Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-18-02970/USCOURTS-ca8-18-02970-0/pdf.json

Parties Involved:
Miller Architects & Builders
Appellee
Westfield Insurance Company
Appellant

Document Text:

United States Court of Appeals

For the Eighth Circuit 

___________________________

No. 18-2970

___________________________ 

Westfield Insurance Company

 Plaintiff - Appellant

v.

Miller Architects & Builders

 Defendant - Appellee

____________

Appeal from United States District Court 

for the District of Minnesota

____________ 

Submitted: October 15, 2019

 Filed: January 30, 2020

____________ 

Before LOKEN, SHEPHERD, and STRAS, Circuit Judges. 

____________

STRAS, Circuit Judge.

When a number of problems arose during the construction of a luxury 

apartment complex, the property owner sought damages against the general 

contractor, Miller Architects and Builders, in arbitration. Miller asked its insurer, 

Westfield Insurance Company, to defend it, but Westfield sued Miller in federal 

court instead. Westfield was unsuccessful in its effort to get a declaration freeing it 

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of its duty to defend Miller, and we agree with the district court1 that it was not 

entitled to one.

I.

The construction project was plagued with problems from the start, which 

eventually led the property owner to terminate Miller a little over a year after 

construction began. Over the next few months, workers allegedly discovered 

“significant” architectural and structural problems caused by Miller and its 

subcontractors. This discovery led to threats of legal action, which prompted Miller 

to seek coverage under its commercial general liability insurance policy with 

Westfield. Westfield warned Miller at the time that it was likely to deny coverage.

Westfield followed through on its warning once the property owner sought 

damages against Miller in arbitration. Rather than defending Miller, Westfield filed 

an action in federal district court seeking a declaration relieving it of its obligation 

to both defend and indemnify Miller. Miller took the opposite position and filed a

counterclaim against Westfield.

The district court concluded that Westfield would have to defend Miller 

because some claims are arguably covered by the policy. So on the duty-to-defend 

claim, the court entered final judgment against Westfield. See Fed. R. Civ. P. 54(b). 

As for the duty to indemnify, the court was not yet ready to say whether Westfield 

would be responsible for any damages awarded in the arbitration, so it stayed 

resolution of that question. On appeal, Westfield renews its argument that it has no

duty to defend Miller.

1

The Honorable Paul A. Magnuson, United States District Judge for the 

District of Minnesota.

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II.

Under Minnesota law, an insurer’s duty to defend is broader than its duty to 

indemnify. Specifically, all Miller must show at the duty-to-defend stage is that one

of the property owner’s claims is “arguably within the [policy’s] scope.” Jostens, 

Inc. v. Mission Ins. Co., 387 N.W.2d 161, 165 (Minn. 1986) (internal quotation 

marks and citation omitted); Murray v. Greenwich Ins. Co., 533 F.3d 644, 649 (8th 

Cir. 2008) (applying Minnesota law). If it can, then the burden shifts to Westfield

to establish that the claims “fall clearly outside the scope of coverage” under one or 

more policy exclusions. Jostens, 387 N.W.2d at 166 (emphasis added); Remodeling 

Dimensions, Inc. v. Integrity Mut. Ins. Co., 819 N.W.2d 602, 616 (Minn. 2012). At 

both of these steps, our review is de novo, see RSUI Indem. Co. v. New Horizon Kids 

Quest, Inc., 933 F.3d 960, 963 (8th Cir. 2019), and we must give the policy, 

including individual terms and exclusions, its plain and ordinary meaning, Midwest 

Family Mut. Ins. Co. v. Wolters, 831 N.W.2d 628, 636 (Minn. 2013).

We begin and end with a claim that is arguably covered under the policy: the 

damage caused by a leaky roof. See Jostens, 387 N.W.2d at 165. The property 

owner has alleged in the arbitration that water has come through a defectively 

installed roof and has damaged the “finishes and electrical work in the building’s 

interior.” This claim arguably falls under the initial grant of coverage in the policy, 

which includes “property damage” caused by an “occurrence.” The harm to finishes 

and electrical work qualifies as “property damage” under Minnesota law, see, e.g., 

Remodeling Dimensions, 819 N.W.2d at 611, and “faulty construction” is an 

“occurrence,” see, e.g., Ohio Cas. Ins. Co. v. Terrace Enters., Inc., 260 N.W.2d 450, 

452–53 (Minn. 1977). Miller has satisfied step one.

The second step is to consider the three exclusions raised by Westfield. See 

Jostens, 387 N.W.2d at 165–66. We can treat two of them together because they

both depend on where the faulty work and the damage occurred. The first, exclusion 

(j)(5), provides no coverage for “[p]roperty damage” to “[t]hat particular part of real

property” upon which “contractors or subcontractors” are still “performing 

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operations, if the property damage [arose] out of those operations.” (Internal 

quotation marks omitted). The second, exclusion (j)(6), applies to “[p]roperty 

damage” to “[t]hat particular part of any property that must be restored, repaired or 

replaced because [Miller’s] work was incorrectly performed on it.” (Internal 

quotation marks omitted). By using the words “property damage” in conjunction 

with “to . . . [t]hat particular part of [the] property,” both exclusions are triggered 

only when the faulty work and the damage are to the same “part” of the property. 

Suffice it to say, it is far from clear that the roof, which is on the building’s exterior, 

and the finishes and electrical work, which are in the building’s interior, are the same 

“particular part of [the] property.” 

In an effort to bring the alleged property damage within one of these

exclusions, Westfield urges us to interpret the phrase “[t]hat particular part of [the] 

property” as including the whole apartment complex, because Miller’s responsibility 

extended to the entire project. Even assuming that Westfield has accurately 

described Miller’s role, its interpretation gives little meaning to the three consecutive 

limiting words that narrow the exclusion’s scope. The first of the three is “part,”

which means a “piece, or segment of a whole”—that is, something less than the 

whole. The American Heritage Dictionary of the English Language 1284 (5th ed. 

2016) (emphasis added); Webster’s Third New International Dictionary 1645 

(2002). The second is the immediately preceding adjective “particular,” which 

describes “some but not all of the members of a class or group,” further narrowing 

the scope of what is excluded. American Heritage, supra, at 1286; Rodney 

Huddleston & Geoffrey K. Pullum, The Cambridge Grammar of the English 

Language 558 (2002). Finally, the word “that” serves a similar narrowing function 

by singling out one “particular part” from all others. American Heritage, supra, at 

1802–03; The Cambridge Grammar, supra, at 538–39. The bottom line is that 

Westfield’s interpretation reads out the words “[t]hat particular part” and would 

allow the excluded “part” to swallow the otherwise-included whole.

Westfield fares no better with its reliance on exclusion (l). As relevant here, 

it excludes “[p]roperty damage to [Miller’s] work,” but it “does not apply if . . . the 

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work out of which the damage [arose] was performed . . . by a subcontractor.” 

(Internal quotation marks omitted). By its terms, this exclusion “does not apply” 

here because a subcontractor built and installed the roof.

In sum, the claims against Miller do not “clearly” fall outside the scope of 

coverage. Jostens, 387 N.W.2d at 166. The alleged damages from the leaky roof 

are arguably within the policy’s scope and there are no clearly applicable exclusions. 

Under these circumstances, Westfield cannot “escape [its] duty” to defend Miller. 

Id.

We accordingly affirm the judgment of the district court.

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