Cincinnati Insurance v. AMSCO Windows
921 F. Supp. 2d 1226
| D. Utah | 2013Background
- AMSCO manufactures windows; Nevada homeowners sue contractors for defects. AMSCO tendered defense to insurers; Cincinnati declined, seeking declaration of no duty to defend/indemnify AMSCO; Arrowood and AMSCO seek coverage; Chapter 40 notices in Nevada may trigger coverage only with insurer consent; framing issue is whether Utah law governs, and whether ‘occurrence’ includes resultant damages from faulty workmanship; court addresses burden of proof, policy language, and Utah law standards for duty to defend and exclusions.
- AMSCO’s position: defective workmanship causing damage to non-work-product property may be covered as an occurrence; burden on AMSCO/Arrowood to show coverage and defense costs.
- Cincinnati’s position: under Utah law, defective windows/negligent manufacturing does not constitute an occurrence; defense costs and indemnity not triggered; also challenges extrinsic-evidence framework and seeks exclusions to defeat coverage.
- This action is a diversity case with declaratory relief; the court applies Utah law on contract interpretation and occurrence; AMSCO/Arrowood move for summary judgment on coverage and defense costs; Cincinnati and Arrowood cross-move; court held hearings and issued rulings on multiple issues.
- Court’s posture: motions for summary judgment on occurrence, exclusions, and equitable contribution/indemnity; decision addresses whether Chapter 40 notices constitute a “suit” under policy; whether extrinsic evidence is permissible; and whether collateral estoppel bars Arrowood’s counterclaim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Cincinnati has a duty to defend AMSCO under Utah law | AMSCO/Arrowood argue occurrence-based coverage applies; Chapter 40 damages fall within ‘property damage’ from an occurrence | Cincinnati contends no occurrence; damages are merely the natural/foreseeable results of defective workmanship; exclusions apply | Partially yes; some resultant damages may constitute an occurrence under Utah law; narrow scope for exclusions applies |
| Whether ‘occurrence’ includes resultant damages from faulty workmanship | Under Utah law, damage to property other than the work product caused by faulty workmanship can be an occurrence | Under Utah law, neglectful or faulty workmanship alone is not an occurrence; focus on expectations/intent | Utah law would likely treat resultant damage as an occurrence; H.E. Davis/Linford misapplied; Caleb/Hoffman guidance favors coverage for resultant damages |
| Whether extrinsic evidence is needed or permissible to determine the duty to defend | If policy terms and complaint align, extrinsic evidence unnecessary | Extrinsic evidence may be relevant when contract terms tie defense to facts outside the complaint | Extrinsic evidence may be necessary where the duty to defend depends on facts beyond the face of the complaint |
| Whether Arrowood’s counterclaim for equitable contribution/indemnity is barred by collateral estoppel | Linford decision precludes Arrowood’s claim on the merits | Linford did not adjudicate Arrowood’s entitlement to indemnity; question not actually litigated | Collateral estoppel not applicable; Arrowood’s claim remains; summary judgment denied on that counterclaim |
| Whether Cincinnati’s exclusions apply to the Homeowner Claims | Exclusions (e.g., Expected or Intended Injury, Damage to Property, Your Product, etc.) should bar coverage | Exclusions do not conclusively bar coverage given potential ‘resultant damages’ | Exclusions resolved in AMSCO’s favor for some claims; summary judgment on exclusions granted in AMSCO’s favor to the extent excluded |
Key Cases Cited
- Nova Cas. Co. v. Able Const., Inc., 983 P.2d 575 (Utah 1999) (negligent misrepresentation not an occurrence; calibration of accident vs. misrepresentation)
- Hoffman v. Life Ins. Co., 669 P.2d 410 (Utah 1983) (accident defined as not the natural/probable result of insured’s acts; distinction from foreseeability)
- N.M. ex rel. Caleb v. Daniel E., 175 P.3d 569 (Utah 2008) (test is whether result was expected or anticipated, not whether foreseeable)
- Bartile Roofs, Inc. v. Employers Mut. Cas. Co., 618 F.3d 1153 (10th Cir. 2010) (Utah law focus on expected vs. unexpected; rejection of purely foreseeability standard)
- Equine Assisted Growth & Learning Ass’n v. Carolina Cas. Ins. Co., 266 P.3d 733 (Utah 2011) (duty to defend may hinge on extrinsic facts; contract terms may tie defense to outside facts)
- Lopez v. United Auto. Ins. Co., 2012 UT 10 (Utah 2012) (principles of interpreting insurance contracts and liberal construction in favor of insured)
- Sharon Steel Corp. v. Aetna Cas. & Sur. Co., 931 P.2d 127 (Utah 1997) (duty to defend broader than indemnification; depends on allegations and policy)
- Therkelsen v. United States Fidelity & Guar. Co., 2001 UT 48, 27 P.3d 555 (Utah 2001) (extrinsic evidence vs. complaint-based duty to defend; governs when terms are facially triggered)
- Green v. State Farm Fire & Cas. Co., 2005 UT App 564, 127 P.3d 1279 (Utah App. 2005) (occurrence defined; emphasis on fortuity and unexpected damages)
- H.E. Davis & Sons, Inc. v. North Pacific Insurance Co., 248 F.Supp.2d 1079 (D. Utah 2002) (foreseeability standard used; widely criticized in Utah context)