Magnus, Inc. v. Diamond State Insurance Co.
545 F. App'x 750
10th Cir.2013Background
- Magnus, Inc. sues Diamond State Insurance Co. in a diversity action for breach of a CGL policy relating to a Kansas state suit against Precision Design Products.
- Precision manufactured adaptors for broadheads; Magnus alleges Precision used softer aluminum than specified, causing broadheads to stiffly bind to arrows.
- Magnus contends Precision’s intentional manufacturing defect caused damages, including loss of business reputation and profits.
- Precision entered into a CGL policy with Diamond State; Diamond State denied the claim after being notified of the Kansas suit.
- Precision settled with Magnus, assigned its CGL rights to Magnus, and Magnus sought defense and indemnification in the federal suit.
- The district court granted summary judgment against Magnus, holding no occurrence under the policy because the acts were intentional.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an intentional act can trigger coverage as an occurrence under the CGL policy. | Magnus argues unintended injury results from intentional acts; thus an occurrence exists. | Diamond State argues the acts were intentional and produced no accident. | Remanded for analysis of whether the acts caused unintended injury under Kansas law. |
| Whether Kansas law’s revised test for intentional injury applies and affects duty to defend. | Magnus relies on Park Univ. Enters. for an occurrence despite intent. | Diamond State argues revisor test not addressed, but aligns with Kansas law. | Remand to determine applicability of the revised test and its impact. |
| Whether the district court erred by failing to assess whether Precision’s willful conduct caused an unintended injury under either test. | District court did not evaluate unintended injury under two tests. | Not explicitly addressed in briefs. | Remand for consideration of this issue and other defenses to indemnification. |
Key Cases Cited
- Park Univ. Enters. v. Am. Cas. Co., 442 F.3d 1239 (10th Cir. 2006) (intentional act may cause unintended injury for coverage purposes)
- Thomas v. Benchmark Ins. Co., 179 P.3d 421 (Kan. 2008) (adopts revised test for intentional injury)
- Maryland Casualty Co. v. Mike Miller Cos., 715 F. Supp. 321 (D. Kan. 1989) (discusses duty to defend vs. indemnify under CGL)
- Hamilton Die Cast, Inc. v. U.S. Fid. & Guar. Co., 508 F.2d 417 (7th Cir. 1975) (damages to business reputation considered intangible)