Selective Way Insurance Co. v. CSC General Contractors, Inc., 994 F.3d 952

Background

CSC General Contractors built a store and parking lot for Acme; CSC subcontracted concrete mixing/pouring to Glosson Group, LLC. Glosson's commercial general liability policy (Selective Way) named subcontractors’ contractors as additional insureds by blanket endorsement.
Acme sued CSC for parking-lot defects (scaling, cracking, pop-outs), alleging use of 3,000-psi concrete and poor workmanship. CSC tendered defense to Selective; Selective denied coverage on two grounds: CSC was not an additional insured, and Glosson had no contractual duty to defend/indemnify.
CSC pursued a third-party claim against Glosson; an arbitrator found Glosson owed CSC indemnification for Acme’s damages. CSC settled with Acme.
Selective sued in federal court seeking a declaratory judgment; cross-motions for summary judgment resulted in a district-court ruling for Selective.
On appeal, the Eighth Circuit reversed and remanded: it held CSC was an additional insured under the policy as damage was caused in part by Glosson’s handling of cement (a “product”), estopped Selective from asserting coverage defenses not in its denial letter, and found disputed facts on CSC’s bad-faith claim that precluded summary judgment.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether CSC is an additional insured under Glosson's policy	CSC: blanket endorsement covers damage caused by Glosson’s "product" (mixed cement handled by Glosson)	Selective: once mixed/poured/hardened the cement became real property, not a "product," so no coverage	Court: damage resulted at least in part from handling of cement before hardening; cement is a "your product" → CSC is an additional insured
Whether Selective may rely on coverage grounds not stated in its denial letter (estoppel)	CSC: insurer is estopped from raising new denial grounds because it relied on Selective's limited denial and was prejudiced	Selective: district court may consider all coverage issues; no estoppel	Court: insurer that denies on specific grounds and induces reliance may be estopped from later raising other grounds; Selective is estopped from asserting new grounds it raised only in this suit
Whether Selective denied coverage in bad faith	CSC: denial was unreasonable given the complaint/arbitrator finding and Selective’s prior statements — bad faith	Selective: coverage was fairly debatable and denial was reasonable	Court: bad-faith is ordinarily a question of fact; there are disputed material facts on reasonableness → summary judgment improper on bad-faith claim
Whether appellee (Selective) waived challenge to additional-insured ruling by not cross-appealing	CSC: Selective waived attack by failing to cross-appeal district court’s finding that CSC was an additional insured	Selective: may defend the judgment on any ground supported by the record even if it rejects district court’s reasoning	Court: appellate review may affirm on any record-supported ground; it considered additional-insured issue and resolved it on the merits

Key Cases Cited

Torgerson v. City of Rochester, 643 F.3d 1031 (8th Cir. 2011) (summary judgment standard; de novo review)
Wisness v. Nodak Mut. Ins. Co., 806 N.W.2d 146 (N.D. 2011) (principles for construing insurance policies and ambiguities)
D.E.M. v. Allickson, 555 N.W.2d 596 (N.D. 1996) (insurer estoppel where disclaimer relied on limited grounds and caused prejudice)
Schultze v. Cont'l Ins. Co., 619 N.W.2d 510 (N.D. 2000) (duty to defend arises if complaint gives potential for coverage)
Tibert v. Nodak Mut. Ins. Co., 816 N.W.2d 31 (N.D. 2012) (duty to defend measured at time defense is tendered)
Hartman v. Est. of Miller, 656 N.W.2d 676 (N.D. 2003) (insurer not bad-faith if claim is fairly debatable; bad-faith typically a fact question)
Kyllo v. Northland Chemical Co., 209 N.W.2d 629 (N.D. 1973) (insurer's duty to defend governed by claimant's pleading)
Jennings v. Stephens, 574 U.S. 271 (2015) (appellee may urge any matter in the record in support of the judgment)