Puritan Insurance Company, and Twin City Fire Insurance Company, Intervening v. Aldan Rubber Company

OPINION OF THE COURT

GIBBONS, Chief Judge.

Aldan Rubber Company, a manufacturer of polyurethane coatings, and an insured under general liability insurance policies issued by Puritan Insurance Company and Twin City Fire Insurance Company, appeals from a summary judgment in favor of the insurance companies in their action seeking a declaratory judgment that they need not defend or indemnify in connection with a suit against Aldan pending in the United States District Court for the District of Delaware.

Puritan Insurance Company has moved to dismiss Aldan’s appeal against it as untimely because the summary judgment against it was entered on February 8, 1988, and the notice of appeal was filed on July 21, 1988. The motion will be denied. When Twin City Fire Insurance Company was permitted to intervene the case fell within the terms of Fed.R.Civ.P. 54(b). No final judgment was entered, therefore, until the court granted Twin City’s summary judgment motion on June 22, 1988. Thus the appeal was timely.

The underlying claim is East-Wind. Industries, Inc. v. Aldan Rubber Company, Civil Action No. 86-27 (D.Del.). It alleges that it purchased coated fabric from Tan-Tex Industries, Inc. to use in manufacturing parkas for the military, that Aldan manufactured the polyurethane coating on the fabric, which it certifies would produce fabric which complied with MIL-C43906A.

The policy exclusion on which the district court relied in granting summary judgment to the general liability insurers reads:

This insurance does not apply:

(m) to loss of use of tangible property which has not been physically injured or destroyed resulting from:

(1) a delay in or lack of performance by or on behalf of the named insured of any contract or agreement, or

(2) the failure of the named insured’s product or work performed by or on behalf of the named insured to meet the level of performance, quality, fitness or durability warranted or represented by the named insured; but this exclusion does not apply to loss of use of other tangible property resulting from the sudden and accidental physical injury to or destruction of the named insured’s product or work performed by or on behalf of the named insured after such products or work have been put to use by any person or organization other than an insured.

Aldan contends that this exclusion does not apply because the East-Wind Industries, Inc. complaint does not allege a “loss of use of tangible property ... resulting from: (2) the failure of the named insured’s product ... to meet the level of performance, quality, fitness or durability warranted or represented by the named insured .... ” Our review of the summary judgment is plenary. Like the district court, we conclude that the East-Wind claim falls squarely within the exclusion. See, e.g., Unifoil v. CNA, 218 N.J.Super. 461, 528 A.2d 47 (App.Div.1987).

Alternatively Aldan contends that there are material issues of disputed fact as to whether, assuming exclusion (m)(2) applies, the exception to that exclusion for “sudden and accidental physical injury to or destruction of the named insured product or work” also applies. This contention does not appear to have been advanced in the district court in opposition to the summary judgment. It is in any event without merit, for the East-Wind complaint cannot fairly be read as alleging any sudden and accidental physical injury to or destruction of the coating manufactured by Aldan. It alleges only that the sealant supplied by Aldan peeled off the polyurethane coating which the insured added. In Imperial Casualty and Indemnity Company v. High Concrete Structures, Inc., 858 F.2d 128 (3d Cir.1988), it was conceded that pitting of washers was a physical damage and the lack of such damage was not argued. Thus it is not controlling here.

The judgment appealed from will therefore be affirmed.