Delta Fiberglass v. U.S. Fidelity

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
NOV 2 2000
TENTH CIRCUIT
PATRICK FISHER
Clerk
DELTA FIBERGLASS
STRUCTURES, INC., a Utah
corporation,
Plaintiff - Appellant, No. 99-4187
v. (D. Utah)
UNITED STATES FIDELITY AND (D.C. No. 97-CV-211-C)
GUARANTY COMPANY, a foreign
corporation; RELIANCE
INSURANCE COMPANY, a foreign
corporation; and AGORA
SYNDICATE, a foreign corporation,
Defendants - Appellees.
ORDER AND JUDGMENT *
Before MURPHY and ANDERSON , Circuit Judges, and KANE ** , District
Judge.
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
Honorable John L. Kane, Jr., United States District Judge for the District
**
of Colorado, sitting by designation.
Delta Fiberglass, Inc. (“Delta”) appeals the district court’s grant of
summary judgment in favor of United States Fidelity & Guarantee Co.
(“USF&G”) and Reliance Insurance Co. (“Reliance”). 1
The district court
exercised diversity jurisdiction over the matter pursuant to 28 U.S.C.
§ 1332(a)(1). We have jurisdiction pursuant to 28 U.S.C. § 1291, and affirm in
part and reverse and remand in part.
This case involves the collapse of a fiberglass dome manufactured by Delta.
It was conclusively determined that both the dome that collapsed and a companion
dome, which had been delivered to the job site but not installed, were defectively
manufactured by Delta. Delta reimbursed the prime contractor for costs it
incurred in repairing a damaged mast arm and tank anchoring system, removing
the collapsed dome and installing its replacement. In addition, Delta directly
incurred expenses for disposing of both defective domes and designing and
manufacturing replacement domes for the project. Delta attempted to recover the
foregoing costs and expenses from its insurance carriers. Both USF&G and
Reliance denied coverage based on exclusions contained in the relevant insurance
policies, as a result of which Delta commenced this action. The district court
1
The district court also granted summary judgment in favor of a third
insurer, Agora Syndicate, Inc. Delta does not appeal that part of the judgment.
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found that the damages claimed were excluded by the plain language of the
policies and granted summary judgment in favor of USF&G and Reliance.
In its brief and at oral argument, Delta substantially restates the arguments
it raised before the district court. Namely, Delta argues that (1) the costs incurred
by the prime contractor in repairing the mast arm and tank anchoring system were
admitted by Reliance to be “covered costs” under the CGL policy issued by
Reliance and should have been awarded to Delta by the district court; (2) the
costs incurred by the prime contractor in removing the defective dome and
installing its replacement are “covered costs” under the CGL policy issued by
Reliance; (3) the incorporation doctrine should apply so that it can be said that the
entire structure, rather than Delta’s product, collapsed, bringing the replacement
cost of the domes under the coverage of the CGL policy issued by Reliance; (4)
the addition of the impaired property exclusion and the modification to the
product exclusion in the 1986 CGL form permit recovery to Delta from Reliance
for the collapse of the dome; (5) the trial court erred in ruling that the prime
contractor’s purchase order did not incorporate the general provisions of the
prime contract thereby precluding coverage under the property policy issued by
USF&G; and (6) the trial court erred in finding that the non-collapsed dome was
not covered under the CGL policy issued by Reliance or the property policy
issued by USF&G.
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We review appeals from summary judgment de novo , applying the same
legal standard used by the district court. Simms v. Oklahoma ex rel. Dep’t of
Mental Health & Substance Abuse Servs. , 165 F.3d 1321, 1326 (10th Cir.)
(further citations and quotations omitted), cert. denied , 120 S. Ct. 53 (1999). The
construction of an insurance policy is a matter of law which we review de novo .
Grimes v. Swaim , 971 F.2d 622, 624 (10th Cir. 1992).
After thoroughly reviewing the briefs, examining the record and
considering the arguments made before us at oral argument, we conclude that the
district court did not err, with one exception. Reliance admitted before the
district court and before this court that it was responsible to reimburse Delta for
money Delta spent on repairs to the mast arm and tank anchoring system. The
district court acknowledged Reliance’s admission, but failed to make any award
to Delta. The district court erred in failing to award Delta those covered costs.
Accordingly, we reverse the judgment to the extent that it disallows recovery for
the cost of repairing the mast arm and the tank anchoring system and remand for
entry of an award of those covered costs to Delta. 2
In all other respects we affirm
2
Reliance states that the covered repairs amount to approximately $4000. It
is not clear on appeal whether or not that amount is disputed, but it is clear that
any amount Delta spent on the repair of the covered items, namely the mast arm
and the tank anchoring system, should be awarded to Delta on remand.
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the judgment substantially on the grounds and for the reasons relied upon by the
district court in its Order dated July 29, 1999.
AFFIRMED IN PART, REVERSED AND REMANDED IN PART.
ENTERED FOR THE COURT
Stephen H. Anderson
Circuit Judge
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