MEMORANDUM AND ORDER

David J. Waxse, United States Magistrate Judge.

This is an action for declaratory judgment to determine whether Plaintiff American Mercury Insurance Group ("Plaintiff") has a duty to defend and/or indemnify Meadows General Contracting ("MGC") under an insurance policy issued by Plaintiff to MGC. The matter presently is before the Court on Plaintiff's Motion for Summary Judgment (doc. 12). For the reasons set forth below, Plaintiff's Motion is granted.

I. Facts

The following facts are uncontroverted:

• Plaintiff is an insurance company incorporated in Oklahoma, which issued an insurance policy to MGC under policy no. GLA 3532582-00-02.

• Defendant James Urban ("Defendant" or "Urban") is a Kansas resident and resides at 960 Fargo Springs Road, Bendena, Kansas.

• MGC was owned and operated by Theodore Meadows ("Meadows") of Gypsum, Kansas, who is now deceased.

• Defendant Sandra Benefer ("Benefer"), also known as Sandra Meadows, is the administrator of the estate of Meadows.

• Defendant Urban purchased a wet bin from Mike Woodfin of Woodfin Trade Services, Brownsville Texas.

• Jerry Hanson, from whom the Urbans purchased a grain dryer which was to work with the wet bin purchased from Woodfin Trade Services, arranged a meeting between Urban and Meadows of MGC regarding the design, construction and installation of the wet bin, the dryer, two overhead bins, a grain pit, a grain leg and related parts and components of Urban's grain handling facility.

• Urban and Meadows met on January 17, 1997 and entered into an agreement for Meadows to develop a plan to construct and install those things referenced in paragraph 6.

• The wet bin, the two overhead bins and the grain dryers were purchased separately by Urban, but other materials were to be purchased and provided by Meadows.

• As part of the agreement, MGC was to develop the concrete work needed to integrate the new parts referenced in paragraph 6 into Urban's existing grain handling facility, including the design, pouring and constructing the cement pads for the wet bin, grain dryer the leg it would sit upon and to design and pour the concrete pit into which grain would be dumped.

• Under the terms of the agreement, MGC was not required to do grading or other site preparations for the setting of the concrete pads.

• MGC commenced work in June 1997, designed and poured the concrete pad upon which the wet bin sat, completed the roof and put two rings together in connection with the construction of the wet bin, which bin was constructed from top to bottom and raised up as it was constructed.

• Meadows and MGC were unable to complete the contracted work as Meadows was killed in an accident on or about July 26, 1997 at Seneca/Baileyville Coop.

• In August of 1997, Urban met with and hired Charles Reef ("Reef") of Reef Welding and Construction ("RWC") to complete the work started by MGC at an additional cost of $38,000.

• When Reef started working on the construction, the concrete pad for the wet bin had already been poured and all but one bolt that had been inserted in the pad by Meadows had to be redrilled.

• The wet bin, when empty, weighed approximately 17,000 pounds.

• The wet bin is designed to hold 17,000 bushels of grain.

• In the fall of 1997, Reef had Urban put 5,000 to 6,000 bushels of shelled corn into the bin so he could complete work on the bin.

• After the wet bin was filled with 5,000 to 6,000 bushels of shelled corn, the concrete pad settled and the wet bin tilted to the northeast, causing damage to itself and other portions of Urban's grain handling facility that were not constructed by Meadows.

• Urban has alleged in a civil lawsuit ("the underlying lawsuit") in the District Court of Doniphan County, Kansas against the Estate of Meadows that the unexpected, sudden and accidental tilting of the wet bin and the resulting damage to other portions of his grain handling facilities was caused by Meadows inadequate and negligent design of the concrete pad on which the wet bin was erected.

• Plaintiff American Mercury has denied coverage under the insurance policy which they [sic] issued to Meadows, have [sic] agreed to defend the estate of Meadows under reservation of rights in the civil action which has been filed in Doniphan County, Kansas and has filed this declaratory judgment action, seeking a ruling that there is no coverage under the policy for the claims that have been made by Urban and there is no duty to defend the lawsuit, which is filed in Doniphan County, Kansas.

• Plaintiff American Mercury has denied coverage based upon the policy provisions in the Commercial General Liability Coverage, Form No. CG 00 01 11 88.

• Plaintiff denies that there is coverage under the Product/Completed Operations Liability Coverage, Form No. CG 00 37 10 90.

• It is alleged in Urban's petition that the unexpected, sudden and accidental tilting of the wet bin caused damage to Urban's existing grain handling facility as a whole.

• It is alleged in Urban's petition that since the wet bin began tilting, the Urbans have only been able to fill the wet bin to one-third of its capacity and, as a result, the entire receiving/drying portion of their grain handling facility has operated at one-third capacity since the fall of 1997.

• It is alleged in Urban's petition that the injury and damage to other existing portions of Urban's grain handling facility was caused by Meadows' inadequate design and construction of the concrete pad the wet bin was erected upon.

• It is alleged in Urban's petition that the sudden, unexpected and accidental tilting of the wet bin in the fall of 1997 was caused by the inadequate and negligent design of the concrete pad the bin was erected upon.

• It is alleged in Urban's petition that the concrete pad the wet bin was erected on was poured by Meadows on an uncontained sand base which shifted when it was subjected to the pressure caused by putting grain into the wet bin, and the shifting of the concrete pad caused the wet bin to tilt.

• It is alleged in Urban's petition that the original design of the concrete pad on which the wet bin was erected specified 46 yards of concrete was to be used.

• It is alleged in Urban's petition that Meadows altered the design and only used 36 yards of concrete for all the work he did, including the pad for the wet bin, the pad for the tower and part of the dump pot, thus compromising the structural integrity of the Urbans' entire grain handling facility.

Plaintiff filed the instant cause of action against Urban and Benefer seeking a legal declaration that the insurance policy issued to MGC — more specifically, provisions within Commercial General Liability Coverage, Form No. CG 00 01 11 88, and provisions within the Products/Completed Operations Liability Coverage, Form No. CG 00 37 10 90 — do not cover the claims made by Urban against MGC and that Plaintiff does not have a duty to indemnify or defend Meadows' Estate in the Doniphan County lawsuit.

II. Summary Judgment Standard

Summary judgment is appropriate if the moving party demonstrates that there is "no genuine issue as to any material fact" and that it is "entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In applying this standard, the Court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). A fact is "material" if, under the applicable substantive law, it is "essential to the proper disposition of the claim." Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). An issue of fact is "genuine" if "there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way." Id. (citing Anderson, 477 U.S. at 248).

The moving party bears the initial burden of demonstrating an absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Id. at 670-71. In attempting to meet that standard, a movant that does not bear the ultimate burden of persuasion at trial need not negate the other party's claim; rather, the movant need simply point out to the court a lack of evidence for the other party on an essential element of that party's claim. Id. at 671 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)).

Once the movant has met this initial burden, the burden shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256; see also Adler, 144 F.3d at 671 n. 1 (concerning shifting burdens on summary judgment). The nonmoving party may not simply rest upon its pleadings to satisfy its burden. Anderson, 477 U.S. at 256. Rather, the nonmoving party must "set forth specific facts that would be admissible in evidence in the event of trial from which a rational trier of fact could find for the nonmovant." Adler, 144 F.3d at 671. "To accomplish this, the facts must be identified by reference to affidavits, deposition transcripts, or specific exhibits incorporated therein." Id.

Finally, the Court notes that summary judgment is not a "disfavored procedural shortcut"; rather, it is an important procedure "designed to secure the just, speedy and inexpensive determination of every action." Celotex, 477 U.S. at 327 (quoting Fed.R.Civ.P. 1).

III. Analysis

Plaintiff asserts it has no duty to defend and/or indemnify Meadows' Estate in the Doniphan County lawsuit because the damages alleged in the lawsuit were not caused by an "occurrence" as defined by the terms of insurance policy in the Commercial General Liability Coverage, Form No. CG 00 01 11 88 ("CGL provisions") and the Products/Completed Operations Liability Coverage, Form No. CG 00 37 10 90. Plaintiff goes on to assert that even if the alleged damages had been caused by an "occurrence," such occurrence is specifically precluded from coverage due to various exclusions within the CGL and Products/Completed Operations provisions of the policy.

• Insurance Contracts — Generally

The construction of an insurance contract is a question of law. United States Fidelity Guaranty Co. v. Morrison Grain Co., 734 F. Supp. 437, 442 (D.Kan. 1990), aff'd, 999 F.2d 489 (10th Cir. 1993); Wing Mah v. United States Fire Ins. Co., 218 Kan. 583, 545 P.2d 366, 369 (1976) (quoting Goforth v. Franklin Life Ins. Co., 202 Kan. 413, 449 P.2d 477 (1969)). If the relevant facts are admitted, the court may decide whether they come within the terms of the contract. U.S. Fidelity, 734 F. Supp. at 442; Wing Mah, 545 P.2d at 369.

An insurance contract, like any other contract, must, if possible, be construed so as to give effect to the parties' intent. Westchester Fire Ins. Co. v. City of Pittsburg, Kan., 768 F. Supp. 1463, 1467 (D.Kan. 1991), aff'd sub nom., Pennsylvania Nat. Mut. Cas. Ins. Co. v. City of Pittsburg, Kan., 987 F.2d 1516 (10th Cir. 1993); Catholic Diocese of Dodge City v. Raymer, 251 Kan. 689, 693, 840 P.2d 456, 459 (1992); Farm Bureau Mut. Ins. Co., v. Old Hickory Cas., 248 Kan. 657, 810 P.2d 283, 286 (1991). This is to be accomplished by considering the policy as a whole and taking into account the circumstances of the parties. Coleman Co., Inc. v. California Union Ins. Co., 960 F.2d 1529, 1532 (10th Cir. 1992); Reynolds v. S D Foods, Inc., 822 F. Supp. 705, 707 (D.Kan. 1993).

Where an insurance contract is unambiguous, the court must enforce the contract as made and not make another contract for the parties. Catholic Diocese of Dodge City, 251 Kan. at 693, 840 P.2d at 459; Farm Bureau Mut., 810 P.2d at 286. The court must take unambiguous language in its plain, ordinary, and popular sense. Wing Mah, 545 P.2d at 369 (quoting Bramlett v. State Farm Mut. Auto. Ins. Co., 205 Kan. 128, 468 P.2d 157 (1970)). Where there is no ambiguity, there is no need for either judicial interpretation or the application of liberal rules of construction. American Media, Inc. v. Home Indem. Co., 232 Kan. 737, 658 P.2d 1015, 1019 (1983) (quoting Goforth, 449 P.2d at 481). That is, the court must enforce an unambiguous contract according to its terms. Id.

Where a contract is ambiguous, the construction most favorable to the insured prevails. American Media, Inc., 658 P.2d at 1019 (quoting Fancher v. Carson-Campbell, Inc., 216 Kan. 141, 530 P.2d 1225, 1229 (1975)); Wing Mah, 545 P.2d at 369 (quoting Goforth, 449 P.2d at 481). This is so because the insurer, as the one who prepared the contract, must suffer the consequences of failing to make the terms clear. See Dronge v. Monarch Ins. Co. of Ohio, 511 F. Supp. 1, 4 (D.Kan. 1979) (comparing insurance contracts to adhesion contracts); Gowing v. Great Plains Mut. Ins. Co., 207 Kan. 78, 483 P.2d 1072, 1074-1075 (1971) (same).

Although the burden is on the insured to demonstrate that the loss falls within the scope of the policy, Harris v. Richards, 254 Kan. 549, 553, 867 P.2d 325, 327 (1994), coverage clauses are interpreted broadly to afford broad protection to the insured. United States Fidelity Guaranty Co. v. Morrison Grain Co., 734 F. Supp. at 442.

• The Commercial General Liability (CGL) Provisions of the Insurance Policy Occurrence

The CGL provisions of the insurance policy covering MGC during the relevant time period provide that American Mercury will "pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage' . . . caused by an 'occurrence' that takes place in the 'coverage territory.'" The policy defines "occurrence" as an "accident, including continuous or repeated exposure to substantially the same general harmful conditions." The word "accident" is not defined in the policy, thus "it must be interpreted in its usual, ordinary and popular sense." ERA Franchise Systems, Inc. v. Northern Ins. Co. of New York, 32 F. Supp.2d 1254, 1259 (D.Kan. 1998) (quoting Brumley v. Lee, 265 Kan. 810, 822, 963 P.2d 1224 (1998)). As typically used, the word "accident" means an "undesigned, sudden, and unexpected event, usually of an afflictive or unfortunate character, and often accompanied by a manifestation of force." Harris v. Richards, 254 Kan. at 553, 867 P.2d at 327 (citations omitted). When the resulting injury is the natural and probable consequence of the insured's act, however, the event might not qualify as a accident. See id. (under circumstances where insured fired two shotgun blasts into cab of pickup truck injuring man who was seated next to insured's former spouse in cab of pickup truck, court found resulting injury was natural and probable consequence of insured's act and not an "accident" qualifying as covered occurrence under homeowner's policy.).

In support of its Motion for Summary Judgment, Plaintiff argues the alleged physical damages to Urban's grain handling facility were a natural and probable consequence of MGC's work on the facility and not an "accident" qualifying as a covered occurrence under the CGL provisions of the insurance policy. Plaintiff further argues that providing coverage for poor workmanship under the CGL provisions of the insurance policy improperly would transform such policy into a performance bond.

In response, Defendant Urban maintains the tilting of the wet bin after it was partially filled with grain qualifies as an occurrence because, regardless of whether the tilting was caused by faulty workmanship, it meets the usual and ordinary definition of accident: an undesigned, sudden, and unexpected event of an afflictive or unfortunate character accompanied by a manifestation of force.

Although the Court has reviewed and considered the parties' arguments on this issue, the Court finds it unnecessary under the facts presented to determine whether the damages alleged in the underlying lawsuit were caused by an "occurrence" as defined by the terms of the CGL provisions of the insurance policy here. This is so because, even if the alleged damages were caused by an "occurrence" or "accident" under the policy, several of the stated policy exclusions effectively deny coverage in this case as a matter of law.

2. Exclusions

Exclusions within commercial general liability insurance policies generally are "based upon the notion that the purpose of the commercial general liability insurance policy is to provide coverage for the risk of injury to the property of others and to place the risk of loss arising from costs associated with 'replacement and repair' to the property constructed by the contractor on the contractor." Walter J. Andrews and Matthew H. Metcalf, Coverage for Natural and Unnatural El Ninos, 34 Tort Ins. L.J. 863 (Spring 1999) (citing Western Employers Ins. Co. v. Arciero Sons, Inc., 194 Cal.Rptr. 688, 690 (Cal.Ct.App. 1983)).

The risk of replacing and repairing defective materials or poor workmanship has generally been considered a commercial risk that is not passed on to the liability insurer. Rather, liability coverage comes into play when the insured's defective materials or work cause injury to property other than the insured's own work or products. . . . This distinction is significant. Replacement and repair costs are to some degree within the control of the insured. They can be minimized by careful purchasing, inspection of material, quality control and hiring practices. If replacement or repair costs were covered, the incentive to exercise care or to make repairs at the least possible cost would be lessened since the insurance company would be footing the bill for all scrap.

Just as coverage clauses are interpreted broadly to afford the broadest protection to the insured, exclusionary clauses are interpreted narrowly against the insurer. United States Fidelity Guaranty Co. v. Hokanson, 2 Kan. App. 2d 580, 582, 584 P.2d 1264 (1978); see, also, Farm Bureau Mut. Ins. Co. v. Evans, 7 Kan. App. 2d 60, 62, 637 P.2d 491 (1981), rev. denied, 231 Kan. 800 (1982). If an insurer intends to restrict or limit coverage provided in a policy, it must use clear and unambiguous language in doing so. Farm Bureau Mut. Ins. Co. v. Old Hickory Casualty Ins. Co., 248 Kan. 657, 660, 810 P.2d 283, 286 (1991). If the language of the policy is capable of two meanings, it must be construed in favor of the insured. Id. It is the insurer's burden to prove that an exclusion applies to a particular set of circumstances. Upland Mut. Ins. Co. v. Noel, 214 Kan. 145, 150, 519 P.2d 737, 742 (1974). The overall function and goal of the court is to give effect to the intent of the parties and to enforce the contract as made. Farm Bureau Mut. Ins. Co., 248 Kan. at 660, 810 P.2d at 286.

a. Exclusion "j(5)"

Exclusion "j(5)" of the CGL provisions of the insurance policy at issue here excludes coverage for property damage to "[t]hat 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." Within the policy, "property damage" is defined as "physical injury to tangible property, including all resulting loss of use of that property" or "loss of use of tangible property that is not physically injured."

Defendant Urban asserts exclusion "j(5)" does not preclude coverage under the facts presented because (a) Urban's claims here are not for damages to the concrete pad, the wet bin or any other "particular part" of real property upon which MGC was performing operations, but instead are for damages relating to the partial "loss of use" and "diminished value" of his entire grain-handling facility; and (b) Urban's damages did not occur while MGC was in the process of "performing operations" as defined by the policy.

Plaintiff, on the other hand, argues that exclusion "j(5)" precludes coverage in this matter because (a) contrary to Defendant Urban's assertion, the alleged damages were not sustained to any property other than the "particular part" of the real property upon which the work was performed; and (b) MGC was in the process of "performing operations" when the damage occurred because Reef was "working indirectly on behalf of the insured" when Reef finished the work MGC had started.

"Particular Part"

Defendant Urban asserts that the damages in the underlying petition were alleged to have been sustained to property other than that property upon which MGC was working and thus exclusion "j(5)" does not preclude coverage because Urban's claims here are for damages to his entire grain-handling facility and not for damages to the particular part of the real property upon which MGC was working.

Relevant to the issue of Urban's claim for damages, the facts to which the parties stipulated for purposes of this motion state as follows:

18. After the wet bin was filled with 5,000 to 6,000 bushels of shelled corn, the concrete pad settled and the wet bin tilted to the northeast, causing damage to itself and other portions of Urban's grain handling facility that were not constructed by Meadows.

19. Urban has alleged in a civil lawsuit in the District Court of Doniphan County, Kansas against the Estate of Meadows that the unexpected, sudden and accidental tilting of the wet bin and the resulting damage to other portions of his grain handling facilities was caused by Meadows inadequate and negligent design of the concrete pad on which the wet bin was erected.

23. It is alleged in Urban's petition that the unexpected, sudden and accidental tilting of the wet bin caused damage to Urban's existing grain handling facility as a whole.

25. It is alleged in Urban's petition that the injury and damage to other existing portions of Urban's grain handling facility was caused by Meadows' inadequate design and construction of the concrete pad the wet bin was erected upon.

Memorandum in Support of Plaintiff's Motion for Summary Judgment at p. 5, 13 (doc. 13) (emphasis added). Although the Court certainly could infer from the language used in the stipulations that there was damage to property other than the concrete pad and wet bin, neither the stipulations nor the parties' briefs specifically identify the "other portion of the grain handling facility" that sustained damage. Given the arguments made by Defendant Urban in his brief, it appears the damage to "other property" claimed by him is purely economic in nature and consists only of damages attributable to partial loss of use of his entire grain handling facility due to the physical damage to the concrete pad and wet bin.

Even if the Court were to infer physical damage to "other property," Kansas law supports a finding that under the terms of the contract that "particular part" of the real property upon which MGC performed work actually encompasses the "grain-handling facility" as a whole. See Utility Maintenance Contractors, Inc. v. Western American Ins. Co., 19 Kan. App. 2d 229, 866 P.2d 1093, rev. denied, 254 Kan. 1010 (1994) (exclusion "j(5)" precluded coverage for damage to entire sewer line on which insured was working despite the fact that the discrete portion of the line damaged was under a different property than the entrance to the sewer line). See, also, William Crawford, Inc. v. Travelers Ins. Co., 838 F. Supp. 157 (S.D.N.Y. 1993), aff'd, 23 F.3d 663 (2d Cir. 1994) (where fans used during renovations of apartment caught fire damaging apartment, no coverage under contractor's insurance contract because contractor was performing work on entire apartment).

The parties have stipulated that MGC agreed to construct and install the wet bin, the dryer, the two overhead bins, the grain pit, the grain leg and related parts and components of Urban's grain handling facility and that MGC ultimately made progress towards this goal before Meadows' death. Moreover, the parties agree that MGC purchased many of the materials for the entire grain-handling facility, designed and poured the concrete pad upon which the wet bin was placed, completed the roof, put two rings together in connection with construction of the wet bin and developed the concrete work needed to integrate all of the parts. These facts establish that the parties intended MGC to work, and MGC did in fact work, on the entire "grain-handling facility."

Given the finding that MGC worked on the grain handling facility as a whole, exclusion "j(5)" excludes coverage for partial "loss of use" to the grain handling facility as a whole if MGC, or anyone acting directly or indirectly on behalf of MGC, was performing operations at the time of the property damage and if the property damage arose out of those operations. The Court finds exclusion "j(5)" ultimately does not preclude coverage because neither MGC, nor anyone working directly or indirectly on MGC's behalf, was "performing operations" when the property damage occurred. Exclusion "j(5)" is written in the present tense and must be construed to bar coverage for a contractor's work only at the time the work is being performed. See Robert J. Franco, Insurance Coverage for Faulty Workmanship Claims Under Commercial General Liability Policies, 30 Tort Ins. L. J. 785, 795 (1995). In order for exclusion "j(5)" to apply, MGC — or someone working directly or indirectly on behalf of MGC as the insured party — must have been in the process of performing operations.

The undisputed facts demonstrate that at the time Urban's property damage occurred, Meadows already had died. Although Reef and his company were "performing operations" when the property damage occurred, there is no indication that Reef or his company were working directly or indirectly on behalf of MGC, especially given the fact that it was Urban, not MGC, who hired Reef to complete the project after Meadows died. Thus, exclusion "j(5)" does not preclude coverage here.

b. Exclusion "j(6)"

Exclusion "j(6)" within the CGL provisions of the insurance policy does not preclude coverage either. This exclusion states the insurance policy does not apply to property damage to "that particular part of any property that must be restored, repaired or replaced because 'your work' was incorrectly performed on it." "Your work" is defined in the policy as "work or operations performed by you or on your behalf and materials, parts or equipment furnished in connection with such work or operations" and includes "warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of 'your work.'" Again, "property damage" is defined as "physical injury to tangible property, including all resulting loss of use of that property" or "loss of use of tangible property that is not physically injured."

Defendant Urban argues exclusion "j(6)" does not apply here because the damages claimed by Urban are for partial "loss of use" of his entire grain handling facility — which he maintains is "other property" — and not for the cost of restoration, repair or replacement of the concrete pad, wet bin or any other unnamed discrete component of the overall grain handling facility that was physically damaged. Defendant Urban does not dispute that the concrete pad and the wet bin meet the definition of "property that must be restored, repaired or replaced" under this exclusion or that damages attributable to the resulting "loss of use" of the concrete pad and the wet bin are excluded under the policy. Instead, Defendant Urban appears to assert there is a difference between (1) "loss of use" of the concrete pad and the wet bin; and (2) partial "loss of use" of the grain-handling facility as a whole.

The Court is not persuaded by Defendant Urban's argument. Under exclusion "j(6)", the insurance policy is inapplicable to "loss of use" of the "particular part[s] of [the] property that must be restored, repaired or replaced because [MGC's] work was incorrectly performed on [them]." Although, as stated in section B(2)(a), infra, the Court certainly could infer from the language used in stipulated Fact Nos. 18, 19, 23 and 25 that there was damage to property other than the concrete pad and wet bin, the Court again notes that neither the stipulations nor the parties' briefs specifically identify the "other portion of the grain handling facility" that sustained damage. As is also noted, infra, it appears from Defendant Urban's brief that the "loss of use" damage to "other property" claimed by him consists only of damages attributable to partial loss of use of his entire grain handling facility due to the physical damage to the concrete pad and wet bin.

Even if the Court were to infer "loss of use" damage to "other property," Kansas law supports a finding that, under the terms of the contract, the "particular part" of the property that must be restored, repaired or replaced because MGC's work was incorrectly performed on it actually encompasses the "grain-handling facility" as a whole. See Utility Maintenance Contractors, Inc. v. Western American Ins. Co., 19 Kan. App. 2d 229, 866 P.2d 1093, rev. denied, 254 Kan. 1010 (1994) (exclusion "j(5)" precluded coverage for damage to entire sewer line on which insured was working despite the fact that the discrete portion of the line damaged was under a different property than the entrance to the sewer line). See, also, William Crawford, Inc. v. Travelers Ins. Co., 838 F. Supp. 157 (S.D.N.Y. 1993), aff'd, 23 F.3d 663 (2d Cir. 1994) (where fans used during renovations of apartment caught fire damaging apartment, no coverage under contractor's insurance contract because contractor was performing work on entire apartment).

As noted above, the facts establish that the parties intended MGC to work, and MGC did in fact work, on the entire "grain-handling facility." See stipulated Fact Nos. 6-11. Moreover, the necessary steps to "restore, repair or replace" the concrete pad and wet bin to full use are the same steps that would be necessary to "restore, repair or replace" the entire grain-handling facility to full use. Simply put, Urban's damages related to partial "loss of use" of the grain-handling facility are identical to his damages related to "loss of use" of the concrete pad and wet bin.

Since there are no damages for "loss of use" to the entire grain handling facility other than those damages for "loss of use" to the concrete pad and wet bin, exclusion "j(6)" appears to preclude coverage. The policy specifically states, however, that exclusion "j(6)" is inapplicable to "property damage" included in the "products-completed operations hazard." Because the Court finds in section C(2), infra, that the property damage alleged here is included within the "products-completed operations hazard" as defined by this policy, exclusion "j(6)" is inapplicable and thus does not preclude coverage.

c. Exclusion "k"

Exclusion "k" precludes coverage. This exclusion provides that the insurance policy does not apply to "'property damage to your product' arising out of it or any part of it." The policy defines "your product" as "any goods or products, other than real property, manufactured, sold, handled, distributed or disposed of by you" and includes "warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of 'your product.'" Based on this language, the policy unambiguously excludes "loss of use" of property "handled" by MGC. The facts establish that MGC "handled" the property which makes up the grain handling facility as a whole. See stipulated Fact Nos. 6-11. Consequently, exclusion "k" precludes coverage for damages related to partial "loss of use" of the grain handling facility.

d. Exclusion "l"

Exclusion "l" also precludes coverage. This exclusion precludes coverage for "property damage to 'your work' arising out of it or any part of it and included in the 'products-completed operations hazard.'" Again, this language excludes "loss of use" of property "handled" by MGC and the facts establish that MGC "handled" the property which makes up the grain handling facility as a whole. See stipulated Fact Nos. 6-11. Moreover, the Court finds in section C(2), infra, that the alleged property damage is included within the "products-completed operations hazard" as defined by this policy. By its very terms, exclusion "l" is intended to apply only to work within the "products-completed operations hazard" and thus is applicable here. Accordingly, exclusion "l" is applicable and precludes coverage.

e. Exclusion "m": The Impaired Property Exclusion

Exclusion "m" precludes coverage. This exclusion denies coverage for claims arising out of m. "Property damage" to "impaired property" or property that has not been physically injured, arising out of:

(1) A defect, deficiency, inadequacy or dangerous condition in . . . "your work;" or

(2) A delay or failure by you or anyone acting on your behalf to perform a contract or agreement in accordance with its terms.

"Impaired property" is specifically defined in the policy as follows:

5. "Impaired property" means tangible property, other than . . . "your work," that cannot be used or is less useful because

a. It incorporates . . . "your work" that is known or thought to be defective, deficient, inadequate or dangerous; or

b. You have failed to fulfill the terms of a contract or agreement;

if such property can be restored to use by:

a. The repair, replacement, adjustment or removal of . . . "your work;" or

b. Your fulfilling the terms of the contract or agreement.

The effect of this "impaired property" exclusion is to bar coverage for "loss of use" claims (1) when the loss was caused by the insured's poor workmanship or faulty materials; and (2) when there has been no physical injury to property other than the insured's work itself. See, e.g., Transcontinental Ins. Co. v. Ice Systems of America, Inc. 847 F. Supp. 947, 950 (M.D.Fla. 1994) (citations omitted). The exclusion does not apply if the insured's work cannot be repaired or replaced without causing physical injury to other property or if the "loss of use" of other property arises out of sudden and accidental physical injury to the insured's work after it has been put to its intended use.

Under the facts presented, exclusion "m" precludes coverage here. The first part of the exclusion is satisfied because the facts establish that the underlying lawsuit is a "loss of use" claim allegedly caused by the insured's poor workmanship. See stipulated Fact Nos. 19, 25-29. The second requirement is also satisfied. Although, as stated in section B(2)(a), infra, the Court certainly could infer from the language used in stipulated Fact Nos. 18, 19, 23 and 25 that there was damage to property other than the concrete pad and wet bin, the Court again notes that neither the stipulations nor the parties' briefs specifically identify the "other portion of the grain handling facility" that sustained damage. As is also noted, infra, however, it appears from Defendant Urban's brief that the damage to "other property" claimed by him is purely economic in nature and consists only of damages attributable to partial loss of use of his entire grain handling facility due to the physical damage to the concrete pad and wet bin. Thus, it appears there may have been no physical injury to property other than the insured's work itself.

Even if the Court were to infer physical damage to "other property," Kansas law supports a finding that, under the terms of the contract, the property upon which MGC performed work actually encompasses the "grain-handling facility" as a whole. See Utility Maintenance Contractors, Inc. v. Western American Ins. Co., 19 Kan. App. 2d 229, 866 P.2d 1093, rev. denied, 254 Kan. 1010 (1994) (exclusion "j(5)" precluded coverage for damage to entire sewer line on which insured was working despite the fact that the discrete portion of the line damaged was under a different property than the entrance to the sewer line). See, also, William Crawford, Inc. v. Travelers Ins. Co., 838 F. Supp. 157 (S.D.N Y 1993), aff'd, 23 F.3d 663 (2d Cir. 1994) (where fans used during renovations of apartment caught fire damaging apartment, no coverage under contractor's insurance contract because contractor was performing work on entire apartment). As noted above, the facts establish that the parties intended MGC to work, and MGC did in fact work, on the entire "grain-handling facility." See stipulated Fact Nos. 6-11. Moreover, MGC's work can be repaired or replaced without causing physical injury to other property. Accordingly, exclusion "m" precludes coverage under the facts presented here.

C. Products/Completed Operations Liability Coverage

The Products/Completed Operations liability coverage purchased by MGC provides that American Mercury will "pay those sums that the insured becomes legally obligated to pay as damages because of . . . 'property damage' included within the 'products-completed operations hazard' . . . caused by an 'occurrence' that takes place in the 'coverage territory.'"

1. Occurrence

As a preliminary matter, and as noted in section B(1), supra, the Court finds it unnecessary under the facts presented to determine whether the damages alleged in the underlying lawsuit were caused by an "occurrence" as defined by the terms of the Products/Completed Operations provisions of the insurance policy here. This is so because, even if the alleged damages were caused by an "occurrence" or "accident" under the policy, several of the stated exclusions effectively deny coverage in this case as a matter of law.

2. "Products-Completed Operations Hazard"

The "products-completed operations hazard" includes "property damage occurring away from premises you own or rent and arising out of . . . your work," except if the work "has not yet been completed or abandoned." Work is deemed "complete" "[w]hen 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." The policy does not define "abandoned."

By its plain meaning, the "products-completed operations hazard" is triggered when the insured contractor completes work on a project. Work is deemed complete when it has been put to its intended use by someone other than a contractor working on the project. Conversely, work that "has not yet been completed" is still in progress and not included within the "products-completed operations hazard."

The parties agree that "[i]n the fall of 1997, Reef had Urban put 5,000 to 6,000 bushels of shelled corn into the bin so he could complete work on the bin" and that "[a]fter the wet bin was filled with 5,000 to 6,000 bushels of shelled corn, the concrete pad settled and the wet bin tilted to the northeast, causing [the alleged] damage." See stipulated Fact Nos. 17 and 18 (emphasis added). On the one hand, the Court could conclude from these facts that the work at issue was "complete" as defined by the policy at the time the alleged damage was sustained because Defendant Urban was the individual who actually placed the bushels of corn into the bin; thus, the work had been put to its intended use by Defendant Urban, not by another contractor or subcontractor. On the other hand, the Court could conclude that the work at issue was "incomplete" as defined by the policy because the language used by the parties in the stipulated facts clearly reflect that Reef — another contractor — was in the process of completing, but had not yet completed, the work at issue when the alleged damage occurred.

Although under the facts presented by Plaintiff it is unclear whether the insured's work should be deemed "complete" and thus included within the "products-completed operations hazard," it seems clear from the facts that MGC "abandoned" the work it was doing for Defendant Urban when Meadows died. The parties agree that "Meadows and MGC were unable to complete the contracted work as Meadows was killed in an accident on or about July 26, 1997" and that "[in] August of 1997, Urban met with and hired Charles Reef of Reef Welding and Construction to complete the work started by MGC." See stipulated Fact Nos. 12 and 13 (emphasis added). When an insured abandons work on a project, the insured effectively has "completed" its work for that project, even if the project remains unfinished. MGC "abandoned" the work it was doing for Defendant Urban when Meadows died because, although the project remained unfinished, MGC effectively had completed its work for the project. The fact that MGC abandoned its work means the alleged damages are included within the "products-completed operations hazard" as defined by the policy. Notwithstanding this conclusion, however, the damages alleged ultimately are precluded from coverage due to various exclusions within the Products/Completed Operations provisions of the policy.

3. Exclusions

a. Exclusion "h"

The language in this exclusion is identical to the language in exclusion "k" of the CGL provisions of the policy. Based on the discussion in section B(2)(c), supra, the Court finds exclusion "h" precludes coverage under the Products/Completed Operations provisions of the policy.

b. Exclusion "i"

The language in this exclusion is identical to the language in exclusion "l" of the CGL provisions of the policy. Based on the discussion in section B(2)(d), supra, the Court finds exclusion "i" precludes coverage under the Products/Completed Operations provisions of the policy.

c. Exclusion "j"

The language in this exclusion is identical to the language in exclusion "m" of the CGL provisions of the policy. Based on the discussion in section B(2)(e), supra, the Court finds exclusion "j" precludes coverage under the Products/Completed Operations provisions of the policy.

D. Duty to Defend

The determination of whether there is a duty to defend ultimately depends upon whether coverage exists under an insurance policy. Patrons Mut. Ins. Ass'n v. Harmon, 240 Kan. 707, 709-10, 732 P.2d 741 (1987) (citing Spruill Motors, Inc. v. Universal Underwriters Ins. Co., 212 Kan. 681, 684, 512 P.2d 403 (1973)); Casualty Reciprocal Exchange v. Thomas, 7 Kan. App. 2d 718, 647 P.2d 1361 (1982) (insurer has no duty to defend if there is no coverage).

An insurer must look beyond the effect of the pleadings and must consider any facts brought to its attention or any facts which it could reasonably discover in determining whether it has a duty to defend. If those facts give rise to a 'potential of liability,' even if remote, under the policy, the insurer bears a duty to defend. MGM, Inc. v. Liberty Mut. Ins. Co., 253 Kan. 198, 202, 855 P.2d 77 (1993). The duty to defend rests primarily on the possibility that coverage exists, and the possibility of coverage must be determined by a good faith analysis of all information the insurer may know or could have reasonably ascertained. If ambiguities in coverage, including exclusionary clauses, are judicially determined against the insurer, the ultimate result controls the insurer's duty to defend. Aselco, Inc. v. Hartford Ins. Group, 21 P.3d 1011, 1018 (Kan.App. 2001) (quoting Steinle v. Knowles, 265 Kan. 545, 554, 961 P.2d 1228 (1998) (quoting Spivey v. Safeco Ins. Co., 254 Kan. 237, 245-46, 865 P.2d 182 (1993))).

Because there was a possibility of coverage prior to the date of this Order, the Court finds there was a duty on the part of Plaintiff to defend the underlying lawsuit. Because the Court finds, as of the date of this Order, that various policy exclusions effectively deny coverage in this case as a matter of law, there accordingly is no duty on the part of Plaintiff from this day forward to defend the underlying suit.

IV. Conclusion

Based on the discussion above, it is hereby ordered that Plaintiff's Motion for Summary Judgment is granted and judgment will be entered in favor of Plaintiff American Mercury Insurance Group and against Defendants James Urban and Sandra Benefer (as administratrix of the estate of Theodore C. Meadows) on Plaintiff's claims for declaratory judgment that there is no coverage for James Urban's claims against Meadows General Contracting in Case No. 99-C-57, under Policy No. GLA 3532582-00-02 and that Plaintiff has no duty to indemnify or defend such claims from this day forward.

IT IS SO ORDERED.