The question whether liability was caused by “ongoing” or “completed” operations has been a significant one in the asbestos arena – possibly impacting whether claims payments are subject to aggregate or only occurrence limits. This question has been hard fought and with a lot at stake.

The issue also arises in a less high-profile scenario – possibly determining the availability of coverage for an additional insured for a construction defect related claim. The issue is aptly demonstrated in the recent decision of Noble v. Ohio Casualty, No. 2012-CA-1269 (Miss. Ct. App. Nov. 19, 2013).

The facts of Noble are typical for a construction defect case. Noble Real Estate hired Harris Construction Company to perform dirt work and site preparation for a new home Noble was building. Harris, as required, obtained an endorsement for its commercial general liability policy with Ohio Casualty that named Noble as an additional insured. But the insurance provided under the endorsement only applied to “liability ... caused in whole or in part by [Harris’s] ongoing operations performed for [Noble].”

Harris’s “ongoing operations” performed for Noble ended in March 2006. Noble then built a house on the site which it sold in September 2007. Before closing, the homeowners noticed cracks in the home, but purchased it anyway. When the cracks got worse, they sued Noble. They alleged foundation issues related to faulty dirt work.

Putting aside a lot of other issues, the court addressed whether Noble was entitled to coverage, from Ohio Casualty, based on the additional-insured endorsement. The endorsement was clear that it only covered liability that arose from “ongoing operations.” And the homeowners’ damage did not arise until well after Harris had completed its operations.

Noting that Harris’s policy did not define “ongoing operations,” and with no Mississippi guidance, the Noble court looked to other jurisdictions that have interpreted “ongoing operations” in similarly worded endorsements. The court held: “After reviewing these precedents, we are persuaded by the courts that have found that, in order for ‘ongoing operations’ to have any meaning, it cannot encompass liability arising after the subcontractor’s work was completed.” The court went on: “Giving ‘ongoing operations’ its plain and ordinary meaning, the Colorado Court of Appeals found this phrase referred to an action ‘actually in process.’” As examples of what would be covered as ongoing operations, the court gave these – if Harris accidentally knocked over a neighbor’s tree with a bulldozer or cut a gas line while performing dirt work.

This all seems simple enough. So what did Noble offer to counter this? “As Noble sees it, if the damage can be traced back to Harris’s active operations, the endorsement covers it.” But the court rejected this: “[T]o accept Noble’s argument, we would have to read the word ‘ongoing’ out of the endorsement and find that Noble is covered for liability caused by Harris’s operations—active or completed. And ‘a court must refrain from altering or changing a policy where terms are unambiguous.’ (citation omitted). So we will not manipulate the endorsement to expand coverage that is clearly and unambiguously limited to liability caused by ‘ongoing operations.’”