Economy Lumber Co. of Oakland, Inc. v. Insurance Co. of North America

This is an appeal from a judgment holding that a general liability insurance policy issued to appellant does not cover its claim for property damage.

The judgment is reversed and remanded.

Statement of Facts

In December, 1976, plaintiff and appellant Economy Lumber Company of Oakland, Inc. (hereafter, Economy Lumber), contracted to sell 90,000 board feet of specially milled siding to Arlotta and Paradise Construction Company (hereafter, A&P). A&P was the general contractor on a construction project in Foster City and intended to use the siding on the exterior of homes it was building there. Economy Lumber contracted with D. L. Ford & Company (hereafter, Ford) to perform the milling and then to deliver the lumber to the construction site.

A&P received the siding from Ford and began to apply it to eight houses. Within a day or two, after about 25 percent of the total amount of the siding had been applied, it became apparent that the siding had been mismilled. The pieces were not of uniform size and caused the exterior of the homes to take on a very unsightly appearance, quite obvious to any onlooker. Apparently, the defect could not have been detected prior to the…