Celina Mutual Insurance Company v. Gallas et al

Filing 60

OPINION AND ORDER GRANTING 49 Celina's Motion for Summary Judgment; DECLARATORY JUDGMENT is entered in favor of Celina declaring that under insurance policy number 7114353-0, The Celina Mutual Insurance Company has no duty to defend or indemni fy Daniel L. Gallas, Catherine D. Gallas, and/or Finishing Touch Cleaning Service, Inc., against claims asserted by Geoffrey Wendt, Nadia Wendt and Windham Bremer as trustee of The Zenonas PuzinauskasDaughters Family Trust (whether individually or jointly) in case number 46D02-1303-CT-508 in the LaPorte County, Indiana, Superior Court. Signed by Judge Rudy Lozano on 1/30/17. (mlc)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION

THE CELINA MUTUAL
INSURANCE COMPANY, a
member of a pool of
companies known as Celina
Insurance Group,
Plaintiff,
vs.
DANIEL L. GALLAS,
CATHERINE D. GALLAS,
FINISHING TOUCH CLEANING
SERVICE, INC., GEOFFREY
WENDT, NADIA WENDT, and
WINDAM BREMER as Trustee
of The Zenonas
Puzinauskas Daughters’
Family Trust,

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NO. 3:14–CV-1616

Defendants.
OPINION AND ORDER
This matter is before the Court on the Motion for Summary
Judgment filed by Plaintiff, The Celina Mutual Insurance Company
(“Celina”), on March 3, 2016 (DE #49).

For the reasons set forth

below, Celina’s Motion for Summary Judgment (DE #49) is GRANTED.
The Clerk of the Court is DIRECTED to enter a DECLARATORY JUDGMENT
in favor of Celina declaring that under insurance policy number
7114353-0, The Celina Mutual Insurance Company has no duty to

‐1‐ 

defend or indemnify Daniel L. Gallas, Catherine D. Gallas, and/or
Finishing Touch Cleaning Service, Inc., against claims asserted by
Geoffrey Wendt, Nadia Wendt and Windham Bremer as trustee of The
Zenonas Puzinauskas Daughters’ Family Trust (whether individually
or jointly) in case number 46D02-1303-CT-508 in the LaPorte County,
Indiana, Superior Court.

BACKGROUND
Celina

filed

this

declaratory

judgment

action

seeking

a

determination as to whether it owes a duty to defend or indemnify
Defendants Finishing Touch Cleaning Service, Inc. (“Finishing
Touch”), Daniel L. Gallas, and Catherine D. Gallas (together,
“Gallas Defendants”) for claims brought by Defendants Geoffrey
Wendt, Nadia Wendt, and Windam Bremer as Trustee of The Zenonas
Puzinauskas Daughters’ Family Trust (together, “Wendt Defendants”)
in a lawsuit pending in Indiana state court.

In that lawsuit, the

Wendt Defendants allege that they hired Finishing Touch to clean
the glass in the windows and doors of their home in Beverly Shores,
Indiana, and that Finishing Touch damaged parts of the windows and
doors in doing so.

Celina is defending the Gallas Defendants in

the underlying lawsuit under a reservation of rights.
Celina filed a motion for summary judgment on the issue of
whether

it

is

obligated

to

defend

and

Defendants in the underlying lawsuit.

‐2‐ 

indemnify

the

Gallas

Celina argues that the

claims in the underlying lawsuit are excluded from coverage under
the insurance policy at issue. The Wendt Defendants and the Gallas
Defendants (together, “Defendants”) filed responses to the motion,
maintaining that the claims are not excluded from coverage.

The

Gallas Defendants also argue that Celina waived its right to deny
coverage or is estopped from denying coverage.

SUMMARY JUDGMENT STANDARD
Summary judgment must be granted when “there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.”

Fed. R. Civ. P. 56(a).

A genuine

issue of material fact exists when “the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct.
2505, 91 L. Ed. 2d 202 (1986).

Not every dispute between the

parties makes summary judgment inappropriate; “[o]nly disputes
over facts that might affect the outcome of the suit under the
governing

law

will

properly

preclude

the

entry

of

summary

judgment.” Id. To determine whether a genuine dispute of material
fact exists, the Court must construe all facts in the light most
favorable

to

the

non-moving

party

inferences in that party’s favor.
F.3d 355, 358 (7th Cir. 2010).

and

draw

all

reasonable

See Ogden v. Atterholt, 606
A party opposing a properly

supported summary judgment motion may not rely on allegations in

‐3‐ 

his own pleading, but rather must “marshal and present the court
with the evidence [it] contends will prove [its] case.”

Goodman

v. Nat'l Sec. Agency, Inc., 621 F.3d 651, 654 (7th Cir. 2010).
“[I]nferences relying on mere speculation or conjecture will not
suffice.”

Stephens v. Erickson, 569 F.3d 779, 786 (7th Cir. 2009)

(citation omitted).
The party with the burden of proof on an issue can obtain a
summary judgment “only where the evidence is so one-sided that it
points inescapably” in the movant’s favor, and “every reasonable
jury” would decide that the movant has met its burden of proof.
Thorne v. Member Select Ins. Co., 899 F. Supp. 2d 820, 824 (N.D.
Ind. 2012) (citations omitted).

If the non-moving party fails to

establish the existence of an essential element on which he bears
the burden of proof at trial, summary judgment is proper.

Massey

v. Johnson, 457 F.3d 711, 716 (7th Cir. 2006).

FACTS
The Underlying Lawsuit
Geoffrey

Wendt

(“Wendt”)

and

Nadia

Wendt

(together,

the

“Wendts”) hired Finishing Touch to clean the glass in the windows
and doors of their home in Beverly Shores, Indiana, in June 2011.1
After Finishing Touch’s employees finished their work at the

1

  The Wendts lived in the home and were beneficial owners of the
home at all times pertinent to this litigation. 

‐4‐ 

Wendts’ home, Wendt noticed white stains and spots on the glass,
though the glass itself was not damaged.

He contacted Daniel

Gallas (“Gallas”), the owner of Finishing Touch, and asked that
the employees return to the home and remove the spots from the
glass in the windows and doors.

According to Wendt, his agreement

with Gallas was only for removing the spots on the glass, it was
not to wipe down or clean, or perform any work on any portions of
the home other than the glass.

(DE #55-2, ¶7.)

In August 2011, two of Finishing Touch’s employees returned
to the Wendts’ home.

Gallas testified that he told the employees

to use a liquid product called OneRestore to remove the spots from
the glass.

The label of the OneRestore container instructs the

user to “[a]lways test a small area first to determine applications
and dwell time,” “not allow product to dry on surface,” and rinse
the product off by using “a thorough, high pressure rinse.”
#55-6 at 7.)

(DE

Gallas testified that he instructed the employees to

“spray the window [with OneRestore], and use your window apparatus
tools to apply water to rinse it off the window, and clean the
window like you would normally clean the window, squeegee it off
and wipe it off, wipe off the frames with their rags.”
at 5.)

(DE #50-5

He testified that Finishing Touch “was hired to clean

glass,” and that while he instructed the employees “to clean the
windows,” this meant “to clean the glass” to them.

(Id. at 6.)

He also testified that when the employees “do a window-cleaning

‐5‐ 

job, the water is gonna get on the frame, no matter what you do.
So, they’re trained to wipe off the frame. . . .
water drips.”

That’s where the

(Id. at 7.)

One of the Finishing Touch employees explained the process he
used to clean the glass with OneRestore:
[We] [g]ot our spray bottle, we sprayed the window, the
glass part, and as soon as we got done spraying the
window we used our sponge with the soapy water and we
used a squeegee to get it off. And, you know, we wiped
where the water sits on – like, because when we wiped
with the squeegee, water usually goes down, right, so we
wiped the bottom frame.
(DE #50-4 at 6.)
at 7.)

He did his “best just to spray the glass.”

(Id.

The other employee testified that “[w]e just spray on the

glass and right away with the sponge with the water and so we try
to clean it up and then squeegee.

And just dry a little bit of

water that runs in the frame and that’s it.”

(DE #50-3 at 7.)

When asked what precautions were taken to prevent OneRestore from
coming into contact with the window frames, sills, or cladding, he
testified that “[w]e just dried it off with a towel.

Any water or

liquid that comes out, we dried it off with a towel.”

(Id. at 8.)

The Finishing Touch employees removed the spots from the glass
using OneRestore without damaging the glass.
After the Finishing Touch employees had left the home, Wendt
observed that the glass was clean and the water spots had been
removed, but that the paint around the glass in the windows and
doors was bubbling and blistering, and some paint was sliding off.

‐6‐ 

He also observed that the silicone seals and caulking of the
windows had “turned to a soft rubbery bubblegum-like consistency
and br[oke] into strands.”

(DE #55-2, ¶11.)

The Wendts’ home

subsequently experienced condensation in the windows, and on cold
days and nights, condensation would drip from the windows and form
small puddles inside the home. (Id., ¶13.)

The Wendts contacted

Pella Windows and various contractors regarding these problems,
and were advised that replacing the windows and doors would be
less expensive than repairing them.

The Wendts replaced the

windows and doors, which caused damage to the siding shingles
covering the home’s exterior, some interior woodwork and other
parts of the home’s interior.

The Wendts replaced the damaged

siding shingles, damaged interior woodwork and repainted and restained parts of the home’s interior.
The Wendt Defendants filed a lawsuit against the Gallas
Defendants in LaPorte County Superior Court No. 2 under Cause No.
46D02-1303-CT-508 (“underlying lawsuit”).

The complaint in the

underlying lawsuit alleges that the Gallas Defendants carelessly
and negligently allowed chemicals intended to clean the glass in
the windows of their home to come in contact with the other
portions of the windows and damaged them, including the window
frames,

casings,

trim

and

sills.

While

the

complaint

only

addresses the windows of the Wendts’ home, it is undisputed that
the Wendt Defendants also allege damage to the glass doors of the

‐7‐ 

home in the underlying lawsuit.

The Wendt Defendants seek to

recover the cost to remedy and repair the damage to the windows,
doors, siding shingles, interior woodwork and interior trim, and
all other damages they suffered.
The Gallas Defendants submitted a claim to Celina for the
defense of and indemnity for the underlying lawsuit.

On April 22,

2013, Celina agreed to provide defense for the allegations in the
underlying lawsuit, subject to Celina’s reservation of rights.

On

June 6, 2014, Celina filed its complaint for declaratory judgment
seeking a declaration that it is not legally obligated to defend
or indemnify the Gallas Defendants in the underlying lawsuit.
The Policy
Celina had issued an all business coverage insurance policy
number 7114353-0 to Finishing Touch as the named insured for the
policy period of July 14, 2011, through July 14, 2012 (“Policy”).
(DE #50-9.)

Gallas and Catherine Gallas were also insureds under

the Policy as executive officers, directors and/or stockholders of
Finishing Touch.

(Id. at 100.)

The commercial general liability

(“CGL”) coverage in the Policy states in relevant part:
We will pay those sums that the insured becomes legally
obligated to pay as damages because of “bodily injury”
and “property damage” to which this insurance applies.
We will have the right and duty to defend the insured in
any “suit” seeking those damages. However, we 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. . . .

‐8‐ 

(Id. at 92.)

The Policy contains two relevant exclusions, which

state that the insurance does not apply to:
j.

Damage to Property
“Property damage” to:
. . .
(6) That particular part of any property that must
be restored, repaired or replaced because “your
work” was incorrectly performed on it.
. . .
Paragraph (6) of this exclusion does not apply to
“property damage” included in the “productscompleted operations hazard”.
. . .

l.

Damage to Your Work
“Property damage” to “your work” arising out of it
or any part of it and included in the “productscompleted operations hazard”.

(Id. at 95-96.)

The Policy defines “products-completed operations

hazard” in relevant part as:
a.

Includ[ing] all “bodily injury” and “property
damage” occurring away from premises you own or
rent and arising out of “your product” or “your
work” except:
. . .
(2) Work that has not yet been completed or
abandoned.
However, “your work” will be
deemed completed at the earliest of the
following times:
(a) When all the work called for in your
contract has been completed.
. . .
Work
that
may
need
service,
maintenance,
correction, repair or replacement, but which is
otherwise complete, will be treated as completed.

(Id. at 105.)
The Policy defines “property damage” in relevant part as
“[p]hysical injury to tangible property, including all resulting

‐9‐ 

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. . . .”
(Id.)

According to the terms of the Policy, “your work”:
a.

Means:
(1) Work or operations performed by you or on your
behalf; and
(2) Materials, parts or equipment furnished in
connection with such work or operations.
Includes
(1) Warranties or representations made at any time
with
respect
to
the
fitness,
quality,
durability, performance or use of “your work”,
and
(2) The providing of or failure to provide
warnings or instructions.

b.

(Id. at 106.)

DISCUSSION
Defense under Reservation of Rights
As an initial matter, the Gallas Defendants maintain that
Celina waived its right to deny insurance coverage, or is otherwise
estopped from denying coverage, because it elected to control the
defense of the Gallas Defendants in the underlying lawsuit under
a reservation of rights.

They rely upon In re Lodholtz, 769 F.3d

531 (7th Cir. 2014), to assert that under Indiana law, an insurer
may not control the defense of its insured without acknowledging
coverage.
effort

to

In Lodholtz, the Seventh Circuit describes an insurer’s
intervene

in

an

underlying

retaining its reservation of rights:

‐10‐ 

tort

litigation

while

A reservation of rights is problematic from the
insured’s standpoint. It creates a risk that the insurer
will not put up a strong defense to the suit against the
insured . . . , wishing to economize on legal expense
and hoping to avoid having to indemnify the insured at
all if the latter is hit with a judgment. Mindful of
this danger, the Indiana courts forbid the insurer to
control the defense of the insured without acknowledging
coverage. Cincinnati Ins. Co. v. Young, 852 N.E.2d 8,
13–15 (Ind. Ct. App. 2006); see also Travelers Indemnity
Co. v. Dingwell, 884 F.2d 629, 638–40 (1st Cir. 1989).
Such intervention in the defense of the suit would
unfairly restrict the insured, who faces the very real
risk of an uninsured liability, and grant the insurer a
double bite at escaping liability.
Id. at 533 (internal quotation marks omitted).
Lodholtz did not resolve the issue raised by the Gallas
Defendants, that is, the relationship between an insurer’s defense
under a reservation of rights and its right to challenge coverage.
There, the insurer had attempted to intervene in the underlying
tort litigation after making no appearance in the litigation and
after the state court had entered a default judgment against the
insured. The state court denied the insurer’s motion to intervene,
and the court of appeals affirmed this decision.

See id.

The

insured filed a federal action arguing that the state workers
compensation act had deprived the Indiana courts of jurisdiction
to entertain the tort litigation.

Id.

The Seventh Circuit held

that the jurisdictional issue on which the insurer’s suit was based
“was resolved against it by the Indiana courts, and that there
[was] no ground for a collateral attack by another judicial system
on that determination.”

Id. at 534.

‐11‐ 

Magistrate Judge Nuechterlein considered and rejected the
Gallas Defendants’ argument in his November 4, 2015, discovery
order, correctly noting that Lodholtz “applied Indiana law related
specifically

to

the

issue

of

intervention

in

conclusion about the control of defense issue.”
(citing Young, 852 N.E.2d at 13-15).)

reaching

its

(DE #46 at 8

The Court agrees that

Lodholtz did not overrule “Indiana’s long-standing law on an
insurer’s ability to protect its right to challenge coverage by
defending under a reservation of rights or filing a declaratory
action.”2

(Id. (citing Grinnell Mut. Reinsurance Co. v. Ault, 918

N.E.2d 619, 625 (Ind. Ct. App. 2009)).
reference
issue.

the

Magistrate

Judge’s

The Court incorporates by

prior

ruling

regarding

this

Accordingly, the Court rejects the Gallas Defendants’

argument that Celina waived its right to deny coverage or is
estopped from denying coverage because it elected to defend the
Gallas Defendants in the underlying lawsuit under a reservation of
rights.
Policy Exclusions
In Indiana, “[t]he interpretation of an insurance policy is
primarily a question of law for the court, and it is therefore a
question
Wagner

which

v.

is

Yates,

particularly
912

N.E.2d

suited

805,

808

for

(Ind.

2

 The parties agree that Indiana law applies. 

‐12‐ 

summary
2009)

judgment.”
(citation

omitted).

Indiana courts interpret an insurance contract under

the same rules of construction as other contracts.

Westfield Cos.

v. Knapp, 804 N.E.2d 1270, 1274 (Ind. Ct. App. 2004) (citation
omitted).

Courts “interpret an insurance policy with the goal of

ascertaining and enforcing the parties’ intent as revealed by the
insurance contract.”

Id.

“[C]lear and unambiguous language in an

insurance policy should be given its plain and ordinary meaning,
even if those terms limit an insurer’s liability.”

Everett Cash

Mut.

(Ind.

Ins.

(citation

Co.

v.

Taylor,

omitted).

established

simply

926

“[A]n
because

N.E.2d

1008,

ambiguity

is

controversy

1012
not

exists

2010)

affirmatively
and

one

party

asserts an interpretation contrary to that asserted by the opposing
party.”

Beam v. Wausau Ins. Co., 765 N.E.2d 524, 528 (Ind. 2002)

(citation omitted).
“An insurance company’s duty to defend is broader than its
duty to indemnify.”

Newnam Mfg., Inc. v. Transcon. Ins. Co., 871

N.E.2d 396, 401 (Ind. Ct. App. 2007).

“If the pleadings reveal

that a claim is clearly excluded under the policy, then no defense
is required.”

Id.

“[W]here the insurer is aware of facts, not in

the pleadings, which clearly disclose an absence of coverage, it
can refuse to defend or clarify its obligation by means of a
declaratory judgment action.”

Cincinnati Ins. Co. v. Mallon, 409

N.E.2d 1100, 1105 (Ind. Ct. App. 1980) (citation omitted).

Courts

are to “determine the insurer’s duty to defend from the allegations

‐13‐ 

contained within the complaint and from those facts known or
ascertainable by the insurer after reasonable investigation.”
Newnam

Mfg.,

Inc.,

871

N.E.2d

at

401.

Indiana

courts

have

considered extrinsic evidence in assessing an insurer’s duty to
defend.

See Ind. Farmers Mut. Ins. Co. v. N. Vernon Drop Forge,

Inc., 917 N.E.2d 1258, 1267 (Ind. Ct. App. 2010) (considering
extrinsic evidence in assessing an insurer’s duty to defend);
Selective Ins. Co. of S.C. v. Erie Ins. Exch., 14 N.E.3d 105, 113
(Ind. Ct. App. 2014) (same).

“[T]he insured has the burden of

proving that the coverage applies, and the insurer, if relying on
an exclusion to deny coverage, has the burden of demonstrating
that the exclusion is applicable.”

Bowman, Heintz, Boscia &

Vician, P.C. v. Valiant Ins. Co., 35 F. Supp. 3d 1015, 1023 (N.D.
Ind. 2014) (citation omitted).
Celina argues that it has no duty to defend or indemnify the
Gallas

Defendants

under

underlying lawsuit.

the

Policy

for

claims

made

in

The Policy covers “property damage” caused by

an “occurrence,” which is defined in part as an “accident.”
#50-9 at 105.)

the

(DE

The Defendants contend that the Policy covers the

property damage alleged in the underlying lawsuit because it was
caused unintentionally.3

Celina does not dispute that the damage

3

The Wendt Defendants assert that Finishing Touch’s allegedly
faulty use of OneRestore caused the damages alleged in the
underlying lawsuit. The Gallas Defendants reserve the right to
‐14‐ 

to

the

windows

and

doors

alleged

in

the

underlying

constitutes “property damage” under the Policy.
n.6.)

lawsuit

(DE #50 at 13

Nor does Celina assert a lack of coverage because no

“occurrence” took place; rather, it maintains that coverage does
not exist based on exclusion provisions in the Policy.
n.11.)

(Id. at 16

Thus, for the purpose of this motion, the Court assumes

that the alleged property damage was caused by an “occurrence”
under the Policy.

See Sheehan Constr. Co., Inc. v. Continental

Cas. Co., 935 N.E.2d 160, 171-72 (Ind.) (“faulty workmanship may
constitute an accident and thus an occurrence” under a CGL policy),
modified on other grounds, 938 N.E.2d 685 (Ind. 2010). 
Celina argues that the damages alleged in the underlying
lawsuit are excluded from coverage under two Policy provisions:
the “Damage to Property” exclusion and the “Damage to Your Work”
exclusion.

“Generally, insurers are allowed to limit liability in

any manner which is not inconsistent with public policy.”

Hoosier

Ins. Co. v. Audiology Found. of Am., 745 N.E.2d 300, 309 (Ind. Ct.
App. 2001).

A coverage exclusion is usually an affirmative

defense, with the insurer bearing the burden of proof.
unambiguous
enforcement.”

exclusionary
Id.

clause

is

ordinarily

Id.

“[A]n

entitled

to

However, exclusions must be plainly expressed

and clear, and any doubts as to coverage will be construed against

dispute liability for the alleged damages, and the alleged damages
themselves, in the underlying lawsuit. (DE #56 at 1-2.) 
‐15‐ 

the insurer.
The

Id.

Damage

to

Property

exclusion

excludes

coverage

for

property damage to “[t]hat particular part of any property that
must be restored, repaired or replaced because ‘your work’ was
incorrectly performed on it.” (DE #50-9 at 96.) Defendants assert
that this exclusion does not apply here because it “does not apply
to

‘property

damage’

included

operations hazard’” (“PCOH”).

in

(Id.)

the

‘products-completed

The Policy defines the PCOH

to include property damage arising out of “your work,” except for
“[w]ork that has not yet been completed.”
that

may

need

service,

maintenance,

(Id. at 105.)

correction,

“Work

repair

or

replacement, but which is otherwise complete, will be treated as
completed.”

(Id.)

Because the Damage to Property exclusion does

not apply to property damage included in the PCOH, the exclusion
applies only if the insured’s work has not been completed.
Defendants

maintain

that

Finishing

Touch’s

work

at

the

Wendts’ home was complete under the PCOH because it was work that
needed

correction,

but

was

otherwise

completed.

Celina

acknowledges that the Damage to Property exclusion only applies if
the insured’s work is not yet complete, and does not dispute that
Finishing Touch’s work was complete under the PCOH.
n.8.)

(DE #59 at 3

Because the parties do not dispute that (1) the Damage to

Property exclusion only applies where the insured’s work has not
been completed, and (2) Finishing Touch’s work was complete under

‐16‐ 

the PCOH, the Court finds that the Damage to Property exclusion
does not apply here.
Turning to the Damage to Your Work exclusion, this provision
excludes coverage for property damage to “‘your work’ arising out
of it or any part of it and included in the [PCOH].”4
at 96.)

(DE #50-9

In Indiana Insurance Company v. DeZutti, 408 N.E.2d 1275

(Ind. 1980), the Supreme Court of Indiana considered whether a
similar exclusionary clause eliminated coverage for an insured’s
faulty workmanship.5

There, the insured was a general contractor

who built and sold a house that subsequently suffered damage due
to improper construction of the footings.

Id. at 1276.

The court

considered the insured’s CGL policy and explained:
What is covered by the policy is defective workmanship
which causes personal injury or property damage not
excluded under some provision of the policy. So if the
insured’s breach of an implied warranty results in
damage to property other than the insured’s work or
product which is excluded by [the exclusionary clauses],
the policy would provide coverage. To hold otherwise
would effectively convert the policy into a performance

4

 Unlike the Damage to Property exclusion, the Damage to Your Work

exclusion applies to property damage “included in the [PCOH].”
(DE #50-9 at 96.) Thus, this exclusion may apply where, as here,
it is undisputed that the insured’s work was completed.
5

 DeZutti addressed an exclusionary clause similar to the Damage to

Your Work exclusion, which provided that the policy did not apply
to “property damage to work performed by or on behalf of the named
insured arising out of the work or any portion thereof, or out of
materials, parts or equipment furnished in connection therewith.
. . .” 408 N.E.2d at 1277. Another exclusionary clause at issue
in DeZutti provided that the policy did not apply to “property
damage to the named insured’s products arising out of such products
or any part of such products.” Id. 
‐17‐ 

bond or guarantee of contractual performance and result
in coverage for repair and replacement of the insured’s
own faulty workmanship.
This was not the intent and
understanding of the parties at the time the policy was
purchased.
Id. at 1279 (emphasis added).

“[T]he costs attendant upon the

repair or replacement of the insured’s own faulty work is part of
every business venture and is a business expense to be borne by
the insured-contractor in order to satisfy customers.

It is a

business risk long excluded by comprehensive liability policies.”
Id.

The court noted that “[t]he same neglectful craftmanship may

cause both a business expense of repair and a loss represented by
damage to persons and property other than the insured’s own product
or work.”

Id.

It explained that the policy “does not cover an

accident of faulty workmanship but rather faulty workmanship which
causes an accident.”

Id.

(citing Weedo v. Stone-E-Brick, Inc.,

405 A.2d 788, 796 (N.J. 1979)).
The court held that the exclusionary clauses clearly excluded
“coverage for damages to the insured’s product or work when such
damages are confined to the product or work and caused by the
product or work, or any part thereof.

It is only damage to other

property arising out of the insured’s product or work which would
be covered.”

Id. at 1280 (emphasis in original).

Whether an

exclusion applies “depends upon the meaning of the insured’s ‘work’
which . . . is determined by who the insured is.”

Id.

“[T]he

exclusion applies to what the insured or those on his behalf worked

‐18‐ 

upon or produced.” Id. The court considered whether the insured’s
“work” was the entire house that he had built, or only the
footings.

It found that coverage was excluded because the insured

was a general contractor and his work was the entire house.

Id.

at 1280-81; see Sheehan Const. Co., 935 N.E.2d at 166 (noting that
no coverage existed in DeZutti because “faulty workmanship by a
contractor

was

specifically

excluded

based

on

the

clear

and

unambiguous ‘business risk’ exclusionary clauses”); T.R. Bulger,
Inc. v. Indiana Ins. Co., 901 N.E.2d 1110, 1115 (Ind. Ct. App.
2009) (“business risk [of a contractor’s faulty work] is born by
the

contractor

and

is

not

insured

by

a

CGL

policy”);

Transcontinental Ins. Co., RTW Indust., Inc., No. 1:02CV01733,
2004 WL 1638221, at *7 (S.D. Ind. Jun. 30, 2004) (finding insurer
had no obligation to defend or indemnify insured where CGL policy
excluded the type of damage caused by insured’s work to insured’s
product).
The parties agree that the Damage to Your Work exclusion does
not exclude coverage for damage to other property arising out of
Finishing Touch’s work.
damages

alleged

in

the

However, they disagree as to whether the
underlying

lawsuit

“are

confined

to

[Finishing Touch’s] work and caused by the . . . work,” and thus,
fall within the Damage to Your Work exclusion. DeZutti, 408 N.E.2d
at 1280.

The application of this exclusion depends upon the

meaning of Finishing Touch’s “work.”

‐19‐ 

See id.

The Policy defines “your work” in relevant part as “work or
operations performed by you or on your behalf.” (DE #50-9 at 106.)
Celina maintains that Finishing Touch’s wiping of the window and
door frames after spraying the glass with OneRestore was work
performed by Finishing Touch, and thus, any resulting property
damage is excluded from coverage under the Damage to Your Work
exclusion.

In support of this position, Celina relies upon

Alverson v. Northwestern National Casualty Company, 559 N.W.2d 234
(S.D. 1997).

In that case, a masonry subcontractor damaged the

windows of a residence while trying to clean them after splattering
them

with

mortar.

Id.

at

236.

In

assessing

whether

the

subcontractor’s CGL insurance policy covered the damage to the
windows, the Supreme Court of South Dakota reasoned:
[The policy] excludes damage to any property, which
includes the windows, that must be replaced because
“your work” was incorrectly performed on it. . . .
“[Y]our work” is defined in the policy as “work or
operations performed by you or on your behalf.”
The
window cleaning was “work” done “by” Alverson and his
employees and it was done as part of the masonry
contract. While work on windows was not included in the
masonry contract, it became Alverson’s work to clean
them incidental to the contract.
Id. (emphasis added).

The court found that the exclusion applied

and there was no coverage.

Id.

Celina also relies on Lusalon, Inc. v. Hartford Accident and
Indemnity Company, 511 N.E.2d 595 (Mass. 1987), in which the
insured was a subcontractor that was hired to install concrete

‐20‐ 

block at a construction site.

While installing concrete block,

the insured accidentally splattered mortar on an adjacent door and
window frames.

Id. at 596.

The insured used a cleaning agent to

remove the splattered mortar, but failed to properly remove the
cleaning agent from the door and window frames.

Id.

When the

door and window frames were painted, the paint peeled as a result
of the cleaning agent.
exclusion

eliminated

particular

part

of

Id.
coverage

any

The insurer argued that a policy
for

property,

property
the

damage

restoration,

to

“that

repair

or

replacement of which has been made or is necessary by reason of
faulty workmanship thereon by or on behalf of the insured.”
at 597.
was

not

Id.

The insured maintained that the alleged property damage
part

of

its

work

product.

The

court

disagreed.

“[C]ontrary to [the insured’s] characterization, [the insured’s]
work did include cleaning up the mortar which its employees
splattered on the door and window frames.”

Id. at 598.

The

Lusalon court affirmed summary judgment in favor of the insurer
where “[t]he insurance furnished was not intended to indemnify the
plaintiff for damages resulting because the plaintiff furnished
defective . . . workmanship in the cleanup and related work.”
at 599.

Id.

In both Alverson and Lusalon, the policy exclusions

applied to the insured’s work on windows, even though the insureds
had not been hired to do such work.
Defendants do not address or distinguish Alverson or Lusalon.

‐21‐ 

Rather, they rely upon DeZutti to argue that the Damage to Your
Work exclusion does not apply here.

They maintain that Finishing

Touch’s work was limited to glass cleaning because Finishing Touch
was hired to clean only the glass in the windows and doors of the
Wendts’ home. They liken Finishing Touch to a subcontractor, whose
work “is merely a component part of a larger work or product.
Thus, a subcontractor’s exclusion would be less encompassing and
any damage to the larger work or item caused by his product or
work would be damage to other property which would fall outside
[the business risk] exclusions.”

DeZutti, 408 N.E.2d at 1280.

According to Defendants, the Damage to Your Work exclusion
should not apply because the alleged damages were not to Finishing
Touch’s work of cleaning glass, arising out of it or any part of
it.

It is undisputed that Finishing Touch’s use of OneRestore

removed the spots from the glass in the windows and doors of the
Wendts’ home, and did not damage the glass itself.

Other parts of

the windows and doors were allegedly damaged, including the window
sills, frames, caulking and seals.

Defendants insist that because

the alleged damages are not “to” Finishing Touch’s work of glass
cleaning and are not confined to that work, the Damage to Your
Work exclusion does not apply.
Defendants rely on Travelers Insurance Company v. Volentine,
578

S.W.2d

501

(Tex.

Ct.

App.

1979),

in

which

the

insured

incorrectly repaired valves in a car, causing the valves to

‐22‐ 

malfunction and destroy the engine.

When the car owner sued the

insured,

the

the

insurer

precluded coverage.

claimed

that

“your

work”

exclusion

The Texas Court of Appeals noted that the

underlying lawsuit between car owner and the insured did not allege
that the insured “performed work on any part of the engine except
the valves.” Id. at 504. The court held that because the insured’s
work was limited to repairing only the valves in the engine, the
policy afforded coverage despite the “your work” exclusion.

Id.;

see also Am. Home Assurance Co. v. Cat Tech, L.L.C., 660 F.3d 216,
221 (5th Cir. 2011) (holding “‘your work’ exclusion only precludes
coverage for damage to that portion of Ergon’s property upon which
Cat Tech performed repair services, defective or otherwise.

It

does not preclude coverage for any damage to Ergon’s property that
Cat Tech did not repair or service.”)
Defendants assert that “it was not necessary for Gallas or
Finishing Touch to touch or come into contact with any portion of
the windows or doors other than the glass in order to perform the
limited service of removing white spots from the glass.”
at 22.)

(DE #55

But the undisputed evidence demonstrates otherwise.

As

Gallas testified, “when [Finishing Touch employees] do a windowcleaning job, the water is going to get on the frame, no matter
what you do.

So, they’re trained to wipe off the frame.”

(DE

#50-5 at 7 (emphasis added).) When Gallas instructed the employees
to use OneRestore, he told them to “clean the window like you would

‐23‐ 

normally clean the window, squeegee it off and wipe it off, wipe
off the frames with their rags.”

(Id. at 5.)

Finishing Touch

employees also testified that they wiped the frames when they
cleaned glass, and when they applied OneRestore to the glass in
the windows and doors of the Wendts’ home.
DE #50-4 at 6.)

(See DE #50-3 at 7-9;

When asked what precautions were taken to prevent

OneRestore from coming into contact with the window frames, sills,
and cladding, one employee explained, “[w]e just dried it off with
a towel.
a towel.”

Any water or liquid that comes out, we dried it off with
(DE #50-3 at 8.)6

The Policy states that “your work” “[m]eans . . . [w]ork or
operations performed by you or on your behalf.”
(emphasis added).)

(DE# 50-9 at 106

It does not limit “your work” to work that the

insured was hired to do.

Moreover, Indiana courts apply business

risk exclusions “to what the insured or those on his behalf worked
upon or produced.”

DeZutti, 408 N.E.2d at 1280 (emphasis added).

Given the undisputed evidence that Finishing Touch’s employees

6

 Celina notes that to the extent that the Defendants were to argue

that Finishing Touch did not work on the window caulking and seals,
these parts of the windows were encompassed within the framing
structure of the windows upon which Finishing Touch worked. (DE
#59 at 6 n.10.) Defendants do not distinguish between the frames
surrounding the glass and the caulking and sealing, but rather,
maintain that it was not necessary for Finishing Touch to come
into contact with any portion of the windows or doors other than
the glass in order to remove the spots from the glass. (DE #55 at
22.)
As explained above, the undisputed evidence shows that
Finishing Touch did come into contact with other portions of the
windows and doors when cleaning the glass.
‐24‐ 

were trained to wipe the frames surrounding the glass they cleaned,
and that they wiped off the OneRestore that came in contact with
the frames, sills and cladding, the Court finds that Finishing
Touch

performed

work

upon

the

frames,

sills

and

cladding

surrounding the glass of windows and doors of the Wendts’ home.
As such, any property damage resulting from Finishing Touch’s work
upon the frames, sills and cladding of the windows and doors of
the Wendts’ home is eliminated from coverage by the Damage to Your
Work exclusion.7
Celina also argues that the Wendt Defendants’ alleged damages
to the shingle siding, interior woodwork, painting, and loss of
use, are excluded from coverage.

These damages were not caused by

OneRestore coming into contact with these parts of the home, but

7

  Celina also maintains that the Damage to Your Work exclusion
applies to the damages to the windows and doors surrounding the
glass because the damaged parts are “connected together or
immediately adjacent to each other so as to constitute a collective
unit.” (DE #50 at 20 (quoting Vinsant Elec. Contractors v. Aetna
Cas. & Sur. Co., 530 S.W.2d 76, 76 (Tenn. 1975) (finding policy
exclusion applied to damage to a switchboard because it was “a
unit composed of many interrelated and interdependent parts”).)
Defendants respond that an issue of fact exists as to whether the
glass of a window or door is a single unit with the window or door,
or a separate item of property. They note that if an insured files
a claim for a window in which the glass was broken, the Policy
does not cover the replacement of the entire window; rather, it
covers the replacement of the glass in the window. (See DE #50-9
at 65 (Celina “will determine the value of Covered Property in the
event of loss or damage as follows: . . . d. Glass at the cost of
replacement with safety glazing material if required by law.”).)
The Court need not decide this issue because it is undisputed that
Finishing Touch’s work included wiping down more than just the
glass in the windows and doors. 

‐25‐ 

rather, were caused by the replacement of the windows and doors.
According to Celina, because the Policy affords no coverage for
the damages to the windows and doors, there is also no coverage
for the damages allegedly resulting from the replacement of the
windows and doors.
The Wendt Defendants maintain that after Finishing Touch
allegedly

damaged

OneRestore,

the

the

windows

windows

condensation problems.

and

and
doors

doors

by

improperly

experienced

serious

using
water

They were advised that replacing the

windows would be less expensive than repairing them, so they
replaced the windows and doors. Replacing them “necessarily caused
damage to siding shingles covering the Home’s exterior, parts of
the interior woodwork, and other parts of the Home’s interior.”
(DE #55 at 5 (citations omitted).)

The Wendt Defendants sued the

Gallas Defendants in part “for the cost to repair the parts of the
Home necessarily damaged by replacing the windows and doors” and
“for the temporary living expenses while the Home was uninhabitable
during the repair and replacement process.”

(Id. at 6.)

Thus,

the parties do not dispute that these alleged damages were the
result of replacing the windows and doors.

While Defendants argue

that damages are an issue of fact, the issue before the Court is
one of law, that is, whether the Policy excludes coverage for the
damages allegedly caused by replacing the windows and doors.

‐26‐ 

The Court has determined that any property damage resulting
from Finishing Touch’s work upon the frames, sills and cladding of
the windows and doors of the Wendts’ home is eliminated from
coverage

by

the

Damage

to

Your

Work

exclusion.

The

costs

associated with replacing the windows and doors are likewise
excluded under Indiana law.

As DeZutti explained, “the costs

attendant upon the repair or replacement of the insured’s own
faulty work is part of every business venture and is a business
expense to be borne by the insured-contractor in order to satisfy
customers.

It is a business risk long excluded by comprehensive

liability policies.”

408 N.E.2d at 1279; see Sheehan Const. Co.,

935 N.E.2d at 166 (describing DeZutti as “holding that the CGL
policy did not provide coverage to correct, repair or replace the
contractor’s own poor workmanship”); Jim Barna Log Sys. v. Gen'l
Cas. Ins. of Wis., 791 N.E.2d 816, 823-24 (Ind. Ct. App. 2003)
(discussing the allocation of risk in a CGL policy).
Because the Court holds that the Damage to Your Work exclusion
eliminates coverage for the claims alleged in the underlying
lawsuit, that is, claims of damage to the windows and doors of the
Wendts’ home, and damage attendant upon the replacement of the
windows and doors, the Court will enter declaratory judgment in
favor of Celina.

‐27‐ 

CONCLUSION
For the reasons set forth above, Celina’s Motion for Summary
Judgment (DE #49) is GRANTED.

The Clerk of the Court is DIRECTED

to enter a DECLARATORY JUDGMENT in favor of Celina declaring that
under

insurance

policy

number

7114353-0,

The

Celina

Mutual

Insurance Company has no duty to defend or indemnify Daniel L.
Gallas,

Catherine

D.

Gallas,

and/or

Finishing

Touch

Cleaning

Service, Inc., against claims asserted by Geoffrey Wendt, Nadia
Wendt and Windham Bremer as trustee of The Zenonas Puzinauskas
Daughters’ Family Trust (whether individually or jointly) in case
number 46D02-1303-CT-508 in the LaPorte County, Indiana, Superior
Court.

DATED:

January 30, 2017

/s/ RUDY LOZANO, Judge
United States District Court

‐28‐