Reversing the district court's grant of summary judgment in favor of the insurer, the Tenth Circuit found that exclusions (j) 5 and (j) 6 were ambiguous as applied to the facts of the case. MTI, Inc. v. Emplrs. Ins. Co., 2019 U.S. App. LEXIS 2543 (10th Cir. Jan. 25, 2019).

    Western Farmers Electrical Cooperative (WFEC) owned cooling towers which were serviced by MTI, Inc. Wausau provided a CGL policy to MTI. 

    in 2011, MTI found that anchor bolts in Cooling Tower 1 were corroded. WFEC hired MTI to make repairs by installing new anchor castings with anchor bolts and anchor adhesive. 

    On May 23, 2011, MTI employees removed all of the corroded anchor bolts in Tower 1. Because the adhesive applicator had not yet arrived, MTI did not immediately install new anchor bolts. On the night of May 24, strong winds struck the tower, causing it to lean and several structural components broke. Due to the extent of the structural damage, removal and replacement of the tower was determined to be the only viable option. 

    WFEC demanded MTI pay the cost of removing and replacing the entire tower, which totaled over $1.4 million. MTI filed a claim for coverage with Wausau. Coverage was denied based on business risk exclusions (j) 5 and (j) 6. 

    MTI sued and Wausau moved for summary judgment. The district court agreed that the events fell within the scope of both exclusions j(5) ad j (6) and entered judgment in favor of Wausau. 

    On appeal, the Tenth Circuit considered whether the exclusions were ambiguous. Exclusion j (5) barred coverage for property damage to "that particular part . . . on which you . . . are performing operations, if the 'property damage' arises out of those operations." Similarly, exclusion j (6) excluded property damage to "that particular part of any property that must be restored, repaired or replaced because 'your work' was incorrectly performed on it." The key phrase for this appeal was "that particular part." 

    As favored by MTI, the phrase "that particular part" could be read to refer solely to the direct object on which the insured was operating. Alternatively, Wausau argued it applied to those parts of the project directly impacted by the insured party's work. The court found the former interpretation was reasonable. Therefore, the phrase was ambiguous and had to strictly and narrowly construed in a matter favorable to the insured party. 

    Here the "particular part" on which MTI was "performing operations" and upon which work "was incorrectly performed" was reasonably understood to be the anchor bolts. Those bolts were "distinct component parts" of the tower. MTI performed work incorrectly by removing them without promptly replacing them or bracing the structure. It was objectively reasonable that MTI would expect coverage for the cost of replacing the entire tower, including all of its operational elements, given the ambiguous language of exclusions j (5) and j (6). 

    Therefore, the district court's grant of summary judgment in favor of Wausau was reversed and the case remanded for further proceedings.