Opinion
Case No. A3-97-23.
Filed June 22, 1999.
Summary : Court granted defendant insurer's renewed motion for summary judgment because the was no genuine issue of material fact that the payments/credits made by insured were for the costs of replacement doors and the costs associated with replacing the defective doors, both of which are excluded by the "your products" exclusion of the insurance policy at issue.
MEMORANDUM AND ORDER
I. INTRODUCTION
Before the Court is St. Paul's renewed motion for summary judgment, (docket # 72). Preliminarily, the Court hereby GRANTS St. Paul's motion for leave to file a reply brief in support of the renewed summary judgment motion, (docket # 94). The Court also acknowledges receipt of St. Paul's supplemental memorandum filed upon request of the Court. Oral argument on the matter was heard on Monday, June 14, 1999.
The background of this case has been fully recited by the Court in its Order of January 8, 1999, and will not be repeated here. Upon consideration of the written and oral presentations of the parties, St. Paul's motion for summary judgment is hereby GRANTED, and PrimeWood's complaint and cause of action is DISMISSED. In light of this ruling, St. Paul's motions in limine, (docket ## 79, 80 85), are hereby DENIED AS MOOT.
II. DISCUSSION A. Summary Judgment Standard
Summary judgment is appropriate only when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). A fact is "material" if it might affect the outcome of a case, and a factual dispute is "genuine" if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Churchill Bus. Credit, Inc. v. Pacific Mut. Door Co., 49 F.3d 1334, 1336 (8th Cir. 1995).
The "basic inquiry" for purposes of summary judgment is "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." Quick v. Donaldson Co., Inc., 90 F.3d 1372, 1376 (8th Cir. 1996) (citing Anderson, 477 U.S. at 251-52). The Court's function is to determine whether a dispute is genuine; and, "[i]f reasonable minds could differ as to the import of the evidence," summary judgment is inappropriate. Id. at 1377 (citing Anderson, 477 U.S. at 250). This determination is made by reading the record in the light most favorable to the nonmoving party and drawing all "justifiable inferences" in the nonmovant's favor. Id. (citing Anderson, 477 U.S. at 255); see also Churchill, 49 F.3d at 1336 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)).
The moving party has the initial burden of demonstrating that there is no genuine issue of fact. Webb v. Lawrence County, 144 F.3d 1131, 1134 (8th Cir. 1998) (citing Celotex Corp., 477 U.S. at 323). Once the moving party has met this burden, however, the nonmoving party cannot simply rest on the mere denials or allegations in the pleadings; rather, the nonmovant must set forth specific facts showing that there is a general issue for trial.Id. (citing Fed.R.Civ.P. 56(e)).
B. Analysis
St. Paul asserts (1) that the damages sustained by PrimeWood do not constitute "property damage" because PrimeWood cannot prove "physical damage to tangible property of others" or "loss of use of tangible property of others," and (2) that the payments/credits made by PrimeWood were for the costs of the replacement doors and the costs associated with replacing the defective doors, both of which are excluded by the "your products" exclusion. PrimeWood counters that (1) there has been a loss of use to property of others, (2) PrimeWood has made payment for such loss of use, (3) the "your products" exclusion is inapplicable, and (4) in any event, installation costs are recoverable. The Court does not fully agree with either party.
By Order of January 8, 1999, this Court concluded and explained that:
1. Under the St. Paul policies at issue, St. Paul agreed to pay amounts PrimeWood is legally required to pay as damages for, among other things, property damage, as that term is defined in the policy;
2. Property damage, as defined, includes loss of use of tangible property of others that isn't physically damaged;
3. The goal of a Commercial General Liability policy is to protect the insured from the claims of injury or damage to others, but not to insure against economic loss sustained by the insured due to replacing its own defective products;
4. To the extent that PrimeWood seeks to recover for their own defective product, i.e., the doors, and costs associated with the replacement and or repair of the doors themselves, the "your products" exclusion precludes recovery;
5. The "impaired property" and "product recall" exclusions would not prohibit recovery; nonetheless, PrimeWood's recovery would be limited; and
6. The Court viewed proof of claims for loss of use of others as PrimeWood's primary obstacle to recovery.
The Court affirms its view that the "your products" exclusion precludes recovery for PrimeWood's own defective product, i.e., the doors, and costs associated with the replacement and or repair of the doors themselves, i.e., installation and other miscellaneous expenses. See Ex.s 13 16 Att. St. Paul Memo. Supp. Original Mot. Summ. J. (St. Paul CGL 89-90 policy, and 92-93 policy, respectively) (definition of "your products" includes warranties provided with products). The Court can reach no other conclusion than that installation and other miscellaneous expenses related to replacement of the insured's defective product are logically, naturally and properly classified under "your products" and warranty. Thus, PrimeWood's assertions that the "your products" exclusion is inapplicable, and in any event that installation costs are recoverable, are mistaken.
The Court recognizes that PrimeWood contends that since the Court found that the exception to the impaired property exclusion applies, that coverage exists, period, and that no other exclusion may bar recovery. The Court does not read Fisher so broadly. See Fisher v. American Family Mut. Ins., 579 N.W.2d 599, 602 (1998);see also Dundee Mut. Ins. Co. v. Balvitsch, 540 N.W.2d 609, 611 (N.D. 1995) ("when an insurance policy contains an exclusion to an exclusion from coverage, coverage exists for the exclusion to the exclusion"). PrimeWood fails to accede that in finding an exception to an exclusion, the Court merely determines that the particular exclusion at issue will not bar recovery. It does not necessarily follow that another exclusion can not apply. The Court can not assign liability where none was ever intended. The Court here reiterates that the "your product" exclusion limits the ultimate recovery under the policies at issue, notwithstanding the Court's determination that the exception to the "impaired property" exclusion was satisfied.
The Court acknowledges PrimeWood's assertion that at least the installation and other miscellaneous expenses should be recoverable under Geddes Smith, Inc. v. Saint Paul Mercury Indem. Co., 407 P.2d 868, 872 (Cal. 1964), in which it was held that the insurer was still liable for the expense of installing replacement doors and costs of removing defective doors notwithstanding that the costs of defective doors themselves were excluded. PrimeWood assumes strength in this position becauseGeddes was cited with approval by the North Dakota Supreme Court in Fisher. PrimeWood's reliance on Geddes is too simplistic and unpersuasive.
The court in Fisher cited Geddes as exemplar support of the proposition that the damage to the insured's product or work would be excluded under the policy at issue, but damage to other property caused by the insured's product or work was not excluded.Fisher, 579 N.W.2d at 605. This Court does not disagree with that premise. In Fisher, the policy at issue was determined to exclude coverage for replacement of the insured's product or the labor in applying the insured's product. Id. To the extent that PrimeWood relies on Geddes directly to support recovery under the policy for labor and miscellaneous costs associated with the replacement of its defective product because PrimeWood is not in the business of installation, the Court notes the importance of careful examination of specific policy language at issue.
The court in Geddes, dealt with policy language different than that present here, see 407 P.2d at 870 n. 1, and relied on the rule announced in Hauenstein v. Saint Paul Mercury Indem. Co., 65 N.W.2d 122 (Minn. 1954), which itself has since been discredited.See Kyllo v. Northland Chem. Co., 209 N.W.2d 629, 633 (N.D. 1973) (noting standard insurance contracts rewritten "in order to eliminate future decisions awarding coverage to insureds for products liability claims based on breach of warranty" and distinguishing previous case holdings which reached contrary decisions, specifically including Hauenstein); New Hampshire Ins. Co. v. Vieira, 930 F.2d 696, 698-701 (9th Cir. 1991) (noting attractiveness of Hauenstein, Geddes, and other cases and their expansive interpretation of "property damage," but recognizing modification of the definition of "property damage" to restrict the scope of coverage, and refusing to "transform a general liability insurance policy into a guarantee or contractual performance bond").
The Court here fails to see how, and PrimeWood can not seriously assert that, installation and other miscellaneous costs are "property damage," i.e., "physical damage to tangible property of others," or "loss of use of tangible property of others that isn't physically damaged," for which there is coverage.
Additionally, the Court remains of the view that a significant purpose or use of cabinetry is aesthetic; and, undoubtably, end-users of the defective doors at issue here suffered loss of use. Thus, St. Paul's assertion that they must prevail because PrimeWood cannot prove physical damage to, or loss of use of, tangible property of others is also mistaken.
Nonetheless, the issue is not simply whether end-users suffered a loss of use, but rather whether PrimeWood ever became "legally required to pay" for such loss of use or, viewing the issue more generously, even whether PrimeWood ever actually did pay out to anyone, either their customers or end-users, on that basis. Based on the deposition testimony of PrimeWood's four major customers representing approximately 80% of credits/payments made by PrimeWood in this matter, and the anecdotal affidavits of three end-users of the cabinetry, it is clear to the Court that the payments/credits made by PrimeWood were for the costs of the replacement doors and the costs associated with replacing the defective doors, both of which are excluded by the "your products" exclusion. See Ex.s 1, 4-8 Att. Bouslog Aff. Supp. Mot. Summ. J.; Aff.s of Zabriskie, Mundy, and Smith Supp. Pl. Opp. Def.'s Mot. Summ. J. Interestingly, the end-users attest that they were satisfied by replacement of the product; none mention a bonus or additional payment for their inconvenience or loss of use. See Zabriskie Aff. (replacement "was satisfactory to us"); Mundy Aff. (replacement "fully restored to my kitchen the . . . look that I had purchased"); Smith Aff.("[r]eplacement of the doors was a satisfactory correction to us").
PrimeWood's current assertion that they have made payment for loss of use damages is disingenuous and simply unsupported by the record. See, e.g., Koenig Depo. at 324-25, Ex. 1 Att. Bouslog Aff. Supp. Mot. Summ. J. (credits or direct payments to PrimeWood's customers were for replacement of the yellowed doors, labor, and perhaps freight associated with the replacement of the doors). St. Paul has demonstrated to the Court that there is no genuine issue of fact. See Webb, 144 F.3d at 1134; Fed.R.Civ.P. 56(c). PrimeWood cannot simply rest on mere denials, allegations, or argument; rather, PrimeWood is required to set forth specific facts showing that there is a general issue for trial. See id.; Fed.R.Civ.P. 56(e). PrimeWood has simply failed to do this.
It is apparent to the Court that PrimeWood is disappointed and frustrated with the Court's rulings of January 8, 1999, regarding coverage. It is also apparent that PrimeWood is not now seriously contending that a genuine factual issue regarding loss of use damages remains for a jury; rather, PrimeWood is trying to resurrect failed legal arguments and recharacterize damages. There is no genuine issue of material fact remaining to be determined by a factfinder; the evidence here is so one sided that St. Paul must prevail as a matter of law in this regard. See Fed.R.Civ.P. 56(c);Quick, 90 F.3d at 1376 (citation omitted). Thus, St. Paul's renewed motion for summary judgment is GRANTED.
While it is obvious that PrimeWood has paid dearly for the defective plastic foil covering on their cabinet components, which was likely due to no fault of its own, the business decision to warrant or otherwise stand behind its product, and make things right for its customers, is simply not the type of risk coverage for which was bargained for with St. Paul.
III. CONCLUSION
St. Paul's motion for leave to file a reply brief in support of the renewed summary judgment motion, (docket # 94), is GRANTED. St. Paul's renewed motion for summary judgment, (docket # 72), is GRANTED. St. Paul's motions in limine, (docket ## 79, 80 85), are DENIED AS MOOT. PrimeWood's complaint and cause of action are DISMISSED.
LET JUDGMENT BE ENTERED ACCORDINGLY.
IT IS SO ORDERED.
Summary : Court grants defendant's motion for leave to file renewed motion for summary judgment and defendant's motion for expedited hearing.
MEMORANDUM AND ORDER
Before the Court are motions by defendant St. Paul (1) for leave to file a renewed motion for summary judgment, and (2) motion for expedited hearing. Upon consideration by the Court, St. Paul's motion for leave to file a renewed motion for summary judgment and motion for expedited hearing are hereby GRANTED. Plaintiff PrimeWood is hereby ORDERED to file its response to defendant St. Paul's renewed motion for summary judgment on or before June 9, 1999. Oral argument will be heard on Monday, June 14, 1999, at 10:00 a.m. in Courtroom #1, Quentin N. Burdick United States Courthouse, Fargo, North Dakota. Parties will each be allotted 20 minutes for oral presentation.
IT IS SO ORDERED.
Summary : Court denied PrimeWood's motion to revise the Court's Order of May 26, 1999. Court convinced that it is appropriate to entertain the renewed motion for summary judgment.
MEMORANDUM AND ORDER
Before the Court is PrimeWood's motion to revise, (docket # __). The Court is fully aware of the magistrate's prior ruling, which at the time made, was completely appropriate. Nonetheless, in the interest of justice, the Court has determined that St. Paul's motion for summary judgment should be considered by the Court. PrimeWood's motion to revise is hereby DENIED.
IT IS SO ORDERED.