       IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA

                             September 2015 Term
                                                                       FILED
                              _______________
                                                                  October 7, 2015
                                                                    released at 3:00 p.m.
                                No. 15-0424                       RORY L. PERRY II, CLERK
                                                                SUPREME COURT OF APPEALS
                              _______________                        OF WEST VIRGINIA




                  STATE OF WEST VIRGINIA ex rel.,

             NATIONWIDE MUTUAL INSURANCE COMPANY,

                            Petitioner


                                     v.

                 THE HONORABLE RONALD E. WILSON,

                  Judge of the Circuit Court of Ohio County;

                              TRAVIS NELSON;

                           TERESA NELSON; and

                     FRED HLAD, individually and d/b/a

                      ALLSTATE CONSTRUCTION,

                                 Respondents


      ____________________________________________________________

                 PETITION FOR WRIT OF PROHIBITION

                            WRIT GRANTED
      ____________________________________________________________

                       Submitted: September 22, 2015

                          Filed: October 7, 2015



Donna S. Quesenberry, Esq.                Brian A. Ghaphery, Esq.
Maria Marino Potter, Esq.                 Ghaphery Law Offices, PLLC
MacCorkle Lavender, PLLC                  Wheeling, West Virginia
Charleston, West Virginia                 Counsel for Respondents Travis and
Counsel for the Petitioner                Teresa Nelson


JUSTICE KETCHUM delivered the Opinion of the Court.
                             SYLLABUS BY THE COURT



              1.     “Where the provisions of an insurance policy contract are clear and

unambiguous they are not subject to judicial construction or interpretation, but full effect

will be given to the plain meaning intended.” Syl., Keffer v. Prudential Ins. Co., 153

W.Va. 813, 172 S.E.2d 714 (1970).

              2.     “In determining whether under a liability insurance policy an

occurrence was or was not an ‘accident’—or was or was not deliberate, intentional,

expected, desired, or foreseen—primary consideration, relevance, and weight should

ordinarily be given to the perspective or standpoint of the insured whose coverage under

the policy is at issue.” Syl., Columbia Cas. Co. v. Westfield Ins. Co., 217 W.Va. 250, 617

S.E.2d 797 (2005).

              3.     “Defective workmanship causing bodily injury or property damage

is an ‘occurrence’ under a policy of commercial general liability insurance.” Syl. Pt. 6, in

part, Cherrington v. Erie Ins. Prop. & Cas. Co., 231 W.Va. 470, 745 S.E.2d 508 (2013).

              4.     “[I]ncluded in the consideration of whether the insurer has a duty to

defend is whether the allegations in the complaint . . . are reasonably susceptible of an

interpretation that the claim may be covered by the terms of the insurance policies.” Syl.

Pt. 3, in part, Bruceton Bank v. U.S. Fid. & Guar. Ins. Co., 199 W.Va. 548, 486 S.E.2d 19

(1997).




                                             i
Justice Ketchum:


             Petitioner, Nationwide Mutual Insurance Company (“Nationwide”) seeks a

writ of prohibition to halt enforcement of a March 16, 2015, order of the Circuit Court of

Ohio County. The circuit court denied Nationwide’s request for declaratory relief and

found that its commercial general liability (“CGL”) policy with its insured (Mr. Fred

Hlad) requires it to provide coverage, defend, and “indemnify [Mr. Hlad] for any

damages that may be recovered” in the underlying lawsuit. (Emphasis added). The

underlying lawsuit arises out of Mr. Hlad’s agreement to construct a house for the

Respondents, Travis and Teresa Nelson. The Nelsons seek damages from Mr. Hlad for

breach of contract, various intentional tort claims, and negligence in constructing their

house.

             Nationwide asserts that the circuit court erred by finding that the CGL

policy provided coverage to Mr. Hlad for any damages that may be recovered in the

underlying lawsuit. Upon review, we find that most of the claims asserted by the Nelsons

did not trigger coverage under the CGL policy, and the claims that did trigger coverage

were precluded by clear and unambiguous exclusions.          Accordingly, we find that

Nationwide has no duty to defend or indemnify Mr. Hlad in the underlying lawsuit, and

we grant Nationwide’s requested writ of prohibition and halt enforcement of the circuit

court’s March 16, 2015, order.




                                            1

                                    I.

                   FACTUAL AND PROCEDURAL BACKGROUND



                In July 2009, Mr. Hlad signed a contract to build the Nelsons a house. The

agreement provided that Mr. Hlad would complete work on the house by November

2009, and that he would withdraw funds from the Nelsons’ construction loan account to

pay for supplies and labor.

                However, the contractual relationship between the Nelsons and Mr. Hlad

deteriorated.     The Nelsons allege that Mr. Hlad withdrew $257,200 from their

construction loan account and then failed to pay various suppliers and subcontractors.

They also contend that Mr. Hlad lied to his suppliers and subcontractors about the reason

for his non-payment, falsely stating that the Nelsons did not provide him money. In

addition, the Nelsons claim that Mr. Hlad charged them overages without explanation.

Finally, the Nelsons maintain that Mr. Hlad missed his deadline to complete construction

of the house and that the work he performed was done negligently.

                As a result, the Nelsons contend that they suffered damages in excess of

$257,200, which include the amount Mr. Hlad withdrew from their construction loan

account without performing on the contract, subcontractors’ liens placed on the Nelsons’

house due to Mr. Hlad failing to pay them, damage to the Nelsons’ reputation due to Mr.

Hlad’s defamatory statements, and damage to the structural integrity of the house caused

by Mr. Hlad’s negligent work.

                To recover these damages, the Nelsons sued Mr. Hlad in Ohio County (the

underlying lawsuit).     Their amended complaint contained nine counts asserting the

                                             2

following causes of action: (1) breach of contract; (2) breach of the covenant of good

faith and fair dealing;1 (3) defamation; (4) unfair and deceptive practices under West

Virginia Code § 46A-6-104; (5) fraud and intentional misrepresentation; (6) conversion;

(7) unconscionability;2 (8) a request for injunctive relief prohibiting Mr. Hlad from

making statements that he was not paid (this count did not seek damages); and (9)

negligence (defective workmanship).3

              Mr. Hlad had a CGL policy with Nationwide at all times relevant to this

case.4 The CGL policy provided two pertinent types of coverage: Coverage A, which

              1
               An alleged breach of the covenant of good faith and fair dealing is not a
separate cause of action from a breach of contract claim. See Gaddy Eng’g Co. v. Bowles
Rice McDavid Graff & Love, LLP, 231 W.Va. 577, 587, 746 S.E.2d 568, 578 (2013)
(Breach of the common law duty of good faith sounds in breach of contract and is not an
independent claim.).
              2
                The Nelsons allege that their contract with Mr. Hlad was procedurally
unconscionable. However, unconscionability is a defense to enforcement of a contract,
not a cause of action.
              3
               In their original complaint, the Nelsons did not allege that Mr. Hlad was
negligent in constructing their house. They amended their complaint to include the
negligence claim. For purposes of this appeal, we examine the Nelsons’ amended
complaint.
              4
                Technically, Mr. Hlad had two CGL policies with Nationwide while he
worked on the Nelsons’ house. One policy was in effect from February 2009 to Feburary
2010. The other was in effect from February 2010 to February 2011. Both of these
policies are identical in terms of coverage. Therefore, we refer to them collectively, as
“the CGL policy.”

               We also note that Mr. Hlad’s CGL policies were accompanied by umbrella
policies which promised to indemnify for damages exceeding the CGL coverage. The
circuit court’s order and Nationwide’s petition for writ of prohibition only pertain to Mr.
Hlad’s CGL policy with Nationwide. We limit our discussion to the CGL policy.


                                            3

insures against “property damage and bodily injury liability” caused by an “occurrence,”

(otherwise known as an accident); and Coverage B, which insures against “personal and

advertising injury.” Both Coverage A and Coverage B are subject to exclusions in the

CGL policy.

              Although the Nelsons’ claims against Mr. Hlad were primarily for breach

of contract and intentional torts, Nationwide provided Mr. Hlad a defense in the

underlying lawsuit under a reservation of rights.5 Nationwide also intervened in the

lawsuit and filed a complaint for declaratory relief to determine whether it has a duty to

defend or indemnify Mr. Hlad.

              In the meantime, Nationwide served the Nelsons with interrogatories

regarding the defective workmanship claim. The Nelsons did not answer or object to the

interrogatories.6   When Nationwide reminded the Nelsons that answers to its

interrogatories were due, counsel for the Nelsons responded in a letter that they would

not comply with Nationwide’s request for information.         The Nelsons’ counsel then

demanded information about a Nationwide settlement in a separate, unrelated case and

requested that two of Nationwide’s agents attend a deposition at a date unilaterally set by

him. The letter continued: “Upon receipt of the same, I will be happy to respond to your


              5
               A reservation of rights is “[a] notice of an insurer’s intention not to waive
its contractual rights to contest coverage or to apply an exclusion that negates an
insured’s claim.” Black’s Law Dictionary 1422 (9th ed. 2009).
              6
               West Virginia Rule of Civil Procedure 33(b)(3)[2001], requires parties to
answer or object to an interrogatory within thirty days of being served.


                                             4

discovery requests.” Thereafter, Nationwide filed a motion to compel the Nelsons to

answer its interrogatories and a motion for a protective order regarding the Nelsons’

demands. The circuit court has not ruled on these motions.

             The circuit court denied Nationwide’s request for declaratory relief in an

order dated March 16, 2015.       In its order, the circuit court noted that defective

workmanship constitutes an “occurrence,” and the Nelsons alleged that Mr. Hlad

constructed their house in a defective manner.7 It then concluded:

                    [T]he Nelsons have asserted a claim for damages that
             are not foreign to the risks insured against by Nationwide’s
             CGL policies, and Nationwide has a duty to indemnify [Mr.
             Hlad] for any damages that may be recovered against [Mr.
             Hlad], and Nationwide may not withdraw from its defense of
             the insured in this case.

(Emphasis added). Nationwide then petitioned this Court for a writ of prohibition.


                                      II.

                              STANDARD OF REVIEW



             When considering a petition for a writ of prohibition, we have held:

             In determining whether to entertain and issue the writ of
             prohibition for cases not involving an absence of jurisdiction
             but only where it is claimed that the lower tribunal exceeded
             its legitimate powers, this Court will examine five factors: (1)
             whether the party seeking the writ has no other adequate
             means, such as direct appeal, to obtain the desired relief; (2)
             whether the petitioner will be damaged or prejudiced in a way
             that is not correctable on appeal; (3) whether the lower

             7
              See Syl. Pt. 6, Cherrington v. Erie Ins. Prop. & Cas. Co., 231 W.Va. 470,
745 S.E.2d 508 (2013).


                                            5

              tribunal’s order is clearly erroneous as a matter of law; (4)
              whether the lower tribunal’s order is an oft repeated error or
              manifests persistent disregard for either procedural or
              substantive law; and (5) whether the lower tribunal’s order
              raises new and important problems or issues of law of first
              impression. These factors are general guidelines that serve as
              a useful starting point for determining whether a discretionary
              writ of prohibition should issue. Although all five factors
              need not be satisfied, it is clear that the third factor, the
              existence of clear error as a matter of law, should be given
              substantial weight.

Syl. Pt. 4, State ex rel. Hoover v. Berger, 199 W.Va. 12, 483 S.E.2d 12 (1996) (emphasis

added).

              Nationwide contends that the circuit court clearly erred by finding that its

CGL policy covered the Nelsons’ claims against Mr. Hlad.                  We have held:

“[d]etermination of the proper coverage of an insurance contract when the facts are not in

dispute is a question of law.” Syl. Pt. 1, Tennant v. Smallwood, 211 W.Va. 703, 568

S.E.2d 10 (2002).


                                          III.

                                       ANALYSIS



              The circuit court held that Nationwide has a duty to provide coverage,

defend, and indemnify Mr. Hlad for “any damages that may be recovered against [him]”

in the underlying lawsuit. Nationwide argues the circuit court clearly erred by failing to

consider (1) all relevant factors as to whether the Nelsons’ claims against Mr. Hlad

triggered coverage under the CGL policy, and (2) whether any exclusions precluded

coverage. Thus, Nationwide asserts that it is entitled to relief in prohibition based on the


                                             6

third Hoover factor. We find that the damages sought by the Nelsons were not covered

by Nationwide’s CGL policy because they did not trigger coverage or were precluded by

clear and unambiguous exclusions. Accordingly, we grant Nationwide’s requested writ

of prohibition and hold that the circuit court clearly erred as a matter of law by finding

that Nationwide is required to defend Mr. Hlad and indemnify him for any damages

recovered against him by the Nelsons.

                A. Triggering coverage under Nationwide’s CGL policy

              The circuit court found that Nationwide’s CGL policy covered all nine

counts in the underlying lawsuit based solely on the fact that one of those counts alleged

defective workmanship. The circuit court’s order stated: “defective workmanship . . . is

an ‘occurrence’ under a policy of commercial general liability insurance.” The circuit

court continued: “[t]he Nelsons allege . . . defective construction and completion of their

home. . . . The Court FINDS that the Nelsons have asserted a claim for damages that are

not foreign to the risks insured against by Nationwide’s CGL policies[.]”

              Nationwide argues that eight of the nine counts asserted against Mr. Hlad

(i.e. those alleging breach of contract or intentional torts) were not caused by his

defective workmanship. Therefore, the mere fact that coverage was triggered on the

ninth count (the defective workmanship claim), does not mean that coverage was

triggered on the other eight counts in the underlying lawsuit.        Nationwide further

contends that because these eight counts did not trigger coverage, it has no duty to

indemnify Mr. Hlad for the damages that may be recovered on those counts.



                                            7

              We agree that Nationwide’s duty to indemnify Mr. Hlad is limited only to

those claims that triggered coverage. It is well established that “an insurer is only

obligated to indemnify its insured for claims that actually fall within the terms of the

policy.” See 3 JEFFREY E. THOMAS, NEW APPLEMAN ON INSURANCE LAW LIBRARY

EDITION § 18-1 (LexisNexis). See also Perdue Farms, Inc. v. Travelers Cas. & Sur. Co.,

448 F.3d 252, 259 (4th Cir. 2006) (“[A]n insurer has no obligation to remunerate its

insured for claims not covered under its policy.”). In determining whether a claim falls

within the terms of a CGL policy, we give effect to the policy’s clear and unambiguous

terms. See Syl. Keffer v. Prudential Ins. Co., 153 W.Va. 813, 172 S.E.2d 714 (1970)

(“Where the provisions of an insurance policy contract are clear and unambiguous they

are not subject to judicial construction or interpretation, but full effect will be given to the

plain meaning intended.”).

              By contrast, an insurer’s duty to provide its insured a defense is broader

than the duty to indemnify. Allegations in a complaint against an insured trigger the duty

to defend if they are “reasonably susceptible of an interpretation that the claim may be

covered by the terms of the insurance policies.” Syl. Pt. 3, in part, Bruceton Bank v. U.S.

Fid & Guar. Ins. Co., 199 W.Va. 548, 486 S..E.2d 19 (1997). Furthermore, “if part of

the claims against an insured fall within the coverage of a liability insurance policy and

part do not, the insurer must defend all of the claims[.]” Horace Mann Ins. Co. v. Leeber,

180 W.Va. 375, 378, 376 S.E.2d 581, 584 (1988).

              Therefore, an insurer’s duty to indemnify its insured under a CGL policy is

narrower than its duty to provide a defense. In assessing whether an insurer is obligated

                                               8

to indemnify under a CGL policy, each claim is examined individually. When only

some, but not all, of the claims in a lawsuit fall within the terms of a CGL policy, the

insurer is not obligated to indemnify its insured for those claims that do not fall within the

CGL policy’s terms. Thus, in finding that Nationwide has a duty to indemnify Mr. Hlad

for all nine counts in the underlying lawsuit based solely on the defective workmanship

claim, the circuit court incorrectly treated the duty to indemnify the same as the duty to

defend. With these principles in mind, we now turn to Nationwide’s CGL policy.

               Nationwide’s CGL policy provides two types of coverage that are pertinent

to this petition: Coverage A and Coverage B. Under Coverage A, Nationwide promised

to indemnify Mr. Hlad for sums that he becomes obligated to pay because of “property

damage” or “bodily injury” caused by an “occurrence,” otherwise known as an

“accident.”    Under Coverage B, Nationwide promised to indemnify Mr. Hlad for

“personal and advertising injury,” which includes injury caused by “oral or written

publication . . .that slanders or libels a person[.]”

               Therefore, in determining whether the Nelsons’ amended complaint

triggered a duty under Nationwide’s CGL policy to indemnify Mr. Hlad or provide him a

defense, we are guided by the clear and unambiguous terms of the CGL policy in

Coverage A and Coverage B. Nationwide has a duty to indemnify Mr. Hlad for only

those claims that are caused by an “occurrence” or that satisfy the CGL policy’s

definition of “personal and advertising injury.” Furthermore, for Nationwide to have a

duty to provide a defense in the underlying lawsuit, at least one of the Nelsons’ claims

must be reasonably susceptible of coverage under the CGL policy.

                                                9

                                      1. Coverage A

              Coverage A of Nationwide’s CGL policy provides:

                      We will pay those sums that the insured becomes
              legally obligated to pay as damages because of “bodily
              injury” or “property damage” to which this insurance applies.
              . . . [W]e will have no duty to defend the insured against any
              “suit” seeking damages for “bodily injury” or “property
              damage” to which this insurance does not apply. . . . This
              insurance applies to “bodily injury” and “property damage”
              only if: (1) The “bodily injury” or “property damage” is
              caused by an “occurrence[.]”

(Emphasis added). Therefore, to establish that Nationwide has a duty to defend or

indemnify Mr. Hlad under Coverage A, there must be proof that the damages the Nelsons

suffered were caused by an “occurrence.” See Cherrington v. Erie Ins. Prop. & Cas. Co.,

231 W.Va. 470, 482, 745 S.E.2d 508, 520 (2013) (“In order for a claim to be covered by

the subject CGL policy, it must . . . [have] been caused by an ‘occurrence.’”).

              Nationwide’s CGL policy defines “occurrence” as “an accident, including

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

We have defined “accident” as such: “In determining whether under a liability insurance

policy an occurrence was or was not an ‘accident’—or was or was not deliberate,

intentional, expected, desired, or foreseen—primary consideration, relevance, and weight

should ordinarily be given to the perspective or standpoint of the insured whose coverage

under the policy is at issue.” Syl., Columbia Cas. Co. v. Westfield Ins. Co., 217 W.Va.

250, 617 S.E.2d 797 (2005). Furthermore, “‘[a]n accident is never present when a

deliberate act is performed unless some additional unexpected, independent and

unforeseen happening occurs which produces the damage.’” State Bancorp, Inc. v. U.S.

                                            10

Fid. & Guar. Ins. Co., 199 W.Va. 99, 105, 483 S.E.2d 228, 234 (1997) (quoting Harrison

Plumbing & Heating, Inc. v. N.H. Ins. Group, 37 Wash. Ct. App. 621, 624, 681 P.2d 875,

878 (1984)).

               The Nelsons’ amended complaint contained nine counts against Mr. Hlad:

(1) breach of contract by failing to complete their house on time; (2) breach of the

covenant of good faith and fair dealing; (3) defamation in knowingly making false

statements that the Nelsons failed to pay him, even though Mr. Hlad had withdrawn

$257,200 from their construction loan account; (4) unfair and deceptive acts; (5) fraud

and intentional misrepresentation in inducing the Nelsons to contract with him; (6)

conversion by withdrawing funds from the Nelsons’ construction loan account without

complying with the contract; (7) procedural unconscionability in forming the contract; (8)

a request for injunctive relief prohibiting Mr. Hlad from making false statements that he

was not paid; and (9) negligence in defectively constructing their house (defective

workmanship).

               The first eight counts of the amended complaint alleged misconduct that is

either intentional or contractual in nature. Intentional misconduct is not an “accident”

under the terms of the CGL policy. Furthermore, this Court has recognized that it is

against public policy to permit insurance coverage for intentional torts. See Leeber, 180

W.Va. at 380, 376 S.E.2d at 586. As to the Nelsons’ claims for breach of contract, we

have held: “[A] breach of contract . . . is not an event that occurs by chance or arises from

unknown causes, and therefore, is not an ‘occurrence’ as that word is defined in . . . CGL



                                             11

policies.” State Bancorp, Inc., 199 W.Va. at 105, 483 S.E.2d at 234.8 Accordingly, to

the extent that the amended complaint alleged that Mr. Hlad’s actions were intentional

misconduct or purely breach of contract, his actions are not “occurrences” as defined by

Nationwide’s CGL policy and do not trigger coverage under Coverage A.

              The ninth count of the amended complaint alleged that Mr. Hlad

negligently constructed the Nelsons’ house. As to defective construction of a house, we

have held: “[d]efective workmanship causing bodily injury or property damage is an

‘occurrence’ under a policy of commercial general liability insurance.” Syl. Pt. 6, in part,

Cherrington, 231 W.Va. at 478, 745 S.E.2d at 521. According to the Nelsons’ complaint,

Mr. Hlad negligently built their house, and thereby “adversely impacted the structural

integrity of [their] home, [and caused] cracks in the foundation of [their] home and water

leaks and structural and other property damages[.]” The Nelsons also assert that as a

result of Mr. Hlad’s defective work, they had to replace “various doors, windows, walls,

lights;” “vinyl siding and flashing;” “kitchen cabinets, tiles, and appliances;” etc. These

damages were caused by an “occurrence.”




              8
                In regards to claims for breach of contract, we caution that “the same act
may constitute both a breach of contract and a tort.” Vandenberg v. Superior Court, 21
Cal 4th 815, 838, 982 P.2d. 229, 245 (1999). Thus, in determining whether a claim is
covered under a CGL policy, courts must not focus exclusively on the legal theory
asserted by the claimant. Rather, the relevant considerations are: “the nature of [the]
property, the injury, and the risk that caused the injury, in light of the particular
provisions of each applicable insurance policy.” Id., 982 P.2d at 234-44.


                                            12

              Therefore, only those alleged damages caused by Mr. Hlad’s defective

workmanship were caused by an “occurrence” as is required to trigger coverage under

Coverage A of Nationwide’s CGL policy.

                                       2. Coverage B

              Nationwide’s CGL policy also provided Mr. Hlad coverage for “personal

and advertising injury” under Coverage B.           The CGL policy defines personal and

advertising injury as: “injury . . . arising out of one or more of the following offenses: . . .

d. Oral or written publication . . . of material that slanders or libels a person[.]” This

Court has held that defamation satisfies this definition of “personal and advertising

injury,” and thus, triggers coverage under Coverage B of a CGL policy. Butts v. Royal

Vendors, Inc., 202 W.Va. 448, 453, 504 S.E.2d 911, 916 (1998).

              The Nelsons allege that Mr. Hlad defamed them by falsely stating to

subcontractors and suppliers that he was unable to pay them because the Nelsons failed to

provide money to do so, thus causing the subcontractors and suppliers to place a lien on

the Nelsons’ house. Therefore, the Nelsons’ claim against Mr. Hlad for defamation

triggers coverage under the CGL policy because it falls within the terms of Coverage B.

                      B. Exclusions under Nationwide’s CGL policy

              However, the mere fact that coverage is triggered under a CGL policy does

not end our inquiry. Rather, Nationwide must be given an opportunity to prove that an

exclusion to coverage applies. See Syl. Pt. 1, Jarvis v. Penn. Cas. Co., 129 W.Va. 291,

40 S.E.2d 308 (1946) (“Where . . . [the] insured has made out a prima facie case of loss

within the coverage provided by the policy, the burden is upon the insurer to prove . . .

                                              13

that the loss is one for which the insurer is not liable because it comes within an

exception in the policy.”).

              Therefore, we now turn to whether the two counts that triggered coverage

(defective workmanship under Coverage A and defamation under Coverage B) are

precluded by exclusions in the CGL policy.

                      1. Defective workmanship under Coverage A

              Nationwide claims that the following exclusions preclude coverage for the

Nelsons’ defective workmanship claim, which exclude:

              l. Damage To Your Work:

              “property damage” to “your work” arising out of it or any part
              of it and included in the “products-completed operations
              hazard.”

              This exclusion does not apply if the damaged work or the
              work out of which the damage arises was performed on your
              behalf by a subcontractor.

              m. Damage To Impaired Property Or Property Not
              Physically Injured:

              “Property damage” to “impaired property” or property that
              has not been physically injured, arising out of:

              (1) A defect, deficiency, inadequacy or dangerous condition
              in “your product” or “your work”; or

              (2) A delay or failure by you or anyone acting on your behalf
              to perform a contract or agreement in accordance with its
              terms.




                                             14

(Boldface added) (collectively, hereinafter “your-work” exclusion).9

              We recently upheld the validity of the “your-work” exclusion and held that

it precludes coverage for the defective workmanship of a contractor, but not the defective

workmanship of a subcontractor. Cherrington, 231 W.Va. at 487-88, 745 S.E.2d at 525­

26. Therefore, whether this exclusion applies to the underlying lawsuit depends on

whether Mr. Hlad himself (as opposed to his subcontractors) performed the allegedly

deficient work.

              We have held: “An insurance company seeking to avoid liability through

the operation of an exclusion has the burden of proving the facts necessary to the

operation of that exclusion.” Syl. Pt. 7, Nat’l Mut. Ins. Co. v. McMahon & Sons, Inc.,

177 W.Va. 734, 356 S.E.2d 488 (1987) overruled on other grounds by Potesta v. U.S.

Fid. & Guar. Co., 202 W.Va. 308, 504 S.E.2d 135 (1998).

              However, a plaintiff seeking coverage under an insurance policy plays a

major role in determining whether an exclusion applies. We have held: “[I]ncluded in the

consideration of whether the insurer has a duty to defend is whether the allegations in the

complaint . . . are reasonably susceptible of an interpretation that the claim may be

covered by the terms of the insurance policies.” Syl. Pt. 3, in part, Bruceton Bank, 199

W.Va. 548, 486 S.E.2d 19 (emphasis added). Likewise,



              9
                Nationwide also argues that another exclusion, “Damage to Property”
precludes coverage. Because we find that coverage is precluded under the “your-work”
exclusion, we need not address this additional exclusion.


                                            15

                      [A]n insurer has a duty to defend an action against its
              insured only if the claim stated in the underlying complaint
              could, without amendment, impose liability for risks the
              policy covers. . . . If the causes of action alleged in the
              plaintiff’s complaint are entirely foreign to the risks covered
              by the insurance policy, then the insurance company is
              relieved of its duties under the policy.

State Auto Mut. Ins. Co. v. Alpha Eng’g Serv., Inc., 208 W.Va. 713, 716, 542 S.E.2d 876,

879 (2000).

              This rule applies with equal force to determining whether an exclusion

applies as it does to determining whether coverage was triggered. See W.Va. Fire & Cas.

Co. v. Stanley, 216 W.Va. 40, 602 S.E.2d 483 (2004) (“[I]n order to determine whether

there is coverage under the policy at issue, we look to the claims set forth in the

underlying complaint to see if they, without amendment, may impose liability for risks

not precluded by [an] . . . exclusion.”). See also Alpha Eng’g Serv. Co., 208 W.Va. at

717, 542 S.E.2d at 880 (holding liability insurer established that “professional services”

exclusion applied because the exclusion’s language covered the allegations in the

plaintiff’s complaint).

              Therefore, our question becomes whether the Nelsons’ amended complaint

seeks damages for the defective workmanship of Mr. Hlad’s subcontractors.             The

Nelsons’ amended complaint alleges that “Mr. Hlad, individually and d/b/a Allstate

Construction,” was negligent in selecting the location for the foundation of the house; in

framing the house; and in installing water drainage systems, vinyl siding, doors, kitchen

appliances, etc. The complaint does not allege, or even imply, that a subcontractor



                                            16

performed any of the allegedly defective work.10 Furthermore, the Nelsons do not claim

that Mr. Hlad was vicariously liable for any misconduct by a subcontractor or that he

negligently supervised the subcontractors’ work on the Nelsons’ house. Finally, and with

little surprise, the Nelsons did not name a subcontractor as a defendant. Accordingly, it is

clear that the Nelsons’ amended complaint seeks damages exclusively for Mr. Hlad’s

defective workmanship, not his subcontractors.

              We recognize that “[w]hen a complaint is filed against an insured, an

insurer must look beyond the bare allegations contained in the third party’s pleadings and

conduct a reasonable inquiry into the facts in order to ascertain whether the claims

asserted may come within the scope of the coverage that the insurer is obligated to

provide.” Syl., Farmers & Mech. Mut. Fire Ins. Co. of W.Va. v. Hutzler, 191 W.Va. 559,

447 S.E.2d 22 (1994). Pursuant to this duty, Nationwide expended reasonable effort to

ascertain if the Nelsons had evidence that any defective workmanship was performed by

subcontractors. The Nelsons refused to reply to Nationwide’s requests for information in

its interrogatories despite their obligation to do so.

              Rather than provide Nationwide the requested information, the Nelsons

argue before this Court that the “your-work” exclusion does not preclude work done by

Mr. Hlad. Moreover, they claim it does not matter who performed the allegedly deficient

work. However, we have stated: “[the your-work exclusion] excludes coverage for the


              10
                We also note that Mr. Hlad did not indicate that a subcontractor
performed any of the allegedly defective work.


                                              17

work of [the insured contractor].”). Cherrington, 231 W.Va. at 486, 745 S.E.2d at 524.

The “your-work” exclusion leaves no ambiguity as to whether the insured contractor’s

work is excluded, and we give full effect to the plain meaning of clear and unambiguous

exclusions. See Alpha Eng’g Serv. Inc., 208 W.Va. at 716, 542 S.E.2d at 879.

              Nationwide’s CGL policy precludes coverage for claims caused by Mr.

Hlad’s own work. The Nelsons seek damages for Mr. Hlad’s own defective work, so the

“your-work” exclusion applies to the underlying lawsuit.         Therefore, the Nelsons’

defective workmanship claim is not covered under Nationwide’s CGL policy.

                            2. Defamation under Coverage B

              The Nelsons’ defamation claim, which triggered coverage for “personal and

advertising injury,” is also precluded by an exclusion. Coverage B provides: “This

insurance does not apply to: . . . ‘Personal and advertising injury’ arising out of oral or

written publication of material, if done by or at the direction of the insured with

knowledge of its falsity.”11 This Court has upheld and applied this exclusion to preclude

coverage in State Bancorp, Inc., 199 W.Va. at 109, 483 S.E.2d at 238 (“Therefore, we

conclude that any ‘personal injury’ inflicted by the [insurers] by the submission of the

above letter was intentional and, is therefore, expressly excluded from coverage[.]”).




              11
                The elements of defamation do not require the defendant to have known
that the defamatory statement was false. All that is required as to the defendant’s intent
is “negligence on the part of the publisher[.]” Butts, 202 W.Va. at 453, 504 S.E.2d at
916.


                                            18

             The Nelsons claimed in their amended complaint that: “Defendant Hlad,

individually and d/b/a/ Allstate Construction, and his employee(s) have made these

[defamatory] statements to suppliers and subcontractors knowing at the time that the

statements were false.” (Emphasis added). Accordingly, the Nelsons’ allegations for

defamation clearly fall within the terms of an exclusion to coverage, and thus, the

defamation claim is not covered under Nationwide’s CGL policy.


                                        IV.

                                    CONCLUSION



             Therefore, only two of the nine counts alleged in the Nelsons’ amended

complaint may be read to have triggered coverage under the CGL policy. However,

coverage for both of those counts is precluded by clear and unambiguous exclusions.

Because no claim in the underlying lawsuit is reasonably susceptible of an interpretation

suggesting coverage by the CGL policy, we find that Nationwide has no duty to provide

coverage, defend, or indemnify Mr. Hlad in the underlying lawsuit. Accordingly, we

grant Nationwide’s requested writ of prohibition and halt enforcement of the circuit

court’s March 16, 2015 order.

                                                                         Writ Granted.




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