of discovery.”).
It provides coverage for “bodily injury . . . caused by an occurrence which takes place . . . during
the policy period.” (Emphasis added.) None of the parties dispute that Amy Dutton suffered a
No. 04-5823           State Farm Fire and Casualty v. McGowan, et al.                          Page 4


“bodily injury” as defined by the policy. The question, therefore, is whether her injury was caused
by an occurrence that took place during the policy period. McGowan contends that his failure to
inspect and remove the decaying tree while he owned the apartment building was an occurrence
within the meaning of the policy, but State Farm argues that the occurrence did not take place until
the tree actually fell onto the building and killed Amy.
        The insurance policy defines an “occurrence” as “an accident, including continuous or
repeated exposure to substantially the same general harmful conditions which result in bodily
injury.” As the district court noted, “[n]o party addressed the exposure-to-harmful-conditions aspect
of the policy’s definition for ‘occurrence,’ so the [issue is] whether the alleged negligence
constitutes an accident.”
        The Tennessee Supreme Court addressed the meaning of the term “accident” as used in an
insurance policy in Gassaway v. Travelers Insurance Co., 439 S.W.2d 605 (Tenn. 1969). Gassaway
involved an insurance policy that was issued to the developer of a residential subdivision. The
policy provided coverage for property damage “caused by accident.” Id. at 606. An underground
storm sewer, not disclosed by the developer to the purchasers of the lots, caused serious damage to
a subdivision house when the foundation began to settle as a result of discharge from the sewer.
Although the court acknowledged that the developer did not intend the damage, it held that such
settling was reasonably foreseeable and thus not an “accident” as used in liability insurance policies.
The court defined an accident as “an event not reasonably to be foreseen, unexpected and
fortuitous.” Id. at 608. It stated that a determination of “[w]hether the damages suffered resulted
from an accident so as to make the insurer liable requires the examination of the entire factual
situation.” Id. at 607.
        The Gassaway court cited a number of cases in which an insured’s negligence qualified as
an accident under policies containing similar language. Among the cases cited were American
Employers Insurance Co. v. Knox-Tenn Equipment Co., 377 S.W.2d 573 (Tenn. 1963) (holding an
insurer liable for damage caused when a contractor used drill bits that were too big because the
supplier (the insured) did not know that the manufacturer had changed the size of the bits); Bundy
Tubing Co. v. Royal Indemnity Co., 298 F.2d 151 (6th Cir. 1962) (holding the insurance company
responsible for losses caused by defective steel tubing used in a hot water heating system because
the seller of the tubing (the insured) did not know that it was faulty and could not have foreseen the
resulting damages); and Ritchie v. Anchor Casualty Co., 286 P.2d 1000 (Cal. Ct. App. 1955)
(finding the insurance company liable for damages caused by the sale of rancid oil by its insured
because the insured did not know that the oil was rancid).
        The court in Gassaway distinguished the above cases from the one before it on the grounds
that the developer in Gassaway knew of the risk created by the drainage facilities and could have
reasonably foreseen the damage that ultimately occurred. It concluded that, because the damages
caused by the developer’s failure to disclose the presence of the sewer were not the result of an
accident, the insurance company was not obligated to provide coverage. Gassaway, 439 S.W.2d at
609-10.
        As noted by the district court in the present case, the complaint in the underlying state-court
action “alleges that McGowan failed to adequately inspect and resolve the condition of the tree.”
The district court concluded that “McGowan’s alleged negligence does not suggest any intent to
cause harm or to overlook a risk of harm . . . . The underlying lawsuit . . . suggests he did not know
the tree’s condition or know that allowing it to remain would pose a risk of harm to the occupants
of the apartment building.” Because the fall of the tree was unforeseen, unexpected, and fortuitous,
McGowan’s negligent omission constituted an accident as the term is used in insurance policies.
See Standard Constr. Co. v. Md. Cas. Co., 359 F.3d 846, 851 (6th Cir. 2004) (holding that an
insured’s negligence was an occurrence under an insurance policy because it was unintended and
No. 04-5823           State Farm Fire and Casualty v. McGowan, et al.                          Page 5


unforeseen) (applying Tennessee law); Westfield Ins. Co. v. Tech Dry, Inc., 336 F.3d 503, 510 (6th
Cir 2003) (holding that an employer’s negligence in hiring and retaining an employee who caused
a customer’s death was an accident and thus an occurrence under the employer’s insurance policy)
(applying Kentucky law).
       State Farm, however, argues that it does not have a duty to defend McGowan because
       [a]n “occurrence” for coverage purposes is the point in time when actionable
       negligence arises, which is when an injury or damage is caused and results from the
       breach of duty owed. The ultimate question for coverage is not when McGowan may
       have committed a negligent act, but instead the time when his acts or omissions may
       have arisen to the level of negligence actionable at law.
In support of its argument, State Farm correctly recites the elements of actionable negligence. See
McClung v. Delta Square Ltd., 937 S.W.2d 891, 894 (Tenn. 1996) (“To establish negligence, one
must prove: (1) a duty of care owed by defendant to plaintiff; (2) conduct falling below the
applicable standard of care that amounts to a breach of that duty; (3) an injury or loss; (4) cause in
fact; and (5) proximate, or legal, cause.”). It also correctly concludes that McGowan’s failure to
maintain the apartment premises did not mature into a cause of action for negligence until his breach
of duty caused an injury (Amy Dutton’s death). But State Farm does not provide any support for
its assertion that the insurance policy requires actionable negligence for coverage. Rather, the
policy simply requires “bodily injury . . . caused by an occurrence which takes place . . . during the
policy period.”
        State Farm repeatedly asserts that a negligent act alone is not an occurrence. To bolster its
argument, it notes that the insurance policy provides that the occurrence must result in “bodily
injury” in order for State Farm to be liable. This is undoubtedly true, but the policy does not specify
when the bodily injury must take place. Moreover, the Tennessee Supreme Court has specifically
held that “the negligent acts of an insured can be an accident as this word is used in insurance
policies.” Gassaway, 439 S.W.2d at 607. So even though an injury must manifest itself in order to
trigger State Farm’s obligation to defend McGowan, the policy requires only that the occurrence
must take place during the policy period, not the resulting injury.
        State Farm attempts to distinguish Gassaway from the present case on the ground that “[t]he
Gassoway [sic] decision did not address the question of timing for policy application purposes.” It
then cites the following three cases that stand for the proposition that the term “occurrence” means
the time when the claimant is injured, not the time of the negligent act or omission: State Auto
Mutual Insurance Co. v. Shelby Mutual Insurance Co., No. 1162, 1988 WL 67155, at *3 (Tenn. Ct.
App. June 30, 1988) (unpublished) (holding that “coverage of property damage caused by an
occurrence as defined in the policy is limited to damage occurring during the policy period”);
Monticello Insurance Co. v. Kentucky River Community Care, Inc., No. 98-5372, 1999 WL 236190,
at *4 (6th Cir. Apr. 14, 1999) (unpublished) (noting that the “customary rule” is that the occurrence
of an accident is when the damage occurs, not the wrongful act) (applying Kentucky law); and
Shreckengast v. State Farm Fire & Casualty Co., No. 97C-06-015 HDR, 1998 WL 731566, at *3
(Del. Super. Ct. May 18, 1998) (unpublished) (holding that “the ‘occurrence’ is not the time of the
negligent act, but the time when the complaining party actually suffered damage”).
        Two of these cases, State Auto Mutual Insurance Co. and Monticello Insurance Co., are
readily distinguishable from the present case in that the policies at issue in both cases specifically
limited coverage based on the timing of the injury. See State Auto Mut. Ins. Co., 1988 WL 67155,
at *1 (“Property damage is defined as the destruction of tangible property which occurs during the
policy period.”) (emphasis added); Monticello Ins. Co., 1999 WL 236190, at *1 (“The company will
pay on behalf of the insured all sums which the insured shall become legally obligated to pay as
No. 04-5823            State Farm Fire and Casualty v. McGowan, et al.                            Page 6


damages because of injury to which this insurance applies caused by a medical incident which
occurs during the policy period.”) (emphasis added). The State Farm policy at issue here does not
contain a similar limitation. Instead, it provides that coverage applies to McGowan’s obligation to
pay damages “because of bodily injury . . . caused by an occurrence which takes place . . . during
the policy period,” and further provides that “bodily injury means bodily injury, sickness or disease
sustained by a person, including death resulting from the bodily injury, sickness, or disease at any
time.”
        State Farm argues that the words “at any time” in the definition of “bodily injury” are
intended to clarify that death resulting from an injury need not occur during the policy period. It
maintains that the mortal injury must occur during the policy period for coverage to apply, even if
the injured individual does not die until after the expiration of the policy. We agree that the absence
of a comma before the phrase “at any time” suggests that State Farm may have intended for the
phrase to modify “death” and not “bodily injury.” On the other hand, we can also see how one
might reasonably read the definition to mean that the injury itself can occur at any time. In that case,
a plausible interpretation of the policy would be that the occurrence must take place during the
policy period, but that the resulting injury can happen either during the policy period or after the
policy has expired.
        The policy is therefore ambiguous as to when the injury must occur. Tennessee law requires
that ambiguities of this nature must be resolved in favor of the insured. Am. Justice Ins. Reciprocal
v. Hutchison, 15 S.W.3d 811, 815 (Tenn. 2000). We further note that State Farm easily could have
included explicit language limiting coverage based on the timing of the injury, but it did not do so.
State Farm’s argument that both the negligent act and the injury must occur during the policy period
is therefore unpersuasive.
         Turning now to the third case relied on by State Farm, the unpublished Delaware decision
in Shreckengast, we acknowledge that the facts are strikingly similar to those in the present case.
In Shreckengast, a tree fell onto an apartment building owned by the plaintiffs, causing personal
injuries and significant property damage. The insurance policy issued to the plaintiffs provided for
coverage of an “occurrence which takes place during the policy period” and defined “occurrence”
in the same terms as in the present case. Concluding that the “occurrence” was the falling of the
tree, rather than the deterioration of the tree’s roots, the Delaware court held that the plaintiffs could
not recover under the policy “because the triggering ‘occurrence’ took place after the policy
terminated.” 1998 WL 731566, at *3.
        Shreckengast is nevertheless unpersuasive for several reasons. Aside from being an
unpublished decision from another jurisdiction, the case does not mention the policy’s definition of
“bodily injury,” which is relevant because the definition in the present case arguably provides that
the injury can occur “at any time.” Moreover, Shreckengast fails to resolve the ambiguities in the
policy in favor of the insured, as Tennessee law requires. See Hutchison, 15 S.W.3d at 815.
        In the present case, because we conclude that the meaning of the term “occurrence” is
ambiguous, the policy language that limits coverage must be construed in favor of the insured. See
id. We therefore resolve any doubts regarding whether the occurrence took place within the policy
period in favor of McGowan.
                                         III. CONCLUSION
        For all of the reasons set forth above, we AFFIRM the judgment of the district court.
