            IN THE MISSOURI COURT OF APPEALS
                    WESTERN DISTRICT

KRETSINGER REAL ESTATE                         )
COMPANY and AMERICAN CENTRAL                   )
TRANSPORT, INC.,                               )
                                               )
                                 Appellants,   )    WD78791
                                               )
v.                                             )    OPINION FILED:
                                               )    June 21, 2016
                                               )
AMERISURE INSURANCE COMPANY,                   )
                                               )
                                Respondent.    )


                 Appeal from the Circuit Court of Clay County, Missouri
                           The Honorable Janet Sutton, Judge

                  Before Division IV: Alok Ahuja, Chief Judge, Presiding,
                  Mark D. Pfeiffer, Judge, and J. Dale Youngs, Special Judge

       Kretsinger Real Estate Company (“Kretsinger”) and American Central Transport, Inc.

(“ACT”) (collectively, “Judgment Creditors”) appeal from the Judgment of the Circuit Court of

Clay County, Missouri (“trial court”), after a bench trial, in favor of Amerisure Insurance

Company (“Amerisure”) on the Judgment Creditors’ equitable garnishment claim. We affirm.
                                      Facts and Procedural History1

        ACT desired to erect a parking lot in Clay County, Missouri, on land that it leased from

Kretsinger. The parking lot was to abut ACT’s truck maintenance center. The City of Kansas

City approved the ACT terminal development plan, which included a pavement plan with

pavement specifications.         Kretsinger and ACT hired Triad Construction, Inc. (“Triad”) to

construct the parking lot in accordance with the pavement plan. Triad subcontracted with City

Cement Construction Company to supply labor and materials. City Cement purchased the

concrete used to construct the parking lot from Fordyce Concrete.

        City Cement completed construction of the parking lot in February 2007. Kretsinger and

ACT commenced using the parking lot for tractors and trailers in March 2007. In May 2008,

Kretsinger and ACT became aware that the parking lot was beginning to crumble, crack, and

deteriorate.

        Kretsinger and ACT filed suit against Triad and City Cement,2 asserting claims for

negligence in design of the parking lot, negligent misrepresentation, breach of professional

contract, negligent supervision, and breach of contract (“Underlying Lawsuit”). A bench trial

was conducted on December 30, 2013. The court entered judgment in favor of Kretsinger and

ACT and against Triad on the negligent supervision and breach of contract counts and in favor of

Triad and against Kretsinger and ACT on the negligence in design, negligent misrepresentation,

and breach of professional contract counts. The court concluded that Triad breached its contract

with Kretsinger and ACT to furnish all required labor, material, and equipment necessary to

provide a parking lot in accordance with the ACT terminal final development plan and pavement

bid.

        1
        This court views the evidence in the light most favorable to the trial court’s judgment. Vill. at Deer Creek
Homeowners Ass’n v. Mid-Continent Cas. Co., 432 S.W.3d 231, 234 n.1 (Mo. App. W.D. 2014).
      2
        Kretsinger and ACT later dismissed all claims against City Cement.


                                                         2
         In accordance with the opinion of Kretsinger and ACT’s expert, Dr. Avi Mor, the court

found:

        the concrete that City Cement purchased from Fordyce Concrete was defective at the

         time it was purchased and installed because it had air entrainment that was excessive and

         inconsistent, it had reinforcement fiber that was not sufficiently mixed, it consistently

         failed to attain the PSI and flexural strength required by the pavement plan, and it failed

         to achieve a strength adequate for the load after curing at least 28 days;

        the deterioration of the concrete was not repairable, and the only viable option for

         correction was removal and replacement of the concrete.

The court found that City Cement did not construct the parking lot in accordance with the

pavement plan in that it used defective concrete and that Triad was responsible for the actions of

its subcontractor City Cement. The court further found that as a direct and proximate result of

the use of the defective concrete in the construction of the parking lot, the parking lot failed. The

court found that the parking lot was irreparable and will continue to fail and deteriorate, with the

only viable option for correction of the defective concrete being removal and replacement.

         The court awarded Kretsinger and ACT a total of $3,374,870.80 in damages as a result of

City Cement’s use of defective concrete. The court found that the damages were liquidated and

awarded Kretsinger and ACT prejudgment interest at the rate of 9% per annum from March 1,

2007, the date City Cement finished installing the defective concrete, until the date of judgment,

December 30, 2013, for a total of $2,077,071.30 in prejudgment interest (“Underlying

Judgment”).

         Thereafter, on February 8, 2014, Judgment Creditors filed a petition for equitable

garnishment pursuant to section 379.200, RSMo 2000, against Triad and its commercial general




                                                   3
liability (“CGL”) insurer, Amerisure Insurance Company (“Amerisure”). Judgment Creditors

sought satisfaction of the Underlying Judgment from primary and umbrella insurance policies

issued by Amerisure to Triad.

       A bench trial was conducted. Judgment Creditors’ evidence consisted of certified copies

of the primary and umbrella insurance policies issued by Amerisure to Triad, with effective dates

from August 1, 2007, through August 1, 2011; certified copies of the certificates of good

standing for Kretsinger and ACT; certified copies of the petition in the Underlying Lawsuit, the

answers of Triad and City Cement, and the Underlying Judgment.

       Amerisure’s evidence included a certified copy of the transcript of the Underlying

Lawsuit and the transcript of the deposition of a representative of Cincinnati Insurance Company

and accompanying exhibits, which included the primary and umbrella insurance policies

Cincinnati issued to Triad for the policy period from August 2005 through August 1, 2007, and

evidence of Cincinnati’s settlement of the property damage claim against Triad. Testifying for

Amerisure was Randall Bernhardt, a licensed engineer certified for testing concrete and asphalt

for pavement. Based upon his review of Dr. Mor’s affidavit and the business records of Alpha

Omega Geotech, which had tested the concrete, Mr. Bernhardt agreed with Dr. Mor’s opinions

that the concrete did not meet the specifications, was deficient, and should have been rejected.

He testified that the only remedy for out-of-specification concrete is removal and replacement

with up-to-specification concrete.

       The trial court entered its judgment on June 3, 2015, in favor of Amerisure and against

Judgment Creditors. The trial court found that Amerisure issued a CGL policy to Triad with

policy limits of $1 million per occurrence and an umbrella policy with policy limits of $10

million per occurrence for the periods, with three annual renewals, of August 1, 2007, through




                                               4
August 1, 2011. The trial court concluded that Judgment Creditors did not meet their burden of

establishing coverage under Amerisure’s policies, and alternatively, Amerisure had met its

burden to establish that the “your product” exclusion in the policies applied to defeat coverage.

Specifically, the trial court concluded:

       (1) Judgment Creditors failed to offer substantial evidence of “property damage” within

       any Amerisure policy period; coverage under CGL insurance policies is triggered when

       the “injury-in-fact” occurs, and Judgment Creditors’ damages were fixed as of March 1,

       2007, when the parking lot was put to its intended use and immediately began to

       deteriorate because the only remedy for that damage was complete removal and repair of

       the parking lot;

       (2) Judgment Creditors failed to offer substantial evidence that the damages awarded in

       the Underlying Judgment constituted an “occurrence” covered by the Amerisure policies;

       damages flowing from a breach of contract due to failure to perform to designated

       specifications does not trigger coverage under an indemnity policy; and

       (3) Judgment Creditors’ claims are barred by the “your product” policy exclusion.

       Judgment Creditors timely appealed.

                                       Standard of Review

       The interpretation of Amerisure’s policies to determine whether they cover the damages

awarded Judgment Creditors in the Underlying Judgment is a question of law we review de novo.

Vill. at Deer Creek Homeowners Ass’n v. Mid-Continent Cas. Co., 432 S.W.3d 231, 239 (Mo.

App. W.D. 2014). “However, in reviewing any factual determinations made by the trial court as

a precursor to its determination of coverage, we apply the standard established by Murphy v.

Carron, 536 S.W.2d 30, 32 (Mo. banc 1976).” Id. (internal quotation omitted). Under this




                                               5
standard, we will affirm the trial court’s decision unless it is not supported by substantial

evidence, it is against the weight of the evidence, or it misstates or misapplies the law. Id. “In

applying this standard, we must view the evidence in [the] light most favorable to the judgment

and disregard all contrary evidence and permissible inferences.” Id. (internal quotation omitted).

                                     Equitable Garnishment

       This appeal arises from the judgment in an equitable action brought pursuant to

section 379.200. Although sometimes called an “equitable garnishment,” this direct cause of

action against an insurance company “is no garnishment at all.” Zink v. Emp’rs Mut. Liab. Ins.

Co. of Wis., 724 S.W.2d 561, 564 (Mo. App. W.D. 1986), overruled on other grounds by

Johnston v. Sweany, 68 S.W.3d 398, 403 (Mo. banc 2002). “An equitable garnishment action is

a legal proceeding, authorized by section 379.200, RSMo [2000], to reach insurance money in

satisfaction of a judgment.” McDonald v. Ins. Co. of State of Pa., 460 S.W.3d 58, 67 (Mo. App.

W.D. 2015) (internal quotation omitted). “The underlying judgment is binding on the insurer by

way of the doctrine of collateral estoppel.” Id. (internal quotation omitted).

       To establish an equitable garnishment claim, Judgment Creditors have the burden of

proving three elements:

      First, that they obtained a judgment in their favor against Amerisure’s insured (Triad).

       Id. This element is not implicated by any of the issues on appeal, as there is no question

       that the Underlying Judgment for negligent supervision and breach of contract was in

       favor of Judgment Creditors against Triad.

      Second, that Amerisure’s policies were in effect when the incident occurred. Id. This

       element is implicated by points one, two, three, four, and five, which relate to whether

       “property damage” as defined by the policy occurred within any Amerisure policy period.




                                                 6
      Third, that Amerisure’s policies covered the damages awarded in the Underlying

       Judgment against Triad. Id. This element is implicated by points six, seven, and eight,

       which relate to whether Judgment Creditors’ damages were caused by an “occurrence” as

       defined by the policy.

       Judgment Creditors’ ninth point on appeal implicates an issue as to which Amerisure

bears the burden of proof—whether a policy exclusion applies to bar coverage. Vill. at Deer

Creek Homeowners Ass’n, 432 S.W.3d at 239.              Judgment Creditors claim the trial court

erroneously declared the law when it found that the “your product” exclusion applied to bar

coverage for Judgment Creditors’ judgment.

       Affirmance of the trial court on any one of these three coverage issues is dispositive of

the appeal.

                                             Analysis

                Points One, Two, Three, Four, and Five: “Property Damage”

       Judgment Creditors’ first five points challenge the trial court’s judgment that they failed

to establish that the Underlying Judgment was for “property damages” as anticipated by

Amerisure’s policies. In the first point, Judgment Creditors claim it was error for the trial court

to find that they failed to establish “property damage” that occurred within Amerisure’s policy

period. In the second point, they claim it was error for the trial court to find that all of Judgment

Creditors’ damages were fixed as of March 1, 2007. In points three, four, and five, they claim

that the trial court erred in admitting the testimony of Randall Bernhardt and erred in finding that

Judgment Creditors’ damages were fixed as of March 1, 2007, based on Mr. Bernhardt’s

testimony.




                                                 7
       Coverage A of Amerisure’s CGL policies provides that Amerisure “will pay those sums

that the insured becomes legally obligated to pay as damages because of . . . ‘property damage’

to which this insurance applies.” The insurance applies to “property damage” “only if . . .

[t]he . . . ‘property damage’ occurs during the policy period.” The policy defines “property

damage” as:

       a. Physical injury to tangible property, including all resulting loss of use of that
       property. All such loss of use shall be deemed to occur at the time of the physical
       injury that caused it; or

       b. Loss of use of tangible property that is not physically injured. All such loss of
       use shall be deemed to occur at the time of the “occurrence” that caused it.

(Emphasis added.) Coverage A of Amerisure’s Umbrella policies provides that Amerisure “will

pay on behalf of the insured the ‘ultimate net loss’ in excess of the ‘retained limit’ because of . . .

‘property damage’ to which this insurance applies.” The limitation of the insurance to “property

damage” occurring during the policy period and the definition of “property damage” are identical

to that in the CGL policies.

       Judgment Creditors assert that the “property damage” covered by the policy occurred in

June 2008 when the crumbling, cracking, and deterioration of the parking lot manifested itself,

not in March 2007, when the defective concrete was installed.

       “An occurrence policy provides coverage for an event that occurs during the policy

period, regardless of when a claim is asserted.” City of Lee’s Summit v. Mo. Pub. Entity Risk

Mgmt., 390 S.W.3d 214, 220 (Mo. App. W.D. 2012) (internal quotation omitted). “For an event

to be a covered occurrence, the time of first actual damage must be within the effective dates of

the policy.” Id. In cases of progressive damage, coverage issues are determined at the time the

initial property damage occurs, even if the damage is not apparent until later. See D.R. Sherry

Constr., Ltd. v. Am. Family Mut. Ins. Co., 316 S.W.3d 899, 905-06 (Mo. banc 2010) (holding



                                                  8
coverage triggered when home is built on fill dirt rather than when cracks in the foundation

appeared from progressive damage); Stark Liquidation Co. v. Florists’ Mut. Ins. Co., 243 S.W.3d

385, 393-94 (Mo. App. E.D. 2007) (holding coverage triggered when infected fruit trees were

delivered rather than when bacterial disease was discovered several years later); Scottsdale Ins.

Co. v. Ratliff, 927 S.W.2d 531, 534 (Mo. App. E.D. 1996) (holding coverage triggered when

termite inspection was conducted rather than when structural problems arose due to progressive

damage from infestation).      Amerisure’s CGL policies expressly adopted this principle by

providing that all loss “shall be deemed to occur at the time of the physical injury that caused it.”

(Emphasis added.)

       Judgment Creditors were injured in fact on March 1, 2007, the date City Cement finished

installing the defective concrete. Even Judgment Creditors’ expert, Dr. Avi Mor, testified in the

Underlying Lawsuit trial that once the defective concrete was installed in March 2007, the only

repair that could correct the defect was to remove and replace the concrete. Consistent with

Dr. Mor’s testimony, the judgment in the Underlying Lawsuit (which was drafted by Judgment

Creditors’ counsel) found that “the concrete . . . was defective at the time it was purchased and

installed.” The underlying judgment also found that Judgment Creditors’ damages were fixed

and complete when the concrete installation was completed, since the judgment awarded

Judgment Creditors $2,077,071.30 in prejudgment interest, calculated on the entire underlying

damage award, and accruing as of March 1, 2007. The award of prejudgment interest was based

on the judgment’s conclusion that the entirety of the Judgment Creditors’ damages were

liquidated as of that date. Because coverage under Amerisure’s policies did not commence until

August 1, 2007, the trial court correctly concluded that there was no “property damage” within

any Amerisure policy period.




                                                 9
       Judgment Creditors also assert that the trial court erred in finding that their damages were

fixed as of March 2007, based on Mr. Bernhardt’s expert testimony admitted over objection at

the equitable garnishment trial. However, Bernhardt’s testimony was, in all relevant aspects,

nothing more than corroborative of the testimony by Judgment Creditors’ expert, Dr. Avi Mor, at

the trial leading to the Underlying Judgment. Both ultimately concluded that the concrete was

defective at the time of installation and that it was irreparable, short of removal and replacement

of the concrete. “In a court-tried case it is extremely difficult to predicate reversible error on the

erroneous admission of evidence. Erroneous admission of evidence only requires reversal where

the complaining party is prejudiced.” Sanders v. Ins. Co. of N. Am., 42 S.W.3d 1, 11 (Mo. App.

W.D. 2000) (citation omitted) (emphasis added).          Here, where Bernhardt’s testimony was

essentially corroborative of Dr. Mor’s testimony (as well as the court’s findings relating to the

Underlying Lawsuit) from the trial leading to the Underlying Judgment, Judgment Creditors

have not established any prejudice due to the admission of Bernhardt’s testimony at the equitable

garnishment trial. Thus, we need not and do not address whether Bernhardt’s testimony was

inadmissible at the equitable garnishment trial due to principles of collateral estoppel.

       Points one, two, three, four, and five are denied. Furthermore, our ruling as to the first

five points relied on is dispositive of this appeal; thus, we need not and do not address the

remaining points on appeal.

                                            Conclusion

       The trial court’s judgment is affirmed.



                                               Mark D. Pfeiffer, Judge

Alok Ahuja, Chief Judge, and J. Dale Youngs, Special Judge, concur.




                                                 10
