Naturlac sought recovery not for loss of use of the formula, but for lost profits resulting from the loss of use. In T.E. Ibberson Co. v.American Foreign Ins. Co., 346 N.W.2d 659, 661-63 (Minn.App. 1984), this court construed work-product exclusions in a general liability policy, one of which was identical to exclusion (n) in I.F.P.'s policy with Western National. In Ibberson, the insured had constructed a grain elevator for a client.
While ordinarily all evidentiary doubts are resolved against the party to whom summary judgment has been granted, where the parties have agreed there is no evidentiary doubt to be resolved, the lower court's determination is to be sustained unless it is without reasonable support in the evidence. T.E. Iberson Co. v. American Foreign Ins. Co., 346 N.W.2d 659, 661 (Minn.App. 1984) (citing Telex Corp. v. Data Products Corp., 271 Minn. 288, 291, 135 N.W.2d 681, 685 (1965)). The facts in this case are undisputed, and the only issue is whether the trial court reasonably construed the policy provisions.
1. While ordinarily all evidentiary doubts are to be resolved against the party to whom summary judgment has been granted, where the parties have agreed that there is no evidentiary doubt to be resolved, the lower court's determination is to be sustained unless it is without reasonable support in the evidence. T.E. Ibberson Co. v. American Foreign Insurance Co., 346 N.W.2d 659, 661 (Minn.Ct.App. 1984). Here there is no evidentiary dispute; rather this is a question of contract interpretation.
* * * If any of the claims asserted against the insured fall within the scope of coverage, the insurer has a duty to defend.T.E. Ibberson Co. v. American Foreign Insurance Co., 346 N.W.2d 659, 661 (Minn.App. 1984) (citations omitted). It is not disputed that the damage to the house was an "occurrence" within the meaning of the Transamerica policy.
Subsequent Minnesota cases, however, have treated loss of use resulting from defective construction as outside the coverage of policies containing the same language as those involved in this case. Quality Homes, Inc. v. Bituminous Casualty Corp., 355 N.W.2d 746 (Minn.Ct.App. 1984); T.E. Ibberson Co. v. American and Foreign Ins. Co., 346 N.W.2d 659 (Minn.Ct.App. 1984). We are satisfied that the Supreme Court of Minnesota would agree with these holdings of an intermediate appellate court, because they are compelled by the plain words of the policies.
Knutson Constr. Co. v. St. Paul Fire Marine Ins. Co., 396 N.W.2d 229, 235 (Minn. 1986); Carpole's Inc. v. Insurance Co. of N. America, 544 F. Supp. ¶ (D.Minn. 1982); T.E. Ibberson Co. v. American Foreign Ins. Co. 346 N.W.2d 659 (Minn.Ct.App. 1984). The facts of this case fall squarely within this exclusion, Home argues, because the settlement agreement only obligates Marvin to provide replacement products at discounted prices.
See also U.S. Fire Ins. Co. v. Colver, 600 P.2d 1 (Alaska 1979); Quality Homes, Inc. v. Bituminous Casualty Corp., 355 N.W.2d 746 (Minn. Ct. App. 1984); T.E. Ibberson Co. v. American Foreign Ins. Co., 346 N.W.2d 659 (Minn. Ct. App. 1984). The reasoning in these decisions is persuasive, and although we know of one State court which has held the contrary, Mid-United Contractors, Inc. v. Providence Lloyds Ins. Co., 754 S.W.2d 824, 826 (Tex. Ct. App. 1988), we follow what is clearly the majority view.
In so holding this court also relied on Haugan et al. v. Home Indemnity Co. et al., 86 S.D. 406, 197 N.W.2d 18 (1972), and Home Indemnity v. Miller, 399 F.2d 78 (8th Cir. 1968), which stated the exclusion applied to claims for damages arising from the internal defectiveness of the insured's own work product. For cases where other jurisdictions addressing similar exclusions in liability insurance contracts have reached the same conclusion, see T.E. Ibberson Co. v. American Foreign Ins., 346 N.W.2d 659 (Minn.App. 1984); Nationwide Mut. Ins. v. Wenger, 222 Va. 263, 278 S.E.2d 874 (1981); Indiana Ins. Co. v. DeZutti, 408 N.E.2d 1275 (Ind. 1980); cf. Ohio Cas. Ins. Co. v. Terrace Enterprises, Inc., 260 N.W.2d 450 (Minn. 1977).
The insured can be held responsible only for risks within the named insured's control. See Terrace Enter., 260 N.W.2d at 454; T.E. Ibberson Co. v. American Foreign Ins. Co., 346 N.W.2d 659, 662 (Minn.App. 1984). In granting summary judgment, the district court did not address the control issue.
See Quality Homes, Inc. v. Bituminous Casualty Corp., 355 N.W.2d 746, 749 (Minn.App. 1984), pet. for rev. denied (Minn. Feb. 15, 1985); T.E. Ibberson Co. v. American Foreign Ins. Co., 346 N.W.2d 659, 661-62 (Minn.App. 1984). The judgment creditors argue the damage was not to the insured's product, the seed potatoes, but to the judgment creditors' product, their potato crop.