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National Union Fire Insurance Company of Pittsburg v. Viracon, Inc.

United States District Court, D. Minnesota

June 18, 2018

National Union Fire Insurance Company of Pittsburgh, PA, Plaintiff,
Viracon, Inc., Defendant.


          Paul A. Magnuson United States District Court Judge

         This matter is before the Court on Plaintiff's Motion for Summary Judgment. For the following reasons, the Court grants the Motion in part and denies it in part.


         Defendant Viracon, Inc., is an Owatonna, Minnesota-based company that manufactures architectural glass. Viracon's insulated glass products, called IGUs, are used primarily for the curtain walls of commercial buildings. (Am. Compl. (Docket No. 9) ¶ 1.) Beginning in approximately 2006, Viracon secured comprehensive general liability (“CGL”) insurance through Plaintiff National Union Fire Insurance Company of Pittsburgh. (Id. ¶ 73.) From 2006 to 2009, Viracon also had commercial umbrella liability insurance through National Union. (Id. ¶¶ 77, 82.)

         Viracon is a named Defendant in two state-court lawsuits relating to its IGUs.[1]These lawsuits involve the InterContinental Hotel in San Francisco (id. Ex. D), and a mixed-use building in Portland, Oregon, owned by a company called 12W (id. Ex. G). The InterContinental lawsuit alleges, among other things, defects in the manufacture and/or performance of the sealants Viracon and others used in manufacturing the IGUs or in attaching the IGUs to their frames. The 12W lawsuit contends that the opacifier film on the IGUs is defective, causing injury to the windows themselves and to property within the building that was exposed to sunlight.

         Nation Union accepted the defense of these lawsuits under a reservation of rights and brought this lawsuit seeking declarations regarding its duties toward Viracon. Specifically, Counts V and VI of the Amended Complaint seek a declaration that National Union has no duty to indemnify under the CGL policies and Count VII involves indemnification under the umbrella policies. Viracon then successfully moved to stay the matter pending the outcome of the underlying litigation. (Docket No. 26.)

         Trial in the Inter Continental lawsuit commenced in March 2017, but the case settled before the jury rendered a verdict. The 12W lawsuit is ongoing and has not yet been set for trial.

         National Union now argues that summary judgment in its favor is appropriate. It contends that the evidence presented in the InterContinental lawsuit establishes that the insurance policies do not provide coverage for the damages claimed in any of the lawsuits. It asks for a declaration that the cost to repair or replace the IGUs is not property damage under the policies and is precluded by policy exclusions in any event, and that therefore National Union has no indemnity obligation for either the InterContinental settlement or the 12W lawsuit.


         A. Standard of Review

         General principles of contract interpretation govern the construction of insurance contracts. Lobeck v. State Farm Mut. Auto. Ins. Co., 582 N.W.2d 246, 249 (Minn. 1998). Words in insurance contacts are “given their natural and ordinary meaning and any ambiguity in coverage is construed in favor of the insured.” Am. Family Ins. Co. v. Walser, 628 N.W.2d 605, 609 (Minn. 2001).

         As an initial matter, Viracon argues that National Union should be precluded from arguing that the “your work” exclusion precludes coverage for the damages claimed in the underlying lawsuits, because the Amended Complaint does not mention this exclusion and does not seek any relief regarding this exclusion. In its reply memorandum, National Union asserts that it reserved its rights under this exclusion because the Amended Complaint, ostensibly including “the relevant policy language in [its coverage] letters and cit[ing] the operative ‘your work' language in the [Amended] Complaint.” (Pl.'s Reply Mem. (Docket No. 42) at 13 n.8.) But National Union does not refer the Court to any documents in the record or cite to any paragraphs of the Amended Complaint that reference the “your work” exclusion.[2] The Court has reviewed the record, including the Amended Complaint and the coverage letters attached thereto, and finds no reference to the “your work” exclusion in any documents. (E.g., Am. Compl. Exs. G, F, H, and I.) Having failed to include any claim regarding the “your work” exclusion its pleadings, National Union cannot now amend those pleadings by argument. The Court will not consider the “your work” exclusion in evaluating National Union's Motion.

         B. Coverage

         Viracon has the burden to establish that the InterContinental settlement encompasses covered claims. See United Health Grp. Inc. v. Exec. Risk Specialty Ins. Co., 870 F.3d 856, 862 (8th Cir. 2017). This burden is two-fold: first Viracon must prove that the claims asserted against it in the InterContinental lawsuit are within the insurance policies' grant of coverage, and then Viracon must establish what portion of the settlement amount is allocated to covered claims. United Health Grp. Inc. v. Columbia Cas. Co., 47 F.Supp.3d 863, 873 (D. Minn. 2014) (Schiltz, J.); see also Exec. Risk, 870 F.3d at 863 (holding that insured “bears the burden to allocate the settlement between the potentially covered [claims] and the non-covered [claims] with enough specificity to permit a reasoned judgment about ...

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