Pella Corp. v. Liberty Mut. Ins. Co.
| Decision Date | 31 March 2017 |
| Docket Number | No. 4:11–cv–00273–JEG,4:11–cv–00273–JEG |
| Parties | PELLA CORPORATION, Pella Windows and Doors, Inc, and Pella Windows and Doors of Ontario Corp., Plaintiffs, v. LIBERTY MUTUAL INSURANCE COMPANY, Defendant. Liberty Mutual Insurance Company, Third–Party Plaintiff, v. Pella Corporation and Pella Windows and Doors of Ontario Corp., Third–Party Defendants. |
| Court | U.S. District Court — Southern District of Iowa |
Burt M. Garson, KASOWITZ BENSON TORRES & FRIEDMAN LLP, Adam S Ziffer, Kenneth H Frenchman, Marc Thomas Ladd, John P Winsbro, Keith McKenna, Robin L Cohen, NEW YORK, NY, Richard W Lozier, Jr., BELIN McCORMICK, P.C., DES MOINES, IA, for Plaintiffs.
Maryanne B Foster, Charles W Browning, Jeffrey C Gerish, Kenneth C. Newa, Lauren Beth McMillen, Bloomfield Hills, MI, Robert VP Waterman, Jr, LANE & WATERMAN LLP, DAVENPORT, IA, Shannon L. H. Phillips, COLLINS EINHORN FARRELL PC, SOUTHFIELD, MI, for Defendant.
Maryanne B Foster, Charles W Browning, Jeffrey C Gerish, Kenneth C. Newa, Bloomfield Hills, MI, Robert VP Waterman, Jr, LANE & WATERMAN LLP, DAVENPORT, IA, Shannon L. H. Phillips, COLLINS EINHORN FARRELL PC, SOUTHFIELD, MI, for Third–Party Plaintiff.
Burt M. Garson, KASOWITZ BENSON TORRES & FRIEDMAN LLP,
Adam S Ziffer, Kenneth H Frenchman, Marc Thomas Ladd, NEW YORK, NY, Richard W Lozier, Jr., BELIN McCORMICK, P.C., DES MOINES, IA, for Third–Party Defendants.
This matter comes before the court on a motion for partial summary judgment filed by Plaintiffs Pella Corporation, Pella Windows and Doors of Ontario Corporation, and Pella Windows and Doors, Inc. (collectively, Pella). Defendant Liberty Mutual Insurance Company (Liberty) resists. A hearing on the Motion was held on February 15, 2017. Attorneys Keith McKenna, Marc Ladd, and Richard Lozier were present on behalf of Pella, and attorneys Charles Browning, Jeffrey Gerish, and Bob Waterman were present on behalf of Liberty. The matter is fully submitted and ready for disposition.
Pella purchased annual liability insurance policies from Liberty covering the years between 2000 and 2008. These insurance policies fell under two categories. Comprehensive general liability policies (CGL Policies) insured Pella for certain damages and costs, including defense costs, subject to deductibles called self-insured retentions (SIRs). "Aggregate SIR Policies," also referred to as "Excess Indemnity Policies," offered coverage for payment of SIRs under each of the GCL Policies, subject to a separate deductible called "Insured's Retentions."
The CGL Policies cover damages and defense costs in excess of an SIR where there is "personal injury" or "property damage" caused by an "occurrence" during the policy period (as defined in the CGL Policies). Pella App. 595, ECF No. 173–1. An "occurrence" is defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." Pella App. 613. Where several "occurrences" are triggered under the same CGL Policy, Pella is subject to the policy's SIR with respect to each occurrence, and this application of the SIR may trigger coverage under the Aggregate SIR Policies.
In the present action, Pella seeks reimbursement of certain expenses incurred in defending against and resolving (by settlement or damage awards) various claims against Pella. Because there are many disputed underlying lawsuits against Pella, the litigation focuses on fifteen of the highest value claims (the Sample Claims). The Sample Claims generally alleged that Pella's windows were defectively designed, manufactured, or installed, and allowed water intrusion to buildings that resulted in third-party property damage or personal injury.
The parties have made a number of summary judgment motions bearing on disputed issues in this litigation, a few of which this Court has already resolved. This Court has held that the Sample Claims alleged property damage caused by an occurrence and thus triggered Liberty's defense coverage obligation under the CGL Policies. ECF No. 222; see also Pella Corp. v. Liberty Mut. Ins. Co. , No. 4:11–cv–000473–JEG, 221 F.Supp.3d 1107, 1131, 2016 WL 6514171, at *20 (S.D. Iowa Nov. 1, 2016). Specifically, this Court found that claims based on allegations of defective design or workmanship, including those seeking damages due to negligence, may give rise to an "accident" as that term is used in the definition of "occurrence." This Court observed that under Iowa law, the alleged tortious conduct that gives rise to a claim is not an occurrence, but the resulting damage-causing misfortune may be. In Decker Plastics Inc. v. West Bend Mutual Insurance Co. , 833 F.3d 986, 988 (8th Cir. 2016), the alleged occurrence consisted of the deterioration of plastic landscaping bags manufactured by the insured, where the insured faced claims that it failed to properly manufacture the bags after the allegedly defective bags caused other property damage. Id. at 988. Applying Decker Plastics to the present case, this Court held that "claims of defective workmanship manifesting in water intrusion ... include the allegations of an accident—namely, unexpected and unintended water intrusion—and thus support the finding of an ‘occurrence.’ " Pella Corp. , 221 F.Supp.3d at 1126,2016 WL 6514171, at *16.2
Separately, this Court, addressing motions filed by both parties, has also held that the pro rata method of allocation applies to the CGL Policies where one occurrence causes damage that triggers multiple policy periods. ECF No. 228. Also pending before the Court is a motion by Pella for a declaration that costs incurred for settlements and judgments in connection with the Sample Claims are covered under the CGL Policies, ECF No. 170, and a motion by Liberty to dismiss claims by Pella relating to Aggregate SIR Policies from 2002–2008, ECF No. 117.
The Motion addressed in this Order raises the question of how many occurrences the Sample Claims present. Pella, in its Motion for Summary Judgment on the Number of Occurrences at Issue in the Sample Claims, ECF No. 171, seeks a declaration that each of the fifteen Sample Claims presents one "occurrence" as that term is defined in the CGL Policies. Pella also argues that even if the Sample Claims do not present separate occurrences as a matter of law, summary judgment is nevertheless appropriate on estoppel grounds because Liberty treated each Sample Claim as a separate occurrence when processing them. Liberty resists the Motion, arguing that the Sample Claims set forth either three or four occurrences at most, and also that summary judgment is improper because Pella should be estopped from arguing that the Sample Claims present separate occurrences after taking a contrary position in prior litigation before this Court.
The basic facts regarding the underlying Sample Claims have been summarized in this Court's prior order dated November 1, 2016. ECF No. 222; see also Pella Corp. , 221 F.Supp.3d at 1110–14, 2016 WL 6514171, at *2–5. This Motion implicates additional facts in the record on summary judgment, including the allegations made by the various plaintiffs in the Sample Claims and facts observed by Pella or other experts in its investigations of the claims.
The 464 Prospect Claim.3 The 464 Prospect Claim sought damages allegedly caused by Pella products installed at two buildings in La Jolla, California. The Pella products at issue were Architect Series aluminum-clad windows and hinged and sliding doors. These products were manufactured in Pella, Iowa, in 1999 and 2000, and in Sioux Center, Iowa in 2003. Noted or alleged defects included: glazing leaks at window sashes, frame corners, cranks, latches, and hinge hardware; gaps in weather-stripping material; water penetration under door thresholds; leaks at horizontal mullions between connected windows and doors; and leaks in "peel and stick" barriers surrounding windows. Pella tendered the 464 Prospect Claim to Liberty on January 16, 2006.
The Diamantis Claim.4 The Diamantis Claim sought damages allegedly caused by Pella products installed at a home and pool house in Madison, Alabama. The Pella products at issue were Architect Series casement windows and hinged doors, ProLine Series sliding windows, and Clad Frame support products. These products and replacements that Pella issued were manufactured in 1994–1996 and 2000, respectively. Defects that were noted or alleged included a leaking mullion joint for a circle head window, glazing leaks, mullion assembly leaks, loose weatherstripping, and leaking bases of patio doors. Pella tendered the Diamantis Claim to Liberty on October 17, 2008.
The Eakins Claim.5 The Eakins Claim sought damages allegedly caused by Pella products to a home in Wilmington, North Carolina, on behalf of a class of similarly situated North Carolina customers. The Pella products at issue were Designer Series Smart Sash II windows that were manufactured in 2000. The plaintiffs alleged defects including: gaps in weather-stripping material; leaks at window sashes, frame corners, and sash corners; and unsloped sills leading to water trapped behind weatherstripping.
The G.T. Leach Claim.6 The G.T. Leach Claim sought damages allegedly caused by Pella products to a condominium complex in Houston, Texas. The Pella products at issue were ProLine Casement and Clad Frame windows that were manufactured in 2001. The plaintiffs alleged defects including: gaps on vent frames caused by snap-on cladding, leaking vertical mullion joints, and leaks due to missing "peel and stick" tape on horizontal supports. Pella tendered the G.T. Leach Claim to Liberty on August 8, 2007.
The Kaslly Claim.7 The Kaslly Claim sought damages allegedly caused by Pella products to a home in Henderson, Nevada. The Pella products at issue were Architect Series Classic casement windows and hinged doors that were manufactured in 2002. Defects noted or alleged included leaks at...
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