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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
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No. 20-14081
Non-Argument Calendar
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D.C. Docket No. 2:18-cv-00151-RWS
MORGAN CONCRETE COMPANY,
Plaintiff-Appellant,
versus
WESTFIELD INSURANCE COMPANY,
Defendant-Appellee.
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Appeal from the United States District Court
for the Northern District of Georgia
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(February 26, 2021)
Before WILLIAM PRYOR, Chief Judge, MARTIN and BRANCH, Circuit Judges.
PER CURIAM:
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Morgan Concrete Company appeals the summary judgment against its
complaint for breach of contract and for a declaratory judgment that it was owed a
defense by and indemnification from Westfield Insurance Company. Morgan
Concrete sold its product to another contractor that refused to pay for it after
discovering that the concrete failed to comply with engineering and quality
requirements. Westfield provided a defense to Morgan Concrete under a
reservation of rights, but Westfield withdrew the defense after learning that
Morgan Concrete blamed the defect in the product on the other contractor and that
it had withheld payment to recover its costs to strengthen the defective product.
The district court ruled that Westfield had no duty to defend or indemnify because
Morgan Concrete caused no “property damage” under the insurance policy and
because the policy excluded coverage for the property damage that Morgan
Concrete suffered. We affirm.
I. BACKGROUND
Westfield issued an insurance policy to Morgan Concrete that included
coverage for “those sums that [it] becomes legally obligated to pay as damages
because of . . . ‘property damage’” “caused by an ‘occurrence.’” The policy
defined “property damage” as either “[p]hysical injury to tangible property,
including all resulting loss of use of that property” or the “[l]oss of use of tangible
property that is not physically injured.” And the policy defined “occurrence” as “an
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accident, including continuous or repeated exposure to substantially the same
general harmful conditions.” The policy contained several exclusions to coverage,
including “property damage” to the Morgan Concrete “product.”
While the policy was in effect, Georgia Concrete hired Morgan Concrete to
supply ready-mix concrete for a multi-level building being constructed at Clemson
University in South Carolina. The specifications required concrete that could
withstand 5,000 pounds per square inch. During construction of the second floor,
Georgia Concrete encountered strength deficiencies with the concrete supplied by
Morgan Concrete. Georgia Concrete ordered higher strength ready-mix concrete
from Morgan Concrete for future pours on the second-level slab but encountered
the same strength deficiency. Georgia Concrete refused to pay Morgan Concrete,
which, in turn, refused to supply more concrete.
Morgan Concrete attributed the strength issues to the mishandling of its
product by Georgia Concrete. Morgan Concrete blamed Georgia Concrete for
exposing the concrete to high ambient temperatures and for failing to comply with
standards established by the American Society for Testing and Materials to sample,
maintain, and test the concrete. Those errors, Morgan Concrete contended, caused
its ready-mix concrete to dry out or to be “cooked,” which lessened its strength.
The owner of the project, the general contractor, and Georgia Concrete
elected to repair rather than replace the second-level slab. Project consultants
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identified a “product failure (low break) problem” and a “lower than required 5000
PSI” in the second-level slab. The general contractor notified Georgia Concrete
and Morgan Concrete that they were liable for two incidents of concrete failure.
Morgan Concrete filed a mechanic’s lien on the building project for
$408,733.35. Morgan Concrete also filed a claim with Westfield, which launched
an investigation. Westfield provided a defense to Morgan Concrete under a
reservation of rights. Westfield warned Morgan Concrete that its claim might not
constitute “property damage” caused by an “occurrence” under the insurance
policy or might be barred by several of its exclusions from coverage.
Georgia Concrete proposed to apportion repair costs by absorbing $98,796
and requesting $116,046 from Morgan Concrete. Georgia Concrete stated that its
expenditures included the premium it had paid Morgan Concrete for higher-
strength concrete; an x-ray taken of the second-level slab; the addition of fiber
mesh “tendons” and other materials to strengthen the second-level slab; anticipated
future expenses for making cosmetic repairs to the second-level slab; additional
labor; and a premium paid to another company to supply concrete for the third
level of the building.
Morgan Concrete rejected the proposal. The company disclaimed
responsibility for the strength of its concrete after dispensing the product from its
trucks. Morgan Concrete responded that, after it advised Georgia Concrete several
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times how to handle the concrete, Georgia Concrete disregarded standard practices
and failed to ensure that a certified field technician made and cured samples of the
concrete. Morgan Concrete identified two deliveries in July when test cylinders
showed that its concrete exceeded the strength of 5,000 pounds per square inch.
Morgan Concrete sued Georgia Concrete in a South Carolina court for
foreclosure on the mechanic’s lien bond, breach of contract, and quantum meruit,
and Georgia Concrete filed an answer and a counterclaim for breach of contract.
Georgia Concrete alleged that Morgan Concrete breached its agreement to provide
concrete of a specified strength, which required Georgia Concrete to “perform
repairs on the portions of the Project in which [the inferior] concrete was used,
including but not limited to structural repair work [costing] in excess of $115,000
. . . on the Project’s Level 2 Slab.”
Westfield notified Morgan Concrete that it was withdrawing its defense.
Westfield determined that Morgan Concrete caused Georgia Concrete no “property
damage,” which its policy defined as “[p]hysical injury to tangible property,
including all resulting loss of use of that property.” Westfield also determined that
the spoilage of the concrete Morgan Concrete supplied was barred by exclusions in
the policy for “‘Property damage’ to [its] product,” “‘Property damage’ to [its]
work,” and “Damages claimed for any loss, cost, or expense incurred by [it] or
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others for the loss of, . . . inspection, repair, replacement, [or] adjustment . . . of
‘[its] product,’ ‘[its] work,’ or ‘Impaired Property.’”
Morgan Concrete filed a complaint in the district court that Westfield
breached its contract and owed a duty to resume its defense of and to indemnify
Morgan Concrete for the costs it had incurred in its action against Georgia
Concrete. Westfield moved for summary judgment and argued that its policy did
not cover the claim for the reasons it had earlier disclosed to Morgan Concrete.
The district court ruled that Westfield had no duty to defend or indemnify
and entered summary judgment in its favor. The district court “presume[d] the
existence of an occurrence” based on “the unexpected (and unintended) self-
desiccation of the concrete used for the Level 2 Slab,” but determined the
“property damage” was to the concrete and not to any “other component parts of
the Level 2 Slab” or to “the structure as a whole.” Alternatively, the district court
determined that the “property damage” to the concrete supplied by Morgan
Concrete “f[ell] squarely within the Policy’s Exclusion for Damage to Product”
and that the “remediation of the Level 2 Slab . . . to ameliorate problems with the
concrete” was excluded from coverage as damage to the work of Morgan Concrete.
II. STANDARD OF REVIEW
We review de novo a summary judgment. Am. Gen. Life Ins. Co. v.
Schoenthal Family, LLC,
555 F.3d 1331, 1337 (11th Cir. 2009).
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III. DISCUSSION
Morgan Concrete argues that Westfield was obligated to defend and
indemnify it in the state action. Morgan Concrete argues that the concrete it
supplied caused “property damage” because Georgia Concrete had to purchase and
install external cable support systems to strengthen the slab. Morgan Concrete also
argues that the exclusions for damage to its product or work do not apply because
its “bad ready-mix concrete damaged other subcontractors’ property” and the
“Level 2 Slab.”
In the policy that Westfield issued, “property damage” is defined as
“physical injury to tangible property, including all resulting loss of use of that
property.” We must interpret the language in the policy consistent with Georgia
law. See Amerisure Mut. Ins. Co. v. Auchter Co.,
673 F.3d 1294, 1300 (11th Cir.
2012). The Georgia Supreme Court has held that the term “property damage”
means damage to property that was previously undamaged “and to damage beyond
mere faulty workmanship.” Taylor Morrison Servs., Inc. v. HDI-Gerling Am. Ins.
Co.,
746 S.E.2d 587, 591 (Ga. 2013). As a result, there is no coverage for
“liabilities for the repair or correction of the faulty workmanship of the insured.”
Id.
The only “property damage” identified in the state lawsuit was damage to
the product that Morgan Concrete supplied. Morgan Concrete alleged in its
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complaint that its concrete was damaged through mishandling by Georgia
Concrete. Georgia Concrete alleged in its counterclaim that it incurred economic
losses to strengthen the concrete.
Westfield had no duty to continue to defend because there was no claim for
“property damage” that was covered by the insurance policy. The insurance policy
excluded from coverage “property damage” to a “product” that was
“manufactured, sold, handled or distributed” by Morgan Concrete. That exclusion
applied to the allegations by Morgan Concrete that Georgia Concrete damaged its
product. The policy covered “property damage” that Morgan Concrete caused, but
the claim against it was for breach of contract to recover costs attributable to
repairing its defective product. And Morgan Concrete identified no allegation or
evidence that its inferior concrete damaged “any property that [was] nondefective”
in the slab or the structure. See Taylor Morrison,
746 S.E.2d at 591. Because the
dispute between the concrete companies involved only damage to the inferior
concrete and economic losses for repairs necessitated by the defective product, the
insurance policy did not require Westfield to provide a defense.
IV. CONCLUSION
We AFFIRM the summary judgment in favor of Westfield Insurance.
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