The insurer unsuccessfully moved for summary judgment on the CGL policy's business risk exclusions. Scottsdale Ins. Co. v. TL Spreader, LLC, (W.D. La. Oct. 20, 2017).

    Helena Chemical Company contracted with its customer Wild Farms to sell and apply certain herbicides and pesticides to Wild Farms' 123 acre rice filed. Helena subcontracted the TL Spreader, LLC (TLS) to apply the chemicals to Wild Farm's rice field. The TLS employee failed to properly neutralize a chemical being used in the spray. 

    TLS finished its work on May 6, 2014, completing all its work for Helena's contract with Wild Farms. Three days after completion of the spraying, the rice crop first began to exhibit physical damage in the form of abnormal stunting, lesions, yellowing and death. 

    Wild Farms made a claim for crop damage allegedly incurred because of the misapplication of chemicals. TLS provided notice of this occurrence to Scottsdale. Coverage was denied. Helena ultimately settled the claim of Wild Farms, with payments from both TLS and Helena.

    Helena was an additional insured on TLS's policy with Scottsdale. TLS and Helena made a final demand on Scottsdale. Scottsdale filed a declaratory judgment suit.

    Scottsdale moved for summary judgment. Scottsdale first argued there was no coverage because there was no property damage to tangible property. Claims for the hope of future income from crops constituted intangible, incorporeal property and were not covered under the policy. The court, however, found that the policy was triggered by the undisputed facts. Application of the wrong chemicals to the rice field resulted in physical damage and loss of use of tangible property, constituting property damage.

    Scottsdale next contended that Exclusion (j) (6) precluded coverage for property damage arising from the incorrect performance of TLS's work. Exclusion (j) (6) applied while the insured's work was in process, i.e., the work was not yet completed. The exclusion did not apply, however, to property damage included in the products-completed operations hazard. The products-completed operations hazard applied only to property within the hazard after the work was completed. Under the products-completed operations hazard provision, damages, other than the faulty product or work itself, arising out of the faulty workmanship were covered by the policy.

    Therefore, Scottsdale's policy extended coverage to the insureds depending upon whether their work was completed at the time of the occurrence. Prior to completion, the policy unambiguously excluded coverage for all damages arising out of the insureds' incorrectly performed work. However, once the work was completed, the claim did not fall within Exclusion (j) (6) as the products-completed operations hazard provision provided coverage for any damages caused by the insureds' faulty work, except the cost to repair the faulty work itself. 

     The court agreed with the insureds that coverage was not triggered until the property damage manifested, which was after completion of the work. Therefore, Scottsdale failed to carry its burden and show Exclusion (j) (6) negated coverage. Scottsdale's Motion for Summary Judgment was denied.