reply brief, J.A. Street & Associates v. Bitco General

No 17-0079

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA

JA STREET amp ASSOCIATES INC Jt2 0 ts ~-fl-~I DEFENDANTffHIRD-P ARTY PLAINTIFF BEIPI ~1i

PETITIONER 1 4 2017iU I AUG Ill) v I

I L-_____-J FOrill PRRY II ClcHK

surhr H caUi f OF AP~hLS L___~2 r 1L~

BITCO GENERAL INSURANCE CORPORATION --_-1

PLAINTIFF BELOW

and

LIBERTY MUTUAL AGENCY MARKETS (THE OHIO CASUALTY INSURANCE COMPANY)

ZURICH AMERICAN INSURANCE COMPANY OF ILLINOIS SCOTTSDALE INSURANCE COMPANY

THE PRINCETON EXCESS AND SURPLUS LINES INSURANCE COMPANY and THE CINCINNATI INSURANCE COMPANY

THIRD-PARTY DEFENDANTS BELOW

RESPONDENTS

PETITIONER JA STREET amp ASSOCIATES INCS COMBINED REPLY BRIEF AND RESPONSE TO

RESPONDENTS CROSS-ASSIGNMENTS OF ERROR

S Douglas Adkins Esquire (WVSB 80) Donald Capparella Esquire sdadkinscyrusandadkinscom TN Bar No 11239 pro hac vice CYRUS ADKINS amp WALKER capparelladodsonparkercom 636 Fourth Avenue DODSON PARKER BEHM Huntington WV 25701 amp CAPPARELLA PC (304) 522-9593 1310 Sixth Avenue North COUNSEL FOR PETITIONER Nashville Tennessee 37208

(615) 254-2291 COUNSEL FOR PETITIONER

TABLE OF CONTENTS

Table Of Contents

Table Of Authorities IV

Petitioner JA Street amp Associates Inc s Combined Reply Brief And Response To Respondents Cross-Assignments Of Error 1

Introduction 1

Argument 1

I Replies To Responses To JA Streets Assignments Of Error 1

A Introduction 1

B The Circuit Court Erred In Granting Summary Judgment When Genuine Issues Of Material Exist Particularly When There Are Questions Of Fact With Respect To What Damages Occurred And When 4

C The Circuit Court Erred In Granting Summary Judgment To BITCO Cincinnati Princeton Scottsdale And Zurich On The Holding That The Contractual Liability Exclusion Applied To Foreclose Coverage Entirely For The Claims Asserted By Thundering Herd Against JA Street Based On Tennessee Law 6

1 There Is A Distinction Between Coverage Under The Insuring Agreement And The Applicability Of The Contractual Liability Exclusion 7

a Claims Of Faulty Workmanship Constitute An Occurrence 9

b Breach Of Contract Claims Can Constitute An Occurrence Under A CGL Policy 10

11 There Was Damage To A Third Party 12

111 The Contractual Liability Exclusion Does Not Preclude Coverage 15

IV Assuming Arguendo That The Contractual Liability Exclusion Applies The Exception To The Exclusion Is Applicable 23

D Endorsement 4 Of The Zurich Policy Does Not Foreclose Coverage 25

E Exclusion M Of The Business Risk Exclusions Does Not Foreclose Coverage 25

F The Circuit Court Erred In Granting Summary Judgment To Ohio Casualty On The Holding That There Was No Damage To Property Other Than The Insured JA Street And That There Was No Occurrence Resulting In Property Damages Under The Policy The Circuit Court Conflated JA Streets Work With JA Streets Property 31

G The Circuit Court Erred In Granting Summary Judgment To Ohio Casualty On The Basis That There Can Be No Exhaustion Of The Primary Coverage And Thus No Excess Coverage When There Are Genuine Disputes Of Material Fact As To The Final Determination Of Damages In The Underlying Action The Circuit Court Additionally Incorrectly Ruled That The Damages Suffered By Thundering Herd Were Not Property Danlage Sustained By A Third Party 32

H The Definition Of Property Damage Provides Coverage For Loss Of Use 33

II Responses To Cross-Assignments Of Error 34

A The Circuit Court Did Not Err In Finding That The Application Of The Known Loss Exclusion And Loss-In-Progress Doctrine Are Questions Of Fact For The Jury 34

B The Circuit Court Did Not Err in Concluding that Questions of Fact Existed Regarding JA Streets Alleged Failure to Comply with Notice Provisions Which Precluded Summary Judgment 42

ii

C The Trial Court Correctly Determined that There are Questions of Fact with Respect to the Performing Operations Faulty Workmanship Damage to Property Exclusions 47

D The Trial Court Correctly Determined That The Subsidence Exclusion Involves A Question Of Fact For The Jury 52

E The Circuit Court Did Not Err In Holding That More Than One $1 Million Limit Can Apply 54

F The Circuit Court Did Not Err In Denying Summary Judgment On The Alternative Ground That Even If Failure Of The Slope Was Property Damage JA Street Could Exhaust BITCOs Primary Coverage For Ohio Casualtys Policy Period 55

G The Circuit Court Did Not Err In Denying Zurichs Motion For Summary Judgment As Faulty Workmanship Which Damages An Insureds Own Work Is Not Property Damage 56

H The Court Correctly Denied Summary Judgment To Ohio On The Issue Of The Impaired Property Exclusion 57

1 The Court Correctly Determined That Multiple Genuine Issues Of Material Fact Preclude Summary Judgment Where The Issues Of JA Streets Notice To The Insurers And Notice Of Loss Are Concerned 57

Conclusion 57

111

TABLE OF AUTHORITIES

CASES

Aetna Casualty amp Surety Company v Cotter 522 NE2d 1013 (Mass 1988) 22

Alcazar v Hayes 982 SW2d 845 852-853 856(Telm 1998) 4244

Alkemade v Quantz Indemnity Company No 14-35605 (9th Cir April 20 2017) 40

American amp Foreign Insurance Company Inc v Sequatchie Concrete Services Inc

441 F3d 341 (6th Cir 2006) 344041

American Empire Surplus Lines Insurance Company v Hathaway Dev Company

288 Ga 749 707 SE2d 369371 (Ga 2011) 91049

American Family Mutual Insurance Company v American Girl Inc 2004 WI 2 268 Wis 2d 16 673 NW2d 65 7883-84 (Wis 2004) 10 12 16 19

20293050

Anderson v National Union Fire Insurance Company ofLouisiana 912 So2d 400 (La App 2 Cir 2005) 21

Anthony v Long No E1998-00747-COA-R3-CV 2000 WL 115981 at 6 (Tenn Ct App Jan 28 2000) 44

Architex Association Inc v Scottsdale Insurance Company 27 So 3d 1148 (Miss 2010) 1049

Arnett v Mid-Continental Casualty Company 2010 US Dist LEXIS 71666 2010 WL 2821981 (MD Fla July 162010) 20

Auto Owners Insurance Company v Newman 385 Sc 187684 SE2d 541 (SC 2009) 1050

iv

Auto-Owners Insurance Company v Se Car Wash Sys 184 F Supp 3d 625630 (ED Tenn 2016) 33

Basic Energy Servs v Liberty Mutual Insurance Company 655 F Supp 2d 6666772009 US Dist LEXIS 92005 27 (WD Tex 2009) 47

Broadmoor Anderson v National Union Fire Insurance Company 912 So2d 400 (La App 2d Cir 2005) cert denied 925 So2d 1239 (La 2006) 21

Burlington Insurance Company v PMI America Inc 2012 WL 995294 2012 US Dist LEXIS 40315 (SD Ohio Mar 23 2012) 21

Cherrington v Erie Insurance Property and Casualty Company 231 WVa 470480 745 SE2d508 521 (2013) 8101528

50

Cincinnati Insurance Company v Grand Pointe LLC No 105-CV-161 2006 US Dist LEXIS 44602 (ED Tenn June 29 2006) 16 17

Cincinnati Insurance Company v Pointe LLC Nos 105-CV-161 105-CV-157 2007 US Dist LEXIS 39784 (ED Tenn May 30 2007) 2 18

Clark Constr Group Inc v Eagle Amalgamated Serv 2005 US Dist LEXIS 34812 (WD Tenn Aug 24 2005) 20

Commercial Union Insurance v Basic American Med 703 FSupp 629 (ED Mich 1989) 22

Continental Insurance Company v Bussell 498 P2d 706 (Alaska 1972) 22

Crossmann Communities oINe Inc v Harleysville Mutual Insurance Company

717 SE2d 589 No 26909 395 SC 40 2011 SC LEXIS 277 2011 WL 3667598 at 3 (S Ct SC Aug 222011) 1050

v

0-

Dreis amp Krump Manufacturing Company v Phoenix Insurance Company 548 F 2d 681 (7th Cir 1977) 22

Erie Insurance Property amp Casualty Company v Chaber 801 SE2d 207 (WVa 2017) 53

Federated Mutual Insurance Company v Grapevine Excavation Inc 197 F3d 720 728 (5th Cir 2000) 22

Fejes v Alaska Insurance Company 984 P2d 519 (Alaska 1999) 1050

Ferrell v West Bend Mutual Insurance Company 393 F3d 786 (8th Cir Ark 2005) 21

Fidelity amp Deposit Company ofMaryland v Hartford Casualty Insurance Company

189 F Supp 2d 1212 1213 (D Kan 2002) 2627

French v Assurance Company ofAmerica 448 F3d 693 (4th Cir 2006) 1050

Garrison v Bickford 377 SW3d 659 664 (Tenn 2012) 28

Gibbs M Smith Inc v U8F amp G 949 P2d 337 (Utah 1997) 22

Gore Design Completions Ltd v Hartford Fire Insurance Company 538 F3d 365 371 (5th Cir 2008) 47

Great American Insurance Company v Woodside Homes Corp 448 F Supp 2d 1275 (D Utah 2006) 1050

Greystone Constr v National Fire amp Marine Insurance Company 661 F3d 1272 1282-1283 (lOth Cir Colo 2011) 949

In re Idleaire Technologies Corp No 08-10960(KG) 2010 WL 582361 at 17 (BankrDDelFeb172010) 4446

Indiana Insurance Company v Kopetsky 11 NE3d 508 (Ill App 2014) 21

vi

Inland Waters Pollution Control Inc v National Union Fire Insurance Company

997 F2d 172178-179 (6th Cir 1993) 3541

Insurance Company oNorth American Inc v Us Gypsum Company 870 F2d 148 (1989) 35

J L Simmons Company v Fidelity amp Casualty Company 511 F2d 87 (7th Cir 1975) 35

Jaffe v Bolton 817 SW2d 1925 (Tenn Ct App 1991) 33

King County v Travelers Insurance Company 1996 WL 257135 1996 US Dist LEXIS 21946 (WD Wash Feb 20 1996) 21

Knutson Constr Company v St Paul Fire and Marine Insurance Company

396 NW2d 229234 (Minn 1986) 51

Lamar Homes Inc v Mid-Continent Casualty Company 242 SW3d 1 (Tex 2007) 1050

Larsen v General Casualty Company 99 F Supp 300 302 (DMinn 1951) affd 196 F2d 170 (8th Cir 1952) 19

Lee Builders Inc v Farm Bureau Mutual Insurance Company 281 Kan 844 137 P3d 486 (Kan 2006) 1050

Lee v Nationwide Mutual Insurance No 87-357-11 1988 WL 39567 at 3 (Tenn Ct App Apr 29 1988) 52

Lennar Corp v Great American Insurance Company 200 SW3d 651 (Tex App - Houston 14th Dist 2006 pet denied) 21

Marathon Plastics Inc v International Insurance Company 514 NE2d 479 (Ill App Ct 1987) 26

Vll

Marlin v Wetzel County Board ofEducation 212 WVa 215 569 SE2d 462 (2002)

Marlin Fin amp Leasing Corp v Nationwide Mutual Insurance Company

157 SW3d 796809 (Tenn Ct App 2004)

Minergy Neenah LLC v Rotary Dryer Parts Inc No 05-C-1181 2008 WL 1869040 at 5

1522

1533

49(ED Wis Apr 24 2008)

Montrose Chemical Corp v Admiral Insurance Company 10 Cal 4th 645 913 P2d 878 (Supreme Court of California 1995) 40

MR Hotels LLC v LLWArchitects Inc No M201500840COAR9CV 2016 WL 4070050 at 4 (Tenn Ct App July 282016) 33

Murray v State Farm Fire amp Casualty Company 509 SE2d 1 (WVa 1998) 5354

Musgrove v Southland Corp 898 F2d 1041 (5 th Cir 1990) 22

National Union Fire Insurance Company v Modern Contl Construction Company

2009 Mass Super LEXIS 413 27 Mass L Rep 16 (Mass Super Ct 2009) 20

Olympic Inc v Providence Insurance Company 648 P2 1008 (Alaska 1982) 21

OShaughnessy v Smuckler Corp 543 NW2d 99 (Minn Ct App 1996) 17

Phoenix Insurance Company v Estate ofGainer No M200701446COAR3CV 2008 WL 5330493 at 10 (Tenn Ct App Dec 19 2008) 31

Sheehan Construction Company v Continental Casualty Company 935 NE2d 160 (Ind 2010) 1049

Vlll

Silk v Flat Top Construction 453 SE2d 356 (WVa 1994) 1524

Smith amp Nephew Inc v Federal Insurance Company 2005 WL 3134053 5 (WD Tenn 2005) 4446

Smithway Motor Xpress v Liberty Mutual Insurance 484 NW2d 192 (Iowa 1992) 22

Sphere Drake Insurance Company v Tremco Inc 513 NW2d 473 (Minn Ct App 1994) 22

Standard Construction Company v Maryland Casualty Company No 01-2006V 2002 WL 1477886 (WD Tenn May 152002) 445051

Standard Fire Insurance Company v Chester ODonley amp Associates Inc 972 SW2d 1 10 (Tenn Ct App 1998) 283357

State ex rei Nationwide Mutual Insurance Company v Wilson 236 WVa 228 778 SE2d 677 (2015) 142324

Stewart Interior Contractors LL c v Metalpro Industries LL c 969 So2d 653 (La App 4 Cir 2007) 21 22

S Tr Insurance Company v Phillips 474 SW3d 660665 (Tenn Ct App 2015) 28

Tata v Nichols 848 SW2d 649650 (Tenn 1993) 52

Tennessee Farmers Mutual Insurance Company v Reed 419 SW3d 262 (Tenn Ct App 2013) 34

Travelers Indemnity Company ofAmerica v Moore amp Associates Inc 2005 Tenn App LEXIS 596 (Tenn Ct App Sept 202005) 2 17

Travelers Indemnity Company ofAmerica v Moore amp Associates Inc 216 SW3d 302304305307308310 (Tenn 2007) 289 11 16

17 18 1928 29303149

IX

Travelers Insurance Company v Eljer Mfg 757 NE2d 481 (Ill 2001) 26

Trinity Homes LLC v Ohio Casualty Insurance Company 629 F3d 653 (7th Cir 2010) 104950

Trinity Univ Insurance Company v Turner Funeral Home Inc 2003 US Dist LEXIS 27205 18

United National Insurance Company v International Petroleum amp Exploration

2007 US Dist LEXIS 93429 at (D Utah Dec 20 2007) 20

us Bank NA v Tennessee Farmers Mutual Insurance Company 277 SW3d 381386 (Tenn 2009) 28

us Fire Insurance Company v Js UB Inc 979 So 2d 871 (Fla 2007) 10 50

Vanbebber v Roach 252 SW3d 279284 (Tenn Ct App 2007) 40

Vandenberg v Superior Court 21 Cal 4th 815 88 Cal Rptr2d 366982 P2d 229 245 (1999) 1423

Vinsant Electric Contractors v Aetna Casualty amp Surety Company 530 SW2d 76 77 (Tenn 1975) 49

Vernon Williams amp Son Construction Inc v Continental Insurance Company

591 SW2d 760 764 765 (Tenn 1979) 2 10 11 15 16 17 18 19

STATUTES

Tennessee Code Ann sect56-6-115 42

x

OTHER AUTHORITIES

See Patrick J Wielinksi Insurance for Defective Construction International Risk Management Institute (4th Ed 2015) at pp344-46)

Rowland H Long Law ofLiability Insurance sectsect 107[1] 107[2] (1997)

263051

19

RULES

West Virginia Rules of Appellate Procedure 10(g)

West Virginia Rule of Appellate Procedure 20

1

1

Xl



INTRODUCTION

In accordance with the Orders of January 27 2017 and July 7 2017 by this Court

Petitioner JA Street amp Associates Inc (hereinafter JA Street) files its consolidated and

combined Reply Brief to the Response and Responsive Brief to Cross-Assignments ofError raised

by the Respondents in this matter Petitioner reiterates that the complexities of this case and the

application of Tennessee law mean that this case continues to be one appropriate for the awarding

of oral argument and renews its request for oral argument under West Virginia Rule of Appellate

Procedure 20

ARGUMENT

I Replies to Responses to JA Streets Assignments of Error

The six different insurers in this case each filed briefs in response to JA Streets initial

brief on appeal JA Street has combined its replies and has addressed the responses ofthe insurers

below JA Street has attempted to identify circumstances in which the insurers made similar

responses using different phrases

A Introduction

The Respondents briefs attempt to muddy the picture regarding the claims of property

damage that JA Street is seeking coverage for so a brief summary bears repeating JA Street is

seeking coverage under the policies issued to it by the insurers for property damage to certain

buildings and other structures at the MCF Shopping Center allegedly caused by JA Streets faulty

work in regard to the site development and the fill material utilized in the project Thundering

Herd Development LLC and THD Investors 7 LLC (hereinafter collectively Thundering

1

Herd) is not seeking damages for the cost of correcting JA Streets alleged faulty work in regard

to site development and fill material This distinction is critical to this Courts analysis of

Tennessee law and it is a distinction that the Circuit Court failed to appreciate

Tennessee law as set forth in Travelers Indemnity Company of America v Moore amp

Associates l has determined that claims based upon defective workmanship may constitute an

occurrence and that damages caused by faulty workmanship are property damage2 Contrary

to Respondents arguments neither Vernon Williams (a pre-Travelers opinion) nor subsequent

cases support a denial of coverage in this matter They merely stand for the proposition that a CGL

policy does not provide coverage to an insured where the sole damages claimed are the cost of

correcting the faulty work3 Vernon Williams and subsequent cases involved claimed damages for

the correction for the faulty work itself The Travelers Court noted that because the damages

alleged were not limited to faulty workmanship but included property damage caused by the faulty

work there was property damage which was not excluded from coverage Additionally

Travelers held that to the extent that alleged damages resulted from the faulty workmanship of a

subcontractor those damages were also not excluded from coverage4

Vernon Williams et aI are distinguishable from the facts in Travelers and in this case

The distinction between a claim for the cost or replacement of JA Streets alleged defective work

and a claim for property damage to buildings or structures caused by its alleged faulty work is

critical In Travelers the Court highlighted this distinction between damage to the work itself or

to other property noting that if the claim had been for the cost of the windows themselves (which

1216 SW3d 302 (2007) 2 Travelers supra at 304 3 Vernon Williams supra at 765 See also Cincinnati Insurance Company v Grand Pointe LLC 105-CVshy157207 US Dist LEXIS 39784 17 (ED Tenn May 30 2007) 4 Travelers supra at 310 311

2

was the insureds faulty work) the damage would not have been property damage because it

would have related only to defective components ofthe work However since the windows caused

property damage to the walls the rooms and other parts of the building there was property

damage under the insuring agreement portion for the COL 5

As noted above Thundering Herd is not seeking damages for the cost of correcting the fill

material but instead is seeking damages to buildings and other structures on the site allegedly

caused by the defective fill Thundering Herd has never alleged that the buildings and other

structures on the site were constructed in a defective manner Moreover the work for the buildings

and other structures was not done at the same time or under the same contracts Thundering Herd

and JA Street had entered into a series of contracts for site preparation and construction of

improvements including buildings roadways parking lots and utilities6 There were four

construction contracts between the parties for the project The first contract executed by the parties

on June 5 2001 was for complete site work including grading utilities paving concrete curbs

site lighting and landscaping The second and third contracts were for the construction ofthe retail

buildings north of the Target building and other buildings on the site including a building

designated Shops A The fourth contract was for the construction of the Home Depot building

The initial slope failure occurred on the Target property on or about September 21 200 17

Only after J A Street had completed site development under the original contract with Thundering

Herd and then constructed buildings under the other contracts did settlement occur to the buildings

identified as Shops A and AC Moore resulting in cracks and other damage to the buildings

5 Travelers supra at p 311 6 See JAS 001006 7 See lAS 000548

3

B The Circuit Court Erred In Granting Summary Judgment When Genuine Issues Of Material Exist Particularly When There Are Questions Of Fact With Respect To What Damages Occurred And When

Summary judgment is not appropriate in this case because there are material questions of

fact with respect to what damages occurred and when they happened

Scottsdale Insurance Company (hereinafter Scottsdale) claims that lmdisputed facts

prove it was not given timely notice in this matter (Scottsdale brief at pp 13-14) Scottsdale also

claims without elaboration that a report submitted by Thundering Herd supports the applicable

exclusions within the Scottsdale insurance policies (Scottsdale brief at 15) The Cincinnati

Insurance Company (hereinafter Cincinnati) raises the issue of these fact questions as crossshy

assignments of error Cincinnati argues that the Circuit Court erred in finding questions of fact

with respect to JA Streets timeliness in notifying Cincinnati of the claims against it and in

Cincinnatis independent knowledge regarding the claims (See eg Cincinnati Brief at pp 21shy

22) Zurich American Insurance Company of Illinois (hereinafter Zurich) claims that none of

the exclusions at issue in the Zurich or BITCO General Insurance Corporation (hereinafter

BITCO) policies is dependent upon the amount of damages claimed when those damages

occurred and whether they are ongoing (Zurich brief at p 15) The position that there are no

issues of material fact is inconsistent with the arguments that these insurance companies make

with respect to the business risk exclusions

A ruling on the business risk exclusions question requires determinations of fact In order

to determine whether the damages in this case were sudden and accidental a factual

determination must be made as to when the damages occurred In order to determine whether it

was JA Streets own work that was allegedly deficient such that the your work exception

forecloses coverage a factual determination must be made with respect to what is the extent of

4

JA Streets work the extent of the damage and the reason therefore In order to determine which

individual policies and excess policies may be triggered by the allegations at issue factual

determinations must be made with respect to when damages occurred and the extent of those

damages during the applicable policy periods

The Circuit Court issued lengthy opinions addressing the myriad issues in this case In so

doing the Circuit Court expressly acknowledged the existence of many genuine issues ofmaterial

fact in this case See eg Cincinnati Summary Judgment Order (finding of genuine issue of

material fact as to when property damage occurred finding of genuine issue of material fact as to

Cincinnatis late notice argument finding of genuine issue of material fact as to whether any

Cincinnati policies are implicated by the alleged occurrences at issue)8 The Princeton Excess and

Surplus Lines Insurance Company (hereinafter Princeton) Summary Judgment Order (question

of fact as to cause of damages question of fact as to continuation of damages question of fact as

to whether there were occurrences)9 Scottsdale Summary Judgment Order (question of fact as

to Scottsdales late notice argument question of fact as to continuing loss question of fact as to

operations of the insured question of fact as to cause ofdamages) 10 Zurich Summary Judgment

Order (question of fact as to what work was being done at what site during each policy period

question of fact as to whether areas other than the Target site were completed when the first slide

occurred question of fact as to whether subsidence exclusion applies question of fact as to extent

of damage and knowledge of loss question of fact as to application of loss in progress doctrine

question of fact to late notice argument) 1 I BITCO Summary Judgment Order (question of fact as

to insureds knowledge of property damage question of fact as to whether any BITCO umbrella

8See lAS 010604 - 0106068 lAS 10609 and lAS 10610 9 See lAS 010653 See lAS 010654 and lAS 010655 0 See lAS 01067 lAS 010685 and lAS 010686 II See lAS 010720 lAS 010721 lAS 010723 lAS 010724 lAS 010725 and lAS 010728

5

policies are implicated) 12 Liberty Mutual Agency Markets (The Ohio Casualty Insurance

Company) (hereinafter Ohio Casualty) Summary Judgment Order (question offact as to whether

impaired property exclusion applies) 13

In short while there are potential complex questions of law with respect to the

interpretation of coverage and exclusions in this case there are also underlying factual questions

that simply have to be determined in conjunction with a determination ofthe legal questions Those

facts can only be determined if a trial in the underlying case occurs Accordingly as a whole this

is not a case that is well-suited for summary judgment and the trial court erred in granting

summary judgment with respect to the legal questions that cannot be answered without the

prerequisite determination of fact questions in the underlying case

C The Circuit Court Erred In Granting Summary Judgment To BITCO Cincinnati Princeton Scottsdale And Zurich On The Holding That The Contractual Liability Exclusion Applied To Foreclose Coverage Entirely For The Claims Asserted By Thundering Herd Against JA Street Based On Tennessee Law

BITCOs response brief misconstrues and unfortunately misstates the Circuit Courts

findings and conclusions in granting summary judgment Other Respondents make similar

misguided statements The Circuit Court did not hold that the claims asserted against JA Street

in the underlying action were not covered under the clear and unambiguous terms ofthe applicable

policies initial grants of coverage because the claims were based upon breach ofcontract Instead

the Circuit Courts ruling was based on its interpretation ofthe contractual liability exclusion

12 See JAS 010577 and JAS 010579 13 See JAS 010630

6

i There Is A Distinction Between Coverage Under The Insuring Agreement And The Applicability Of The Contractual Liability Exclusion

As explained in the Petition for Appeal there is a distinction between whether coverage is

available under an insuring agreement and the subsequent applicability ofan exclusion See Brief

ofPetitioner JA Streets amp Associates Inc at pp 28-29 A substantial portion of several of the

Respondents arguments in relation to JA Streets assignment of error regarding the Circuit

Courts improper application of the contractual liability exclusion are dedicated to two primary

lines of argument (1) the assertion that commercial liability policies afford coverage for only tort

claims not claims for breach of contract and (2) whether or not faulty workmanship constitutes

an occurrence under the insuring agreement See BriefofRespondent BITCO General Insurance

Corporation and Cross-Assignments of Error at pp 15-20 Brief on Behalf of Respondent

Scottsdale Insurance Company Including Cross-AsSignments of Error at pp 17-21 Brief of

Respondent The Princeton Excess and Surplus Lines Insurance Company at pp 8-10 (purportedly

raised as a cross-assignment although not properly identified as such in violation of West Virginia

Rules ofAppellate Procedure 10(g))

The insurers arguments are not responsive to the issue of whether or not the Circuit Court

erred in finding that the contractual liability exclusion was applicable The Circuit Courts decision

regarding this exclusion is hinged on its belief that there was no damage to a third party along with

its belief that the exception to the contractual liability exclusion was not applicable The questions

of whether or not a CGL insurance policy can ever provide coverage for a breach of contract and

whether or not faulty workmanship is an occurrence under the insuring agreement are

completely separate and distinct from whether or not the contractual liability exclusion applies to

the specific breaches of contract asserted by Thundering Herd against JA Street

7

In fact the Circuit Court specifically rejected the Respondents arguments on precisely

these issues See December 29 2016 Order Granting Summary Judgment to BITCO General

Insurance Company (The reasonable expectations doctrine dictates that construction defects are

occurrences to hold otherwise would render the coverage provided under CGL policies largely

illusory for contractors This Court is not prepared to hold that under Tennessee law the claims

of THD against JAS may not conceivably fall within the scope of the insuring agreement of the

BITCO policies On that basis the Court would not be inclined to grant summary judgment and

The Court does not interpret this exclusion to exclude all contract claims in general simply

because the facts are plead in contract)14 December 29 2016 Order Granting Summary

Judgment in Favor of Zurich Insurance Corporation15 Order Granting Summary Judgment in

Favor ofPrinceton Excess and Surplus Lines Insurance Companies 16 and December 292016

Order Granting Summary Judgment in Favor ofThird-Party Defendant The Cincinnati Insurance

Company (Based on the decisions of the Tennessee Supreme Court in Travelers Indemnity

Company ofAmerica v Moore amp Associates Inc 216 SW2d 302 (Tenn 2007) as well as the

Florida Court in Js UB and our own Court in Cherrington and other cases around the country

this Court finds that there is no explicit exclusion for contract based claims in CGL policies under

certain circumstances The court finds that based on the facts of this case the fill issue and its

consequences can be considered an occurrence resulting in property damage for which the

insurance companies could be liable if JAS can prove damage to a third party and the

reasonable expectations doctrine dictates that construction defects are occurrences to hold

14 See JAS 010564 - 010566 lAS 010568 15 See JAS 010709 - 010710 16 See JAS 010669 - 010672

8

otherwise would render the coverage provided under CGL policies largely illusory for

contractors) 17

The Respondents are conflating the existence of coverage under the insuring agreement

with the subsequent application of an exclusion Although these arguments are not applicable to

the issue of the application of the contractual liability exclusion JA Street will address these

arguments since at least one of the Respondents (Princeton) has raised the issue as a crossshy

assignment of error

a Claims Of Faulty Workmanship Constitute An Occurrence

In addition to the above-referenced Orders granting summary judgment the Circuit Court

similarly stated in its Order entered in March 2010 that Tennessee law explicitly states that claims

of faulty workmanship could constitute an occurrence under a commercial liability policy18

Furthermore the Circuit Court acknowledged that where faulty workmanship causes damage to

more than the defective work itself the alleged damages are property damage covered by a CGL

policy)9 The Courts ruling was based upon the Tennessee Supreme Courts decision in Travelers

Indemnity Company of America v Moore amp Associates Inc Since 2009 several other courts

including this Court have joined Tennessee in holding that claims for danlages due to faulty

workmanship are covered by commercial liability policies Greystone Construction v National

Fire amp Marine Insurance Company 661 F3d 1272 1282-1283 (lOth Cir Colo 2011) (a strong

recent trend in the case law interprets the term occurrence to encompass unanticipated damage

to nondefective property resulting from poor workmanship) citing American Empire Surplus

Lines Insurance Company v Hathaway Development Company 288 Ga 749 707 SE2d 369 371

17 See JAS 010599 - 010600 18 See JAS 001013 19 See JAS 001005 - 001018

9

(Ga 2011) (acknowledging a trend in a growing number of jurisdictions to cover damage

resulting from poor workmanship) Sheehan Construction Company v Continental Casualty

Company 935 NE2d 160 (Ind 2010) Architex Association Inc v Scottsdale Insurance

Company 27 So 3d 1148 (Miss 2010) Trinity Homes LLC v Ohio Casualty Insurance

Company 629 F3d 653 (7th Cir 2010) Auto Owners Insurance Company v Newman 385 SC

187684 SE2d 541 (SC 2009) clarified by Crossmann Communities ofN c Inc v Harleysville

Mutual Insurance Company 717 SE2d 589 No 26909 395 SC 402011 SC LEXIS 277 2011

WL 3667598 at 3 (S Ct SC Aug 22 2011) Us Fire Insurance Company v Js UB Inc

979 So 2d 871 (Fla 2007) Lamar Homes Inc v Mid-Continent Casualty Company 242 SW3d

1 (Tex 2007) French v Assurance Company ofAmerica 448 F3d 693 (4th Cir 2006) Lee

Builders Inc v Farm Bureau Mutual Insurance Company 281 Kan 844 137 P3d 486 (Kan

2006) Great American Insurance Company v Woodside Homes Corp 448 F Supp 2d 1275 (D

Utah 2006) American Family Mutual Insurance Company v American Girl Inc 2004 WI 2268

Wis 2d 16 673 NW2d 65 (Wis 2004) Fejes v Alaska Insurance Company 984 P2d 519

(Alaska 1999) See also Cherrington v Erie Insurance Property and Casualty Company 231

WVa 470 480 745 SE2d 508 521 (2013) (overruling prior law by adopting the majority view

that damages due to defective workmanship constitute an occurrence under a CGL policy)

b Breach Of Contract Claims Can Constitute An Occurrence Under A CGL Policy

The assertion that breach of contract claims are not covered by a CGL policy is without

merit The Respondents assert that breach of contract claims can never constitute an occurrence

under a commercial liability policy In support of their proposition they rely upon a pre-Travelers

v Moore decision Vernon Williams amp Son Constr Inc v Continental Insurance Company 591

SW2d 760 (Tenn 1979) In Vernon Williams the Court ruled that due to the contractual liability

10

exclusion in the CGL policy at issue there was no coverage for faulty workmanship or breach of

contract claims where the damages claimed are the cost of correcting the work itself Id at

76520 The Tennessee Supreme Court has explicitly stated that Vernon Williams is not relevant

to the determination of whether there has been an occurrence under the terms of the insuring

agreement Travelers v Moore supra at 30721 Vernon Williams is only relevant to whether the

exclusions of a commercial policy preclude coverage for breach of contract claims

The blanket proposition that the insuring agreement of CGL policies do not provide

coverage to contract claims is simply wrong The insuring agreement of a CGL policy grants

coverage if there is property damage that arises from an occurrence As discussed previously

in this and other memoranda previously filed by JA Street an occurrence is defined as an

accident The Tennessee Supreme Court has determined that claims of faulty workmanship may

constitute an accident where the insured did not foresee or anticipate that the work would be

completed negligently Travelers v Moore supra at 30822 Therefore if there is property

damage that was not intended by an insured the insuring agreement provides coverage This

broad grant of coverage is negated by the policy exclusions Id at 309 Clearly breach of contract

20 Unlike this matter in Vernon Williams there were no claims for property damage to property other than the defective work itself 21 The exclusion examined in Vernon Williams was somewhat different to the Contractual Liability Exclusion contained in the policies at issue in this matter The exclusion in Vernon Williams only applied to breach of contract claims for the defective work performed by the contractor but it contained an exception for breach of warranty claims The Court noted that the insureds breach of an implied warranty are covered unless the claimed loss is confined to the insureds work or work product Vernon Williams supra at 764 citation omitted Unfortunately for the insured in Vernon Williams the allegations against the insured did not include breach ofwarranty claims Thunder Herds claims against JA Street include breach of warranty claims (See JAS 00707 - 000724 and JAS 009431 - 009473 22 The insurers attempt to limit the applicability of Travelers v Moore to tort claims There is nothing in Travelers v Moore that indicates whether the claims against the insured were based upon tort or contract theories The Court merely noted that a claim for arbitration was made based upon damages due to Poor and negligent design supervision and implementation of the window installation resulting in water and moisture penetration which in turn has caused pervasive premature deterioration of and damage to other components of the interior and exterior wall structure and some room finishes and fixtures Travelers v Moore supra at 304 These allegations could have sounded in tort or contract

11

claims based upon property damages arising from an occurrence is covered by the insuring

agreement

Furthermore if there is no coverage under the insuring agreement for contract claims then

there is no logical reason for a contractual liability exclusion to be contained in a policy See

American Family Mutual Insurance Company v American Girl Inc supra at 78 (If the insuring

agreement never confers coverage for this type of liability as an original definitional matter then

there is no need to specifically exclude it)

ii There Was Damage To A Third Party

Petitioners have always maintained and asserted that JA Street is seeking coverage for the

claims asserted by a third party - Thundering Herd - for property damage to the buildings and other

structures allegedly suffered as a result of the poor workmanship in relationship to the defective

fill and not coverage for the cost or repair of the defective fill material 23

Respondents are incorrect when they claim that there are no disputes of fact whether

damage occurred to property of a third party Respondents rest this argument primarily on the

alleged claim that lA Street conceded during oral argument that the case against it did not involve

damage to property other than the work performed during the construction of the project and that

all of the work performed was under lA Streets contracts with Thlmdering Herd24 Thus there

was no damage to property owned by a third party Not only is this representation misleading but

the conclusions the Respondents reach as a result of this misstatement are simply wrong

Furthermore Zurichs representation to this Court that JA Street did not raise this issue below is

23 See JAS 010221 24 See Brief of Cincinnati at p 12 and Brief of Scottsdale at pp 22-23

12

belied by the very hearing transcript testimony that Cincinnati and Scottsdale attempt to contort

into a concession25

A review of the hearing transcript cited by the Respondents makes clear that J A Street

never conceded that there was not damage to a third party and that the confusion of the Court

continued26 Rather JA Street responded to the Circuit Courts questions pertaining to the

property damages alleged and if there was property damage other than to the insureds own work

product Counsel for JA Street responded that Thundering Herds allegations had to do with

improper fill and negligence in installing the fill and not the construction of the buildings for

which Thundering Herd was claiming property damage The Circuit Court rejected JA Streets

argument and ruled that because the fill work and construction of the buildings was both done by

JA Street that there could be no damage to a third party thus the contractual liability exclusion

applied completely

The Circuit Courts Summary Judgment Orders on this issue are inconsistent and not

helpful to the resolution of these issues Fortunately the record is otherwise clear A review of the

hearing transcript cited by the Respondents makes clear that JA Street never conceded that there

was not damage to a third party

In the Circuit Courts Memorandum Opinions issued prior to the hearing and incorporated

into its Final Orders27 the Circuit Court found that based on the facts of this case the fill issue

and its consequences can be considered an occurrence resulting in property damage for which the

2S JA Street also argued the issue ofdamage to a third party during the hearing held on April 24 2015 See JAS 010221 26 See JAS 010505 - 010509 27 See JAS 010586 JAS 010634 JAS 010688 JAS 010655 JAS 010613 JAS 010735 JAS 010688

13

insurance companies could be liable if JAS can prove damage to a third party28 The Circuit

Court further noted in its Memorandum Opinion

As the initial pleadings were many years ago the facts have changed and the allegations ofdamages have also Property damage has definitely been alleged The Court further recognizes that the action lies in contract not tort and that the CGL policy does not cover merely economic damages to the work of the insured subject to certain exceptions However as stated previously there are now decisions that hold that faulty construction can constitute an occurrence under certain circumstances29

The Circuit Court also noted the relevance of a footnote in State ex ref Nationwide Mutual

Insurance Company v Wilson 30

In regards to claims for breach of contract we caution that the same act may constitute both a breach of contract and a tort Vandenberg v Superior Court 21 Cal 4th 815 838982 P2d 229245 (1999) Thus in determining whether a claim is covered under a CGL policy courts must not focus exclusively on the legal theory asserted by the claimant Rather the relevant considerations are the nature of [the] property the injury and the risk that caused the injury in light of the particular provisions of each applicable insurance policy Id 982 P 2d at 234shy44Y

Based on this footnote the Court then held

Through its decisions the WVa Supreme Court has made it clear that the contractual liability exclusion in question is unambiguous and that pure breach of contract claims are excluded under such contractual liability exclusions The Court has not found or been cited any case that waivers from this pronouncement and grants Summary Judgment to all insurance companies that have the contractual liability exclusion in their policies If JAS proves that there is damage to a third party then those damages would be entitled to coverage32

In the span of two paragraphs the Court recognized that the court must not focus

exclusively on the theory asserted by the claimant proceeded to focus specifically on the theory

of asserted as contract applied West Virginia law rather than Tennessee law pronolIDced

28 See JAS 00953 1 29 See JAS 009533 30 See JAS 009533 31 See JAS 009535 32 See JAS 009536

14

Summary Judgment and yet also concluded that if JA Street proved that there was damage to a

third party then those damages would be entitled to coverage A few pages later the Circuit Court

again addressed the contractual liability exclusion and concluded after citing two West Virginia

cases (Silk Top and Marlin - two completely inapposite cases) that the contractual liability

exclusion applies Based on TN law unless JAS can prove damages to property other than that of

the insured there is no coverage 33

This Court recognized in Cherrington that in certain circumstances involving a contractor

and property owner there could be property damage under a COL policy In Cherrington a

homeowner entered into a contract with Eries insured Pinnacle for the construction of a home

The property damage at issue included defects to the house itself Significantly this Court did not

deny coverage to the insured contractor on the basis that the homeowner was not a third party In

other words this Court clearly recognized that the homeowner was a third party in that context

Likewise Thundering Herd is a third party in the case sub judice Accordingly the Circuit Court

erred in its ruling to the contrary

iii The Contractual Liability Exclusion Does Not Preclude Coverage

The Respondents reliance on Vernon Williams is misplaced The Tennessee Supreme

Court has not interpreted the Contractual Liability Exclusion in the context at issue in this case

The Tennessee Court in Vernon Williams stated [w]e are convinced that the standard

comprehensive general liability policy does not provide coverage to an insured-contractor for a

breach of contract action grounded upon faulty workmanship or materials where the damages

claimed are the cost of correcting the work itself34 Thundering Herd is not seeking damages

33 See JAS 009548 34 Vernon Williams supra at 765 (emphasis supplied)

15

for the cost of correcting the faulty work ie the defective fill material but instead it is seeking

property damage to the buildings and other structures caused by the defective fill material

In Travelers v Moore the Tennessee Court recognized that the CGL policy language had

changed since Vernon Williams 35 The Court even went so far as to caution that [i]n some cases

courts have misapplied policies by seizing upon conclusions in earlier cases without realizing that

the policy language had been revised

In 2010 the Circuit Court recognized that the same type of contractual liability exclusion

at issue was also contained in the policy in Travelers and held that damages to the property of the

plaintiff were not excluded36 Inexplicably the Circuit Courts latest Orders granting summary

judgment on the issue of the contractual liability exclusion ignore the Courts own prior rulings

ignore Travelers ignore American Girl and ultimately rely on outdated Tennessee law and West

Virginia law to reverse course on a ruling it made six years prior

The Circuit Court relied on outdated law in its rationale to determine that the contractual

liability exclusion applied in this case to exclude coverage for breach of contract claims The

Respondents and the Circuit Court were mistaken in their reliance upon Cincinnati Insurance

Company v Grand Pointe LLC No1 05-CV-161 2006 US Dist LEXIS 44602 (ED Tenn

June 29 2006) in order to justify the ruling on the applicability of the contractual liability

exclusion37 Specifically the Circuit Courts Orders noted that it relied on this unreported opinion

for authority in reaching its conclusion and cited the following language

Some courts have held the new subcontractor exception abrogates the broad holdings of earlier cases like Vernon Williams that construed the 1973 ISO form Id at p 11 American Family Mutual Insurance Company v American Girl Inc

35 Although Travelers was specifically referencing the language in the your work exclusion a review of the policy language in Vernon Williams versus the language at issue in this case reveals changes were made to the contract liability exclusion 36Id 37 See lAS OlO569 lAS 010675 lAS 010713 and lAS 010675

16

673 NW2d 65 83-84 (Wis 2004) see also OShaughnessy v Smuckler Corp 543 NW2d 99 (Minn Ct App 1996) Although the Court understands the rationale of these decisions several Tennessee cases have adopted the holding of Vernon Williams in cases where the 1986 ISO form was used The Court concludes Tennessee courts in the future may very well decide the subcontractor exception to the your work exclusion results in coverage in a case such as this where there has been faulty subcontractor work that has resulted in damage to the contractors non-defective work (emphasis added) However it is not the province of this Court to rewrite well established Tennessee law without some indication from the Tennessee Supreme Court Vernon Williams or later decisions relying on it were abrogated by the addition of the subcontractor exception38

It is crucial to note that the Circuit Court relied upon the 2006 unreported opinion from the

Tennessee Court of Appeals in Travelers v Moore The Tennessee Supreme Court had granted

permission to appeal but had not yet ruled in Travelers when the Grand Pointe Court ruled

There are significant differences between the unreported Tennessee Court ofAppeals case

in Travelers v Moore and the Tennessee Supreme Courts opinion in the case The Tennessee

Court of Appeals merely distinguished Vernon v Williams 39 Yet the Tennessee Supreme Court

ultimately said Vernon v Williams was inapplicable to the facts in Travelers v Moore4o

Accordingly had the Grand Pointe court had the benefit of the Tennessee Supreme Courts ruling

in Travelers v Moore the Grand Pointe Court would have known not to rely upon Vernon v

Williams and its ruling should have been different

Perhaps recognizing the Circuit Courts error In relying upon the 2006 OpInIOn ill

Cincinnati Insurance Company v Grand Pointe BITCOs response brief in support of the Circuit

Courts holding cites to a subsequent ruling in the case in 2007 rather than the outdated opinion

and language cited by the Circuit COurt41 However even that 2007 opinion does not support the

38Id

39 See Travelers Indemnity Company ofAmerica v Moore amp Associates 2005 Tenn App LEXIS 596 11shy12 (Tenn Ct App Sept 20 2005) 40 Travelers Indemnity Company ofAmerica v Moore amp Associates 216 SW3d 302307 (Tenn 2007) 41 See Response Brief of BIT CO at p 20 fn 18 citing to 2007 US Dist LEXIS 39784 (ED Tenn 2007)

17

Respondents position The Grand Pointe case relied upon by BITCO case merely recognized that

Travelers affirmed the law that claims of faulty workmanship or materials where the sole

damages are for replacement of a defective component or correction of faulty installation did not

fall within the definition of property damage in a COL insurance policy42 In Grand Pointe the

damages alleged were the result ofthe insureds negligence in the construction of the building and

the subsequent repair and correction ofthat building This is not applicable to the case sub judice

as Thundering Herd is not alleging defective workmanship of the buildings and other structures

At no point has Thundering Herd alleged that lA Street was negligent or breached its contract as

a result ofthe construction of the buildings or that the construction ofthe buildings were defective

in any manner Rather Thundering Herds allegations are focused solely on lA Streets site

preparation and fill material The property damages Thundering Herd seeks is not for the

replacement ofdefective fill material or the correction ofthe faulty installation offill Thus neither

Vernon Williams nor the subsequent cases which reply upon it are applicable to this case

Additionally the Respondents and the Circuit Courts reliance upon Trinity Univ

Insurance Company v Turner Funeral Home Inc 43 is similarly misplaced Trinity is a federal

court case involving claims against a funeral home with several causes of action including breach

of contract concerning the handling of the remains44 The Circuit Court relied upon this case for

the premise that it applied Tennessee law and held that the standard contractual liability exclusion

contained in a COL policy excludes coverage for breach of contract claims asserted against the

insured45 The Trinity opinion is not only factually distinguishable but once again it is a pre-

Travelers opinion The Respondents and the Circuit Court simply ignore the Travelers opinion

42 Cincinnati Insurance Company v Pointe LLC 2007 US Dist LEXIS 39784 at p 17 (Emphasis added) 43 2003 US Dist LEXIS 27205 44 Id at 23 45 See JAS 010570 JAS 010713 JAS 010675 JAS 010570 and JAS 010675

18

which is the most recent Tennessee Supreme Court and that it cited American Girl with approval

three times within its opinion which is the strongest indicator as to how the Tennessee would

interpret the CGL in terms of a claim and the applicability of the contractual liability exclusion

wherein the property damage claim is for damage caused by the faulty workmanship

Travelers is binding Tennessee law and the Circuit Court erred in its reliance on the older

and inapposite Vernon Williams case Travelers cites American Girl with approval three times

And this is a case with a fact pattern that is strikingly similar to American Girl The Contractual

Liability Exclusion does not foreclose coverage in this case Tennessees position is in line with

authorities around the country A leading commentator is in agreement that the exclusion is not

intended to exclude all liability with a contract made by the insured Rowland H Long Law of

Liability Insurance sectsect 107[1] 107[2] (1997) explains the rationale behind this rule is that

liability assumed by the insured under a contract or agreement presents an uncertain risk which

cannot be determined in advance for the purpose of fixing premiums Id sect 107[2] at 1-421

Consequently [c]ontractual exclusion clauses which deny coverage for liability assumed by the

insured under any contract or agreement not defined in the policy relieve the insurer from liability

only in fact situations where the insured would not be liable to a third person except for the express

assumption ofsuch liability Id At 1-44 emphasis added) This is reasonable in view of the fact

that [a]ll business transactions are entered into according to some sort of agreement or

understanding Larsen v General Casualty Company 99 FSupp 300 302 (DMinn 1951) ajJd

196 F 2d 170 (8 th Cir 1952) If the contractual liability exclusion excluded all liability associated

with a contract made by the insured commercial liability insurance would be severally limited in

its coverage if not eliminated

19

The Contractual Liability Exclusion does not refer to liability that results from breach of

contract but only to liability an insured contractually assumes in contract United National

Insurance Company v International Petroleum amp Exploration 2007 US Dist LEXIS 93429 at

(D Utah Dec 20 2007) (noting that if the contractor had agreed to assume the tort liability of

another the insured contract exception would preclude application of the exclusion too and for

this reason the exclusion is ambiguous and should be construed in favor ofthe insured) Likewise

a federal Tennessee court ruled that the Contractual Liability Exclusion did not apply to a breach

of contract claim for liquidated damages because the insured would have had liability for the

damages even if there were no contract Clark Construction Group Inc v Eagle Amalgamated

Service 2005 US Dist LEXIS 34812 (WD Tenn Aug 24 2005)) See also Arnett v Midshy

Continental Casualty Company 2010 US Dist LEXIS 71666 2010 WL 2821981 (MD Fla July

16 2010) (holding the Contractual Liability Exclusion only applies to liabilities assumed by an

insured in a contract or agreement and does not apply to liabilities for which the insured would

have without a contract) National Union Fire Insurance Company v Modern Continental

Construction Company 2009 Mass Super LEXIS 413 27 Mass L Rep 16 (Mass Super Ct

2009) (ruling the Contractual Liability Exclusion does not apply to breach of contract or breach of

warranty claims that involve liability the insured incurred under its contract with the

Commonwealth rather than liability it assumed under the contract)

BITCO incorrectly states that the author of Insurance for Defective Construction relied on

by J A Street only cites a paucity of authority two cases from 1972 and 1982 and American

Girl in support of the contention that the majority view holds that the Contractual Liability

Exclusion does not apply to simple claims for breach of contract only contractual assumptions

20

of the liability of third parties46 This is incorrect The author cites six additional cases simply by

way of example47

In addition a number of other courts have also reviewed and analyzed the Contractual

liability exclusion and rejected the broad interpretation of the exclusion that BITCO seeks

Olympic Inc v Providence Insurance Company 648 P2 1008 (Alaska 1982) (explaining that

assumption of liability in a contract refers to liability incurred when one promises to indemnify

or hold harmless another and does not refer to the liability that results from breach of contract)

Anderson v National Union Fire Insurance Company ofLouisiana 912 So2d 400 (La App 2

Cir 2005) (explaining that the assumption of liability language in the contractual liability

exclusion has been argued by insurers to broadly exclude coverage for the liability under any

contract of the insured but that a reasonable and more narrow interpretation limits the exclusion to

a specific assumption by the insured that solely results from the negligence or contractual breach

of a third party) Stewart Interior Contractors LL c v Metalpro Industries LL c 969 So2d

46 See BITCOs brief at p 30 47 Indiana Insurance Company v Kopetsky 11 NE3d 508 (Ill App 2014) (holding that the exclusion did not bar coverage for liability by a breach of contract but rather for liability assumed from a third party) Burlington Insurance Company v PMl Am Inc 2012 WL 9952942012 US Dist LEXIS 40315 (SD Ohio Mar 23 2012) (Court declined to apply the contractual liability exclusion since the claim before it did not involve a hold harmless or indemnification agreement rather a breach of contract) Ferrell v West Bend Mutual Insurance Company 393 f3d 786 (8th Cir Ark 2005) (Court declined to apply the contractual liability under the circumstances indicating that the exclusion applies only where the insured assumes the liability of a third party) Broadmoor Anderson v National Union Fire Insurance Company 912 So2d 400 (La App 2d Cir 2005) cert denied 925 So2d 1239 (La 2006) (Court held that a reasonable and narrower interpretation would limit the contractual liability exclusion to a specific assumption by the insured of liability that solely resulted from the negligence or contractual breach of a third party and refused to apply it) Lennar Corp v Great American Insurance Company 200 SW3d 651 (Tex App - Houston 14th Dist 2006 pet denied) (Court refused to apply the contractual liability exclusion to a claim for repair and replacement of defective EIFS limiting its applicability to those situations where the insured contractually assumed liability for the conduct ofa third party such as through an indemnity or hold harmless agreement) and King County v Travelers Insurance Company 1996 WL 257135 1996 US Dist LEXIS 21946 (WD Wash Feb 20 1996)(Court refused to apply the contractual liability exclusion because the liabilities of King County under its agreements with the professional sports teams did not constitute assumptions of liability in hold harmless agreements but simple breaches of contract)

21

653 (La App 4 Cir 2007) Federated Mutual Insurance Company v Grapevine Excavation Inc

197 F3d 720 (5 th Cir 2000) (explaining that the exclusion did not apply when the insured was

sued for its own conduct rather than as a contractual indemnitor ofa third partys conduct) Marlin

v Wetzel County Board ofEducation 212 WVa 215 569 SE2d 462 (2002) (liability assumed

by the insured under contact in an insurance policy or words to that effect refers to liability

incurred when an insured promises to indemnify or hold harmless another party and thereby agrees

to assume that other partys tort liability) Gibbs M Smith Inc v UsFampG 949 P2d 337 (Utah

1997) (contract exclusion clause in CGL policy did not apply to insured publishers breach of its

own contract with author) Sphere Drake Insurance Company v Tremco Inc 513 NW2d 473

(Minn Ct App 1994) Musgrove v Southland Corporation 898 F2d 1041 (5 th Cir 1990) Dreis

amp Krump Manufacturing Company v Phoenix Insurance Company 548 F2d 681 (7th Cir 1977)

J L Simmons Company v Fidelity amp Casualty Company 511 F2d 87 (7th Cir 1975) Continental

Insurance Company v Bussell 498 P 2d 706 (Alaska 1972) Commercial Union Insurance v Basic

American Med 703 FSupp 629 (ED Mich 1989) ([c]ontractual exclusion clauses deny the

coverage generally assumed by a liability policy in cases in which the insured in a contract with a

third party agrees to save harmless or indemnify [a] third party) Smithway Motor Xpress v

Liberty Mutual Insurance 484 NW2d 192 (Iowa 1992) Aetna Casualty amp Surety Company v

Cotter 522 NE2d 1013 (Mass 1988) (The liability assumed exclusion clause has been taken

to refer to liability incurred when one promises to indemnify or hold harmless another)

Based upon the foregoing it is clear that the Contractual Liability Exclusion does not

preclude coverage The allegations asserted against JA Street by Thundering Herd are not claims

for liabilities assumed by JA Street for Thundering Herd or any other party and the exclusion is

not applicable Alternatively even if the exclusion did apply the allegations are for claims for

22

liabilities that would exist in the absence of a contract and the exception to the exclusion would

apply as discussed below48

iv Assuming Arguendo That The Contractual Liability Exclusion Applies The Exception To The Exclusion Is Applicable

The Circuit Court erred in concluding that even ifthe contractual liability exclusion applied

that the exception to the exclusion was applicable for damages that the insured would have in the

absence of the contract or agreement The Circuit Court accepted BITCOS circular logic that

since the claims by THD against JAS are contractual there would be no liability of any kind

absent the contract49 As an initial matter this conclusion simply ignores that the allegations

leveled against JA Street support both tort and breach ofcontract claims Moreover the exception

contains no language requiring that such liability in absence of a contract be pleaded or asserted

in a lawsuit If the Insurers wanted to specifically impose such a time limitation on the exception

then they would have included specific limiting language to that effect Thus the fact that the

statute of limitations for a common-law tort claim had expired by the time Thundering Herd filed

its Amended Complaint adding JA Street as a defendant is irrelevant for purposes of applying

this exception to the Contractual Liability Exclusion

The basis of this case sounds in tort regardless of whether it is pleaded as such by

Thundering Herd

As this Court recognized in Wilson

In regards to claims for breach of contract the same act may constitute both a breach of contract and a tort Vandenberg v Superior Court 21 Cal 4th 815 88 Cal Rptr2d 366 982 P2d 229 245 (1999) Thus in determining whether a claim is covered under a COL policy courts must not focus exclusively on the legal

48 The allegations asserted against JA Street may have been couched as breach ofcontract claims or breach of warranty claims but as discussed in the Petition the claims also support negligence claims The insurer should not be able to deny coverage because the plaintiff did not frame the underlying allegations as negligence claims 49 See JAS 010567 - 010568

23

theory asserted by the claimant Rather the relevant considerations are the nature of [the] property the injury and the risk that caused the injury in light of the particular provisions of each applicable insurance policy fd 982 P2d at 234shy4450

This case is the perfect example of a claim for a breach of contract that also constitutes a tort In

fact the claims against SampME Inc (the only defendant in Thundering Herds complaint filed in

2003) were pleaded as both negligence and a breach ofcontract The nature ofthe property injury

and risk in this case is that the slope at the rear ofthe Target store failed causing a landslide which

extended across the developments eastern property line In addition as to the remainder of the

property damages were incurred related to additional slides sloughing and land movement at other

locations in the development such as to the Shop A building and surrounding area the Shop

C building and surrounding area the Office Depot building and surrounding area and the storm

drainage and sanitary sewer systems

This case has no similarities to the factual predicate found in Silk In Silk there was no

property damage and the damages sought by the plaintiffs related to cost overruns and delay in

moving into their homeS1 It was on that basis that this court found that the damages claimed

herein have their origin solely in contract Here the facts establish property damage and satisfy

the test in Wilson

It is clear that the only reason that Thundering Herd plead the causes of action against lA

Street in contract rather than tort is because the statute of limitations had run on any tort claims by

the time Thundering Herd filed its Amended Complaint and added JA Street as a party The

reasonable expectation doctrine dictates that if J A Street would have had coverage for the

damages if timely pleaded as a tort that it should have coverage for the same damages arising out

50 Wilson supra fn 8236 WVa at 234 778 SE2d at 683 51 Silk supra 192 Wva at 526 453 SE2d at 360

24

ofthe same actions when plead as a breach ofcontract In fact the earlier Federal Court case filed

by Target involving JA Street for the damages Target sustained in the same construction project

BITCO provided coverage because such action sounded in tort It is disingenuous for coverage to

now be denied on the basis that JA Street would not otherwise be liable in absence ofthe contract

JA Street cannot control the timing of when an action is asserted against it by a defendant

D Endorsement 4 Of The Zurich Policy Does Not Foreclose Coverage

This issue raised by J A Street was addressed in its principal brief The Endorsement is

essentially a contractual liability exclusion and JA Streets response thereto is addressed above

E Exclusion M Of The Business Risk Exclusions Does Not Foreclose Coverage

Although all the insurers have policies which include Exclusion M the Circuit Court did

not grant summary judgment to all the insurers based upon this exclusion BITCO Scottsdale and

Zurich each have policies adopting Exclusion M and each argue that Exclusion M operates to

deny JA Street insurance coverage Princeton argues that the nature of its follow form policy

should also mean that BITCOs Exclusion M operates to foreclose coverage under the Princeton

policy Their arguments are incorrect As an initial matter disputed questions of fact exist to make

summary judgment inappropriate But even assuming undisputed facts the exclusion is

inapplicable because it is clear that the damage to the buildings and other structures owned by

Thundering Herd and others cannot be corrected by the repair replacement or removal of the

defective fill material Moreover Thundering Herd is not seeking damages from JA Street for

the repair replacement or removal of the fill Finally an exception to the your work (Exclusion

L) exclusion applies to cover subcontractor work

In its principal brief JA Street addressed the circuit courts incorrect characterization with

respect to the damage at issue in this case The circuit court stated incorrectly that JA Street had

25

conceded there was no damage to property other than that of the insured 52 However JA Street

has always maintained that Thundering Herd and Target each have experienced property damage 53

And as explained more fully below the third-party property provision is not determinative in

this matter

BITCO claims that business risk exclusions are designed to exclude coverage for typical

business risks for defects or deficiencies in work performed which causes damage to the project

itself (BITCO brief at p 31) BITCOs statement is far too broad More correctly stated business

risk exclusions are designed to exclude coverage for the repair or replacement of the insured

contractors defective workmanship Stated otherwise business risk exceptions do not exclude

property damage to the insureds non-defective work

All parties agree that the business risk exclusions like Exclusion M exist to establish that

business owners will bear traditional costs of doing business such as following through on their

express agreements Where there is a physical breakdown of work perfom1ed by the insured and

not a mere failure of the work to perform as warranted the exclusion does not apply See Patrick

J Wielinski Insurance for Defective Construction International Risk Management Institute (4th

Ed 2015) at pp344-46) (citing Fidelity amp Deposit Company ofMaryland v Hartford Casualty

Insurance Company 189 FSupp 2d 1212 (D Kan 2002) Marathon Plastics Inc v International

Insurance Company 514 NE2d 479 (Ill App Ct 1987) overruled on other grounds Travelers

Insurance Company v Eljer Manufacturing 757 NE2d 481 (Ill 2001) In fact Fidelity amp Deposit

Company ofMaryland v Hartford Casualty Insurance Company presented circumstances very

similar to this case - allegations of defective work that resulted in cracked walls and structural

52 See JAS 010628 53 See JAS 000676 JAS 008218 - 008221 and JAS 010505 - 010509

26

The exclusion does not apply if there is damage to property other than the insureds work or if the insureds work cannot be repaired or replaced without causing physical injury to other property

Standard Fire Insurance Company v Chester ODonley amp Associates Inc 972 SW2d 1 10

(Tenn Ct App 1998) (citations omitted)

Zurich also argues that Standard Fire v Chester 0 Donley should be ignored because it

construes Kentucky law However the Tennessee Supreme Court has cited Standard Fire v

Chester 0 Donley with approval in cases involving Tennessee law See eg Garrison v Bickford

377 SW3d 659 664 (Tenn 2012) Us Bank NA v Tennessee Farmers Mutual Insurance

Company 277 SW3d 381 386 (Tenn 2009) Travelers Indemnity Company ofAmerica v Moore

amp Associates Inc 216 SW3d 302 305 (Tenn 2007)

In determining whether Exclusion M applies as a matter of contract law portions of the

policy including exceptions for exclusions must be read together to give meaning to the document

as a whole In Cherrington v Erie Insurance Property amp Casualty Company 231 WVa 470 745

SE2d 508 526 (2013) this Court examined Exclusions M and L and ruled Exclusion M was in

direct conflict with the your work Exclusion L Further the definition of your work must be

construed in favor of the insured S Tr Insurance Company v Phillips 474 SW3d 660 665

(Tenn Ct App 2015) ([C]ontracts of insurance are strictly construed in favor ofthe insured and

if the disputed provision is susceptible to more than one plausible meaning the meaning favorable

to the insured controls) As an initial matter BITCOs repeated assertion that lA Street

contracted to perform all work at the Merritt Creek site is simply incorrect (See BITCO brief at p

34 lAS 008645) The property damage that occurred on the Target pad and Target store constitute

damages to property other than lA Streets work lA Street had no responsibility for building

28

the Target store or the AC Moore Store58 As JA Street argued below the facts of this case - in

which issues related to improper or defective fill material resulted in property damage - are exactly

the factual scenario under which the sudden and accidental exception was intended to apply 59

Tennessee has expressly rejected the idea that a contractors negligence stemming from faulty

workmanship cannot result in accidental damage that would be covered under a CGL policy We

decline to adopt a construction of accident which would so drastically limit the coverage under

a CGL Travelers Indemnity Company ofAmerica v Moore amp Associates Inc 216 SW3d at

308

In any case this is not a situation in which JA Street is asking its insurance companies to

pay for costs related to its own defective work Thus the business risk exceptions do not apply

First Thundering Herd alleges that the defective work concerns the fill material Thundering Herd

is not seeking damages for the cost ofrepair or replacement ofthe fill material but instead damages

to certain buildings and other structures caused by the fill material Moreover the alleged

deficiencies involve the work of subcontractors and the policies at issue contain a subcontractor

exception6o The American Girl case is instructive

Cases in Wisconsin and in other jurisdictions have consistently recognized that the 1986 CGL revisions restored otherwise excluded coverage for damage caused to construction projects by subcontractor negligence In Kalchthaler the court of appeals concluded that [t]he only reasonable reading of [the 1986 exception] is that it restores coverage for damage to completed work caused by the work of a subcontractor Kalchthaler 224 Wis2d at 391591 NW2d 169

58 See JAS 004352) 59 See JAS 008873 60 Business Risk Exclusion L states that there is no insurance coverage for property damage to your work arising out of it or any part of and included in the products-completed operations hazards Exclusion L contains an exception for when the damaged work or the work out ofwhich the damage arises was performed on the insureds behalf by a subcontractor See JAS 001923

29

American Family Mutual Insurance Company v American Girl Inc 673 NW2d 65 83 (Wis

2004) (emphasis supplied)

The subcontractor exception in the your work business risk exclusion is part and parcel

ofa modem CGL policy and a major change from the pre-1986 CGL policy Under the reasonable

expectations doctrine part of the reason a general contractor purchases insurance is to protect its

interests where the work of subcontractors is concerned As explained in Insurance for Defective

Construction the 1986 CGL revisions provide three important assurances to a general contractor

1 There is an affirmative rather than an implied grant of coverage with respect to damage to or arising from the work of the insureds subcontractors

2 The faulty workmanship exclusion is made expressly inapplicable to completed operations

3 The damage to products exclusion is made inapplicable to real property

Wielinksi at p 296 These fundamental principles of a CGL policy demonstrate that coverage for

JA Street is not foreclosed under the facts of this case

Zurich suggests that Tennessee has not explicitly interpreted the subcontractor exception

However Tennessee has explicitly acknowledged the existence of the subcontractor exception in

the standard CGL form

The subcontractor exception provides that any damages arising out of the work performed by a subcontractor fall outside the exclusion and are covered under the CGL It is alleged that the installation of the windows was performed by subcontractors hired by Moore Therefore damages resulting from the subcontractors faulty installation of the windows are not excluded from coverage even if those damages affected Moores work

Travelers Indemnity Company of America v Moore amp Associates Inc 216 SW3d 302 310

(Tenn 2007) It also bears noting that both the Tennessee Supreme Court and the Tennessee Court

of Appeals have cited American Girl when explaining the history and purpose of the CGL forms


30

(Tenn 2007) Phoenix Insurance Company v Estate of Gainer No M200701446COAR3CV

2008 WL 5330493 at 10 (Tenn Ct App Dec 192008) Therefore to the extent that there are

allegations of damage to lA Streets work and that damage was caused by the work of

subcontractors the subcontractor exception applies and there is coverage

Finally even if lA Street were not entitled to judgment as a matter oflaw with respect to

the issues related to Exclusion M because of the subcontractor exception the trial courts opinion

identifies potential factual disputes that would foreclose a grant of summary judgment to

Scottsdale and Zurich The Circuit Court denied summary judgment to Zurich on the issue of the

your work exclusion finding that there were genuine issues ofmaterial fact regarding the work

being done on the various sites during each policy period61 Since the facts apply equally to all

policies and the policies all have the same language with respect to the business risk exclusions

if there were material disputes of fact with respect to Zurich then those same material disputes of

fact should prevent the other insurance companies from being granted summary judgment

F The Circuit Court Erred In Granting Summary Judgment To Ohio Casualty On The Holding That There Was No Damage To Property Other Than The Insured JA Street And That There Was No Occurrence Resulting In Property Damages Under The Policy The Circuit Court Conflated JA Streets Work With JA Streets Property

Respondent Ohio Casualty is simply wrong when it states that the only alleged potentially

covered property damage during its policy period was the $7861930 used to pay an adjacent

property owner for damage to his property Thundering Herd has pleaded damages in the amount

of at least $72187418 during the applicable policy period This amount does not include interest

which has been accruing since September 21 2001

61 See lAS 010720

31

The Circuit Court erroneously conflated JA Streets work with JA Streets property and

did not recognize Thundering Herds property as being that of a third party The confusion

engendered by this determination is made clear by the Circuit Courts ruling on other issues For

example the Circuit Court recognized that where Zurich was concerned there is a question of

fact with respect to whose property was damaged Zurich asserts in their brief that other than the

Target and Home depot buildings (because they were owned by them and they built those

buildings) the rest is damage to their own work The Court finds this to be a question of fact for

the jury 62

Respondent Ohio Casualtys additional argument that there was no property damage due

to the movement of the slope at the Target site because the engineered fill did not suffer any

damage but simply moved is without merit

G The Circuit Court Erred In Granting Summary Judgment To Ohio Casualty On The Basis That There Can Be No Exhaustion Of The Primary Coverage And Thus No Excess Coverage When There Are Genuine Disputes Of Material Fact As To The Final Determination Of Damages In The Underlying Action The Circuit Court Additionally Incorrectly Ruled That The Damages Suffered By Thundering Herd Were Not Property Damage Sustained By A Third Party

The Circuit Courts ruling that JA Street could not exhaust the BITCO primary coverage

in order to reach Ohio Casualtys excess coverage is predicated on the Circuit Courts faulty ruling

on the issue ofwhether or not damage to a third party existed As argued in detail above the Circuit

Courts ruling regarding third-party damages and property damage was incorrect Thundering

Herd has alleged at least $72187418 during the applicable policy period This amount does not

include interest which has been accruing since September 212001

62 See JAS 009564

32

H The Definition Of Property Damage Provides Coverage For Loss Of Use

The insurance companies claim that none of the alleged damages for loss of use constitute

property damage under the policies Rather than base its particular argument on the policys

defined term property damage however Zurich begins its argument by quoting a definition of

tangible property from a treatise (See Zurich brief at p 37) Yet the policy itself establishes that

loss of use is covered

The principles of contract interpretation require that a court look first to the defined terms

in the policy See MR Hotels LLC v LLW Architects Inc No M201500840COAR9CV 2016

WL 4070050 at 4 (Tenn Ct App July 282016) Jaffe v Bolton 817 SW2d 1925 (Tenn Ct

App 1991) Here property damage has two defined meanings physical injury to tangible

property including all resulting loss of use of that property or loss of use of tangible property

that is not physically injured (JA 1933) Therefore loss ofuse is expressly contemplated under

the policies

Zurich also argues that a case from the middle district of Pennsylvania should control the

interpretation of loss of use to foreclose the damages JA Street seeks (Zurich brief at p38

Cincinnati brief at p 15) Scottsdale and Cincinnati argue that Standard Fire Insurance Company

forecloses coverage (Scottsdale brief at p 32) However as explained in lA Streets principal

brief there is case law that explains precisely that loss of use contemplates economic damages

See Marlin Fin amp LeaSing Corp v Nationwide Mutual Insurance Company 157 SW3d 796809

(Tenn Ct App 2004) (noting that the term certainly is not defined in a way that would exclude

economic loss from its reach) Auto-Owners Insurance Company v Se Car Wash Sys 184 F

Supp 3d 625630 (ED Tenn 2016)

33

Zurich points to Tennessee Farmers Mutual Insurance Company v Reed 419 SW3d 262

(Tenn Ct App 2013) to support its position that loss of use damages are not recoverable (See

Zurich brief at p 41) Reed was a case about professional negligence in providing financial advice

and the plaintiff wanted to recover under a CGL policy for the diminished value of an investment

portfolio of promissory notes Id at 264 It is a matter of common sense that the financial

consequences of providing bad investment advice would not be covered by a commercial general

liability policy Reed has nothing in common with the facts ofthis construction case

II Responses To Cross-Assignments Of Error

A The Circuit Court Did Not Err In Finding That The Application Of The Known Loss Exclusion And Loss-In-Progress Doctrine Are Questions Of Fact For The Jury

The Circuit Court did not err in finding that the application of the known loss exclusion

and loss-in-progress doctrine are question offacts for the jury 63 The Cross-Assignments of Error

argued by Scottsdale and Zurich64 are unavailing BITCO too makes a known loss argument

even though BITCO does not phrase it as SUCh65 Similarly BITCOs argument must fail

In denying Scottsdales motion for summary judgment the Circuit Court noted the

following

43 Applying the known loss doctrine (policy language) or loss in progress (common law doctrine) the 6th Circuit predicting Tennessee law applied the following standard

The loss-in-progress doctrine bars insurance coverage under a commercial policy where at the time of the policys inception the insured knew about damages that could underlie a third-partys claim against it American amp Foreign Insurance Company Inc v Sequatchie Concrete

63 BITCO has waived any argument relevant to the Circuit Courts ruling as to the known loss exclusion and loss-in-progress doctrine See Brief of BITCO at p 2 64 Scottsdale Cross-Assignment of Error B and Zurichs Cross-Assignment of Error II 6S In its cross-assignment of error BITCO takes issue with paragraph 35 of the Circuit Courts ruling (BITCO brief at p 37) That paragraph is the Circuit Courts ruling on the known loss doctrine

34

Services Inc 441 F3d 341 (6th Cir 2006raquo Applying the doctrine the Court noted in a third-party insurance case such as the one before us the loss-in-progress doctrine does not apply only where the insured knows that a lawsuit has been filed against it or that it has incurred actual legal liability Rather the doctrine may apply where the insured has sUbjective knowledge of the damages that could underlie a legal claim against it Id at 346 (emphasis added)

44 In regard to the known loss and loss-in-progress doctrines the Court adopts the standard urged by Zurich and other insurers - that is the doctrine may apply where the insured has subjective knowledge of the damages The Court held in Sequatchie Concrete that a pending lawsuit was not required by that the doctrine may apply when the insured has subject knowledge of damages that could underlie a legal claim against it In Inland Waters Pollution Control Inc v National Fire Insurance Co 997 F2d 172 (6th Cir 1993) the Court also held that the insureds subjective knowledge is a question of fact for the jury Additionally as the 4th Circuit held in Insurance Co oNorth American Inc v Us Gypsum Co 870 F2d 148 (1989) knowledge that a subsidence will occur does not mean that it will occur during the policy period

45 As a further ruling this Court finds that the insurance policies contain the policy language any continuation change or resumption of such injury and that such language could be susceptible to more than one interpretation especially in the case ofcontinuing or progressive damages over a period of years

46 The Court finds this to be a question of fact for the jury 66

In denying Zurichs Motion for Summary Judgment on the issue of the loss-in-progress

doctrine the Circuit Court held

Zurich asserted that the loss in progress doctrine preclude coverage in this case because JAS had knowledge ofa loss at the time of inception of the Zurich Policy The initial damage started September 2001 at the Target site and there are allegations that it extended under the property line to property that was not owned by Target There was also testimony in the deposition of Brent Roswall of THD that the slope failure extended into areas of the development where Office Depot and Petco would eventually be built The Zurich Policy had an effective date of March 1 2002 Despite the testimony of Brent Roswall the Court finds there to be a question of fact on this issue67

66 See JAS 010684 - 010685 67 See JAS 010724

35

As the Court has now found that there could be multiple occurrences based on the four (4) contracts at issue there are questions offact as to when the alleged damages occurred Thus the Court finds application of the loss in progress doctrine to be a jury issue or subject to a motion for a directed verdict if the evidence confirms Zurichs allegations68

The evidence in this case supports the Circuit Courts conclusion that questions of fact

existed which precluded summary judgment on behalf of Zurich and Scottsdale Zurich America

Insurance Company of Illinois (Zurich) insured J A Street from 030102 to 030103 Prior to

the 030102 policy renewal of the BITCO CGL policy and the inception of the Zurich umbrella

policy the only property damage that had occurred at the MCF Shopping Center was the slope

failure at the Target site The slope failure was fixed or repaired in the fall of 2001 The

certification for the pad for the Target building occurred in December 11 2001 Thundering Herd

and JA Street believed the fix or repair corrected the slip No other areas or locations within the

MCF Shopping Center had suffered any property damage before 0301102

Consistent with Tennessee law requiring the Court to determine the effects of JA

Streets work the Circuit Court was required to limit its analysis of what knowledge JA Street

had concerning property damage at the MCF Shopping Center to each of the specific five (5) job

sites at issue In other words what property damage was JA Street aware of at the Shops A

jobsite prior to the issuance ofthe insurance policies in effect from 0301102 to 0301103 Cracking

in the walls of Shops A was first visually observed in the fall or late 2002 subsequent to the

completion ofthe building69 On or about 0212403 SampME prepared a report for Thundering Herd

addressing settlement issues at Shops A70 Thereafter in the fall of2003 Hayward Baker installed

68 See JAS 010725 69 See JAS 007377 70 See JAS 009083 - 009161

36

twenty-seven piers to support the foundation at the northern and western ends of Shops A A

report by SampME dated 100803 titled Observation ofDrilled Pillars indicated that the installed

piers would provide the type of permanent support for the building wall as recommended by

SampME in the prior 022403 report7l 1 A Street paid for the work associated with the installation

of the piersJ2 JA Street reasonably believed the property damage at Shops A had been fixed and

repaired

Although other minor items ofdamage or repairs were addressed by Thundering Herd and

JA Street from time to time after 1010803 no further property damage ofnote or significance was

brought to JA Streets attention until receipt of the 120505 letter from Thundering Herds

counsel Scott Damron 73 This letter informed JA Street of damage to the slope area behind the

AC Moore building JA Street refused to repair the slope and denied responsibility for the

damage74

The next work done at the MCF Shopping Center involved the site work construction of

the pad and building at Shops A Although the site work involving Shops A started in September

2001 the actual construction of the pad was not completed until January 9 2002 Foundation and

concrete work was started on March 11 2002 Moreover Shops A was substantially completed

sometime near the early summer of2002 There is no evidence to suggest and neither Cincinnati

nor Zurich have argued that the damage that occurred at Shops A was caused by or contributed to

by any work performed at the Target site

71 See lAS 009162 - 009165 72 See lAS 009082 73 See lAS 009166 - 009168 74 See lAS 009168

37

When viewed from this perspective as required by the effects test it is clear that no

property damage to Shops A occurred prior to March 1 2002 Thus the known loss language in

BITCOs insuring agreement and the common-law known loss doctrine are not applicable

A review of the evidence illustrates the fact question at issue here There is some evidence

that in the fall of 2002 JA Street became aware of cracking in a wall or walls of one or more of

the shops within the Shops A building However it has not been determined how many crack(s)

there were where the crack(s) were located the size or dimensions of the crack(s) or even if the

crack(s) were isolated to a certain area or areas in Shops A Additionally it certainly is not unusual

for a building the size of Shops A having one or more cracks in a wall without rising to the level

to support the known loss doctrine

It was not until SampME prepared a report dated 022303 that the settlement issues at Shops

A were more thoroughly addressed Although the report is dated 022303 it has not been

established when JA Street first received the report or otherwise became aware of the content

andor extent of the report Thus there are material facts about what JA Street knew and when

JA Street knew of any property damage at Shops A prior to 030103 Moreover the factual

dispute must be decided within the standard that the Court adopts ie whether property damage

was reasonably certain or reasonably certain to resume continue or change at some point in time

in the future or whether JA Streets liability for the property damage had been established

As of the fall of2003 JA Street had no reason to believe that there would be any further

damages at Shops A In the fall of 2003 Hayward Baker installed twenty-seven (27) piers to

support the foundation at the northern and western ends of Shops A Subsequent to the installation

of the piers SampME prepared a report dated 1010803 titled Observation of Drilled Pillars The

report was addressed to J A Street SampME reported that the installed piers would provide the type

38

of permanent support for the building wall that SampME had recommended in its previous report

dated February 24 2003 Thus it was certainly reasonable for lA Street and others to believe

that the foundation at Shops A was adequate to prevent any further property damage lA Streets

knowledge about the Shops A damage after the installation of piers and repair and whether that

knowledge meets the standard adopted by the Court is a question of fact

Likewise what JA Street knew about property damage at AC Moore or the other job

sites must be viewed for each policy and each policy period in light of the standard adopted by the

Court Again this creates questions offact which the Circuit Court recognized prohibited summary

judgment

In addition to the many questions of fact surrounding the application of the known loss

doctrine it is important to know that the known loss language in both the insuring agreement and

the exclusion is ambiguous The Scottsdale Endorsement for the policy period 0303 to 0304

states

KNOWN INJURY OR DAMAGE EXCLUSION

This policy does not apply to any injury or damage arising out of an occurrence offense or accident which was known to any insured prior to the policy period

For the purposes of this exclusion injury or damage is known if prior to the policy period any insured authorized by you to give or receive notice of an occurrence offense or accident knew that the injury or damage had occurred in whole or in part

If such insured knew prior to the policy period that the injury or damage occurred then any continuation change or resumption of such injury or damage during or after the policy period will be deemed to have been known prior to the policy period

39

If an insurance contract is ambiguous and susceptible to two reasonable meanings The

one favorable to the insured must be adopted Vanbebber v Roach 252 SW3d 279 284 (Tenn

Ct App 2007)

The terms in part continuation change or resumption in the Scottsdale policy are

ambiguous and susceptible to two (or more) reasonable meanings More specifically is a

continuation change or resumption limited to the same exact location or is it more expansive

If it is more expansive then how expansive What does change mean in this context Any

change whatsoever Or something less expansive

At least one court applied a strict sameness test between the property damages That

existed pre-policy inception date and which took place during the policy period for which

coverage was sought In Alkemade v Quanta Indemnity Company 2017 US App LEXIS 6896

2017 WL 1404708 (9th Cir April 20 2017) the insurer failed in its effort to exclude coverage

based upon a similar Montrose (known loss) Endorsement The Court reasoned that the property

damage that existed pre-policy inception date and that which took place during the policy period

were not sufficiently the same Further the Court concluded that the risk of property damage is

not the same as knowledge of property damage

Tennessee has not adopted the known loss doctrine much less a definition of the doctrine

Here the Circuit Court merely adopted the standard advocated by the insurers75 That standard

was predicated on a prediction by the 6th Circuit - a prediction not only that the Tennessee Supreme

Court would adopt the loss-in-progress doctrine but also that the Tennessee Supreme Court

would adopt the same definition as that adopted by the 6th Circuit See American amp Foreign

75 JA Street argued that the Circuit Court apply a different standard such as the legal liability test set forth in Montrose Chemical Corp v Admiral Insurance Company 10 Cal 4th 645913 P2d 878 (Supreme Court of California 1995)

40

Insurance Company v Sequatchie Concrete Services 441 F3d 341 (6th Cir 2006) Previously the

Sixth Circuit had defined the loss-in-progress doctrine to operate only where the insured is aware

of a threat of loss so immediate that it might be fairly said that the loss was in progress and that

the insured knew it at the time the policy was issued or applied for Inland Waters Pollution

Control Inc v National Union Fire Insurance Company 997 F2d 172 178-179 In Inland

Waters the Sixth Circuit held that the District Court erred in granting summary judgment when

the material issue of the scope of Inland Waters foreknowledge of the eventual loss remained

unresolved Id In other words the 6th Circuit Court held that the operation of the doctrine is

generally a question of fact Moreover the fact that an insurer has incorporated the issue into the

insuring agreement does not negate that conclusion In fact by incorporating what the insured

knew into the insuring agreement the insurers have themselves incorporated a question of fact

into the analysis

Scottsdale and Zurich now object to the Circuit Courts application of the standard for

which they advocated claiming that the Circuit Court was wrong to conclude that there was a

question of fact precluding summary judgment Contrary to this assertion the standard advocated

by the Insurers still involves questions of fact that should not be resolved upon a motion for

summary judgment In this case it requires a factual analysis of what JA Street knew about

property damage at each of the separate and distinct areas of property and that factual

determination must be made for each policy year at issue Therefore it is clear that the Circuit

Court did not err in finding that the application of the Known Loss Exclusion and the loss-inshy

progress doctrine presented jury questions

41

B The Circuit Court Did Not Err In Concluding That Questions Of Fact Existed Regarding JA Streets Alleged Failure To Comply With Notice Provisions Which Precluded Summary Judgment

In response to the Cross-Assignments of Scottsdale Cincinnati and Zurich16 the Circuit

Court did not err in concluding that questions of fact existed regarding JA Streets alleged failure

to comply with notice provisions which precluded summary judgment

In denying the motions for summary judgment on the issue of Notice the Circuit Court

correctly identified Tennessee law on the subject to be governed by Alcazar v Hayes 982 SW2d

845 (Tenn 1998) (When an insured does not provide timely notice to its insurer in accordance

with the terms of the policy a presumption of prejudice to the insurer will arise The insured is

entitled however to rebut this presumption by presenting competent evidence that the insurer was

not prejudiced by the delay) The Circuit Court concluded that there were questions of fact on

the issue of late notice including whether or not the insurers were prejudiced77

The Respondents incorrectly assert that JA Street failed to offer any evidence that rebutted

the presumption of prejudice Cincinnatis CGL and umbrella policies require notice of a claim or

lawsuit as soon as practicable of an occurrence or immediately provide Cincinnati with a copy

of the legal papers in connection with a suit78 As noted below Cincinnati was provided with

notice as soon as practicable It is undisputed that JA Street provided a copy of the amended

complaint to Keith Steere of Insurance Systems close in time to JA Street being served Mr

Steere and Insurance Systems were Cincinnatis agents See Tenn Code Ann sect56-6-115

76 Scottsdales Cross-Assignment of Error C Cincinnatis Cross-Assignment of Error 3 Zurichs CrossshyAssignment of Error III 77 See JAS 010683 (Scottsdale Order) JAS 010607 - 010609 (Cincinnati Order) and 010726 - 010728 (Zurich Order) 78 See JAS 007958 JAS 007979 - 007980

42

Moreover Cincinnati was provided notice again after Thundering Herds investigation resulted in

claims that involved Cincinnatis policy limits

Additionally JA Street filed a counterclaim against Thundering Herd after service ofthe

Amended Complaint Thundering Herd provided notice to Cincinnati of the counterclaim filed

against it by JA Street79 It is also undisputed that Cincinnatis insurance agent Keith Steere of

Insurance Services was notified of the Amended Complaint and provided a copy of it Mr

Steere also advised Cincinnati that Cincinnatis insured J A Street was involved in a coverage

dispute with BITCO 80 Counsel for JA Street also provided additional notice to Cincinnati shortly

after the allegations by Thundering Herd that the property damage at the MCF Shopping Center

were ongoing and that new and additional damage had occurred

Both Zurich and Scottsdales policies require notice of a claim or suit when it is

reasonably likely to involve the umbrella or excess carrier81 Zurich insured JA Street as an

umbrellaexcess carrier from 030102 to 030103 BITCOs $100000000 CGL is in front of

Zurichs policy Scottsdales is the second layer of excess coverage from 030103 to 030104

and 0310104 to 030105 BITCOs $100000000 CGL policy and BITCOs $200000000

excess policy are both in front of Scottsdales policies Up until mid-to-Iate 2013 Thundering

Herds claimed property damages approximated $200000000 Thus the Thundering Herd claim

was not reasonably likely to involve either the Zurich or the Scottsdale policies until 2013

Even if that notice to Cincinnati Zurich and Scottsdale was late the insurers are not

relieved of providing coverage unless each of them was prejudiced Under Tennessee law once

it is determined that the insured has failed to provide timely notice in accordance with the insurance

79 See lAS 009169 - 009170 lAS 009171 - 009192 80 See lAS 009193 - 009194 81 See lAS 007196 lAS 006961 - 006962

43

gt

policy it is presumed that the insurer has been prejudiced by the breach Alcazar v Hayes 982

SW2d 845 856 (Tenn 1998) The insured must rebut this presumption by offering competent

evidence that the insurer was not prejudiced by the insureds delay Id Several courts have found

that no prejudice to an insurer exists when the timing of the insureds notice of a claim would not

have altered the insurers handling of that claim In re Idleaire Technologies Corp No 08shy

10960(KG) 2010 WL 582361 at 17 (Bankr D Del Feb 172010) (citing Smith amp Nephew Inc

v Federal Insurance Company 2005 WL 3134053 5 (WD Tenn 2005)) (holding that by

producing competent evidence at trial that all of the key items of evidence were available for [the

insurers examination when it received notice of the [insureds] claim the [insured] rebutted the

presumption that [the insurer] was prejudiced by the timing ofits receipt ofnotice ofthe [insureds]

claim) see also Standard Construction Company v Maryland Casualty Company No 01shy

2006V 2002 WL 1477886 (WD Tenn May 15 2002) (finding that insurer did not suffer

prejudice from untimely notice where adequate discovery was conducted helpful witnesses were

not lost and the insurer was provided notice and an opportunity to participate prior to settlement)

If the insured has put forth evidence as to a lack of prejudice then whether the insured has

rebutted the presumption ofprejudice is a question offact See Anthony v Long No E1998-00747shy

COA-R3-CV 2000 WL 115981 at 6 (Tenn Ct App Jan 28 2000) (This is not to say that there

was a lack of prejudice but this reasonable inference is enough to make out a genuine issue of

material fact at the summary judgment juncture of this litigation)

It is clear that JA Street has aggressively defended the underlying case and the claims

asserted by Thundering Herd As a result all pertinent witnesses have been questioned or in most

cases deposed Thundering Herds claims have been reviewed examined and challenged by JA

Street Evidence has been preserved Expert witnesses have been retained by lA Street to refute

44

many of Thundering Herds liability and damage claims All infonnation that Cincinnati Zurich

or Scottsdale needs in order to evaluate Thundering Herds liability and damage claims is not only

available but has been provided to those carriers Of significance is that none of the carriers

requested 1A Street to do anything different in the defense of the underlying case or to conduct

any further discovery of any nature to assist in the insurers evaluation In light of the foregoing

the claims of prejudice ring hollow

Cincinnati claims it was prejudiced because it was denied the opportunity to investigate

andor immediately investigate Thundering Herds claims to detennine if any alleged property

damage occurred within a policy period That is an unsupported conclusion Cincinnati offered

no evidence of exactly what it would have done that has not already been done by 1A Street in

defending the case Cincinnati offered no evidence of what information it needs in addition to

what is already available to determine if any of the alleged property damage occurred during

Cincinnatis policy periods Cincinnati also failed to mention in its motion for summary judgment

that it had the opportunity to conduct discovery and investigate whether any of the property

damage occurred during its policy periods Moreover Cincinnati did in fact conduct the

discovery it deemed advisable

Perhaps most perplexing Cincinnati failed to acknowledge that from 2007 until mid-20 13

1A Street was unaware of any property damage claims beyond what existed at the time it was

sued in 120782 Additionally Cincinnati failed to acknowledge that lA Street did not learn of

Thundering Herds claims of property damage that may fall within Cincinnatis policy periods

until Thundering Herd completed its investigation in the mid-20l2 to 2013 time period It was

82 See JAS 007138

45

only then that it was clear that Thundering Herd would contend there had been ongoing property

damage throughout the policy periods

Simply put JA Street was not required to provide notice to Cincinnati of property

damage until Thundering Herd made claims of property damage that involved the policy periods

of the Cincinnati policies Cincinnatis contention that it was prejudiced because of its inability to

participate in previous meditations when the settlement demands were lower is without merit there

were no claims of property damage triggering Cincinnatis policy when the mediations took place

Both Zurich and Scottsdale are umbrella andor excess carriers As such neither has the

right to control the defense BITCO as the CGL and primary carrier has that duty Moreover to

JA Streets knowledge neither carrier has complained or voiced any concerns to BITCO

regarding JA Streets defense Moreover neither Zurich nor Scottsdale can credibly contend that

they would have handled the claim any differently if notice had been provided earlier For

example Zurich DENIED coverage in 0308 less than a month after JA Street notified Zurich of

the amended complaint filed in 1207 Zurich denied coverage based upon a subsidence exclusion

in the policy which is a separate and distinct defense from the late notice defense Scottsdale on

the other hand contends that the known loss language in an endorsement excludes coverage Any

late notice for either insurer did not change in any significant manner the handling of the claim

It is apparent that the timing of the insureds notice of the claim would not have altered the

insurers handling of the claim (See In Re Idleaire Technologies Corp supra) All the key

evidence was available for examination by the insurers when they received notice of the claims

Moreover all of those insurers reviewed evidence and conducted discovery As a result JA

Street has rebutted the presumption that the insurers were prejudiced See Smith amp Nephew Inc

v Federal Insurance Company 2005 WL 3134053 (WD Tenn 2005) Accordingly the Circuit

46

Court did not err in concluding that questions of fact existed regarding the loss-related doctrines

or JA Streets alleged failure to provide notice

C The Trial Court Correctly Determined That There Are Questions Of Fact With Respect To The Performing Operations Faulty Workmanship Damage To Property Exclusions

Zurich argues that the trial court erred in determining that questions of fact precluded

summary judgment in its favor on the issue ofwhat it has referred to as its Performing Operations

Exclusion This is also sometimes referred to as the Damage to Property Exclusion in the BITCO

Policy and it is also an exclusion that Princeton and Scottsdale have relied upon because of

BITCOs underlying coverage Zurich raises a cross-assignment of error as to the property

damage component of its policy as well The Circuit Court did not err in determining there are

genuine issues of material fact where this issue is concerned

Subparagraph (5) of the Damage to Property Exclusion states that it applies only to that

particular part of real property on which the insured or its subcontractors are performing

operations Neither of these phrases are defined by the policy A literal reading of the term that

particular part of real property clearly refers to a specific part of real property It does not apply

to other parts of the property See Basic Energy Servs v Liberty Mutual Insurance Company 655

F Supp 2d 666 677 2009 US Dist LEXIS 92005 27 (WD Tex 2009) (the [t]hat particular

part language is specific to damage on property that the insured actually worked on and not the

entire structure Gore Design Completions Ltd v Hartford Fire Insurance Company 538 F3d

365 371 (5th Cir 2008)) Accordingly Subparagraph (5) applies only to property damage that

arises while the insured is performing operations on that particular or specific part of the

47

property It does not apply to property damages that arise while the insured IS performing

operations on any other part of the property

The allegations against JA Street assert that there were four separate contracts regarding

the operations to be performed Within those contracts JA Street agreed to provide site work and

construction of buildings at separate and distinct sites within the MCF Shopping Center The

property damages at issue in the underlying matter do not arise from just one set of operations For

example property damages such as the Target pad occurred after the set of operations related to

the Target pad Likewise property damages to Shops A occurred after the set ofoperations related

to Shops A The same is true with the property damages at AC Moore Therefore as discussed

above it is crucial to determine the questions of fact relating to when the damages occurred in

relation to which contract was being performed and what operations were ongoing Accordingly

Subparagraph (5) does not operate to exclude coverage for all the claims of property damage

asserted against J A Street

Zurich and Cincinnati essentially argue that the Circuit Court erred in denying them

summary judgment under the provisions of the policies that foreclose coverage for faulty

workmanship that damages the insureds own work Subparagraph (6) of the Cincinnati Damage

to Property Exclusion does not operate to preclude coverage for all the claims asserted against

JA Street83 First this subparagraph only applies to that particular part of property that must

be repaired or replaced because your work was incorrectly performed on that particular part of

property It does not exclude coverage any time any property whatsoever that must be repairedshy

83 Zurich asserts that its your work exclusion precludes coverage However Zurichs your work exclusion is entitled PROPERTY DAMAGE and is virtually the same as Paragraph (6) of the BITCO policy See SECTION IV EXCLUSIONS Paragraph B subparagraph 9 page 7 or 13 of the Zurich policy In other words Zurichs exclusion is a Damage to Property Exclusion

48

just the specific property upon which the defective work was performed84 In other words a court

looks to the work that was being done at the time by the insured and determines whether the

damage was to that specific work or was to collateral parts See eg Minergy Neenah LLC v

Rotary Dryer Parts Inc No 05-C-1181 2008 WL 1869040 at 5 (ED Wis Apr 24 2008)

As the Tennessee Supreme Court has noted the determination of what constitutes that

particular part is always a question of fact Vinsant Electric Contractors v Aetna Casualty amp Sur

Company 530 SW2d 76 77 (Tenn 1975) (Our concern is limited to the meaning of the

phraseology that particular part of any property upon which operations are being performed

This of course is a question of fact and its determination will vary with the facts and

circumstances of each particular case)

Further where faulty workmanship causes damage to more than the defective work itself

the alleged damages are property damage covered by a CGL policy See Travelers Indemnity

Company ofAmerica v Moore amp Associates Inc 216 SW3d 302 (2007) See also Greystone

Construction v National Fire amp Marine Insurance Company 661 F3d 1272 1282-1283 (lOth

Cir Colo 2011) (a strong recent trend in the case law interprets the term occurrence to

encompass unanticipated damage to nondefective property resulting from poor workmanship)

citing American Empire Surplus Lines Insurance Company v Hathaway Development Company

288 Ga 749 707 SE2d 369 371 (Ga 2011) (acknowledging a trend in a growing number of

jurisdictions to cover damage resulting from poor workmanship) Sheehan Construction

Company v Continental Casualty Company 935 NE2d 160 (Ind 2010) Architex Association

Inc v Scottsdale Insurance Company 27 So 3d 1148 (Miss 2010) Trinity Homes LLC v Ohio

84 If the Damage to Property Exclusion were meant to exclude coverage for damages to the insureds nonshydefective work then the exclusion would state the following Property Damage to any property that must be restored repaired or replaced because your work was incorrectly performed

49

Casualty Insurance Company 629 F3d 653 (7th Cir 2010) Auto Owners Insurance Company v

Newman 385 SC 187684 SE2d 541 (SC 2009) clarified by Crossmann Communities oNc

Inc v Harleysville Mutual Insurance Company 717 SE2d 589 No 26909 395 SC 40 2011

SC LEXIS 277 2011 WL 3667598 at 3 (S Ct SC Aug 22 2011) Us Fire Insurance

Company v JS U B Inc 979 So 2d 871 (Fla 2007) Lamar Homes Inc v Mid-Continent

Casualty Company 242 SW3d 1 (Tex 2007) French v Assurance Company 0America 448

F3d 693 (4th Cir 2006) Lee Builders Inc v Farm Bureau Mutual Insurance Company 281 Karl

844 137 P3d 486 (Kan 2006) Great American Insurance Company v Woodside Homes Corp

448 F Supp 2d 1275 (D Utah 2006) American Family Mutual Insurance Company v American

Girl Inc 2004 WI 2 268 Wis 2d 16 673 NW2d 65 (Wis 2004) Fejes v Alaska Insurance

Company 984 P2d 519 (Alaska 1999) See also Cherrington v Erie Insurance Property and

Casualty Company 231 WVa 470480 745 SE2d 508521 (2013) (overruling prior law by

adopting the majority view that damages due to defective workmanship constitute an

occurrence under a CGL policy)85

As Cincinnati recognized on page 21 of its brief the faulty workmanship exclusion does

not apply at all where damage to a third partys property is concerned-which is the case here as

discussed in detail above See Standard Const Company Inc v Maryland Casualty Company

85 Additionally it should be noted that the faulty workmanship exclusion excepts property damage included in the products completed operations hazard JA Street maintains that the facts will demonstrate that the damages that allegedly resulted from any allegedly defective work did not occur until after the operations at each job site were completed because the buildings had been put to their intended use For example the property damages at Shops A did not occur until after it was completed and in most instances after tenants had already moved in those shops and were open for business Accordingly exception (c) to the exclusion applies and the property damage is included as part of the Products Completed Operation Hazard Additionally the damages related to the Products Completed Operation Hazard would be part of the insurers separate aggregate limits for those particular claims which is in addition to the per occurrence limits provided by policies But again at the very least this matter presents material issues of fact for a jury

50

determination as to whether the faulty workmanship property damage or ongoing operations

provisions foreclose coverage

D The Trial Court Correctly Determined That The Subsidence Exclusion Involves A Question Of Fact For The Jury

Zurich and BITCO argue that the trial court erred in determining that the Subsidence

Exclusion in their policies presents a jury question (Zurich Brief at p45 BITCO Brief at p 35)

As an initial matter JA Street maintains that the Subsidence Exclusion does not apply to the

movement of engineered fill The fill was a product used in construction it was not part of the

land or earth86 The product moved and caused damage There is no claim that the land earth

or mud moved The words must be given their ordinary meaning and the exclusions must be

construed strictly in favor of the insured Tata v Nichols 848 SW2d 649650 (Tenn 1993) Thus

with respect to the Scottsdale policy and the Zurich policy JA Street maintains that as a matter

of law the Subsidence Exclusion does not apply

The fact that engineered fill is not covered by the Subsidence Exclusion is made

particularly clear by Zurichs own argument Zurich points to Tennessee case law taking the

ordinary meaning ofearth to be fragmental materials composing part ofthe surface ofthe globe

soil ground usually distinguished from bedrock (Zurich brief at p50 quoting Lee v Nationwide

Mutual Insurance No 87-357-11 1988 WL 39567 at 3 (Tenn Ct App Apr 29 1988))

Engineered fill is a product it is not part of the surface of the globe Therefore the movement of

engineered fill is not the movement of earth

Even ifthe Subsidence Exclusion can be construed to apply to engineered fill however at

the very least there is a question of fact with respect to whether the Subsidence Exclusion operates

86 See JAS 008362 and JAS 009420 (incorporating as if set forth therein Thundering Heres arguments regarding subsidence exclusion (JAS 008432 - 008437)

52

to foreclose coverage under the facts in this case This issue was correctly determined by the

Circuit Court The Circuit Court relied upon Murray v State Farm Fire amp Casualty Company

509 SE2d 1 (WVa 1998) in reaching the conclusion that the ambiguous language presented a

jury question87 The Court was right to rely upon Murray

In Murray the exclusions at issue concerned similar but not identical insurance policies

from two different companies 509 SE2d at 8 The Earth Movement Exclusion in each policy

included subsidence and erosion Id The Murray court pointed out that where both a covered and

non-covered cause could have contributed to a loss it is incumbent upon the fact-finder to

determine the proximate cause of loss Id at 10-1288

Here the policy language excludes coverage where there is movement of land or earth if

the movement is caused by operations of any insured Scottsdales emphasis on the lack of

distinction between man-made and naturally-occurring events is an attempt at misdirection

(Scottsdale brief at p 35) its policy does not even have such limiting language

For the same reasons this Courts recent opinion in Erie Insurance Property amp Casualty

Company v Chaber 2017 WVa Lexis 414 (WVa 2017)89 is also distinguishable In Erie there

was no coverage for landslides and the facts were clear that an event constituting a landslide

occurred This Court determined that the cause of the landslide was immaterial Id at 16 In this

case however the fact question presented is whether the movement ofthe land or earth was caused

by operations of the insured90 - particularly since Thundering Herd has alleged five discrete and

87 See JAS 010685 - 010686 (Scottsdale) JAS 010723 (Zurich) 88 While Murray involved a homeowners insurance policy there is no principled reason to treat the policy at issue in this case any differently Both are insurance contracts subject to customary rules of contract construction 89 To be published at 801 SE2d 207 (WVa 2017) 90 See JAS 010685 - 010686

53

independent damages claims91 Thus like in Murray there are multiple potential causes of loss

that present fact questions and the Circuit Court did not err in declining to grant summary

judgment on the issue of coverage under the Subsidence Clauses in the Zurich and Scottsdale

policies

E The Circuit Court Did Not Err in Holding That More Than One $1 Million Limit Can Apply

BITCDs cross-assignments ofErrors B and C are essentially the same argument regarding

the application of its policies The Circuit Court did not err in holding that more than one $1 million

limit can apply because of the potential multiple occurrences at issue in this case In denying

BITCOs motion for summary judgment on this issue the Court first held that it agreed with

BITCO that only one policy limit applied to each occurrence and that limit could not be stacked

However the Court ruled

There could have been at least four separate occurrences based on the four separate contracts involved if proven Thus it may be that multiple per occurrence limits could apply The Court cannot decide this issue at this stage in the case92

Notably BITCDs argument focuses on whether or not the policy language and law

precluded stacking of limits BITCO glibly dismisses the Circuit Courts ruling that there could

conceivably be four separate occurrences based on four separate alleged breaches of contract

claiming that the Circuit Courts conclusion and logic supporting the same were deeply flawed

In its cross-assignment B BITCD merely claims that the Circuit Court neither cites nor can cite

any authority supporting this proposition and that it simply is not the law93

91 See lAS 008922 (Para 5 ofThundering Herds motion for leave to amend complaint) 92See lAS 010580 - 010581 and lAS 010579 (The Court cannot defmitively decide the number of occurrences on summary judgment) 93 See BITCa brief at p 40

S4

BITCO asserts that the claims against JA Street arise from one occurrence that took place

in September 2001 However the allegations by Thundering Herd in the underlying matter assert

multiple occurrences that occur in multiple locations over a multi-acre worksite and at different

times JA Street and its subcontractors did not engage in one single act or omission that allegedly

gave rise to the claims of damages in the underlying matter Thundering Herds allegations

include cracking and separation in buildings walls and floors at different locations that were

constructed at different times as well as allegations of damages to sewer and drain lines Unlike

the negligence of a driver which may cause a multi-car accident yielding multiple bodily injuries

and multiple claims of property damages the allegations against JA Street involve separate

actions on separate dates covered by separate insurance policies94

Alternatively and at the very least there are questions of material fact concerning the

number of occurrences during the policy years BITCO insured J A Street Thus until the trier of

fact determines the number of occurrences from which the underlying property damage claims

arise there remains an issue of material fact as to the amount of policy limits available under each

COL policy issued to JA Street Accordingly the Circuit Court did not err in denying BITCOs

motion for partial summary judgment on this issue

F The Circuit Court Did Not Err In Denying Summary Judgment On The Alternative Ground That Even If Failure Of The Slope Was Property Damage JA Street Could Exhaust BITCOs Primary Coverage For Ohio Casualtys Policy Period

In response to Ohio CasualtyS Cross-Assignment as set forth in section E of its brief

the Circuit Court did not err in denying summary judgment to Ohio Casualty on the issue of

whether or not JA Street could exhaust BITCOs primary coverage for Ohio Casualtys policy

period In denying Ohio Casualtys motion the Circuit Court rejected this argument on the basis

94 Ohio Casualty agrees that there were mUltiple occurrences

55

that the record was unclear as to under which BITCD policy the $450000 amount was paid (the

March 1 2001 through March 1 2002 policy or the March 1 2002 through March 1 2003

policy)95 Furthennore the Circuit Court noted that the parties had previously detennined that the

issue of allocation was premature and thus the Court would not rule thereon96

Additionally as noted above Thundering Herd has pleaded damages in the amount of at

least $72187418 during the applicable policy period This amount does not include interest which

has been accruing since September 21 2001

G The Circuit Court Did Not Err In Denying Zurichs Motion For Summary Judgment As Faulty Workmanship Which Damages An Insureds Own Work Is Not Property Damage

In response to Zurichs Cross-Assignment as set forth in section V of its brief Petitioner

notes that in its memorandum opinion the Circuit Court rejected Zurichs assertion that other

than the Target and Home Depot buildings (because they were owned by them and they built those

buildings) the damage was to JA Streets work97 The Circuit Court found this to be a question

of fact for the jury

The Circuit Court does not directly address this issue in the Order Granting Summary

Judgment in Favor of Zurich Corporation however as noted above the Circuit Court did

incorporate its Memorandum Opinions into the Final Order98 JA Street incorporates herein the

arguments set forth above pertaining to the existence of third-party damages Although the Circuit

Courts ruling appears to be in stark contrast to the Circuit Courts other rulings on the issue of

third-party damages the Circuit Court correctly rejected Zurichs claims and denied the motion

for summary judgment

95 See lAS 010632 96 See lAS 010634 97 See lAS 009564 98 See lAS 010690 - 010735

56

H The Court Correctly Denied Summary Judgment To Ohio On The Issue Of The Impaired Property Exclusion

Ohio Casualty argues that it should be afforded identical treatment with the other insurers

who were granted summary judgment on the basis of the impaired property exclusion As

explained in JA Streets principal brief on appeal the impaired property exclusion does not apply

at all The exclusion does not apply ifhere is damage to property other than the insureds defective

work itself or if the insureds work cannot be repaired or replaced without causing physical injury

to other property See Standard Fire 972 SW2d at 10 Weilinski p 355 Accordingly the Circuit

Court did not err in refusing to grant summary judgment to Ohio Casualty and summary judgment

should not have been granted to the other insurers on this basis

I The Court Correctly Determined That Multiple Genuine Issues Of Material Fact Preclude Summary Judgment Where The Issues Of JA Streets Notice To The Insurers And Notice Of Loss Are Concerned

The insurers have raised various additional assignments of error with respect to the

timeliness of JA Streets Notice to Insurers whether JA Street had notice of loss that should

foreclose coverage and when occurrences might have taken place that trigger coverage As

described in detail above the Circuit Court recognized many genuine issues of material fact in this

case Just as the factfinder must determine what damage occurred in this case and when it follows

that only after those matters are settled can the question of the timing and extent of JA Streets

knowledge be addressed Again the multiple questions of fact in this case prevent slUnmary

judgment on the grounds asserted by the insurers

CONCLUSION

This Court should reverse the Circuit Courts grant of summary judgment to the

Respondents and overrule the Circuit Courts determinations on the issues of coverage raised as

assignnlents of error by the Petitioner This Court should also determine that the Cross

57

_J

Assignments of Error raised by the various Respondents are without merit and that the underlying

rulings of the Circuit Court should be affirmed As there are many genuine issues of material fact

in this case Petitioner requests this Court to remand the matter but to instruct the Circuit Court to

withhold making any ruling on coverage until the outcome of the underlying litigation giving rise

to this action has adequately determined the underlying questions of fact

Respectfully submitted

S Douglas ns squire (WVSB 80) CYRUS INS amp WALKER 636 Fourth 1venue Huntington West Virginia 25701 (304) 522-9593 Phone I (304) 522-9596 Fax sdadkinscyrusandadkinscom

and

Donald Capparella Esquire TN Bar No 11239 pro hac vice capparelladodsonparkercom DODSONPARKERBEHM

amp CAPP ARELLA PC 1310 Sixth Avenue North Nashville Tennessee 37208 (615) 254-2291 COUNSEL FOR PETITIONER

58

- No 17-0079


JA STREET amp ASSOCIATES INC DEFENDANTTHIRD-PARTY PLAINTIFF BELOW

PETITIONER

v

BITCO GENERAL INSURANCE CORPORATION PLAINTIFF BELOW

and





RESPONDENTS

CERTIFICATE OF SERVICE

The undersigned counsel for petitionerdefendant J A Street amp Associates Inc does hereby certify that the foregoing PETITIONER JA STREET amp ASSOCIATES INC S COMBINED REPLY BRIEF AND RESPONSE TO RESPONDENTS CROSS-ASSIGNMENTS OF ERROR was served upon counsel of record by placing a true copy thereof in the US Mail in postage prepaid envelopes this 14th day of August 2017 addressed as follows

A vrum Levicoff Esquire Holly S Planinsic Esquire THE LEVICOFF LAW FIRM P C HERNDON MORTON 4 PPG Place Suite 200 HERNDON amp YEAGER Pittsburgh P A 15222 83 Edgington Lane COUNSEL FOR BITUMINOUS Wheeling WV 26003 CASUALTY CORPORATION COUNSEL FOR THUNDERING

HERD DEVELOPMENT

Jeffrey P Hinebaugh Esquire Elizabeth M Shaffer Esquire DINSMORE amp SHOHL LLP 255 East Fifth St Suite 1900 Cincinnati OH 45202 COUNSEL FOR THE OHIO CASUALTY INSURANCE COMPANY

W Henry Jernigan Jr Esquire DINSMORE amp SHOHL LLP PO Box 11887 Charleston WV 25339 COUNSEL FOR THE OHIO CASUALTY INSURANCE COMPANY

Tiffany R Durst Esquire PULLIN FOWLER FLANAGAN

BROWN amp POE PLLC 2414 Cranberry Square Morgantown WV 26508 COUNSEL FOR ZURICH AMERICAN INSURANCE COMPANY OF ILLINOIS

Michael S Saltzman Esquire GOLDBERGSEGALLALLP 1700 Market St Suite 1418 Philadelphia P A 19103 COUNSEL FOR SCOTTSDALE INSURANCE COMPANY

Debra Tedeschi Varner Esquire Jerry D Van Volkenburg Esquire McNEER HIGHLAND McMUNN

amp VARNER Lc PO Box 2040 Empire Building 400 West Main St Clarksburg WV 26302 COUNSEL FOR SCOTTSDALE INSURANCE COMPANY

Adam M Barnes Esquire WALSH BARNES COLLIS amp

ZUMPELLA PC Gulf Tower Suite 1400 707 Grant St Pittsburgh P A 15219 COUNSEL FOR THE CINCINNATI INSURANCE COMPANY

Susan L Loughran Esquire MARKS ONEILL OBRIEN

DOUGHERTY amp KELLY PC Gulf Tower Suite 2600 707 Grant St Pittsburgh P A 15219 COUNSEL FOR THE PRINCETON EXCESS AND SURPLUS LINE INSURANCE COMPANY

kins Esquire (WVSB 80) INS amp WALKER

venue Huntington West Virginia 25701 (304) 522-9593 Phone (304) 522-9596 Fax sdadkinscyrusandadkinscom

and

Donald Capparella Esquire TN Bar No 11239 pro hac vice DODSONPARKERBEHM

amp CAPP ARELLA PC 1310 Sixth Avenue North Nashville Tennessee 37208 (615) 254-2291 cappareUadodsonparkercom COUNSEL FOR PETITIONER

TABLE OF CONTENTS

Table Of Contents

Table Of Authorities IV

Petitioner JA Street amp Associates Inc s Combined Reply Brief And Response To Respondents Cross-Assignments Of Error 1

Introduction 1

Argument 1

I Replies To Responses To JA Streets Assignments Of Error 1

A Introduction 1

B The Circuit Court Erred In Granting Summary Judgment When Genuine Issues Of Material Exist Particularly When There Are Questions Of Fact With Respect To What Damages Occurred And When 4

C The Circuit Court Erred In Granting Summary Judgment To BITCO Cincinnati Princeton Scottsdale And Zurich On The Holding That The Contractual Liability Exclusion Applied To Foreclose Coverage Entirely For The Claims Asserted By Thundering Herd Against JA Street Based On Tennessee Law 6

1 There Is A Distinction Between Coverage Under The Insuring Agreement And The Applicability Of The Contractual Liability Exclusion 7

a Claims Of Faulty Workmanship Constitute An Occurrence 9

b Breach Of Contract Claims Can Constitute An Occurrence Under A CGL Policy 10

11 There Was Damage To A Third Party 12

111 The Contractual Liability Exclusion Does Not Preclude Coverage 15










ii








Conclusion 57

111


CASES





441 F3d 341 (6th Cir 2006) 344041


288 Ga 749 707 SE2d 369371 (Ga 2011) 91049


20293050






iv






50








v

0-







189 F Supp 2d 1212 1213 (D Kan 2002) 2627









vi


997 F2d 172178-179 (6th Cir 1993) 3541






396 NW2d 229234 (Minn 1986) 51







Vll



157 SW3d 796809 (Tenn Ct App 2004)


1522

1533

49(ED Wis Apr 24 2008)











Vlll














17 18 1928 29303149

IX












591 SW2d 760 764 765 (Tenn 1979) 2 10 11 15 16 17 18 19

STATUTES


x

OTHER AUTHORITIES



263051

19

RULES



1

1

Xl



INTRODUCTION







Procedure 20

ARGUMENT






A Introduction







1






















2






















3























4























5



















6























7






















8


contractors) 17





assignment of error
















9
























10

















11


agreement




















12


into a concession25










applied completely









13













14























15






















16
















38Id


17























18























19























20


way of example47













21
























22

















Thundering Herd




23















the test in Wilson







24
























25




this matter



















26






















28








308










29





















30




















61 See lAS 010720

31








the jury 62











62 See JAS 009564

32













the policies









Supp 3d 625630 (ED Tenn 2016)

33















following




34








66 See JAS 010684 - 010685 67 See JAS 010724

35




















36






repaired






damage74









37
























38









judgment




states





39



Ct App 2007)




















40












into the analysis










41




















42























43

gt
























44






















82 See JAS 007138

45
























46





















47






















48























49



















50























52





















53




policies
















S4























55






















56



















CONCLUSION




57

_J








and



58

- No 17-0079



PETITIONER

v


and





RESPONDENTS




HERD DEVELOPMENT














and












ii








Conclusion 57

111


CASES





441 F3d 341 (6th Cir 2006) 344041


288 Ga 749 707 SE2d 369371 (Ga 2011) 91049


20293050






iv






50








v

0-







189 F Supp 2d 1212 1213 (D Kan 2002) 2627









vi


997 F2d 172178-179 (6th Cir 1993) 3541






396 NW2d 229234 (Minn 1986) 51







Vll



157 SW3d 796809 (Tenn Ct App 2004)


1522

1533

49(ED Wis Apr 24 2008)











Vlll














17 18 1928 29303149

IX












591 SW2d 760 764 765 (Tenn 1979) 2 10 11 15 16 17 18 19

STATUTES


x

OTHER AUTHORITIES



263051

19

RULES



1

1

Xl



INTRODUCTION







Procedure 20

ARGUMENT






A Introduction







1






















2






















3























4























5



















6























7






















8


contractors) 17





assignment of error
















9
























10

















11


agreement




















12


into a concession25










applied completely









13













14























15






















16
















38Id


17























18























19























20


way of example47













21
























22

















Thundering Herd




23















the test in Wilson







24
























25




this matter



















26






















28








308










29





















30




















61 See lAS 010720

31








the jury 62











62 See JAS 009564

32













the policies









Supp 3d 625630 (ED Tenn 2016)

33















following




34








66 See JAS 010684 - 010685 67 See JAS 010724

35




















36






repaired






damage74









37
























38









judgment




states





39



Ct App 2007)




















40












into the analysis










41




















42























43

gt
























44






















82 See JAS 007138

45
























46





















47






















48























49



















50























52





















53




policies
















S4























55






















56



















CONCLUSION




57

_J








and



58

- No 17-0079



PETITIONER

v


and





RESPONDENTS




HERD DEVELOPMENT














and










Conclusion 57

111


CASES





441 F3d 341 (6th Cir 2006) 344041


288 Ga 749 707 SE2d 369371 (Ga 2011) 91049


20293050






iv






50








v

0-







189 F Supp 2d 1212 1213 (D Kan 2002) 2627









vi


997 F2d 172178-179 (6th Cir 1993) 3541






396 NW2d 229234 (Minn 1986) 51







Vll



157 SW3d 796809 (Tenn Ct App 2004)


1522

1533

49(ED Wis Apr 24 2008)











Vlll














17 18 1928 29303149

IX












591 SW2d 760 764 765 (Tenn 1979) 2 10 11 15 16 17 18 19

STATUTES


x

OTHER AUTHORITIES



263051

19

RULES



1

1

Xl



INTRODUCTION







Procedure 20

ARGUMENT






A Introduction







1






















2






















3























4























5



















6























7






















8


contractors) 17





assignment of error
















9
























10

















11


agreement




















12


into a concession25










applied completely









13













14























15






















16
















38Id


17























18























19























20


way of example47













21
























22

















Thundering Herd




23















the test in Wilson







24
























25




this matter



















26






















28








308










29





















30




















61 See lAS 010720

31








the jury 62











62 See JAS 009564

32













the policies









Supp 3d 625630 (ED Tenn 2016)

33















following




34








66 See JAS 010684 - 010685 67 See JAS 010724

35




















36






repaired






damage74









37
























38









judgment




states





39



Ct App 2007)




















40












into the analysis










41




















42























43

gt
























44






















82 See JAS 007138

45
























46





















47






















48























49



















50























52





















53




policies
















S4























55






















56



















CONCLUSION




57

_J








and



58

- No 17-0079



PETITIONER

v


and





RESPONDENTS




HERD DEVELOPMENT














and




CASES





441 F3d 341 (6th Cir 2006) 344041


288 Ga 749 707 SE2d 369371 (Ga 2011) 91049


20293050






iv






50








v

0-







189 F Supp 2d 1212 1213 (D Kan 2002) 2627









vi


997 F2d 172178-179 (6th Cir 1993) 3541






396 NW2d 229234 (Minn 1986) 51







Vll



157 SW3d 796809 (Tenn Ct App 2004)


1522

1533

49(ED Wis Apr 24 2008)











Vlll














17 18 1928 29303149

IX












591 SW2d 760 764 765 (Tenn 1979) 2 10 11 15 16 17 18 19

STATUTES


x

OTHER AUTHORITIES



263051

19

RULES



1

1

Xl



INTRODUCTION







Procedure 20

ARGUMENT






A Introduction







1






















2






















3























4























5



















6























7






















8


contractors) 17





assignment of error
















9
























10

















11


agreement




















12


into a concession25










applied completely









13













14























15






















16
















38Id


17























18























19























20


way of example47













21
























22

















Thundering Herd




23















the test in Wilson







24
























25




this matter



















26






















28








308










29





















30




















61 See lAS 010720

31








the jury 62











62 See JAS 009564

32













the policies









Supp 3d 625630 (ED Tenn 2016)

33















following




34








66 See JAS 010684 - 010685 67 See JAS 010724

35




















36






repaired






damage74









37
























38









judgment




states





39



Ct App 2007)




















40












into the analysis










41




















42























43

gt
























44






















82 See JAS 007138

45
























46





















47






















48























49



















50























52





















53




policies
















S4























55






















56



















CONCLUSION




57

_J








and



58

- No 17-0079



PETITIONER

v


and





RESPONDENTS




HERD DEVELOPMENT














and








50








v

0-







189 F Supp 2d 1212 1213 (D Kan 2002) 2627









vi


997 F2d 172178-179 (6th Cir 1993) 3541






396 NW2d 229234 (Minn 1986) 51







Vll



157 SW3d 796809 (Tenn Ct App 2004)


1522

1533

49(ED Wis Apr 24 2008)











Vlll














17 18 1928 29303149

IX












591 SW2d 760 764 765 (Tenn 1979) 2 10 11 15 16 17 18 19

STATUTES


x

OTHER AUTHORITIES



263051

19

RULES



1

1

Xl



INTRODUCTION







Procedure 20

ARGUMENT






A Introduction







1






















2






















3























4























5



















6























7






















8


contractors) 17





assignment of error
















9
























10

















11


agreement




















12


into a concession25










applied completely









13













14























15






















16
















38Id


17























18























19























20


way of example47













21
























22

















Thundering Herd




23















the test in Wilson







24
























25




this matter



















26






















28








308










29





















30




















61 See lAS 010720

31








the jury 62











62 See JAS 009564

32













the policies









Supp 3d 625630 (ED Tenn 2016)

33















following




34








66 See JAS 010684 - 010685 67 See JAS 010724

35




















36






repaired






damage74









37
























38









judgment




states





39



Ct App 2007)




















40












into the analysis










41




















42























43

gt
























44






















82 See JAS 007138

45
























46





















47






















48























49



















50























52





















53




policies
















S4























55






















56



















CONCLUSION




57

_J








and



58

- No 17-0079



PETITIONER

v


and





RESPONDENTS




HERD DEVELOPMENT














and



0-







189 F Supp 2d 1212 1213 (D Kan 2002) 2627









vi


997 F2d 172178-179 (6th Cir 1993) 3541






396 NW2d 229234 (Minn 1986) 51







Vll



157 SW3d 796809 (Tenn Ct App 2004)


1522

1533

49(ED Wis Apr 24 2008)











Vlll














17 18 1928 29303149

IX












591 SW2d 760 764 765 (Tenn 1979) 2 10 11 15 16 17 18 19

STATUTES


x

OTHER AUTHORITIES



263051

19

RULES



1

1

Xl



INTRODUCTION







Procedure 20

ARGUMENT






A Introduction







1






















2






















3























4























5



















6























7






















8


contractors) 17





assignment of error
















9
























10

















11


agreement




















12


into a concession25










applied completely









13













14























15






















16
















38Id


17























18























19























20


way of example47













21
























22

















Thundering Herd




23















the test in Wilson







24
























25




this matter



















26






















28








308










29





















30




















61 See lAS 010720

31








the jury 62











62 See JAS 009564

32













the policies









Supp 3d 625630 (ED Tenn 2016)

33















following




34








66 See JAS 010684 - 010685 67 See JAS 010724

35




















36






repaired






damage74









37
























38









judgment




states





39



Ct App 2007)




















40












into the analysis










41




















42























43

gt
























44






















82 See JAS 007138

45
























46





















47






















48























49



















50























52





















53




policies
















S4























55






















56



















CONCLUSION




57

_J








and



58

- No 17-0079



PETITIONER

v


and





RESPONDENTS




HERD DEVELOPMENT














and




997 F2d 172178-179 (6th Cir 1993) 3541






396 NW2d 229234 (Minn 1986) 51







Vll



157 SW3d 796809 (Tenn Ct App 2004)


1522

1533

49(ED Wis Apr 24 2008)











Vlll














17 18 1928 29303149

IX












591 SW2d 760 764 765 (Tenn 1979) 2 10 11 15 16 17 18 19

STATUTES


x

OTHER AUTHORITIES



263051

19

RULES



1

1

Xl



INTRODUCTION







Procedure 20

ARGUMENT






A Introduction







1






















2






















3























4























5



















6























7






















8


contractors) 17





assignment of error
















9
























10

















11


agreement




















12


into a concession25










applied completely









13













14























15






















16
















38Id


17























18























19























20


way of example47













21
























22

















Thundering Herd




23















the test in Wilson







24
























25




this matter



















26






















28








308










29





















30




















61 See lAS 010720

31








the jury 62











62 See JAS 009564

32













the policies









Supp 3d 625630 (ED Tenn 2016)

33















following




34








66 See JAS 010684 - 010685 67 See JAS 010724

35




















36






repaired






damage74









37
























38









judgment




states





39



Ct App 2007)




















40












into the analysis










41




















42























43

gt
























44






















82 See JAS 007138

45
























46





















47






















48























49



















50























52





















53




policies
















S4























55






















56



















CONCLUSION




57

_J








and



58

- No 17-0079



PETITIONER

v


and





RESPONDENTS




HERD DEVELOPMENT














and





157 SW3d 796809 (Tenn Ct App 2004)


1522

1533

49(ED Wis Apr 24 2008)











Vlll














17 18 1928 29303149

IX












591 SW2d 760 764 765 (Tenn 1979) 2 10 11 15 16 17 18 19

STATUTES


x

OTHER AUTHORITIES



263051

19

RULES



1

1

Xl



INTRODUCTION







Procedure 20

ARGUMENT






A Introduction







1






















2






















3























4























5



















6























7






















8


contractors) 17





assignment of error
















9
























10

















11


agreement




















12


into a concession25










applied completely









13













14























15






















16
















38Id


17























18























19























20


way of example47













21
























22

















Thundering Herd




23















the test in Wilson







24
























25




this matter



















26






















28








308










29





















30




















61 See lAS 010720

31








the jury 62











62 See JAS 009564

32













the policies









Supp 3d 625630 (ED Tenn 2016)

33















following




34








66 See JAS 010684 - 010685 67 See JAS 010724

35




















36






repaired






damage74









37
























38









judgment




states





39



Ct App 2007)




















40












into the analysis










41




















42























43

gt
























44






















82 See JAS 007138

45
























46





















47






















48























49



















50























52





















53




policies
















S4























55






















56



















CONCLUSION




57

_J








and



58

- No 17-0079



PETITIONER

v


and





RESPONDENTS




HERD DEVELOPMENT














and
















17 18 1928 29303149

IX












591 SW2d 760 764 765 (Tenn 1979) 2 10 11 15 16 17 18 19

STATUTES


x

OTHER AUTHORITIES



263051

19

RULES



1

1

Xl



INTRODUCTION







Procedure 20

ARGUMENT






A Introduction







1






















2






















3























4























5



















6























7






















8


contractors) 17





assignment of error
















9
























10

















11


agreement




















12


into a concession25










applied completely









13













14























15






















16
















38Id


17























18























19























20


way of example47













21
























22

















Thundering Herd




23















the test in Wilson







24
























25




this matter



















26






















28








308










29





















30




















61 See lAS 010720

31








the jury 62











62 See JAS 009564

32













the policies









Supp 3d 625630 (ED Tenn 2016)

33















following




34








66 See JAS 010684 - 010685 67 See JAS 010724

35




















36






repaired






damage74









37
























38









judgment




states





39



Ct App 2007)




















40












into the analysis










41




















42























43

gt
























44






















82 See JAS 007138

45
























46





















47






















48























49



















50























52





















53




policies
















S4























55






















56



















CONCLUSION




57

_J








and



58

- No 17-0079



PETITIONER

v


and





RESPONDENTS




HERD DEVELOPMENT














and














591 SW2d 760 764 765 (Tenn 1979) 2 10 11 15 16 17 18 19

STATUTES


x

OTHER AUTHORITIES



263051

19

RULES



1

1

Xl



INTRODUCTION







Procedure 20

ARGUMENT






A Introduction







1






















2






















3























4























5



















6























7






















8


contractors) 17





assignment of error
















9
























10

















11


agreement




















12


into a concession25










applied completely









13













14























15






















16
















38Id


17























18























19























20


way of example47













21
























22

















Thundering Herd




23















the test in Wilson







24
























25




this matter



















26






















28








308










29





















30




















61 See lAS 010720

31








the jury 62











62 See JAS 009564

32













the policies









Supp 3d 625630 (ED Tenn 2016)

33















following




34








66 See JAS 010684 - 010685 67 See JAS 010724

35




















36






repaired






damage74









37
























38









judgment




states





39



Ct App 2007)




















40












into the analysis










41




















42























43

gt
























44






















82 See JAS 007138

45
























46





















47






















48























49



















50























52





















53




policies
















S4























55






















56



















CONCLUSION




57

_J








and



58

- No 17-0079



PETITIONER

v


and





RESPONDENTS




HERD DEVELOPMENT














and



OTHER AUTHORITIES



263051

19

RULES



1

1

Xl



INTRODUCTION







Procedure 20

ARGUMENT






A Introduction







1






















2






















3























4























5



















6























7






















8


contractors) 17





assignment of error
















9
























10

















11


agreement




















12


into a concession25










applied completely









13













14























15






















16
















38Id


17























18























19























20


way of example47













21
























22

















Thundering Herd




23















the test in Wilson







24
























25




this matter



















26






















28








308










29





















30




















61 See lAS 010720

31








the jury 62











62 See JAS 009564

32













the policies









Supp 3d 625630 (ED Tenn 2016)

33















following




34








66 See JAS 010684 - 010685 67 See JAS 010724

35




















36






repaired






damage74









37
























38









judgment




states





39



Ct App 2007)




















40












into the analysis










41




















42























43

gt
























44






















82 See JAS 007138

45
























46





















47






















48























49



















50























52





















53




policies
















S4























55






















56



















CONCLUSION




57

_J








and



58

- No 17-0079



PETITIONER

v


and





RESPONDENTS




HERD DEVELOPMENT














and





INTRODUCTION







Procedure 20

ARGUMENT






A Introduction







1






















2






















3























4























5



















6























7






















8


contractors) 17





assignment of error
















9
























10

















11


agreement




















12


into a concession25










applied completely









13













14























15






















16
















38Id


17























18























19























20


way of example47













21
























22

















Thundering Herd




23















the test in Wilson







24
























25




this matter



















26






















28








308










29





















30




















61 See lAS 010720

31








the jury 62











62 See JAS 009564

32













the policies









Supp 3d 625630 (ED Tenn 2016)

33















following




34








66 See JAS 010684 - 010685 67 See JAS 010724

35




















36






repaired






damage74









37
























38









judgment




states





39



Ct App 2007)




















40












into the analysis










41




















42























43

gt
























44






















82 See JAS 007138

45
























46





















47






















48























49



















50























52





















53




policies
















S4























55






















56



















CONCLUSION




57

_J








and



58

- No 17-0079



PETITIONER

v


and





RESPONDENTS




HERD DEVELOPMENT














and
























2






















3























4























5



















6























7






















8


contractors) 17





assignment of error
















9
























10

















11


agreement




















12


into a concession25










applied completely









13













14























15






















16
















38Id


17























18























19























20


way of example47













21
























22

















Thundering Herd




23















the test in Wilson







24
























25




this matter



















26






















28








308










29





















30




















61 See lAS 010720

31








the jury 62











62 See JAS 009564

32













the policies









Supp 3d 625630 (ED Tenn 2016)

33















following




34








66 See JAS 010684 - 010685 67 See JAS 010724

35




















36






repaired






damage74









37
























38









judgment




states





39



Ct App 2007)




















40












into the analysis










41




















42























43

gt
























44






















82 See JAS 007138

45
























46





















47






















48























49



















50























52





















53




policies
















S4























55






















56



















CONCLUSION




57

_J








and



58

- No 17-0079



PETITIONER

v


and





RESPONDENTS




HERD DEVELOPMENT














and
























3























4























5



















6























7






















8


contractors) 17





assignment of error
















9
























10

















11


agreement




















12


into a concession25










applied completely









13













14























15






















16
















38Id


17























18























19























20


way of example47













21
























22

















Thundering Herd




23















the test in Wilson







24
























25




this matter



















26






















28








308










29





















30




















61 See lAS 010720

31








the jury 62











62 See JAS 009564

32













the policies









Supp 3d 625630 (ED Tenn 2016)

33















following




34








66 See JAS 010684 - 010685 67 See JAS 010724

35




















36






repaired






damage74









37
























38









judgment




states





39



Ct App 2007)




















40












into the analysis










41




















42























43

gt
























44






















82 See JAS 007138

45
























46





















47






















48























49



















50























52





















53




policies
















S4























55






















56



















CONCLUSION




57

_J








and



58

- No 17-0079



PETITIONER

v


and





RESPONDENTS




HERD DEVELOPMENT














and

























4























5



















6























7






















8


contractors) 17





assignment of error
















9
























10

















11


agreement




















12


into a concession25










applied completely









13













14























15






















16
















38Id


17























18























19























20


way of example47













21
























22

















Thundering Herd




23















the test in Wilson







24
























25




this matter



















26






















28








308










29





















30




















61 See lAS 010720

31








the jury 62











62 See JAS 009564

32













the policies









Supp 3d 625630 (ED Tenn 2016)

33















following




34








66 See JAS 010684 - 010685 67 See JAS 010724

35




















36






repaired






damage74









37
























38









judgment




states





39



Ct App 2007)




















40












into the analysis










41




















42























43

gt
























44






















82 See JAS 007138

45
























46





















47






















48























49



















50























52





















53




policies
















S4























55






















56



















CONCLUSION




57

_J








and



58

- No 17-0079



PETITIONER

v


and





RESPONDENTS




HERD DEVELOPMENT














and



Documents

reply brief, J.A. Street & Associates v. Bitco General