National Union Fire Ins. v. Structural Sys. Tech., N 89-0037 C

• Decision Date: 25 January 1991
• Docket Number: No. N 89-0037 C,N 89-0112 C.,N 89-0037 C
• Citation: National Union Fire Ins. v. Structural Sys. Tech., 756 F.Supp. 1232 (E.D. Mo. 1991)
• Parties: NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PENNSYLVANIA, Plaintiff, v. STRUCTURAL SYSTEMS TECHNOLOGY, INC., et al., Defendants. STRUCTURAL SYSTEMS TECHNOLOGY, INC., Plaintiff, v. INTERNATIONAL INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Eastern District of Missouri

756 F. Supp. 1232

NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PENNSYLVANIA, Plaintiff, v. STRUCTURAL SYSTEMS TECHNOLOGY, INC., et al., Defendants.

STRUCTURAL SYSTEMS TECHNOLOGY, INC., Plaintiff, v. INTERNATIONAL INSURANCE COMPANY, Defendant.

Nos. N 89-0037 C, N 89-0112 C.

United States District Court, E.D. Missouri, N.D.

January 25, 1991.

COPYRIGHT MATERIAL OMITTED

Fairfax Jones, St. Louis, Mo., W. James Foland, John S. Conner and Joel R. Mosher, Kansas City, Mo., for Nat. Union Fire Ins. Co. of Pittsburgh, Pa Marion F. Wasinger, Hannibal, Mo., for KIRX, Inc.

Thomas J. Skeffington, Chicago, Ill., and Joseph L. Leritz, St. Louis, Mo., for Federal Broadcasting Co.

Daniel T. Rabbitt, T. Michael Ward, St. Louis, Mo., and Fred C. Alexander Jr., Alexandria, Va., for Structural Systems Technology, Inc.

Allen D. Churchill and Joseph B. McDonnell, Belleville, Ill., for Intern. Ins. Co.

MEMORANDUM OPINION

GUNN, District Judge.

This matter is before the Court for a decision on the merits. The parties have submitted stipulations of fact and exhibits, trial briefs, and proposed findings of fact and conclusions of law. The parties have consented to this Court's decision based on a review of all of the above-mentioned material. Accordingly, this Court adopts this memorandum opinion as its findings of fact and conclusions of law pursuant to Fed.R. Civ.P. 52.

Following an introductory paragraph, this memorandum will be divided according to findings of fact and conclusions of law. Much of the factual findings have been stipulated to between the parties. The conclusions of law section will be further divided according to each of the three policies of insurance at issue, and subdivided according to the particular exclusions at issue in each.

This matter consists of two consolidated cases dealing with the same issue: the duty of an insurer to defend and indemnify its insured in actions against it resulting from the collapse of a television broadcasting tower in Knox County, Missouri on June 2, 1988. In action N89-0037-C(6), National Union Fire Insurance Company ("National") filed a complaint for declaratory judgment, seeking this Court's determination of its duty to defend and indemnify its insured, Structural Systems Technology ("SST"), in actions brought against SST by Federal Broadcasting Company ("FBC") and KIRX, Inc. In action N89-112-C(6), SST filed a complaint for declaratory judgment against another one of its insurers, International Insurance Company ("IIC"), seeking a determination of its duty to defend and indemnify.

FINDINGS OF FACT

1) National is a corporation incorporated under the laws of the State of Pennsylvania with its principal place of business in the state of New York.

2) SST is a corporation organized and existing under the laws of the state of Virginia with its principal place of business in the State of Virginia.

3) IIC is a corporation organized and existing under the laws of the state of Illinois with its principal place of business in the state of Illinois.

4) FBC, which owns the television station known as KTVO, is incorporated in the state of Missouri with its principal place of business in Missouri.

5) Federal Enterprises, Inc. (FEI), is a corporation incorporated under the laws of the state of Michigan and has its principal place of business in Michigan. At all relevant times, FBC and FEI were the legal title holders to a television station, broadcasting facilities, and transmission tower in Colony, Missouri.

6) KIRX, Inc. operates radio stations KIRX and KRXL and is incorporated in a state other than Pennsylvania or New York and has its principal place of business in a state other than Pennsylvania or New York.

7) None of the parties objects to this Court's jurisdiction or venue.

8) By letter agreement dated December 26, 1986, SST contracted with Gillett Communications Company (Gillett) for the erection of a 2000-foot broadcasting tower to be located near Colony, Missouri.

9) The land on which the tower was erected was, at all times relevant hereto, owned by Clayton and Carrol Hustead, who leased it to Gillett.

10) FBC and FEI subsequently purchased the tower from Gillett, and entered into a lease of the land with the Husteads on May 3, 1977, for a term of fifty years, renewable for terms of twenty-five years up to a total of fifty years. The lease provides for the construction of the tower on the property, and also permits lessee to remove any structures at the end of the lease, subject to repair of any damage occasioned by the removal.

11) SST purchased a policy of insurance from National, identified as policy no. GL XXX-XX-XX RA, which extended from September 30, 1987 until September 30, 1988. This policy consists of two parts, the Commercial General Liability Coverage (CGL) form, and the Products/Completed Operations Liability Coverage (P-CO) form.

12) SST purchased two policies of insurance from IIC. Policy no. 320-452241-4 is designated as the "Inland Floater Policy", with coverage extending from September 17, 1987 to September 17, 1988. The second policy, no. 523-491499-8, is designated "The Defender-Commercial Umbrella Policy", with coverage extending from September 30, 1987 until September 30, 1988.

13) On January 12, 1987, SST contracted with LeBlanc & Royle Telcom, Inc., for prefabricated steel components to be used in the erection of the tower. The contract provided that LeBlanc & Royle was to "Provide, Fabricate, Galvanize & Deliver to the site all materials per Drawings." SST selected LeBlanc & Royle as the fabricator of the steel components in the tower, provided the specifications for those components, and accepted and used the steel in erecting the tower.

14) On February 2, 1987, SST entered into a contract with KIRX, Inc., to redesign the tower to accommodate the KRXL-FM antenna and transmission line.

15) On June 19, 1987, SST entered into an additional contract with KIRX, Inc., to install additional antennas and transmission lines.

16) Not later than September 6, 1987, SST installed KTVO television transmission equipment onto the tower. The transmitter itself was installed into the building adjacent to the tower by entities other than SST.

17) Not later than September 21, 1987, television station KTVO began transmitting its broadcast signals from the tower.

18) SST performed under the contracts dated December 26, 1986, February 2, 1987, and June 19, 1987, completed the agreements, and was paid in full. Subsequently, defects were discovered in the tower.

19) SST revoked acceptance of the diagonal steel rods fabricated by LeBlanc & Royle by letter dated December 3, 1987. On December 15, 1987, LeBlanc & Royle agreed to replace the diagonal steel rods.

20) Not later than February 13, 1988, SST installed the KRXL-FM transmitter onto the tower.

21) Not later than March 1, 1988, KRXL-FM began transmitting its broadcast signals from the tower.

22) On or about June 2, 1988, the tower, then owned by FBC and FEI, collapsed. The tower and all attached broadcasting equipment of FBC, FEI, and KIRX, was destroyed in the collapse.

23) At the time of the collapse, SST employees were repairing the tower and replacing the diagonal rods on the tower. Both KIRX and FBC were using the facilities for the purpose intended at the time of the collapse.

24) The tower was taxed as leased real property in 1988 and 1989 by the Knox County Assessor.

25) FBC and FEI have sued, among others, SST and LeBlanc & Royle for damages arising out of the collapse of the tower. That suit, also filed in this district court, seeks damages in excess of $50,000 for damage to the tower, its transmission line, antenna system, and associated equipment, and also for the diminution in value of the stations and lost profits. Count I of that action alleges negligent design, manufacture, and assembly of the tower. Count II alleges negligent repair and modifications. Counts III through VII allege breach of contract, breach of implied warranty of workmanlike manner, strict liability, and res ipsa loquitor.

26) KIRX also has sued, among others, SST and LeBlanc & Royle for damages arising out of the collapse of the tower. It seeks damages in excess of $50,000 for damage to its radio antenna, transmission line system, other antennas and transmission lines, a diplexing system, and loss of advertising revenue. That suit is pending in Knox County Circuit Court, and alleges defects in manufacture, erection and design.

CONCLUSIONS OF LAW

Jurisdiction is founded on 28 U.S.C. §§ 1331, 1332, and 2201, and venue is proper pursuant to 28 U.S.C. § 1391(a).

A. National Policy # GL XXX-XX-XX RA

An insurance company's duty to defend an insured arises where the allegations of the complaint against the insured are potentially within the coverage of the policy. It is broader than the duty to pay a judgment rendered against the insured. Howard v. Russell Stover Candies, Inc., 649 F.2d 620 (8th Cir.1981). In this case, National claims that the allegations of FBC/FEI and KIRX in their complaints against SST, do not fall within such potential coverage of the policy. This policy is divided into two separate forms, the Commercial General Liability Form (CGL), and the Products-Completed Operations Form (P-CO). The Court will address these two forms separately. The CGL policy provides coverage, in part, as follows:

1. Commercial General Liability Form (CGL)

Insuring Agreement.

a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies.... This insurance applies only to "bodily injury" or "property damage" which occurs during the policy period. The "bodily injury" or "property damage" must be caused by an "occurrence." The "occurrence" must take place in the "coverage territory." We will have the right and duty to defend any "suit" seeking those damages.

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b. "Property damage" that is loss

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