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03/10/95 STATE FARM FIRE AND CASUALTY COMPANY v.

March 10, 1995

STATE FARM FIRE AND CASUALTY COMPANY
v.
STEVEN C. GWIN AND JAN A. GWIN



Appeal from Baldwin Circuit Court. (CV-92-197). James Reid, TRIAL JUDGE.

Released for Publication June 30, 1995.

Cook, Maddox, Shores, Kennedy, and Butts, JJ., concur.

The opinion of the court was delivered by: Cook

COOK, JUSTICE.

In May 1991, Steven Gwin and his wife Jan Gwin sold two properties to Michael Dobson and his wife Wanda Dobson. The dwellings on the properties were insured by State Farm pursuant to two policies issued to the Gwins in August 1990. On the date of the closing of the sale transaction, the Gwins' insurance on the properties ceased and State Farm transferred their coverage to the duplex into which they moved following the sale.

After the sale of the properties, the Dobsons discovered that the home located on one of the properties was infested with termites, that the roof leaked, and that the electrical wiring in the home was defective. They sued Terminex pest control company, which had treated the property for termite damage when it was owned by the Gwins, and the Gwins, alleging fraud and misrepresentation. Thereafter, State Farm filed this declaratory judgment action in order to determine whether it had an obligation to defend or indemnify the Gwins with regard to the lawsuit filed against them by the Dobsons.

The trial Judge denied State Farm's motion for a summary judgment, but entered a summary judgment for the Gwins. State Farm appeals; we reverse.

The language of the policy states:

" SECTION II - LIABILITY COVERAGES

"If a claim is made or suit is brought against an insured for damages because of bodily injury or property damage to which this coverage applies, caused by an occurrence, we will:

"1. pay up to our limit of liability for the damages for which the insured is legally liable; and

"2. provide a defense at our expense by counsel of our choice...."

The policy further defined "occurrence" as follows:

"an accident, including exposure to conditions, ...


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