Starr Surplus Lines Insurance Company v. Banner Property Management, Inc. et al
Filing
21
ORDER AND REASONS DENYING 13 Motion for Summary Judgment. Signed by Judge Martin L.C. Feldman on 12/10/18. (clc)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
STARR SURPLUS LINES
INSURANCE COMPANY
CIVIL ACTION
V.
NO. 18-5635
BANNER PROPERTY MANAGEMENT
COMPANY; MARC B. BANNER;
and ROBERT J. ROTH
SECTION “F”
ORDER AND REASONS
Before the Court is Starr Surplus Lines Insurance Company’s
motion for summary judgment that it has no duty to defend or
indemnify Banner Property Management, Inc. or Marc C. Banner for
the claims asserted by Robert J. Roth.
For the reasons that
follow, the motion is DENIED.
Background
This
declaratory
judgment
action
regarding
the
scope
of
insurance defense and indemnity obligations arises out alleged
defects in the construction of residential property.
On June 26, 2013, Robert J. Roth entered into a contract with
Banner Property Management, Inc. (“BPMI”) for the construction of
a home on a lot owned by Roth and located at 6851 General Haig
Street in New Orleans, Louisiana.
agreed
to
pay
$367,074.97
for
Pursuant to the contract, Roth
the
construction
in
bi-weekly
installments, with the balance due upon the project’s completion.
Serving
as
the
general
contractor,
1
BPMI
performed
all
work
associated with building the home, either directly or through one
of its subcontractors, aside from the installation of sprayfoam
insulation underneath the floors.
Although Roth purchased some of
the appliances and fixtures for the home, BPMI installed them.
During
the
General
construction
Liability
process,
Insurance
BPMI
Policy
obtained
from
Starr
a
Commercial
Surplus
Lines
Insurance Company (“Starr”), effective from April 9, 2014 through
April 9, 2015.1
The New Orleans Department of Safety and Permits issued a
Certificate of Occupancy on August 1, 2014.
The following year,
on August 3, 2015, Roth sued BPMI and Marc C. Banner, the company’s
manager, in the Civil District Court for the Parish of Orleans,
asserting that the defendants: (1) violated the New Home Warranty
Act,
La.
R.S.
§§
9:3143-3150;
(2)
breached
the
construction
contract by failing to perform services in a workmanlike manner
and/or by providing and utilizing defective materials; and (3)
were negligent in supplying, installing, selling, or otherwise
being responsible for the installation of defective materials in
the home.
After an exception of no cause of action was asserted,
Roth filed an amended petition, alleging the following seventyeight (78) specific physical defects and damages:
The Policy contains a $1,000,000 per occurrence limit of
liability; a $1,000,000 personal and advertising injury limit of
liability; a $2,000,000 general aggregate limit of liability; and
a $2,000,000 products-completed operations limit of liability.
1
2
(1) Discoloration on the brick exterior of the house;
(2) Severe cupping of the wood flooring;
(3) Duct leak in the attic of the house;
(4) Poor quality and construction of the ceramic tile
work located in the bathroom;
(5) Inadequate fastening of fixtures and hardware in the
bathroom located in the front of the house;
(6) Defective wiring of ground fault interrupters which
prevents the interrupters from tripping when tested;
(7) Failure to install proper mounting screws for the
electrical panel cover;
(8) Damaged sheetrock behind the electrical panel cover;
(9) Ceiling fan not properly mounted to the correct
height;
(10) Discoloration exterior window caulking;
(11) Incorrect installation of exterior window caulking;
(12) Mold forming on the exterior window caulking;
(13) Damaged or defective marble floor tiles located in
the master bathroom;
(14) Improper caulking and sealing of the backsplash
located in the bathroom;
(15) Discoloration and damage to the marble sink located
in the master bathroom as a result of the improper
sealing of the marble;
(16) Improper mounting and the light and vent system
located in the master bathroom;
(17) Excess grout used in the finishing the drain of the
shower located in the master bathroom;
(18) Improper installation and plumbing to the master
bathroom shower heads resulting in limited water flow;
(19) Discoloration and damage to the master bathroom
sink as a result of water leakage;
(20) Failure to install shelves in the cabinets of the
master bathroom;
(21) Improper caulking of the bathtub located in the
front bathroom on the left side of the house;
(22) Poor craftsmanship of the ceramic wall tiles in the
left front bathroom;
(23) Poor workmanship of the connection between the vent
and the trim located at the cooktop exhaust vent in the
kitchen;
(24) The metal front of the coolant exhaust vent is bent
and crimped;
(25) Improper installation of the pantry pocket door;
(26) Improper installation of several electrical
switches and junction box covers throughout the house;
(27) Improper installation of the kitchen faucet;
3
(28) Poor craftsmanship of the kitchen countertop
indicated by a poor joint cut in the countertop;
(29) Improper mounting of numerous electrical outlets;
(30) Improper installation of the kitchen countertops;
(31) Separation of the wooden baseboards and the
interior walls;
(32) Improper excess drying leading to visible joints in
the crown molding in the interior of the house;
(33) Improperly finished intersections between interior
walls and wooden beams leading to visible gaps;
(34) Improper over-sanding of wooden bar;
(35) Improper installation of the HVAC system in the
attic leading to sheetrock material coming loose due to
excessive vibration;
(36) Improper finishing of the interior paint;
(37) Mismatched textures used in completing the
sheetrock ceiling of the den;
(38) Splitting and separating of cypress wood beams
located in the house due to excess drying;
(39) Inconsistent paint textures used when touch ups
were performed;
(40) Premature rusting and deterioration of the metal
rails located on the exterior of the house;
(41) Water leakage of the bathroom sink located in the
rear of the house;
(42) Damage to cabinets and flooring of the rear bathroom
due to water leakage;
(43) Improper installation and plumbing of toilet in the
rear bathroom, causing the toilet to run constantly;
(44) Improper finishing and caulking of the exterior
cement siding;
(45) Damage to the concrete located in the screened porch
area due to construction personnel tracking dirt and
sand across the slab for an extended period of time;
(46) Inadequate pouring of the garage slab leading to
standing water forming due to inadequate slope;
(47) Improper mounting of the left rear wooden fence
gate;
(48) Improper installation of the metal fence posts
surrounding the exterior of the home;
(49) Improper installation of the exterior electrical
meter panel;
(50) Improper sealing of the electrical conduit;
(51) Improper installation of crawlspace ventilation
holes on the exterior of the house;
(52) Improper installation and/or wiring of exterior
light fixtures;
4
(53) Improper mounting of the fold down stairs located
in the garage;
(54) Improper wiring located in the roof framing system;
(55) Improper installation of attic ventilation system;
(56) Improper installation of subsurface drain system in
the backyard of the house;
(57) Improper construction and installation of exterior
brick siding;
(58) Failure to paint plumbing vents;
(59) Improper installation of the attic stairs located
inside the house;
(60) Improper insulation used in the attic of the house;
(61) Improper installation of ventilation system of the
attic located in the house;
(62) Improper installation and damage to the air ducts
located in the attic;
(63) Improper installation of attic exhaust vent,
causing a fire hazard;
(64) Failure to install junction box cover in the attic;
(65) Improper window framing in front of the attic;
(66) Improper finishing to the bricks at the front door
threshold;
(67) Discoloration of brick siding throughout the
exterior of house;
(68) Cracks in the brick siding on the left side of the
house;
(69) Debris and trash left on front property by
contractor personnel;
(70) Improper mounting of the left side crawlspace
access hatch;
(71) Failure to secure plumbing lines to the floor
framing;
(72) Cracking in the brickwork on the right side of the
front parapet wall located on front exterior of the
house;
(73) Improper installation of wooden decking located on
front exterior of the house;
(74) Cracked bricks at the side off front steps of the
house;
(75) Damage to the vinyl overhang materials on the
exterior of the house;
(76) Damage and improper installation of the fascia
located on the left side of garage;
(77) Improper installation and finishing of the concrete
finishing on the left side of the screened porch area;
and
5
(78) Improper installation of the heating, light and
ventilation fixtures in three of the four bedrooms in
the house, causing the fixtures to not draw any air.
Roth further alleges that, as a result of the defective workmanship
and/or
installation
of
defective
materials,
he
has
sustained
and/or will sustain the following damages:
(1)
(2)
(3)
(4)
(5)
(6)
Diminution in value of the Property;
Costs to repair defective conditions in
Property;
Loss of use of the Property;
Mental Anguish, past and future;
Attorney’s fees and costs; and
Such other damages as may be proven at trial.
the
Upon being sued, BPMI tendered the lawsuit to Starr for
defense and indemnity.
Thereafter, on June 4, 2018, Starr filed
a complaint for declaratory judgment in this Court against Roth,
BPMI,
and
Banner
to
ascertain
the
scope
of
its
defense
and
indemnity obligations for Roth’s claims under the Starr Policy.
Specifically,
Starr
seeks
a
judicial
declaration
that:
(1)
exclusions in the CGL Policy bar coverage for Roth’s claims against
BPMI and Banner; (2) Starr has no duty to defend BPMI and Banner
against the claims asserted by Roth; and (3) Starr has no duty to
indemnify BPMI and Banner for Roth’s claims.
Starr now moves for
summary judgment, contending that the “work product” exclusions in
the Starr CGL Policy bar coverage for Roth’s claims, such that
Starr has no duty to defend or indemnify BPMI and Banner.
6
I.
Federal Rule of Civil Procedure 56 instructs that summary
judgment is proper if the record discloses no genuine dispute as
to any material fact such that the moving party is entitled to
judgment as a matter of law.
No genuine dispute of fact exists if
the record taken as a whole could not lead a rational trier of
fact to find for the non-moving party. See Matsushita Elec. Indus.
Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
A genuine
dispute of fact exists only “if the evidence is such that a
reasonable jury could return a verdict for the non-moving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The mere argued existence of a factual dispute does not defeat
an otherwise properly supported motion.
See id.
In this regard,
the non-moving party must do more than simply deny the allegations
raised by the moving party.
See Donaghey v. Ocean Drilling &
Exploration Co., 974 F.2d 646, 649 (5th Cir. 1992).
Rather, he
must come forward with competent evidence, such as affidavits or
depositions, to buttress his claims.
Id.
Hearsay evidence and
unsworn documents that cannot be presented in a form that would be
admissible in evidence at trial do not qualify as competent
opposing evidence.
Martin v. John W. Stone Oil Distrib., Inc.,
819 F.2d 547, 549 (5th Cir. 1987); Fed. R. Civ. P. 56(c)(2).
“[T]he
nonmoving
party
cannot
defeat
summary
judgment
with
conclusory allegations, unsubstantiated assertions, or only a
7
scintilla of evidence.”
Hathaway v. Bazany, 507 F.3d 312, 319
(5th Cir. 2007) (internal quotation marks and citation omitted).
Ultimately, “[i]f the evidence is merely colorable . . . or is not
significantly
probative,”
summary
judgment
is
appropriate.
Anderson, 477 U.S. at 249 (citations omitted); King v. Dogan, 31
F.3d 344, 346 (5th Cir. 1994) (“Unauthenticated documents are
improper as summary judgment evidence.”).
Summary judgment is also proper if the party opposing the
motion fails to establish an essential element of his case. See
Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). In deciding
whether a fact issue exists, courts must view the facts and draw
reasonable inferences in the light most favorable to the nonmoving party. Scott v. Harris, 550 U.S. 372, 378 (2007).
Although
the Court must “resolve factual controversies in favor of the
nonmoving party,” it must do so “only where there is an actual
controversy, that is, when both parties have submitted evidence of
contradictory facts.”
Antoine v. First Student, Inc., 713 F.3d
824, 830 (5th Cir. 2013) (internal quotation marks and citation
omitted).
II.
A.
The Declaratory Judgment Act provides:
In a case of actual controversy within its
jurisdiction . . . any court of the United
States, upon the filing of an appropriate
8
pleading may declare the rights and other
legal relations of any interested party
seeking such declaration, whether or not
further relief is or could be sought.
Any
such declaration shall have the force and
effect of a final judgment or decree and shall
be reviewable as such.
28
U.S.C.
§
2201(a).
The
parties
do
not
dispute
that
the
construction defect lawsuit pending in state court, which BPMI
tendered to Starr for defense and indemnity, gives rise to an
“actual
controversy”
within
this
Court’s
jurisdiction.
Accordingly, the Court proceeds to the merits of Starr’s motion.
B.
Louisiana law declares that an insurance policy is like any
other contract and should be construed according to the general
rules of contract interpretation set forth in the Civil Code.
See
Cadwallader v. Allstate Ins. Co., 848 So. 2d 577, 580 (La. 2003).
The Court’s role in interpreting contracts is to determine the
common intent of the parties.
La. Civ. Code art. 2045.
In doing
so, Civil Code article 2047 requires that words and phrases used
in an insurance policy are to be construed using their plain,
ordinary and generally prevailing meaning, unless the words have
acquired a technical meaning.
See Henry v. South Louisiana Sugars
Cooperative, 957 So.2d 1275, 1277 (La. 2007) (citing Cadwallader,
848 So. 2d at 580).
“When the words of a contract are clear and
explicit and lead to no absurd consequences,” Civil Code article
2046 declares, “no further interpretation may be made in search of
9
the parties’ intent,” and the agreement must be enforced as
written.
Hebert v. Webre, 982 So. 2d 770, 773-74 (La. 2008).
However, “[i]f an ambiguity remains after applying the general
rules
of
contractual
interpretation,
the
ambiguous
policy
provision is construed against the insurer who furnished the policy
and in favor of the insured.”
Mossy Motors, Inc. v. Cameras Am.,
898 So. 2d 602, 606 (La. App. 4 Cir. 2005)).
C.
An insurer’s duty to defend and duty to indemnify are separate
and distinct obligations.
Martco Ltd. P’ship v. Wellons, Inc.,
588 F.3d 864, 872 (5th Cir. 2009) (citing Elliott v. Cont'l Cas.
Co., 949 So. 2d 1247, 1250 (La. 2007)).
instructs
that
“[a]
duty
to
defend
Louisiana jurisprudence
will
exist
unless
the
allegations are such that every claim pleaded in the complaint
(and otherwise falling within the insuring clause) unambiguously
falls within an exclusion.”
Id. at 874.
Moreover, in evaluating
the duty to defend, the Court is constrained to “the plaintiff’s
pleadings and the face of the policy, without consideration of
extraneous evidence.”
Louisiana Stadium & Exposition Dist. v. BFS
Diversified Prod., LLC, 49 So. 3d 49, 51 (La. App. 4 Cir. 2010)
(quoting Bryant v. Motwani, 683 So. 2d 880, 884 (La. App. 4 Cir.
1996)).
On the other hand, in examining the duty to indemnify,
the Court is not limited to the allegations in the complaint.
Martco, 588 F.3d at 877.
Indeed, the Court “must apply the Policy
10
to the actual evidence adduced at the underlying liability trial
together with any evidence introduced in the coverage case.”
Id.
Accordingly, “Louisiana law generally provides that until the
underlying issue of liability is resolved and the defendant is
cast in judgment, the issue of indemnity is premature and nonjusticiable.”
New England Ins. Co. v. Barnett, 465 F. App’x 302,
308 (5th Cir. 2012) (citing Mossy Motors, Inc., 898 So. 2d 602,
607 (La. App. 4 Cir. 2005)).
Nonetheless, “a reviewing court may
decide the insurer’s duty to indemnify before the conclusion of
the underlying litigation if ‘the insurer has no duty to defend
and the same reasons that negate the duty to defend likewise negate
any possibility the insurer will ever have a duty to indemnify.’”
LCS Corr. Servs., Inc. v. Lexington Ins. Co., 800 F.3d 664, 669
(5th
Cir.
2015) (quoting Farmers
Tex.
Cty.
Mut.
Ins.
Co.
v.
Griffin, 955 S.W.2d 81, 84 (Tex. 1997)).
III.
Starr contends that it has no duty to defend or indemnify
BPMI and Banner because the “work product” exclusions in the CGL
Policy bar coverage for the claims asserted by Roth. BPMI counters
that these exclusions do not bar coverage for all of Roth’s claims
or, in the alternative, that the mental anguish damages Roth
alleges
trigger
the
“bodily
injury”
agreement.
11
aspect
of
the
insuring
A.
Starr’s CGL Policy describes coverage for bodily injury and
property damage liability as follows:
1. Insuring Agreement
a. We will pay those sums that the
insured becomes legally obligated to pay
as damages because of “bodily injury” or
“property damage” to which this insurance
applies. We will have the right and duty
to defend the insured against any “suit”
seeking those damages.
This
basic
statement
of
coverage
is
qualified
by
several
limitations and exclusions.
First, the insurance only applies if:
(1)
property
the
bodily
injury
or
damage
“is
caused
by
an
‘occurrence’ that takes place in the ‘coverage territory,’” and
(2) the bodily injury or property damage “occurs during the policy
period.”2
Second, the “exclusions” section describes various
circumstances under which the insurance does not apply.
Relevant
It is undisputed that BPMI’s potential liability to Roth arises
out of an “occurrence” within the “coverage territory.” Indeed,
Louisiana jurisprudence “considers defects in construction that
result in damage subsequent to completion to be ‘accidents’ and
‘occurrences’ when they manifest themselves.” See Rando v. Top
Notch Props., L.L.C., 879 So. 2d 821, 833 (La. App. 4 Cir. 2004).
And Roth alleges that the damage was sustained within the United
States.
Although Roth’s petition does not specify dates in which the
alleged bodily injury or property damage occurred, it can be
inferred that such injury and damage occurred during the policy
period – that is, between April 9, 2014 and April 9, 2015.
According to Roth’s petition, the New Orleans Department of Safety
and Permits issued a Certificate of Occupancy on August 1, 2014,
after which Roth discovered the defendants’ faulty workmanship and
afforded them an opportunity to remedy the defects.
2
12
to this claim include the “Damage to Property,” “Damage to Your
Product,” and “Damage to Your Work” exclusions, which provide as
follows:
This 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
“products-completed operations hazard.”
k. Damage To Your Product
“Property damage” to “your product” arising
out of it or any part of it.
l. Damage To Your Work
“Property damage” to “your work” arising out
of it or any part of it and included in the
“products-completed operations hazard.” This
exclusion does not apply if the damaged work
or the work out of which the damage arises was
performed on your behalf by a subcontractor.
The
policy
goes
on
to
define
“products-completed
operations
hazard,” “property damage,” “your product,” and “your work” as
follows:
16.
“Products-completed
operations
hazard:”
a. Includes all “bodily injury” and
“property damage” occurring away from
premises you own or rent and arising out
of “your product” or “your work” except:
(1) Products that are still in your
13
physical possession; or
(2) Work that has not yet been
Completed or abandoned . . . .
17. “Property damage” means:
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.
21. “Your product:”
a. Means:
(1) Any goods or products,
other than real property,
manufactured, sold, handled,
distributed or disposed of by:
(a) You;
(b) Others trading under
your name; or
(c) A person or
organization whose
business or assets you
have acquired; and
(2) Contains (other than
vehicles), materials, parts or
equipment furnished in
connection with such goods or
products.
22. “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.
B.
Starr
property
contends
damage
is
that
coverage
unambiguously
14
for
all
excluded
of
by
Roth’s
the
alleged
“Damage
to
Property,” “Damage to Your Product,” and “Damage to Your Work”
exclusions.
To support this position, Starr points to Louisiana
jurisprudence interpreting these provisions.
First, in Supreme Services and Specialty Co. v. Sonny Greer,
Inc., the Louisiana Supreme Court determined that a CGL policy
with exclusions nearly identical to those presented in this case
barred coverage for claims related to the construction of a faulty
concrete slab.
958 So. 2d 634, 639-41, 645 (La. 2007).
Relying
upon the “Damage to Property” exclusion, the court found there was
no coverage for damage to the concrete slab that had to be
“restored, repaired, or replaced because of the defective work or
the
defective
product
subcontractors.”
of
[the
Id. at 645.
general
contractor]
and
its
The court further noted that,
because there was “no other product damaged or third person
injured,”
the
claim
operation hazard.
was
not
saved
by
the
products-completed
Id.
Similarly, in Provost v. Homes by Lawrence & Pauline, Inc.,
the Louisiana Third Circuit Court of Appeals held that the “Damage
to Your Product” and “Damage to Your Work” exclusions, jointly
referred to as the “work product” exclusion, barred coverage for
all
design
defect
and
poor
workmanship
claims
asserted
by
homeowners against their contractor in an action brought under the
New Home Warranty Act.
103 So. 3d 1280 (La. App. 3 Cir. 2012).
The Third Circuit reasoned that the products-completed operations
15
hazard did not apply to any of the homeowners’ claims for damages
“because
their
claims
itself.”
[we]re
for
[the
contractor’s]
product
Id. at 1285.
Most recently, in considering a fact pattern nearly identical
to the one at issue here, another Section of this Court, in Atain
Specialty Insurance Co. v. VIG II, LLC, determined that the “Damage
to Your Product” exclusion barred coverage for all claims asserted
by homeowners against their general contractor because “[e]very
claimed defect and damage in [their] petition concern[ed] the house
itself.”
No. 15-6499, 2017 WL 3867672, at *7 (E.D. La. Feb. 9,
2017) (Vance, J.).
Relying upon the reasoning of Sonny Greer and
Provost, the Atain Court reasoned: “Because the Zoglios’ home is
VIG II’s product, and the complaint evinces no claims for damage
to anything other than the house itself, the Damage to Your Product
exclusion
claims.”
unambiguously
Id. at *8.
precludes
coverage
for
the
Zoglios’
Accordingly, the Court held that the insurer
had no duty to defend the general contractor or indemnify it for
any resulting liability.
Id.
In this case, Roth alleges in his petition that BPMI and
Banner failed to perform their services in a workmanlike manner
and/or used defective materials in building his home.
Moreover,
in his First and Supplemental Amending Petition, Roth asserts
seventy-eight separate physical defects and damages, all of which
indisputably stem from, and affect, his home.
16
The parties further
appear to agree that BPMI and its subcontractors constructed Roth’s
home, such that the entire home is BPMI’s “product.”
Accordingly,
Starr contends that, under Sonny Greer, Provost, and Atain, all of
Roth’s claims are barred by the “Damage to Property,” “Damage to
Your Product,” and/or “Damage to Your Work” exclusions.
BPMI counters that the duty to defend has been triggered
because not all of Roth’s property damage allegations fall within
the Policy’s exclusions.
BPMI concedes that, to the extent Roth
has alleged faulty work, there is no coverage under the Policy for
the cost of repair or replacement.
However, BPMI correctly notes
that the Louisiana Supreme Court, in Sonny Greer, explicitly
recognized that CGL policies provide coverage for property damage
that arises out of faulty work.
court
used
the
example
of
Specifically, the Sonny Greer
faulty
wiring,
which
resulted
in
subsequent fire damage, to illustrate the distinction between the
“work
product”
exclusion
and
products
completed
operations
coverage:
Under the PCOH provision, damages, other than
the faulty product or work itself, arising out
of the faulty workmanship are covered by the
policy.
Stated
differently,
if
a
subcontractor’s faulty electrical work caused
the building to burn down before completion,
the “work product” exclusion would eliminate
coverage for the faulty electrical work
performed by the contractor or subcontractor.
However, the
operations
hazard
coverage
applies not to the faulty work, but damages
arising out of the faulty work.
Damage to
real property arising out of the faulty work
17
(fire damage) would not be excluded as it
would be covered under the PCOH provision.
Sonny Greer, 958 So. 2d at 645.
In addition, BPMI invokes Iberia
Parish School Board v. Sandifer & Son Constructions Co., Inc., in
which the Louisiana Third Circuit Court of Appeals, at the summary
judgment
stage,
determined
that
neither
the
“Damage
Product” nor “Damage to Your Work” exclusions applied
to
Your
to damages
to a building caused by water leaks arising out of defective roof
installation performed by a subcontractor.
22, (La. App. 3 Cir. 1998).
721 So. 2d 1021, 1021-
According to BPMI, Sonny Greer and
Iberia Parish stand for the proposition that a complaint of faulty
work is not covered under a CGL policy, but a complaint of
additional damage resulting from faulty work is covered under the
products completed operations hazard.
Therefore, BPMI contends, because Roth has alleged that water
leakage has caused “damage to cabinets and flooring of the rear
bathroom,” he has claimed that distinct property damage resulted
from the faulty work.
BPMI notes that the same is true with
respect to Roth’s complaint that “improper installation of the
HVAC system in the attic” has resulted in “sheetrock material
coming loose due to excessive vibration.”
In response, Starr urges this Court not to deviate from its
own ruling in Atain or from the Louisiana Supreme Court’s ruling
in Sonny Greer.
But, the Court agrees with BPMI, and finds that
18
Starr has not carried its burden of proving that coverage is
unambiguously excluded for all of Roth’s asserted claims.
First,
this Court, sitting in diversity, must interpret Louisiana law as
would the Louisiana Supreme Court if faced with the same issue -not as would another Section of this Court.
See In re Chinese
Manufactured Drywall Prods. Liab. Litig., 759 F. Supp. 2d 822, 847
(Fallon, J.) (“[B]ecause the cases at issue are before the Court
on diversity, the Court sits as an Erie court and must apply
Louisiana law . . . . To determine a state law question, [the
court] first look[s] to decisions of the Louisiana Supreme Court.”)
(internal citations omitted). Second, the Court finds that Provost
did not go so far as to hold that, where the insured is the general
contractor of a home, any damage to the entire home falls within
the “your work” and/or “your product” exclusions.
Importantly,
Provost did not involve express allegations of distinct property
damage separate and apart from faulty work itself, as here.
generally Provost, 103 So. 3d 1280.
See
Finally, the Court notes that
Starr’s reliance on the facts of Sonny Greer is misplaced. Because
Sonny
Greer
concerned
defective
concrete
installation
that
resulted in cracks to a slab, all of the damage there, unlike here,
necessitated the repair or replacement of a contractor’s faulty
product or work.
See Sonny Greer, 958 So. 2d at 645.
Ultimately,
because Starr has not satisfied its burden of establishing that
every claim pleaded in Roth’s petition unambiguously falls within
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an exclusion, summary judgment in its favor is inappropriate as to
both the duty to defend and the duty to indemnify.3
See Martco
Ltd. P’ship, 588 F.3d at 874; New England Ins. Co., 465 F. App’x
at 308.
Accordingly, for the foregoing reasons, IT IS ORDERED:
that Starr’s motion for summary judgment is hereby DENIED.
New Orleans, Louisiana, December 10, 2018
______________________________
MARTIN L. C. FELDMAN
UNITED STATES DISTRICT JUDGE
Having determined that coverage is not unambiguously barred under
the “work product” exclusions, the Court need not reach BPMI’s
alternative ground for opposing Starr’s motion – that is, the
possibility of coverage under the “bodily injury” portion of the
insuring agreement.
3
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