Opinion
4:21-cv-00051
2021-11-05
HENNING CONSTRUCTION CO., LLC, Plaintiff, v. The PHOENIX INSURANCE CO., Defendant.
Todd M. Lantz, The Weinhardt Law Firm, Des Moines, IA, for Plaintiff. J. Scott Bardole, Andersen & Assocaites, West Des Moines, IA, Erin Elizabeth O'Brien, Pro Hac Vice, Roderick T. Dunne, Pro Hac Vice, Karbal Cohen Economou Silk & Dunne LLC, Chicago, IL, for Defendant.
Todd M. Lantz, The Weinhardt Law Firm, Des Moines, IA, for Plaintiff.
J. Scott Bardole, Andersen & Assocaites, West Des Moines, IA, Erin Elizabeth O'Brien, Pro Hac Vice, Roderick T. Dunne, Pro Hac Vice, Karbal Cohen Economou Silk & Dunne LLC, Chicago, IL, for Defendant.
ORDER DENYING PHOENIX'S MOTION FOR SUMMARY JUDGMENT AND DENYING HENNING'S CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT
ROBERT W. PRATT, Judge
Before the Court is Defendant The Phoenix Insurance Company's Motion for Summary Judgment, filed on July 7, 2021. ECF No. 21. On July 30, Plaintiff Henning Construction Company, LLC cross-filed its Motion for Partial Summary Judgment, ECF No. 25, and a Resistance to Phoenix's Motion on August 2, ECF No. 26. The parties have filed responses to the respective Motions. ECF Nos. 30, 32. Neither party has requested oral argument, and the Court does not believe that oral argument will substantially aid it in resolving the issues before the Court. The matter is fully submitted.
I. FACTUAL AND PROCEDURAL BACKGROUND
Henning was hired by Stoney Creek Investors of Sioux City in 2007 as a general contractor to build the Stoney Creek Inn & Conference Center (the Inn) in Sioux City, Iowa. ECF No. 25-1 ¶ 1. Henning's subcontractors commenced work on the Inn in October 2007. Id. ¶¶ 1, 2. Construction was complete by July 2009. Id. ¶ 2; ECF No. 25-2 at 9 ¶ 10. During construction, and for some time after construction was completed, Henning was consecutively insured by four of Phoenix's Commercial General Liability (CGL) policies. ECF No. 25-2 at 5 ¶ 13. Each CGL policy covered up to $4 million in the aggregate if Henning became legally obligated to pay for any property damage caused by its subcontractors’ work on the Inn. ECF No. 26-2 at 5 ¶ 14, 8 ¶ 3.
The policies contained an endorsement, CG D2 04 06 01, modifying the scope of coverage for property damage if an Exterior Insulation and Finish System (EIFS) was used. See , e.g. , ECF No. 21-3 at 79. EIFS is defined in each policy exclusion as "an exterior cladding or finish system used on any part of any structure." Id. EIFS consists of "rigid or semi rigid insulation board made of expanded polystyrene or other materials," "adhesive and/or mechanical fasteners used to attach the insulation board to the substrate," "[a] reinforced base coat," and "[a] finish coat providing surface texture and color." Id. Each CGL policy excludes coverage for property damage arising out of an EIFS system. Id. The EIFS exclusions are broken down into two parts. First, coverage is excluded for property damage arising out of:
The design, manufacture, construction, fabrication, distribution, sale, preparation, installation, application, maintenance or repair, including remodeling, service, correction or replacement of any "exterior insulation and finish system" (commonly referred to as synthetic stucco or EIFS) or any part thereof, or any substantially similar system or any part thereof, including the application or use of conditioners, primers, accessories, flashing, coatings, caulking or sealants in connection with such a system.
Id. Second, coverage is excluded for property damage arising out of Henning's or its subcontractors’ work "with respect to any exterior component, fixture or feature of any structure if an [EIFS], or any substantially similar system, is used on any part of that structure." Id.
Henning's subcontractor, Romesburg Plastering, Inc., installed EIFS on the exterior of the Inn. ECF No. 22 at 2; ECF No. 25-2 at 8 ¶ 5, 4 ¶ 11. The Inn's exterior consisted of the EIFS, manufactured stone, metal panels, and brick, also known as "cladding." ECF No. 25-2 at 2 ¶ 3. Behind the stone cladding system was one layer of Tyvek-brand house wrap, also known as weather-resistive barrier (WRB). ECF No. 32 at 2. WRB is "[a] material behind an exterior wall covering that is intended to resist liquid water that has penetrated behind the exterior covering from further intruding into the exterior wall assembly." ECF No. 25-3 at 33.
In February 2016, Stoney Creek notified Henning that the Inn was experiencing water intrusion and water penetration problems causing damage. ECF No. 25-2 at 2 ¶¶ 4, 5. Henning responded immediately by hiring a specialist in building-envelope failures, Jeff Neumeier at Resource, LLC, to investigate. Id. ¶ 6. Neumeier conducted a forensic investigation and surveyed the Inn to provide his professional opinion on the cause of the water infiltration. ECF No. 25-3. It was Neumeier's professional opinion that the WRB on the Inn was "not installed in the appropriate configuration ... as per the industry standards of the time." Id. at 15. The International Building Code (IBC) states that two layers of WRB building wrap are required behind all stone installations. Id. at 11, 38, 41. Neumeier determined that the architectural concrete masonry veneer (ACMV) was "not installed to the industry standards" because the installer "failed to install the second layer of WRB" behind the stone veneer and cladding system "as indicated by the contract documents." Id. at 15. Further, he stated WRB is an interior feature of a wall because it is "not intended to exist on an outside surface." Id. at 9 ¶ 5. Neumeier identified several other workmanship problems, including a lack of properly installed "flashings"—which prevent moisture from entering the walls or redirect it to the exterior of the structure—and improper EIFS installation. Id. at 15, 34. All of these workmanship problems contributed to the Inn's water infiltration and ineffective water exfiltration. Id. However, according to Neumeier, the "most significant deficiency in the original construction of [the Inn] was the absence of two layers of [WRB] behind the manufactured stone veneer." ECF No. 25-3 at 1 ¶ 4.
The Inn's water damage extended from the exterior of the building to the framing lumber, wall insulation, and interior drywall. ECF No. 25-2 at 9 ¶ 13. After receiving notice of the water intrusion and resulting property damage, Henning coordinated repairs at the Inn from 2016 to 2018, as it was legally obligated to do. ECF No. 30-1 at 4 ¶ 19. Henning claims that approximately 5,000 square feet of interior repairs were completed, in addition to almost 13,000 square feet of exterior cladding system repairs. ECF No. 25-2 at 10 ¶ 20. Henning relied on the liability insurance it had purchased to cover the more than $2 million in repairs. ECF Nos. 26-1 at 2; 26-2 at 8 ¶ 2. Henning settled insurance claims with the masonry subcontractor and its insurer for the ACMV stone system, the rough carpentry subcontractor and its insurer, a subsequent general liability insurer, and the EIFS subcontractor. ECF Nos. 25-2 at 4; 26-2 at 4 ¶ 12. But when Henning reported the issue to Phoenix in early 2016 by submitting a claim for Phoenix's share of the repair costs, Phoenix declined coverage based on the EIFS exclusion in its CGL policies. ECF No. 25-2 at 10 ¶ 21.
Henning filed a Complaint with this Court on February 18, 2021, alleging breach of contract against Phoenix for its failure to indemnify under the CGL policies. ECF No. 1. Phoenix now moves for summary judgment on grounds that damages to the Inn were caused by, or related to, the use of EIFS on the exterior of the Inn. ECF No. 21. Phoenix argues the EIFS exclusion in the CGL policies releases it from liability to indemnify Henning, and thus it owes no coverage to Henning as a matter of law. Id. Henning resists Phoenix's Motion and cross-files a Motion for Partial Summary Judgment. ECF No. 26. Henning argues not only does the EIFS exclusion not apply to its claims as a matter of law, but there are other issues regarding interior and structural damages that must be resolved prior to a judgment in this case, even if the EIFS exclusion issue is resolved. Id.
II. SUMMARY JUDGMENT STANDARD
Federal Rule of Civil Procedure 56(a) provides, "A party may move for summary judgment, identifying each claim or defense—or the part of each claim or defense—on which summary judgment is sought." Rule 56(a) mandates the entry of summary judgment upon motion after there has been adequate time for discovery "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." Summary judgment is proper when the record, viewed in the light most favorable to the nonmoving party and giving that party the benefit of all reasonable inferences, shows there is no genuine issue of material fact and the moving party is therefore entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a) ; Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ; Harlston v. McDonnell Douglas Corp. , 37 F.3d 379, 382 (8th Cir. 1994). A disputed issue is "genuine" when the evidence produced "is such that a reasonable jury could return a verdict for the nonmoving party." See Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is considered "material" if it "might affect the outcome of the suit under the governing law." See id. "[T]he substantive law will identify which facts are material .... Factual disputes that are irrelevant or unnecessary will not be counted."
"In considering a motion for summary judgment the court does not weigh the evidence, make credibility determinations, or attempt to discern the truth of any factual issue." Great Plains Real Estate Dev., L.L.C. v. Union Cent. Life Ins. Co. , 536 F.3d 939, 944 (8th Cir. 2008) (quoting Morris v. City of Chillicothe , 512 F.3d 1013, 1018 (8th Cir. 2008) ). Rather, the court only determines whether there are any disputed issues concerning the existence of material facts and, if so, whether those disputes are genuine. See Anderson , 477 U.S. at 251–52, 106 S.Ct. 2505 ; see also Wilson v. Myers , 823 F.2d 253, 256 (8th Cir. 1987) ("Summary judgment is not designed to weed out dubious claims, but to eliminate those claims with no basis in material fact."). Summary judgment is appropriately entered against a party who has failed to make a showing sufficient to establish a genuine dispute as to the existence of an element essential to its case and upon which the party will bear the burden of proof at trial. See Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
III. ANALYSIS
Henning argues the EIFS exclusion in Phoenix's CGL policies does not bar coverage for interior and exterior damage to the Inn. Henning's expert, Neumeier at Resource, LLC, has opined the most significant cause of water damage was the missing second layer of WRB. In Neumeier's opinion, WRB is an interior, rather than exterior, component of a building and separate from the exterior EIFS or cladding system. Thus, Henning argues the WRB failure would not trigger the exclusion because it is neither a part of the EIFS, nor an exterior component, fixture or feature of any structure that used EIFS. Henning alleges that if the EIFS exclusion applies to property damage allegedly caused by the missing layer of WRB, then the term "exterior" in the exclusion is otherwise ambiguous and should be construed in its favor. Additionally, Henning argues that the water damage to the Inn occurred after construction was complete and there is no indication that the EIFS exclusion applies to property damage under the Products/Completed Operations Liability Coverage Part of the CGL polices. In the alternative, Henning argues that if the EIFS exclusion applies, then it renders Phoenix's CGL insurance coverage illusory and unenforceable.
Phoenix argues the EIFS exclusion is plain and unambiguous: if an EIFS is used on any part of a building, then there is no coverage for property damage arising out of work done to the exterior of the building. Phoenix also disagrees with Henning as to the cause of the water damage at the Inn. Phoenix disputes Henning's interpretation of Neumeier's report and argues the cause of damage was the improperly installed ACMV cladding system—an exterior component of the Inn. Phoenix further argues that the term "exterior" should be given its ordinary meaning which includes everything on the outside of a building. Phoenix argues that Henning's purported damages fall squarely within the EIFS exclusion. And as such, Phoenix claims Henning's breach of contract claim fails as a matter of law and summary judgment in Phoenix's favor should be granted.
Henning and Phoenix agree that EIFS was used on the exterior of the Inn. But they dispute several facts in the record. See, e.g. , ECF No. 30-1 ¶¶ 2, 6, 11, 13, 18, 20. Most importantly, the parties disagree on whether the WRB is considered an exterior or interior component, fixture or feature of the Inn, and thus dispute the facts underlying the cause of the property damage. In addition, the parties dispute the scope of the term "exterior" in the EIFS exclusion. The issue for this Court to resolve is whether there lacks any genuine dispute of material fact such that a motion for summary judgment is warranted. In this case, the substantive law underlying Henning's Complaint determines which facts are material. See Nationwide Agribusiness v. Structural Restoration , 705 F. Supp. 2d 1070 (S.D. Iowa 2010) ; Anderson , 477 U.S. at 248, 106 S.Ct. 2505. If Henning establishes there is a genuine dispute as to an element essential to its breach of contract claim, then summary judgment ought to be denied and the case can proceed to trial by jury. Id. ; Celotex Corp. , 477 U.S. at 322, 106 S.Ct. 2548.
A. Henning's Underlying Breach of Contract Claim
In a claim for breach of contract, "the complaining party must prove the existence, terms, and conditions of the contract, that he has performed all of the terms and conditions required under the contract, but that the defendant breached the contract and caused him damages." Bruhn Farms Joint Venture v. Fireman's Fund Ins. Co. , 823 F.3d 1161, 1165 (8th Cir. 2016) (citing Molo Oil Co. v. River City Ford Truck Sales, Inc. , 578 N.W.2d 222, 224 (Iowa 1998) ). To establish a claim against an insurer, the insured plaintiff "has the initial burden of proving that [the insurer]’s disputed claims are ‘comprehended by the policies general coverage provisions.’ " Modern Equip. Co. v. Cont'l W. Ins. Co. , 355 F.3d 1125, 1128 (8th Cir. 2004) (quoting A.Y. McDonald Indus., Inc. v. Ins. Co. N. Am. , 842 F. Supp. 1166, 1171 (N.D. Iowa 1993) ). "Once this burden is met, [the insurer] must in turn prove the ‘applicability of any exclusion which allegedly precludes coverage.’ " Id. This burden-shifting framework leaves the insured plaintiff with the final burden "to prove, if applicable, any exception to the exclusion." Id.
To determine whether a genuine dispute of material fact exists essential to Henning's breach-of-contract claim, the Court must first construe and interpret the plain meaning of the insurance policy. Liberty Mut. Ins. Co. v. Pella Corp. , 650 F.3d 1161, 1169–70 (8th Cir. 2011). Id. "State law governs the interpretation of insurance policies." Liberty Mut. Ins. Co. , 650 F.3d at 1169 (citation omitted). And "[u]nder Iowa law, the intent of the parties, as determined by the language of the policy, controls." Id. (citing Nationwide Agri-Bus. Ins. Co. v. Goodwin , 782 N.W.2d 465, 470 (Iowa 2010) ).
Further, when an insurance policy is modified by an exclusion, as is the case here, Iowa law holds the "insurer assumes a duty to define in clear and explicit terms any limitations or exclusions to the scope of coverage a policy affords." Nat'l Sur. Corp. v. Westlake Inv., LLC , 880 N.W.2d 724, 733–34 (Iowa 2016). If the terms in the exclusion "are clear, they are to be accorded their plain and ordinary meaning." Modern Equip. Co. , 355 F.3d at 1128.
By contrast, if the "policy language is susceptible to two reasonable [or equally plausible] interpretations," then it is ambiguous. Liberty Mut. Ins. Co. , 650 F.3d at 1170. Ambiguous policy language requires the Court to adopt "the construction most favorable to the insured." Id. (quoting Nationwide Agri-Bus. Ins. Co. , 782 N.W.2d at 470 ). This is because insurance policies are typically contracts of adhesion, Nat'l Sur. Corp. , 880 N.W.2d at 733–34, and therefore any ambiguous "exclusions are strictly construed against the insurer." Connie's Constr. Co., Inc. v. Fireman's Fund Ins. Co. , 227 N.W.2d 207, 210 (Iowa 1975). To determine whether an ambiguity exists, the Court must read the policy language in its entirety, including "all declarations, riders, or endorsements attached." Boelman v. Grinnell Mut. Reinsurance Co. , 826 N.W.2d 494, 501–02 (Iowa 2013). In giving every part of the policy meaning, the Court "will not interpret an insurance policy to render any part superfluous, unless doing so is reasonable and necessary to preserve the structure and format of the provision." Id. at 502. To be sure, "[a]n insurance policy is not ambiguous ... just because the parties disagree as to the meaning of its terms." Id. Nor does ambiguity exist "merely because courts reach inconsistent results." R & J Enter. v. Gen. Cas. Co. of Wis. , 627 F.3d 723, 728 (8th Cir. 2010). When the plain language is clear, the Court "will not ‘write a new contract of insurance’ for the parties." Boelman , 826 N.W.2d at 502 (quoting Thomas v. Progressive Cas. Ins. Co. , 749 N.W.2d 678, 682 (Iowa 2008) ). The policy will instead be given its plain, legal effect as written. Id.
To begin our analysis, the Court restates in relevant part the language of the EIFS Exclusion to the CGL policies issued by Phoenix. The EIFS exclusion in each CGL policy is broken down into two parts. First, coverage is excluded for property damage arising out of:
The design, manufacture, construction, fabrication, distribution, sale, preparation, installation, application, maintenance or repair, including remodeling, service, correction or replacement of any "exterior insulation and finish system" (commonly referred to as synthetic stucco or EIFS) or any part thereof, or any substantially similar system or any part thereof, including the application or use of conditioners, primers, accessories, flashing, coatings, caulking or sealants in connection with such a system;
ECF No. 21-3 at 79. Second, coverage is excluded for property damage arising out of Henning or its subcontractors’ work "with respect to any exterior component, fixture or feature of any structure if an [EIFS], or any substantially similar system, is used on any part of that structure." Id.
Here, it is undisputed that the property damage to the Inn is an occurrence under the CGL policies. It is also undisputed that the EIFS exclusion modifies the scope of Phoenix's coverage for the property damage at the Inn under each CGL policy. However, the parties do not agree on the interpretation of the exclusion or its application to the facts in this case. Henning argues the exclusion is unclear for several reasons. First, Henning argues the EIFS exclusion does not appear to apply to completed projects, like the Inn. Henning compares the EIFS exclusion with other exclusions in the CGL policies, like the Lead exclusion, which expressly indicates when an endorsement modifies insurance under the Commercial General Liability Coverage Part as well as the Products/Completed Operations Liability Coverage Part. ECF No. 26-1 at 9. Whereas the EIFS exclusion endorsement only modifies the Commercial General liability Coverage Part and the Owners and Contractors Protective Liability Coverage Part. See, e.g. , ECF No. 21-3 at 79. Henning states the way the exclusion is written, in comparison to similar exclusions in the CGL policies, is not clear or explicit in its application to completed projects.
Second, Henning argues the meaning and scope of the term "exterior" in the second part of the EIFS exclusion is ambiguous. The second part of the EIFS exclusion denies coverage for property damage arising out of Henning's or its subcontractors’ work "with respect to any exterior component, fixture or feature of any structure if an [EIFS], or any substantially similar system, is used on any part of that structure." ECF No. 21-3 at 79 (emphasis added). Henning argues the term "exterior" is not clear and explicit as applied to a building, like the Inn, with multiple layers of exterior cladding. ECF No. 26-1 at 11. In addition, Henning argues that property damage caused by the WRB would not fall under the scope of the term "exterior" to trigger the EIFS exclusion. This is because WRB is allegedly an interior feature of the Inn's construction. Further, Henning argues that, if the second part of the EIFS exclusion applies to the WRB, the first part of the exclusion denying coverage for work directly related to the use of EIFS would otherwise be superfluous.
The parties do not appear to contest that the first part of the EIFS exclusion does not apply since the damages in this case were not caused by a subcontractor's work directly with the EIFS or faulty installation of the EIFS system itself.
Phoenix disagrees. It argues there are two clear and explicit conditions triggering the second part of the EIFS exclusion: (1) the property damage arose out of Henning's work with respect to any exterior component of any structure, and (2) any EIFS is used on any part of that structure. Phoenix argues the scope of the second part of the EIFS exclusion extends to any damage on the outside of the Inn, including damage caused by the missing WRB. Finally, Phoenix argues the second part of the EIFS exclusion does not render the first part—which bars coverage for damages directly caused by using EIFS on a building—superfluous.
The Court has considered the parties’ pleadings, filings, and the four CGL policies, exclusions, and endorsements, and holds the EIFS exclusion language is not ambiguous. The language in the second part of the EIFS exclusion is clear and explicit and only applies to property damage arising out of an exterior feature or component of a building that has used EIFS. Because the policy exclusion is not ambiguous, the Court "will not resort to rules of construction" in analyzing whether the disclaimer at the top of the EIFS exclusion intended to apply to all projects completed. Modern Equip. Co. , 355 F.3d at 1128 (holding courts need "not apply the rules of construction if an insurance contract is unambiguous"). In addition, although the parties disagree on the scope of the term "exterior," they agree on the plain meaning of the term itself. It is undisputed that "exterior" is defined as "being on an outside surface: situated on the outside." Exterior , Merriam-Webster, https://www.merriamwebster.com/dictionary/exterior (last accessed Nov. 2, 2021). The Court agrees the word "exterior" has a very expansive meaning. But just because the parties disagree on the outer limits of the term "exterior," does not make the policy language ambiguous. The Court thus finds the plain meaning of the EIFS exclusion controls, and coverage does not extend to any property damage arising out of an exterior component of the Inn. Furthermore, this interpretation does not render the first part of the EIFS exclusion superfluous or meaningless because damage caused by any interior component of a structure that uses EIFS is not excluded from coverage. The Court understands that EIFS has caused "[a] great deal of insurance coverage disputes ... over the years due to the tendency of EIFS to trap water behind a building's walls." J. Blake Hunter & Kathy J. Maus, Can You Get Stuck with Stucco?: Coverage Under an EIFS Exclusion for Property Damage Caused by Construction Defects , 94 Fla. B.J. 16, 17 (December 2020). "As a result, many insurers implemented an EIFS exclusion in commercial general liability policies barring coverage ...." Id. Despite the prevalence of issues related to insurance coverage under "EIFS exclusions, few courts in the United States [have] analyzed the scope of [the] EIFS exclusion." Id. For the courts that have considered the scope of an EIFS exclusion, the majority hold coverage is barred either because the insured was working directly with the EIFS, or because an exterior component of a building that used EIFS caused property damage. See, e.g. , First Mercury Ins. Co. v. Miller Roofing Enters. , No. C11-0105-JCC, 2013 WL 662970, at *3 (W.D. Wash. Feb. 22, 2013) (barring coverage because negligently constructed roof was "unquestionably, an ‘exterior’ component, fixture or feature’ of the building"); BITCO Nat'l Ins. Co. v. Old Dominion Ins. Co. , 379 F. Supp. 3d 1230, 1241–42 (N.D. Fla. 2019) (barring coverage because defective exterior metal work on roof, gutters, and downspouts caused water damage to building containing EIFS); Devington Condo. Ass'n v. Steadfast Ins. Co. , No. CV06-1213 MJP, 2007 WL 709032, at *1–3 (W.D. Wash. Mar. 5, 2007) (barring coverage because damage was caused by EIFS work performed by subcontractors). Though some EIFS exclusions are broad, the meaning of the exclusion itself is usually clear: it is "designed to exclude from coverage anything that could possibly leak or otherwise permit moisture to enter a structure when that structure has EIFS installed on it." First Mercury Ins. Co. , 2013 WL 662970, at *2. It is not the case, however, that the scope of the EIFS exclusion has been so broadly construed as to apply to damage caused by any interior component, feature, or fixture of a building. Rather, the property damage in cases like First Mercury was "unquestionably" caused by "an ‘exterior component fixture or feature’ of the building." Id. (holding installation of exterior roof caused damages).
On the other hand, there are situations where federal courts have held an EIFS exclusion cannot apply. See, e.g. , Amerisure Ins. Co. v. Auchter Co. , No. 3:16-cv-407, 2017 WL 3584896 at *24 (M.D. Fla. Mar. 30, 2017) (holding EIFS exclusion "so sweeping" that as applied to the facts and the work by the window subcontractor, "it renders the [CGL] Policies illusory, and can not be enforced"); Capitol Specialty Ins. Corp. v. Yuan Zhang , No. C11-41Z, 2012 WL 1252638, at *3 (W.D. Wash. Apr. 13, 2012) (holding it unreasonable as a matter of law to argue "the [EIFS] exclusion bars coverage for property damages arising out of an insured's exterior work if any prior individual used or installed the EIFS present on the structure, no matter how small that EIFS area is, and no matter how unrelated that EIFS was to the insured's work and the resulting damage"); Luxury Living, Inc. v. Mid-Continent Cas. Co. , No. Civ.A. H-02-3166, 2003 WL 22116202, at *17 (S.D. Tex. Sept. 10, 2003) (holding EIFS exclusion inapplicable to insurer's duty to defend because "many of the nine other alleged construction defects do not involve ‘any work or operations with respect to any exterior component, fixture or feature of any structure’ ").
The cases that permit coverage, despite an EIFS exclusion, are factually distinguishable from the present case. For example, in Amerisure Ins. Co. , the policy language was found to be illusory if the EIFS exclusion were to be given effect. Amerisure Ins. Co. , 2017 WL 3584896, at *24. The dispute in Amerisure arose out of property damage caused by a window and glass subcontractor's work on a building that had used EIFS. Id. at *2. The issue in Amerisure was whether the subcontractor's insurance company could deny coverage under the "your work" provision in the EIFS exclusion. Id. at *9, 23. This was despite the fact that the window subcontractor was hired to perform work solely on exterior window installation. Id. at *25. The window-installation subcontractor did not install or work directly with the EIFS system. Id. at *20. The denial by the subcontractor's insurer thus rendered insurance coverage illusory because all the work done by the subcontractor was necessarily exterior. Id. at *24. Whereas in this case, the dispute is over a general contractor's CGL policy and coverage for work done by the general's subcontractors. Unlike in Amerisure , the purpose of obtaining coverage under Phoenix's CGL policies was not solely for exterior work on the Inn, ECF No. 30 at 4, and thus insurance coverage here is not illusory. Likewise, in Capitol Specialty , the issue was EIFS installed prior to the insured's work on the building commenced, and "the scope of repairs needed to repair and correct [the subcontractor's] work did not contain repairs to the EIFS or any damage associated with the EIFS." Capitol Specialty , 2012 WL 1252638, at *3. By contrast, in this case the issue is an EIFS installed at or near the same time Henning's other subcontractors worked on the Inn, and the repairs did contain some damages associated with the EIFS.
What is more, most of the above-mentioned EIFS cases are unpublished decisions and are not binding on this Court. See generally Amerisure Ins. Co. , 2017 WL 3584896, at *20. BITCO Nat'l Ins. Co. is one published decision relevant to the scope of the EIFS exclusion at issue in this case, and it disagrees with the analysis in Amerisure and denies coverage under the EIFS exclusion for property damage caused by an exterior component of a building that had EIFS installed. BITCO Nat'l Ins. Co. , 379 F. Supp. 3d at 1242 ("[The argument that coverage is illusory] is incorrect .... [F]or an exclusion to render a policy's coverage illusory, it must ‘completely contradict the insuring provisions,’ and ‘eliminate all—or at least virtually all—coverage in a policy.’ " (quoting Interline Brands, Inc. v. Chartis Specialty Ins. Co. , 749 F.3d 962, 966 (11th Cir. 2014) ; Zucker for BankUnited Fin. Corp. v. U.S. Specialty Ins. Co. , 856 F.3d 1343, 1352 (11th Cir. 2017) )).
Here, determining whether this case aligns with similar cases granting coverage despite the existence of an EIFS exclusion requires classifying the WRB as an interior or exterior component or feature. If Henning is correct that the WRB is an interior component, then a fact-finder could reasonably conclude that property damage caused by the missing second layer of WRB is a covered occurrence under Phoenix's CGL policies. See, e.g. , Luxury , 2003 WL 22116202, at *17 (granting coverage despite EIFS exclusion because several alleged construction defects were caused by interior components, e.g. , the crawl space, stairs, water heater, and dishwasher drain hose). But if Phoenix is correct that (a) the WRB is considered an exterior component of the Inn, and (b) the damages were caused by an exterior component of the Inn, then a fact-finder could reasonably conclude coverage should be denied under the EIFS exclusion.
Therefore, the Court holds there is a genuine, factual dispute over whether the WRB is considered an exterior component, fixture, or feature of the Inn. The Court holds this factual dispute over whether the WRB was an exterior component of the Inn—and whether the WRB was the cause of the Inn's damage—directly relates to the essential elements of Henning's breach-of-contract claim and is therefore material. Because the Court finds a genuine dispute of material fact exists, the Court need not address the other elements of Henning's breach-of-contract claim nor its alternative arguments for coverage under Phoenix's CGL policy. Phoenix has the burden of proving the EIFS exclusion applies. At this stage, Phoenix cannot meet its burden until a fact-finder resolves the genuine dispute of material fact over whether the missing layer of WRB was the primary cause of property damage at the Inn, and whether the WRB is considered an exterior component of the Inn subject to the EIFS exclusion.
IV. CONCLUSION
For the foregoing reasons, Phoenix's Motion for Summary Judgment (ECF No. 21) is DENIED, and Henning's Cross-Motion for Partial Summary Judgment (ECF No. 25) is DENIED.
IT IS SO ORDERED.