Cincinnati Insurance Company, The v. Charlotte Paint Company Inc et al

Filing 50

OPINION AND ORDER: The Court hereby grants CIC's motion for summary judgment (ECF No. 35) and denies Pro-Tec's motion for summary judgment (ECF No. 43). The Court declares that CIC owes no coverage obligation under the Policy to Southeastern for the Underlying Action. There being no further issues requiring resolution, this action is Dismissed. Signed by Honorable Bruce Howe Hendricks on 10/9/2020. (vdru, )

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UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
CHARLESTON DIVISION

The Cincinnati Insurance Company,

)
)
Plaintiff, )
vs.
)
)
Charlotte Paint Company, Inc. d/b/a Pro)
Tec Weatherproofing, and Southeastern
)
Wall Systems, Inc.
)
)
Defendants. )

Civil Action No. 2:18-cv-657-BHH

OPINION AND ORDER

This matter is before the Court on Plaintiff The Cincinnati Insurance Company’s
(“CIC”) motion for summary judgment (ECF No. 35), and Defendant Charlotte Paint
Company, Inc. doing business as Pro-Tec Weatherproofing’s (“Pro-Tec”) motion for
summary judgment (ECF No. 43). For the reasons set forth in this Order, CIC’s motion is
granted and Pro-Tec’s motion is denied.
BACKGROUND
CIC brought this declaratory judgment action to determine coverage under a
commercial general liability (CGL) policy issued by CIC to Defendant Southeastern Wall
Systems, Inc. ( “Southeastern”). Pro-Tec is the plaintiff in an underlying action against
Southeastern, Charlotte Paint Company, Inc., d/b/a Pro-Tec Weatherproofing, vs.
Southeastern Wall Systems, Inc., No. 2016-CP-10-02204, pending in the Court of
Common Pleas for Charleston County (the “Underlying Action”).
Pro-Tec’s Allegations Against Southeastern
In the Underlying Action, Pro-Tec alleged it contracted with Shipwatch at Wild
Dunes Homeowners Association (“Shipwatch HOA”) to perform a repair project on two
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condominium buildings in September 2014 (“Shipwatch Project”). (Underlying Compl. ¶
5, ECF No. 35-2.) Pro-Tec’s work under the contract included replacing windows, sliding
glass doors, metal roofs, metal stud wall framing, and stucco cladding. (Id.)
Pro-Tec entered into a subcontract with Southeastern for the replacement of the
stucco cladding on the buildings. (Id. ¶ 6.) The subcontract required that Southeastern
protect surfaces adjacent to its work such as windows, doors, ceilings, and slabs. (Id.)
Other subcontractors removed existing stucco cladding, made framing repairs, installed
new windows and sliding glass doors, and installed flashing around window and door
openings with a “Blueskin” waterproof membrane. (Id. ¶ 8.) Southeastern allegedly began
its stucco installation work in February 2015 and substantially completed its work in the
summer of 2015. (Id. ¶¶ 8–9.)
After Southeastern substantially completed its work, during water testing of window
units, the Project Engineer discovered cuts in the Blueskin membrane flashing around
certain window openings. (Id. ¶ 9.) These cuts allegedly damaged the Blueskin waterproof
membrane and the wall sheathing—a product called DensGlass.1 (Id.) The Project
Engineer and Shipwatch HOA directed Pro-Tec to develop a repair plan, which repairs
involved removal of some stucco around the windows and sliding glass doors, repairing
the Blueskin, replacing the stucco, and restoring sealants at all affected locations. (Id.)

The underlying complaint states that the cuts “damaged the waterproofing membrane and also resulted
in leaks and other damage to wall sheathing, as well as components of window and door units.” (Underlying
Compl. ¶ 9.) However, CIC notes in its briefing: (1) the allegation that the cuts in the Blueskin and
DensGlass caused water damage to other building components was not substantiated by any evidence;
(2) Pro-Tec’s expert—Al Schweickhardt, PE, of Applied Building Sciences, Inc.—did not testify to any such
resulting damage; and (3) no repair estimate for any such damage has been produced. (See Schweickhardt
Dep. at 51 & 79, ECF No. 35-7 (describing damage itemized in expert report); EDT Report at 9–10, ECF
No. 35-6 (itemizing subsequent repairs and noting that relevant documents revealed no water damages to
building components from water intrusion at the cuts in the Blueskin or DensGlass).) Moreover, Pro-Tec
does not argue that any such water damage to other building components occurred. (See ECF Nos. 40 &
43-1.) Accordingly, the Court will not consider any purported water damage to other building components.
1

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Pro-Tec allegedly performed these repairs between September 2015 and February 2016.
(Id. ¶ 10.)
Pro-Tec alleged that the cuts were made in the Blueskin during the installation of
the stucco, when Southeastern personnel cut or trimmed felt paper prior to the installation
of stucco and casing bead, and/or when its personnel scraped or cleaned stucco debris
from window and sliding glass door joint gaps prior to the installation of sealant joints. (Id.
¶ 11; see “Discussion of Relevant Building Components, Stucco Installation, and Repairs”
infra at 4–9.) Pro-Tec further alleges that Southeastern failed to repair the damage to the
Blueskin flashing or to otherwise cooperate with Pro-Tec in correcting the damage. (Id. ¶
12.) Pro-Tec contends it suffered damages as a result of Southeastern’s actions,
including more than $1.5 million in repair costs and additional liquidated damages
assessed against Pro-Tec under its contract with Shipwatch HOA due to delays. (Id. ¶
14.) Pro-Tec asserted causes of action for breach of contract, breach of warranty,
negligence, and contractual indemnity against Southeastern in the Underlying Action. (Id.
¶¶ 19–38.) CIC is defending Southeastern in the Underlying Action under reservation of
rights. (See ECF No. 35-3.) By consent order, the Underlying Action has been stayed
until this declaratory judgment action is resolved. (See ECF No. 35-4.)
Evidence Regarding Southeastern’s Claim for Indemnification
Pro-Tec’s claims against Southeastern in the Underlying Action are largely based
upon the deposition testimony and report of Pro-Tec’s expert, Al Schweickhardt, P.E.
(“Schweickhardt”), of Applied Building Sciences, Inc. (“ABS”). Pro-Tec also relies upon
Schweickhardt as its expert in this declaratory judgment action. (See ECF No. 24.) CIC
also retained an expert, Glenn Stewart, M.E., P.E. (“Stewart”), of Engineering Design &

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Testing Corp. (“EDT”). (See ECF No. 28.) Both experts have produced reports and been
deposed in this action. (ABS Report to Pro-Tec dated Feb. 5, 2016 (“ABS Report”), ECF
No. 35-5; EDT Report to CIC dated Mar. 13, 2019 (“EDT Report”), ECF No. 35-6;
Schweickhardt Dep., ECF No. 35-7; Stewart Dep., ECF No. 35-8.) Schweickhardt testified
that he did not disagree with Stewart’s report. (Schweickhardt Dep. at 85–86.) Stewart
testified he generally agreed with Schweickhardt, except that he expressed no opinion as
to Southeastern’s liability for causing the cuts. (Stewart Dep. at 11–14.)
Discussion of Relevant Building Components, Stucco Installation, and Repairs
Southeastern was the stucco subcontractor for the Shipwatch Project.
(Schweickhardt Dep. at 16.) Before Southeastern began its stucco work, other contractors
installed the DensGlass sheathing, the Blueskin membrane, and most of the windows
and doors. (Id. at 17–18.) Photographs depict the condition of the substrate before
Southeastern began its work. (Stewart Dep. at 22–23 & Ex. 5, ECF No. 35-8 at 7 & 9.)
DensGlass sheathing generally comes in 4’x8’ sheets that are installed vertically
to the exterior face of the walls of buildings under construction. 2 DensGlass sheathing
has a facing on its surface that enables it to function as part of a building’s waterproofing
system. (Schweickhardt Dep. at 30.)
Blueskin is a self-adhered air and vapor barrier membrane that is used as a type
of flashing system.3 (Id. at 16.) For purposes of the Shipwatch Project, Blueskin was used
to flash the rough openings for the windows and doors. (Id. at 17.) The Blueskin extended
over the surface of the DensGlass sheathing for a few inches in a border around the
window and door openings. (Id. at 31.) The purpose of the Blueskin is to direct water that

2
3

See https://buildgp.com/product/densglass-gypsum-wall-sheathing/ (last visited Oct. 6, 2020).
See http://www.henryblueskin.com/ (last visited Oct. 6, 2020).

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may get in around the windows and doors to other flashing which, in turn, directs the
water to the exterior of the building. (Id.)
The windows and doors are installed into the rough openings after the Blueskin is
installed. (Id. at 17.) Most of the windows and doors were already installed when
Southeastern began its stucco installation work on the Shipwatch Project. (Id. at 30.)
Southeastern’s scope of work was performed in five stages, which included installation
of: (1) the felt, (2) the casing bead, (3) the lath, (4) the plaster, and (5) the finish coat. (Id.
at 28–29.)
Felt: The felt is a water-resistant paper. (Id. at 29.) It serves the dual purposes of
directing incidental moisture to the building exterior and acting as bond breaker between
the stucco and the substrate. (Id.) The felt was installed onto the substrate, in this case
DensGlass sheathing and whatever was on the DensGlass, including the Blueskin around
the window and door openings. (Id. at 29, 32.) The installation of the felt includes the task
of cutting the felt. (Id. at 29.) To accomplish this, a stucco contractor typically rolls the felt
out over the wall and then cuts out the window openings. (Id. at 66–67.) A contractor may
initially make a rough cut within the window opening, but ultimately the felt must be cut
back to leave the window opening relatively free of paper. (Id. at 67–68.)
Casing Bead: The casing bead forms a boundary between the stucco and
adjacent surfaces such as windows and doors. (Id. at 33.) The casing bead is not
composed of caulking or sealant but is rather made of galvanized metal folded into an “L”
shape with a piece of lath attached. (Id.) CIC contends, and Defendants do not dispute,
that AMICO X-66 Casing Bead or a similar product was used.4 The casing bead is

4

See https://amicoglobal.com/x-66-casing-bead/ (last visited Oct. 7, 2020).

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installed over the felt with the lath against the wall and the “L”-shaped frame running
parallel to the window and door openings. The casing bead is not abutted directly to the
windows and doors—a gap of 1/2” to 5/8” is left between the casing bead and the windows
and doors. (Id. at 33-34; see also ABS Report at 4 (depicting 1/2” gap).)
Lath: The lath is expanded galvanized wire. (Schweickhardt Dep. at 34.) It looks
like metal webbing. (See ABS Report at 7–8 (depicting lath exposed during Mr.
Schweickhardt’s February 2016 investigation of the Shipwatch Project jobsite).) The lath
is screwed to the wall over the felt within the framework created by the casing bead, and
it provides support for the stucco. (Schweickhardt Dep. at 34–35.)
Plaster: The stucco plaster contains Portland cement, sand, and other proprietary
materials. (Id. at 35-36.) It embeds the lath. (Id. at 36.) Two coats of stucco are usually
installed: the scratch coat and the brown coat. (Id.) The casing bead forms the boundary
between the stucco and the windows and doors. (Id.)
Finish Coat: The final step is a finish coat that forms the outer layer of the stucco.
(Id.) The finish coat may have an aesthetic waterproof coating over it. (Id. at 43–44.)
When a stucco contractor is installing the stucco, the contractor must keep stucco
from accumulating in the 1/2” to 5/8” gap between the casing bead and the windows and
doors. (Id. at 38.) This “joint gap” is to be filled with backer rod and sealant. (Id.) The
backer rod is a cylindrical foam material that prevents the sealant from adhering to the
back of the gap. (Id. at 40.) The sealant allows the stucco and the windows/doors, which
are composed of different types of materials, to move separately while preventing water
and pests from getting into the gap. (Id.) Mr. Schweickhardt stated that based on his
discussions with Pro-Tec’s representative and his review of the contract with

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Southeastern, that it was Southeastern’s responsibility to leave the joint gap free of
stucco. (Id. at 38.) Another subcontractor, Ward’s Waterproofing, was tasked with
installation of the backer rod and sealant into the gap. (Id. at 39.)
Pro-Tec hired Mr. Schweickhardt to investigate the cause of the cuts in the
Blueskin that were discovered during window testing. (Id. at 20, 26; ABS Report at 1.)
Schweickhardt concluded that the cuts in the Blueskin were made in two ways: (1) the
majority of cuts were made when a utility knife being used to cut the felt at the window
and door openings cut through the felt into the Blueskin, and in some cases into the
DensGlass facer underneath the Blueskin (Schweickhardt Dep. at 46–47, 54, 78–79); (2)
the remaining 23% of the cuts in the Blueskin were made when the stucco was being
cleaned from the joint gap between the casing bead and the windows/doors (Id. at 46–
47, 56–57). (See ABS Report at 3, 6 (itemizing the location and distribution of the cuts in
the Blueskin and noting that many of those cuts also exhibited cuts and gouges through
the fiberglass surface of the DensGlass sheathing).) The ABS Report did not identify any
moisture-related damage to other building components that necessitated repair. (EDT
Report at 4.) Pro-Tec has not produced any documentation of water damage caused by
the cuts in the Blueskin and DensGlass. (See id. at 8–9.)
Schweickhardt opined that the cuts in the Blueskin and DensGlass occurred while
Southeastern was performing its work. (Schweickhardt Dep. at 57–58.) Specifically, he
concluded the cuts were made while the felt was being cut and while stucco was being
cleaned from the joint gap. (Id. at 54–57.)
The repair methodology identified by ABS consisted of removing materials to gain
access to the areas where the cuts were made, repairing the cuts in the Blueskin and

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DensGlass, and reinstalling the exterior components. (EDT Report at 9.) In the joint gaps,
the backer rod and sealant were removed. (ABS Report at 2.) Where Blueskin damage
was observed, a six-inch section of stucco was removed, and the casing bead and lath
pulled out of the way. (Id.) The cuts in the DensGlass were repaired with a spray-on primer
adhesive. (Id.; Schweickhardt Dep. at 76.) The cuts in the Blueskin were repaired by
adding a strip of Blueskin and using Henry’s Liquid Flash. (ABS Report at 2.) Henry’s
Liquid Flash is a liquid product that is applied with a brush or a putty knife. (Schweickhardt
Dep. at 43.) After these repairs were made, the casing bead, lath, stucco, backer rod, and
sealant that had been removed were reinstalled. (Schweickhardt Dep. at 81–82; ABS
Report at 2.) Lastly, an All-Guard coating was applied for cosmetic purposes, to blend the
repaired areas with the stucco that was not removed. (Schweickhardt Dep. at 44, 82; ABS
Report at 2.)
Both experts agree that the Blueskin and the DensGlass sheathing were preexisting work that Southeastern was required to protect when it installed the stucco.
(Schweickhardt Dep. at 57–59, 74; Stewart Dep. at 10, 23–24.) Southeastern’s
subcontract with Pro-Tec required Southeastern to protect all adjoining surfaces.
(Subcontract, ECF No. 1-2 at 3 (“The Contractor and the Subcontractor agree as follows,
. . . [p]ro[t]ection of all adjoining surfaces . . . .”).)
Mr. Schweickhardt stated that the Blueskin was an adjoining surface and therefore
it was to be protected. (Schweickhardt Dep. at 58.) Subcontractors are not supposed to
damage pre-existing work when they perform their work. (Id.) Southeastern’s scope of
work required it to install the felt, casing bead, lath, and stucco over the Blueskin and
DensGlass sheathing. (Schweickhardt Dep. at 84–85; Stewart Dep. at 17–18.) Except for

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isolated locations unrelated to this litigation, the Blueskin was not Southeastern’s work
product because Southeastern did not install it. (Id. at 14–17.) Mr. Stewart stated that
protection of the Blueskin was part of Southeastern’s scope of work because the Blueskin
was an adjoining surface. (Id. at 23–24; EDT Report at 8.)
General industry standard requires subcontractors to repair damage they cause to
adjoining surfaces. (Schweickhardt Dep. at 59.) A subcontractor may have this
responsibility even in the absence of written contract. (Id. at 85; Stewart Dep. at 24.)
The Insurance Policy at Issue
CIC issued policy number EPP 009 69 57 to Southeastern (“the Policy”). (ECF No.
35-12.) The Policy included commercial general liability (“CGL”) coverage and it was in
effect from September 14, 2014 to September 15, 2015. (Id. at 1.) The Policy limits are
$1,000,000 per occurrence and $2,000,000 in the aggregate. (Id. at 15.) The Policy
provides in relevant part:
SECTION I – COVERAGES
COVERAGE A – BODILY INJURY AND PROPERTY DAMAGE
LIABILITY
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. . . . .
b. This insurance applies to “bodily injury” and “property damage”
only if:
(1) The “bodily injury” or “property damage” is caused by an
“occurrence” . . . ;
(2) The “bodily injury” or “property damage” occurs during the
policy period . . . .
····

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2. Exclusions
This insurance does not apply to:
····
j. Damage To Property
“Property damage” to:
····
(5) That particular part of real property on which you . . . are
performing operations, if the “property damage” arises out of
those operations; or
(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.”
····
SECTION V – DEFINITIONS
····
16. “Occurrence” means an accident, including continuous or repeated
exposure to substantially the same general harmful conditions.
····
19. “Products-completed operations hazard”:
a. Includes all . . . “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.

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However, “your work” will be deemed completed at the earliest
of the following times:
(a) When all of the work called for in your contract has
been completed; or
(b) When all of the work to be done at the job site has
been completed if your contract calls for work at more
than one job site; or
(c) When that part of the work done at a job site has
been put to its intended use by any person or
organization other than another contractor or
subcontractor working on the same project.
Work that may need service, maintenance, correction, repair or
replacement, but which is otherwise complete, will be treated as
completed.
····
20. “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 shall be deemed to occur at the time of the “occurrence”
that caused it.
····
26. “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. Includes:
(1) Warranties or representations made at any time with

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respect to the fitness, quality, durability, performance or use
of “your work”, and
(2) The providing of or failure to provide warnings or
instructions.
(Id. at 17–18, 21, 32, 35–36.)
Procedural History
CIC filed the instant declaratory judgment action on March 9, 2018 seeking relief
pursuant to 28 U.S.C. § 2201 to establish the absence of coverage for the Underlying
Action. (See ECF No. 1.) On September 26, 2019, CIC filed its motion for summary
judgment, advancing arguments limited to application of the Policy’s exclusions I.A.2.j.(5)
and (6) of Form GA 101 12 04, which exclude coverage for damage to “that particular
part” of the property upon which the insured was performing operations, and for removal
and replacement of defective work. (See ECF No. 35-1.) Pro-Tec filed a response in
opposition on November 7, 2019 (ECF No. 40), and on the same day Southeastern filed
a response adopting Pro-Tec’s arguments in favor of coverage for the limited purpose of
this declaratory judgment action (ECF No. 41). CIC filed a reply on November 15, 2019.
(ECF No. 45.) On November 8, 2019, Pro-Tec filed its motion for summary judgment,
advancing essentially the same arguments presented in its response in opposition to
CIC’s motion for summary judgment—namely, that the scope of exclusions j.(5) and (6)
is too narrow to apply to the underlying facts at issue, and/or that the exclusionary
language is ambiguous. (See ECF No. 43-1.) Southeastern filed a response in support
on November 11, 2019 (ECF No. 44), and CIC filed a response in opposition on
November 22, 2019 (ECF No. 47). Pro-Tec filed a reply on December 2, 2019. (ECF No.
48.) This matter is ripe for review and the Court now issues the following ruling.

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LEGAL STANDARD
Summary Judgment
The Court shall grant summary judgment “if the movant shows that 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). The movant bears the initial burden of demonstrating that
summary judgment is appropriate; if the movant carries its burden, then the burden shifts
to the non-movant to set forth specific facts showing that there is a genuine issue for trial.
See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). If a movant asserts that a fact
cannot be disputed, it must support that assertion either by “citing to particular parts of
materials in the record, including depositions, documents, electronically stored
information, affidavits or declarations, stipulations (including those made for purposes of
the motion only), admissions, interrogatory answers, or other materials;” or “showing . . .
that an adverse party cannot produce admissible evidence to support the fact.” Fed. R.
Civ. P. 56(c)(1).
Accordingly, to prevail on a motion for summary judgment, the movant must
demonstrate that: (1) there is no genuine issue as to any material fact; and (2) that he is
entitled to judgment as a matter of law. As to the first of these determinations, a fact is
deemed “material” if proof of its existence or non-existence would affect disposition of the
case under applicable law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An
issue of material fact is “genuine” if the evidence offered is such that a reasonable jury
might return a verdict for the non-movant. Id. at 257. In determining whether a genuine
issue has been raised, the Court must construe all inferences and ambiguities against the
movant and in favor of the non-moving party. United States v. Diebold, Inc., 369 U.S. 654,

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655 (1962). “Summary judgment is proper only when it is clear that there is no dispute
concerning either the facts of the controversy or the inferences to be drawn from those
facts.” Pulliam Inv. Co. v. Cameo Props., 810 F.2d 1282, 1286 (4th Cir. 1987). The Court
must decide “whether the evidence presents a sufficient disagreement to require
submission to a jury or whether it is so one-sided that one party must prevail as a matter
of law.” Anderson, 477 U.S. at 251-52.
South Carolina Insurance Law
In South Carolina, “[i]nsurance policies are subject to the general rules of contract
construction,” and the “cardinal rule of contract interpretation is to ascertain and give
legal effect to the parties’ intentions as determined by the contract language.” Auto
Owners Ins. Co. v. Benjamin, 781 S.E.2d 137, 141 (S.C. Ct. App. 2015) (quoting Whitlock
v. Stewart Title Guar. Co., 732 S.E.2d 626, 628 (S.C. 2012)). “Courts must enforce,
not write, contracts of insurance, and their language must be given its plain, ordinary
and popular meaning.” Id. Where the terms of an insurance policy are ambiguous or
conflicting, courts must construe those terms “liberally in favor of the insured and strictly
against the insurer.” Id. In other words, “where policy provisions may be reasonably
interpreted in more than one way, the court must use the interpretation most favorable
to the insured.” CAMICO Mut. Ins. Co. v. Jackson CPA Firm, No. 2:15-cv-1823-PMD,
2016 WL 7403959, at *8 (D.S.C. Dec. 22, 2016) (citing State Farm Fire & Cas. Co. v.
Barrett, 530 S.E.2d 132, 136 (S.C. Ct. App. 2000)). “‘[T]he Court will look to the
reasonable expectations of the insured at the time when he entered into the contract
if the terms thereof are ambiguous or conflicting, or if the policy contains a hidden
trap or pitfall, or if the fine print takes away that which has been given by the large print.’”

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State Farm Fire & Cas. Co. v. Morningstar Consultants, Inc., C.A. No.6:16-cv-01685MGL, 2017 WL 2265919, at *2 (D.S.C. May 24, 2017) (quoting Bell v. Progressive
Direct Ins. Co., 757 S.E.2d 399, 407 (2014)) (alteration in original). However, “[this]
doctrine is not a rule granting substantive rights to an insured when there is no doubt as
to the meaning of policy language,” id. (quoting Bell, 757 S.E.2d at 407), and “the insurer’s
duty under a policy of insurance . . . cannot be enlarged by judicial construction.” Id. (citing
S.C. Ins. Co. v. White, 390 S.E.2d 471, 474 (S.C. 1990)). “[C]lauses of inclusion should
be broadly construed in favor of coverage, and when there are doubts about the existence
or extent of coverage, the language of the policy is to be ‘understood in its most inclusive
sense.’” Cook v. State Farm Auto. Ins. Co., 656 S.E.2d 784, 786 (S.C. Ct. App. 2008)
(quoting Buddin v. Nationwide Mut. Ins. Co., 157 S.E.2d 633, 635 (1967)). “Courts should
not, however, ‘torture the meaning of policy language in order to extend’ or defeat
coverage that was ‘never intended by the parties.’” Cook, 656 S.E.2d at 786-87 (quoting
Torrington Co. v. Aetna Cas. & Sur. Co., 216 S.E.2d 547, 550 (S.C. 1975)). “The court’s
duty is limited to the interpretation of the contract made by the parties themselves
regardless of its wisdom or folly, apparent unreasonableness, or failure of the parties to
guard their interests carefully.” B.L.G. Enterprises, Inc. v. First Fin. Ins. Co., 514 S.E.2d
327, 330 (S.C. 1999) (quotation marks, alteration, and citation omitted).
Under South Carolina law, the duty to defend is broader than the duty to indemnify.
Ross Dev. Corp. v. Fireman’s Fund Ins. Co., 809 F. Supp. 2d 449, 457 (D.S.C. 2011). “If
the underlying complaint creates a possibility of coverage under an insurance policy, the
insurer is obligated to defend.” City of Hartsville, 677 S.E.2d at 578 (citing Gordon-Gallup
Realtors, Inc. v. Cincinnati Ins. Co, 265 S.E.2d 38 (S.C. 1980)) (emphasis added). This

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District has previously explained, “[T]he duty to defend is triggered where the underlying
complaint includes any allegation that raises the possibility of coverage.” Auto-Owners Ins.
Co. v. Newsome, No. 4:12-CV-00447-RBH, 2013 WL 3148334, at *4 (D.S.C. June 19,
2013) (emphasis added). An insurer’s duty to defend is generally governed by the
allegations in the underlying complaint; however, the possibility of coverage may also be
determined by facts outside of the complaint that are known by the insurer. City of
Hartsville, 677 S.E.2d 574, 578 (S.C. 2009) (citing USAA Prop. & Cas. Ins. Co. v. Clegg,
661 S.E.2d 791, 798 (S.C. 2008)); see also BP Oil Co. v. Federated Mut. Ins. Co., 496
S.E.2d 35, 39 (S.C. Ct. App. 1998) (“Although the determination of an insurer’s duty to
defend is based upon the allegations in a complaint . . . in some jurisdictions, the duty to
defend will be measured by facts outside of the complaint that are known by the insurer.”).
DISCUSSION
CIC asserts that in order to prevent coverage for business risks the Policy excludes
coverage for removal and replacement of defective work. Exclusion I.A.2.j.(6) states that
the CGL insurance does not apply to: “That particular part of any property that must be
restored, repaired or replaced because ‘your work’ was incorrectly performed on it.” (ECF
No. 35-12 at 21.) Moreover, CIC contends that the Policy also excludes coverage for
damage to the property upon which the insured was performing operations. Exclusion
I.A.2.j.(5) states that the CGL insurance does not apply to: “That particular part of real
property on which you or any contractors or subcontractors working directly or indirectly
on your behalf are performing operations, if the ‘property damage’ arises out of those
operations . . . .” (Id.) CIC argues that exclusions j.(5) and (6) apply when the claimed
damage occurred while the insured was working—whether while the insured was

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performing operations (see Bennett & Bennett Const., Inc. v. Auto Owners Ins. Co., 747
S.E.2d 426, 428 (S.C. 2013) (finding exclusion j.(5) applied to property damage to real
property on which insured or subcontractors were performing operations and
subcontractor was actively performing work by cleaning brick face at the time the damage
occurred)), or before the insured completed its work (see Advantage Homebuilding, LLC
v. Maryland Cas. Co., 470 F.3d 1003, 1012 (10th Cir. 2006) (finding exclusion j.(6) applied
to the cost of repairing or replacing windows that were damaged when subcontractor
dropped mortar on them in course of performing its work even though defective work was
not discovered until after insured completed homes). Accordingly, CIC asserts that the
temporal requirement for the applicability of exclusions j.(5) and (6) is satisfied because
the damage to the Blueskin and DensGlass occurred while Southeastern was performing
its work installing the stucco.
CIC contends that exclusion j.(5) is broad enough to include not only the specific
work an insured is hired to do, but the area an insured damages while performing such
work. (See ECF No. 35-1 at 13 (citing Continental Western Ins. Co. v. Shay Constr., Inc.,
805 F. Supp. 2d 1125, 1132 (D. Colo. 2011) (holding that exclusions j.(5) and (6) applied
where insured damaged the work of other trades while repairing its defective work)).) CIC
argues that the Blueskin and DensGlass are property upon which Southeastern was
working because they are part of the exterior walls. (Id. at 14.) CIC further contends that
exclusion j.(6) precludes coverage even when the work of another trade is damaged by
the insured’s work. (Id. at 14–15 (citing Precision Walls, Inc. v. Liberty Mut. Fire Ins. Co.,
763 S.E.2d 598, 602 (S.C. Ct. App. 2014) (holding, where the insured’s scope of work

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included taping and sealing blue board insulation, that exclusion j.(6) 5 applied to preclude
coverage for the cost of removing and replacing masonry, which had to be removed to
gain access to the blue board when the tape failed)).) Thus, CIC argues, if it is true that
Southeastern caused the damage to the Blueskin and DensGlass, then the cost of
removing the stucco, repairing the substrate, and replacing the stucco is excluded from
coverage. (See id. at 15–17.)
In its response, Pro-Tec argues that the focus of this case is on the language, “that
particular part,” in exclusion j.(5). (ECF No. 40 at 5.) Pro-Tec asserts that “the use of the
word ‘particular’ suggests the exclusion should only apply to the smallest unit of division
available to the work in question. The ‘particular part’ language is too limiting to allow the
entire property to fall within the exclusion.” (Id.) In general, Pro-Tec argues that the j.(5)
and (6) exclusions limit their scope to damage to the particular part of the property on
which the insured is performing work, in this case the component parts of the stucco and
nothing else. (See id. at 5–11.) Pro-Tec further argues that the exclusionary language,
“that particular part,” creates ambiguity that the Court must interpret in favor of the
insured. (Id. at 11.)
The Court agrees with CIC and finds that exclusions j.(5) and (6) apply to exclude
coverage of the “property damage” at issue in the Underlying Action . The parties’ dispute
concerns the scope of the exclusions at issue—i.e., how narrowly or broadly they are to
be interpreted. Moreover, the dispute is purely legal in nature; there are no material facts

In Precision Walls, the court referred to the exclusion it was discussing as the “Your Work” exclusion,
which confuses a different exclusion with exclusion j.(6). See 763 S.E.2d at 600–02. However, the
exclusion language that the Precisions Walls court quoted was the j.(6) exclusion. Id. at 602 (“The
exclusion applies to property that must be restored, repaired, or replaced.”).
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in dispute. First, Southeastern had an explicit contractual duty to protect adjoining
surfaces (Schweickhardt Dep. at 57–59, 74; Stewart Dep. at 10, 23–24; Subcontract, ECF
No. 1-2 at 3), and the stucco components were affixed to the DensGlass and Blueskin
(see Schweickhardt Dep. at 42–43 (explaining that when the lath is screwed into the wall
it creates incidental holes in the Blueskin, but this is considered normal and not a
significant or concerning source of moisture)), so protection of the DensGlass and
Blueskin were within Southeastern’s scope of work. Next, the Court finds that—
interpreting the exclusions as narrowly as reasonably possible—the Blueskin and
DensGlass constitute “[t]hat particular part of real property on which [Southeastern was]
performing operations,” and the evidence of record—filtered through the allegations of
the Underlying Action—demonstrates the “‘property damage’ ar[ose] out of those
operations.” (See Exclusion I.A.2.j.(5), ECF No. 35-12 at 21.) The DensGlass sheathing
formed the exterior wall covering over the framing, and the Blueskin wrapped the edges
and borders of the door and window openings on top of the DensGlass. (See Stewart
Dep. Ex. 5, ECF No. 35-8 at 9 (depicting substrate prior to stucco installation).) In other
words, Southeastern by necessity had to install its materials “on” the DensGlass and
Blueskin in order to complete its stucco installation. This is the only reasonable
construction of the exclusionary language in j.(5) as applied to the underlying facts.
The analysis need go no further. If Southeastern did not cause the damage to the
DensGlass and Blueskin, then coverage under the Policy does not apply and CIC has no
duty to indemnify. If Southeastern caused the damage, then it happened while
Southeastern was performing operations on “that particular part” of the Shipwatch
property on which Southeastern was contractually engaged to install stucco. It would

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strain credulity to divorce the DensGlass and Blueskin from “that particular part” of the
property on which Southeastern was performing work. Without the DensGlass there
would be no walls on which to install the stucco. The door and window openings were not
considered complete without the Blueskin lining being installed to ensure waterproofing.
In other words, the DensGlass and Blueskin were integral to the exterior walls on which
Southeastern was performing operations. The component materials of the stucco are not
“part of real property” until they are installed. Thus, for purposes of exclusion j.(5) and
under the instant facts, it would be unreasonable to say that the very materials
Southeastern was installing were “real property on which” it was performing operations.
In contrast, the exterior walls of the condominium buildings—which were necessarily
completed prior to installation of the stucco—were “part of [the] real property on which”
Southeastern performed work.
Moreover, CIC is not seeking to apply the “particular part” language to exclude
damage to unrelated parts of the entire property and it is hyperbole for Pro-Tec to suggest
as much. (See ECF No. 40 at 5 (“The ‘particular part’ language is too limiting to allow the
entire property to fall within the exclusion.” (emphasis added)), 7 (citing Alliance Mut. Ins.
Co. v. Dove, 714 S.E.2d 782 (N.C. Ct. App. 2011) for the proposition that, “If [the
insurance] company wants to exclude coverage for property damage to the entirety of the
property on which its insured performs work, instead of ‘that particular part’ of the property
on which work is performed, it should say so. But the court may not by judicial construction
do the job for it.” (emphasis added)), 10 (citing Gore Design Completions, Ltd. v. Hartford
Fire Ins. Co., 538 F.3d 365, 371 (5th Cir. 2008) for the proposition that, “If work on any
part of a property would leave an insured exposed for damages to the entire property, the

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exclusion should state: ‘Property damage to property that must be restored, repaired or
replaced because your work was incorrectly performed on any part of it.’” (emphasis
added)).) Some of the case law cited by Pro-Tec shows courts wrestling with delineating
the boundaries of the phrase “that particular part,” and the extent to which it limits the
scope of the exclusion. But the facts of this case do not require the Court to grapple with
those boundaries. This case does not involve alleged damage to the whole property, to
neighboring property, or to unrelated building components. Rather, Pro-Tec’s claims in
the Underlying Action are for damage to the very building components on which
Southeastern performed its stucco installation, and which Southeastern was contractually
bound to protect while performing that installation—to wit, the exterior walls, which were
composed of DensGlass sheathing and Blueskin borders around door and window
openings.
Finally, Pro-Tec has not satisfactorily explained why exclusion j.(6) does not apply,
given that the DensGlass and Blueskin indisputably had to be repaired due to incorrectly
performed work.6 (ECF No. 35-12 at 21.)The requirement to construe exclusions narrowly
in favor of the insured does not and should not operate to transform a CGL insurance
policy into a de facto guarantee of a contractor’s work. The damage to the DensGlass
and Blueskin at issue here, given the putative manner in which it came about, is the type
of business risk that courts have held is not covered by CGL insurance. See, e.g., C.D.
Walters Const. Co. v. Fireman’s Ins. Co. of Newark, New Jersey, 316 S.E.2d 709, 711
(S.C. Ct. App. 1984 (“The consequence of not performing well is part of every business

Again, if some other entity caused the cuts in the Blueskin and DensGlass, then Southeastern is not
responsible and the Policy would not provide coverage. If Southeastern caused the cuts, then exclusion
j.(6) applies because the repairs to the DensGlass sheathing and Blueskin membrane were necessitated
by Southeastern’s incorrectly performed work.
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venture; the replacement or repair of faulty goods and works is a business expense, to
be borne by the insured-contractor in order to satisfy customers.” (quotation and citation
omitted)). Therefore, CIC is entitled to summary judgment and the case is dismissed. 7
CONCLUSION
After careful consideration of the parties’ briefs, the associated record, and the
applicable law, the Court hereby GRANTS CIC’s motion for summary judgment (ECF No.
35) and DENIES Pro-Tec’s motion for summary judgment (ECF No. 43). The Court
declares that CIC owes no coverage obligation under the Policy to Southeastern for the
Underlying Action. There being no further issues requiring resolution, this action is
dismissed.
IT IS SO ORDERED.
/s/ Bruce Howe Hendricks
United States District Judge
October 9, 2020
Charleston, South Carolina

Pro-Tec’s motion for summary judgment is denied for all of the same reasons that CIC’s motion is granted,
and disposition of Pro-Tec’s motion requires no additional discussion.
7

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