In a long-standing dispute between a window manufacturer and its insurer, the federal district court found that the insurer was obligated to pay defense costs from the date of installation of the alleged faulty windows even though the underlying complaints did not allege when the damage occurred. Pella Corp. v. Liberty Mut. Ins. Co., No. 4:11-cv-00273 (S.D. Iowa Jan. 16, 2018). The case is here.
The court had previously addressed allocation among the insurer's various policies. It held that the CGL policies provided for pro rata allocation of indemnity payments where a single occurrence triggered multiple policies. The court also held that the CGL policies were ambiguous with respect to allocation of defense costs and thus interpreted the policies in Pella's favor, applying all-sums allocation. The court further granted summary judgment with respect to sample claims where the parties did not dispute which policies were triggered. The court denied summary judgment with respect to the remaining sample claims, finding genuine disputes of material fact prevented summary judgment in Liberty's favor on the issue of when the alleged damage began.
Pella now moved for summary judgment on the issue of when fourteen of the fifteen sample claims first triggered Liberty's obligation to reimburse defense costs. Pella argued that Liberty's duty to defend attached from the point that property damage could potentially have begun, Pella argued this was the time at which the underlying claimant installed the Pella windows at issue in the underlying cases. Liberty contended that the underlying complaints were silent as to when damage began, resulting in a factual dispute between the parties experts about when damage began.
The underlying allegations did not include the time period in which the damage occurred. But there were allegations as to when the allegedly defective windows were sold or installed. These allegations, along with additional facts in the record regarding the sale, delivery, and installation of the windows established that the sample claims were potentially brought within the policy periods of various policies highlighted by Pella.
Liberty argued the facts relied upon by Pella did not disclose when damages potentially occurred. The court disagreed. Facts such as when the windows were installed or when the structure containing the windows was completed shed light on when damage may potentially have occurred. The potential for coverage was sufficient to invoke Liberty's duty to defend. There was no genuine issue for trial on the question of which Liberty policies were triggered by the sample claims with respect to Liberty's duty to reimburse defense costs under the applicable policies.
