United States District Court, D. Utah
THE CINCINNATI SPECIALTY UNDERWRITERS INSURANCE COMPANY, a Delaware Corporation, Plaintiff,
GREEN PROPERTY SOLUTIONS LLC, a Utah limited liability company; RIDGEBROOK OWNERS ASSOCIATION, a Washington non-profit corporation, Defendants.
MEMORANDUM DECISION AND ORDER
Dee Benson United States District Judge
the court is Defendant's Motion for Summary Judgment
pursuant to Federal Rule of Civil Procedure 56. (Dkt. No.
16.) Also before the court is Plaintiff's Motion for
Summary Judgment. (Dkt. No. 30.) Both motions have been fully
briefed by the parties, and the court has considered the
facts and arguments set forth in those filings. Pursuant to
civil rule 7-1(f) of the United States District Court for the
District of Utah Rules of Practice, the Court elects to
determine the motions on the basis of the written memoranda
and finds that oral argument would not be helpful or
necessary. DUCivR 7-1(f).
Green Property Solutions, LLC (“Green Property”)
is a construction company insured under a commercial general
liability policy (“CGL Policy”) issued by
Plaintiff Cincinnati Specialty Underwriters Insurance Company
Ridgebrook Owners Association (“Ridgebrook”)
hired Green Property to blow insulation into the attics of
several condominiums. On December 14, 2018, Ridgebrook filed
a lawsuit in the state of Washington (“Underlying
Complaint”) against Green Property, alleging that the
blown-in insulation work performed by Green Property
negligently blocked the building's ventilation ports and
insect screens. (Dkt. No. 2, Ex. B.) These blocked
ventilation ports allegedly led to moisture buildup in the
attics and resulted in substantial water damage to the roof
plywood sheathing in the condominiums.
service of the Underlying Complaint, Green Property tendered
its defense of the Underlying Complaint to Cincinnati.
Cincinnati refused to defend Green Property, claiming that
the CGL Policy does not cover any of the claims in the
Underlying Complaint. On February 7, 2019, Cincinnati filed
its Complaint for Declaratory Judgment in this action, asking
for a declaration that Cincinnati owes no duty to defend or
indemnify Green Property in the Underlying Complaint. (Dkt.
Green Property and Cincinnati now move for summary judgment.
(Dkt. Nos. 16, 30.) Cincinnati argues that the property
damage alleged in the Underlying Complaint was not caused by
an “occurrence” and therefor not covered by the
CGL Policy. Cincinnati also argues that several exclusions in
the CGL Policy apply to disqualify Green Property from
coverage in the Underlying Complaint. Green Property argues
that it is entitled to a defense because the allegedly
defective blown-in insulation constitutes an
“occurrence” within the meaning of the CGL
Policy, and because no other exclusions in the CGL Policy
apply. Green Property also argues that Cincinnati has acted
in bad faith by refusing to provide a defense against the
Rule of Civil Procedure 56 permits the entry of summary
judgment in matters where “there is no genuine dispute
as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed.R.Civ.P. 56(a). The
party seeking summary judgment has the burden of showing
“that there is no genuine issue of material fact,
” and the court must “construe all facts, and
reasonable inferences therefrom, in favor of the non-moving
party.” WKB Enters., Inc. V. Ruan Leasing Co.,
838 F.Supp. 529, 532 (D. Utah 1993). “For purposes of
summary judgment, … the court examines the evidence to
determine if a reasonable jury could return a verdict in
favor of the nonmoving party. If it can, summary judgment
should be denied.” Id.
Utah law, an insurer has a duty to defend its insured against
“a liability claim which is covered or which is
potentially covered.” Summerhaze Co. v. Fed.
Deposit Ins. Corp., 332 P.3d 908, 920 (Utah 2014).
Whether a claim is covered is determined by comparing the
language of two documents: the insurance policy and the
underlying complaint. See Benjamin v. Amica Mut. Ins.
Co., 140 P.3d 1210, 1214 (Utah 2006). “If the
language found within the collective ‘eight
corners' of these documents [the underlying complaint and
the insurance policy] clearly and unambiguously indicates
that a duty to defend does or does not exist, the analysis is
complete.” Equine Assisted Growth & Learning
Ass'n v. Carolina Cas. Ins. Co., 266 P.3d 733, 737
the CGL Policy at issue only covers property damage caused by
an “occurrence, ” which is defined as “an
accident including continuous or repeated exposure to
substantially the same general harmful conditions.”
(Dkt. No. 16 at 9.) Damage that is not an
“occurrence” or “accident” is not
covered under the CGL Policy. Under Utah law, property damage
may be deemed nonaccidental in two different ways. See
N.M. on behalf of Caleb v. Daniel E., 175 P.3d 566, 569
(Utah 2008). First, damage is nonaccidental if it is intended
by the insured. Id. Second, and more important to
this matter, damage is nonaccidental “if it is the
natural and probable consequence of the insured's act or
should have been expected by the insured.” Id.
while “negligence can give rise to an
occurrence, ” damage that is a natural and probable
consequence of the insured's actions does not qualify as
such an occurrence. Cincinnati Ins. Co. v. AMSCO
Windows, 593 Fed.Appx. 802, 808 (10th Cir. 2014).
Moreover, “[w]hether damaged property underlying a
claim is the direct product of negligent conduct or, instead,
is one or more steps removed from the alleged product of
negligent conduct may determine whether an insured expected
that damage to result.” Id.
to the Underlying Complaint, the damage to the roof was a
direct product of Green Property's own alleged
construction defects. While blowing insulation into the
attics of the condominiums, Green Property allegedly
performed negligently by blocking the ventilation ports in
the attics. The subsequent moisture buildup and water damage
was a natural and probable result of the lack of ventilation
caused directly by Green Property's allegedly defective
work. Thus, the property damage alleged in the Underlying
Complaint was not caused by an “occurrence” and
is not covered by ...