American Home Assurance Co. v. Cat Tech L.L.C.
660 F.3d 216
5th Cir.2011Background
- Cat Tech serviced Ergon Refining's D-651 hydro-treating reactor; January 2005 work included unloading catalyst, removing and reinstalling internals, and loading catalyst.
- A January 2005 high-pressure drop led to a reactor shutdown; February 2005 Cat Tech returned to repair damaged internals and load additional catalyst.
- A second major pressure drop occurred during start-up in February 2005; October 2005 another shutdown occurred with a different contractor performing repairs.
- Arbitrators found Cat Tech liable for damage to the reactor internals due to misplacement of rope packing around Bed 3 Johnson screens and for the February incident; awarded Ergon $1,973,180 plus interest, fees, and an offset for unpaid contract price.
- Cat Tech sought indemnity from its insurers, AHA (CGL) and NUFIC (umbrella); insurers denied coverage citing the 'your work' exclusions; district court granted summary judgment for insurers; Cat Tech appealed.
- The Fifth Circuit reversed and remanded, holding that the 'your work' exclusion may preclude coverage for Cat Tech's work only if the damage is limited to parts Cat Tech worked on; further fact-finding was required.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the your work exclusion preclude coverage for damage to Cat Tech's own work? | Insurers maintain exclusion bars any damage to Cat Tech's work. | Exclusion should not bar damages to third-party property damaged by Cat Tech's work; only defective work damages are barred. | Exclusion precludes damage to parts Cat Tech worked on; damage to other reactor components remains potentially covered. |
| Is the exclusion applicable only if damage is limited to parts Cat Tech repaired or serviced? | Exclusion applies to all damage to Cat Tech's work components. | Exclusion does not bar damage to components Cat Tech did not repair. | Exclusion precludes coverage for damage to the damaged parts of the reactor that Cat Tech serviced; does not preclude coverage for damage to parts not worked on by Cat Tech. |
| Did the district court err in granting summary judgment based on the arbitration award? | Award confirms liability and supports exclusion. | Award is vague about the specific damaged parts and their relation to Cat Tech's work; insufficient to apply exclusion. | District court erred; remand for further fact-finding to determine the scope of damage linked to Cat Tech's work. |
| May the district court consider expert reports on remand when applying the exclusion? | Expert testimony supports application of exclusion. | Not necessary at this stage; factual development required. | Not reached on appeal; remand may require evaluating expert testimony. |
Key Cases Cited
- Wilshire Ins. Co. v. RJT Constr., L.L.C., 581 F.3d 222 (5th Cir. 2009) (your work exclusion covers third-party damage from insured's repairs)
- Volentine v. Travelers Ins. Co., 578 S.W.2d 501 (Tex. Civ. App. Texarkana 1979) (exclusion precludes damage to insured's own work, but covers other property damage from defective work)
- T.C. Bateson Constr. Co. v. Lumbermens Mut. Cas. Co., 784 S.W.2d 692 (Tex. App. 1989) (your work exclusion clearly denies coverage for damage to insured's work that is not defective)
- Eulich v. Home Indem. Co., 503 S.W.2d 846 (Tex. App. Dallas 1974) (your work exclusion excludes liability for damage to the building resulting from faulty workmanship)
- Mid-Continent Cas. Co. v. JHP Dev., Inc., 557 F.3d 207 (5th Cir. 2009) (distinguishes your work exclusion from a 'that particular part' exclusion)
- Dorchester Dev. Corp. v. Safeco Ins. Co., 737 S.W.2d 380 (Tex. App. Dallas 1987) (particular exclusions differ from 'your work' exclusion)
- Mid-United Contractors, Inc. v. Providence Lloyds Ins. Co., 754 S.W.2d 824 (Tex. App. Fort Worth 1988) (limitation distinctions among exclusions relevant to coverage)
- Mid-Continent Cas. Co. v. JHP Dev., Inc., 557 F.3d 207 (5th Cir. 2009) (distinguishes exclusions and scope of coverage)
- Valmont Energy Steel, Inc. v. Commercial Union Ins. Co., 359 F.3d 770 (5th Cir. 2004) (products-completed operations limitation does not create coverage, governs damages amount)