# United States Court of Appeals **for the Fifth Circuit**

____________ No. 23-40435

____________ TIG Insurance Company, as successor by merger to American Safety Indemnity Company, Plaintiff—Appellee ,

versus

Woodsboro Farmers Cooperative, Defendant—Appellant

.

______________________________ Appeal from the United States District Court for the Southern District of Texas USDC No. 5:18-CV-191

______________________________ Before Dennis, Southwick, and Ho, Circuit Judges

. Leslie H. Southwick, Circuit Judge. In this insurance-covera ge action, we must de cide what constitutes “property damage” that would invoke aninsurer’s obligation to indemnify under a common Commercial General Liability insurance policy. The district court determined there was no property damage under the policy, and the insurer therefore had no duty to indemnify the insured for an adverse state arbitration award. We find there to be fact questions that invalidate the grant of summary judgment.
We REVERSE and REMAND

. United States Court of Appeals Fifth Circuit 

### FILED September 20, 2024 Lyle W. Cayce Clerk Case: 23-40435 Document: 65-1 Page: 1 Date Filed: 09/20/2024No. 23-40435

2 FACTUAL AND PROCEDURAL BACKGROUND In March 2013, Woodsboro Farmer s Cooperative contracted with E.F. Erwin, Inc. to construct two Br ock 105’ diameter grain silos in Woodsboro, Texas. Erwin hired su bcontractor AJ Constructors, Inc. (“AJC”) to construct the silos, and Erwin was responsible for supervising the work. Though the cont racts had no deadline, Erwin told Woodsboro that the silos, or at least their bins, would be ready by June or July — in time for the 2013 harvest. Brock silos start as kits shipped fr om the manufacturer and are then assembled according to the manufacturer ’s manuals and specifications. The kits include prefabricated metal walls, roof sheets, and other items necessary for construction. The silos are construc ted section by section, starting with the roof. The prefabricated, corr ugated metal walls are bolted together to form a ring, and the roof is raised and se cured to the first ring with purlins, joists, and struts. The first ring is then jacked up and the next ring is bolted to the first. The process continues until the silo is fully assembled. In short, constructing a silo is a matter of assemb ly. It requires putting the pieces together pursuant to the manufacturer’s instructions. 1 AJC began erecting the silos in May 2013 and completed its work in June or early July. At various st ages, Erwin inspected the quality and progress of AJC’s work. Although Erwin observed some cosmetic problems in the roofing, he determined the silos were structurally sound and not defective. AJC left the job site af ter completing the assembly. Erwin completed the rest of the project on November 1, 2013, and signed an affidavit of completion as required by the contract with Woodsboro.

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1 There are other aspects of the job, e.g. , laying a concrete foundation and postassembly millwright and electrical work. This case, however, concerns only the assembly. Case: 23-40435 Document: 65-1 Page: 2 Date Filed: 09/20/2024No. 23-40435

3 According to Woodsboro, atthis time Erwin represen ted that the silos were ready to be used as intended.
Before Woodsboro tendered its fina l payment, it noticed several defects that caused the silos to leak. To address the leaks, Woodsboro and Erwin signed an addendum to their orig inal contract in late November 26, 2013. Woodsboro agreed to make the final payment to Erwin as consideration for repairing a list of de ficiencies for each silo. Sometime between November 2013 and May 2014 , Erwin attempted to repair the defects but was unable to make them watertight. When it became clear Erwin would not be able to fully repair the silos, Woodsboro contacted Buck Pitcock of Pi tcock Supply, Inc., to inspect them. Pitcock observed numerous faults with the silos’ assembly, including missing or loose bolts; gaps in the tank walls and ceiling; incorrectly installed tank stiffeners; improper sealing; and unse cured roofing. Pitcock concluded that the failure to secure the roofs properlyallowed them to “flex and move” in the wind and weather, causing the silos’ metal parts to fatigue and bend. As the overall condition of th e silos deteriorated, damage from wind and weather accelerated. This could have led the entire structures to fail. Pitcock attributed the damage to AJC’s “poor workmanship.” Because the silos are constructed by jacking up each section, st arting with the roof, they had to be deconstructed in their entirety to fix th e damage and then re constructed. It is undisputed that Woodsboro had to take these steps to fix the problem. In March 2015, Woodsboro hired Pitcock Supply to repair the silos. New Brock kits were purchased becaus e certain parts were so damaged they could not be re-used. When Pitcock Supply finished its work in June, Woodsboro’s total cost was $805,642.74. In August 2014, Woodsboro sued Erwin in Texas state court for breach of contract. In 2017 , the case was sent to anarbitration panel. The Case: 23-40435 Document: 65-1 Page: 3 Date Filed: 09/20/2024No. 23-40435

4 panel found AJC had negligently constructed the silos; the silos were defective and did not conform to the co nstruction contract and subcontract; and Erwin was unwilling or unable to repair them. The panel awarded Woodsboro a total of $988,073.25 in damages. 2 In October 2018, Woodsboro moved for the Texas state court to conf irm the award, and then in November asked the arbitration panel to amend the award to account for certain costs. The motion to confirm was pending for nearly four years before the court issued a final judgment confirmi ng the award in September 2022. In December 2018, TIG Insurance Company, successor by merger to American Safety Indemnity Company (“TIG”), sued Woodsboro and Erwin in the United States District Court for the Southern District of Texas. TIG invoked diversity jurisdiction and sought declaratory relief on its duty to defend and indemnify as Erwin’s insure r. Woodsboro and Erwin then moved to dismiss for lack of subject matter jurisdiction, arguing the matter was not ripe for adjudication because the Texas state court had not yet issued a final judgment, leaving TIG without standing . The district court denied the motion because, even if the issue of TIG’s duty to indemnify was not ripe, the issue of its duty to defend was ripe and was sufficient to provide standing. In March 2022, the district court ruled on the parties’ cross-motions for summary judgment. The court gran ted TIG’s motion as to its duty to defend, finding the underlying pleadings failed to show that Erwin’s breaches resulted in “property da mage” required for coverage under the policy and, even if such damage existed, several exclusions would apply. See VRV Dev. L.P. v. Mid-Continent Cas. Co. , 630 F.3d 451, 456–57 (5th Cir. 2011). The court did not rule on the issue of in demnity because final judgment in the

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2 Woodsboro’s net award, including prejudgment interest and attorneys’ fees, was $1,300,241.39. Erwin was awarded a total recovery of $1,079,963.81 against AJC. Arbitration costs were divided between Erwin and AJC. Case: 23-40435 Document: 65-1 Page: 4 Date Filed: 09/20/2024No. 23-40435

5 underlying case had not yet issued. Thereafter, Woodsboro and Erwin filed another motion to dismiss for lack of jurisdiction, but by the time the district court ruled on the motion in October 20 22, the state court had entered a final judgment and the issue of indemnity was ripe. In June 2023, the district court granted the remainder of TIG’s motion for summary judgment. The co urt concluded there was no “physical injury to tangible property” because of Erwin’s breach apart from defective construction, nor was there any “loss of use” of the silos because the arbitration panel found that Woodsbor o had lost profits on account of Erwin’s late delivery of the project. The district court further determined that, even if its conclusions regarding property damage were incorrect, three policy exclusions would apply, though application of one of the exclusions would be negated by an exceptio n. Woodsboro timely appealed.
DISCUSSION We review a grant of summary judgment de novo , “applying the same standard as the district court.” Lamb v. Ashford Place Apartments LLC, 914 F.3d 940, 943 (5th Cir. 2019) (citation omitted). Summary judgment should be granted “if the movant shows that th ere is no genuine dispute as to any material fact and the movant is enti tled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “When parties file cross-motions for summary judgment, we review each party’s motion independently, viewing the evidence and inferences in the light m ost favorable to the nonmoving party.” A.A. v. Northside Indep. Sch. Dist. , 951 F.3d 678, 684 (5th Cir. 2020) (citation omitted). The grant or denial of a motion to dismiss for lack of jurisdiction is also reviewed de novo , and “the jurisdictional issue of ripeness is a legal question for which review is de novo ,” as well. Choice Inc. of Tex. v. Greenstein , 691 F.3d 710, 714 (5th Cir. 2012) (ita lics added). “[W]e must apply Texas law” to this diversity action and, if no authority from the Supreme Court of Case: 23-40435 Document: 65-1 Page: 5 Date Filed: 09/20/2024No. 23-40435

6 Texas exists, we make “an Erie guess as to how [that court] would decide the question before us.” Gilbane Bldg. Co. v. Admiral Ins. Co. , 664 F.3d 589, 593 (5th Cir. 2011) (citation omitted). TIG argues it is entitled to summary judgment and therefore we should affirm the district court. Wood sboro argues it is entitled to summary judgment and therefore we should render judgment in its favor, or at least remand to the district court for additional factfinding and a trial, if necessary. We will start, though, with Woodsb oro’s alternative argument that the district court lacked su bject matter jurisdiction, because our decision on that issue determines whether we can resolve the others. See Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94–95 (1998). I. Subject matter jurisdiction Woodsboro has two jurisdictional arguments. First, TIG allegedly lacked standing to pursue a declaratory action on its duty to defend because AJC’s insurer, Landmark American Insurance Company, covered Erwin’s defense costs in the underlying proceed ing, and Erwin waived in writing any right to seek defense costs from TI G. Second, the issue of indemnity allegedly was not ripe for adjudication because, under Texas law, a duty to indemnify does not accrue unt il there is a final judgment. As a general matter, federal courts may issue declaratory judgments only where “there exists an actual case or controversy.” Columbia Cas. Co. v. Ga. & Fla. RailNet, Inc. , 542 F.3d 106, 110 (5th Cir. 2008). “An actual case or controversy exists before the resolut ion of an insured’s underlying suit concerning the insurer’s duty to defend.” Id. (emphasis in original). Under Texas law, an insurer’s duties to defend and indemnify “are distinct, and they are to be decided separately.” Gilbane , 664 F.3d at 594. The duty to defend is governed by th e “eight-corners rule,” i.e. , determined “solely by the facts alleged in the petition and the terms of the policy.” Colony Ins. Co. Case: 23-40435 Document: 65-1 Page: 6 Date Filed: 09/20/2024No. 23-40435

7 v. Peachtree Constr., Ltd. , 647 F.3d 248, 253 (5th Cir. 2011). The duty may arise if the alleged facts “ potentially assert a claim for coverage under the insurance policy.” Id. (emphasis in original). The duty to indemnify, on the other hand, is determined “by the actual facts establishing liability in the underlying suit,” and therefore “gener ally cannot be ascertained until the completion of litigation.” Id. Here, the district court had jurisd iction to decide TIG’s duty to defend even though the underlying proc eedings were not final. An actual case or controversy exists in declaratory actions on an insurer’s liability for an underlying state-court action wh ile the action is still pending. Maryland Cas. Co. v. Pac. Coal & Oil Co. , 312 U.S. 270, 273–74 (1941). Because the duty to defend is constrained by the ei ght-corners rule, “an insurer’s duty to defend can be determined at the moment the petition is filed.” Colony , 647 F.3d at 253. Thus, once Woodsboro f iled a petition for breach of contract, there existed a potential claim for coverage sufficient to constitute a case or controversy and conferstanding on TIG as Erwin’s insurer. Id. Further, because the duty to defend is “dec ided separately” fr om the duty to indemnify, federal courts have jurisdic tion to decide the former even if the latter cannot be addressed. Gilbane , 664 F.3d at 594. The district court also did not err in refusing to consider Erwin’s affidavit waiving any claims for defens e costs. Under Texas law, the eightcorners rule “strictly circumscribe[s ]” the court’s analysis of a duty to defend. D.R. Horton-Texas, Ltd. v. Markel Int’l Ins. Co. , 300 S.W.3d 740, 744 (Tex. 2009). The Supreme Court of Texa s recently recognized a collusion exception to this rule and ratified and refined the gap-in-the-pleadings exception initially recognized by this court. Monroe Guar. Ins. Co. v. BITCO Gen. Ins. Corp. , 640 S.W.3d 195, 199, 200– 03 (Tex. 2022). Woodsboro makes no assertion that either exception applies. Case: 23-40435 Document: 65-1 Page: 7 Date Filed: 09/20/2024No. 23-40435

8 Finally, the district court did not err in “defer[ring] resolution of indemnity issues until the liability litigation [was] resolved” and a final judgment was entered. Hartford Cas. Ins. Co. v. DP Eng’g, LLC, 827 F.3d 423, 431 (5th Cir. 2016) (quoting Farmers Tex. Cnty. Mut. Ins. Co. v. Griffin , 955 S.W.2d 81, 84 (Tex. 1997)). Accordin gly, we have jurisdiction under 28 U.S.C. § 1291, 3 and we may proceed. II. TIG’s motion for summary judgment Woodsboro does not appeal the dist rict court’s ruling that TIG had no duty to defend, so we do not reviewthat determination. Regardless, TIG may have a duty to indemnify. That duty depends on th e “facts actually established in the underlying suit” and not on the allegations in the complaint. D.R. Horton , 300 S.W.3d at 744 (citation omitted). Here, Woodsboro challenges the district cour t’s determination that the damage to the silos was not “property damage” co vered by Erwin’s insurance policy, and even if it were, severa l exclusions would apply. a. Property damage
Erwin holds a standard Commer cial General Liability (“CGL”) insurance policy. The policy covers “t hose sums that the insured becomes legally obligated to pay as damages be cause of ‘bodily injury’ or ‘property damage’ to which this insurance app lies.” As relevant here, the policy insures “property damage” only if it “i s caused by an ‘occu rrence’ that takes place in the ‘coverage terri tory.’” The district court determined the claimed damage was caused by a proper “occu rrence.” TIG does not challenge this determination on appeal, and we therefore accept it.

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3 No ruling on TIG’s bill of costs has been made. We may treat the order granting summary judgment as a final order even when a motion for costs is pending. Samaad v. City of Dallas , 922 F.2d 216, 217–19 (5th Cir. 1991). Case: 23-40435 Document: 65-1 Page: 8 Date Filed: 09/20/2024No. 23-40435

9 “Property damage” is defined in Erwin’s policy in two ways: a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physic al injury that caused it; or b. Loss of use of tangible property that is not physically injured. All such loss of use shall be d eemed to occur at the time of the “occurrence” that caused it. Like most CGL policies, Erwin’s do es not define “physical injury,” so its meaning in Texas has been supplied by the state’s Supreme Court. See U.S. Metals, Inc. v. Liberty Mut. Grp., Inc. , 490 S.W.3d 20, 24– 28 (Tex. 2015). Under Texas law, “physical injury” to tangible property “requires tangible, manifest harm and does not result merel y upon the installation of a defective component in a product or system.” Id. at 27. Thus, “faulty workmanship that merely diminishes the value of th e [property] without causing physical injury or loss of use does no t involve ‘property damage.’” Lamar Homes, Inc. v. Mid-Continent Cas. Co. , 242 S.W.3d 1, 10 (Tex. 20 07). On the meaning of “property damage” and “physical injury,” the district court and the parties agree. The parties dis pute, however, whether th e problems here were defective assembly, or whether Erwin ca used tangible, manifest harm to the silos.
The district court determined Erwin’s role was “more akin to ‘defective installation’ requiring repa ir than defective work which caused physical damage to other property.” The district court considered Woodsboro’s affidavits and evidence as to the extent of the damage and concluded that “the entirety of the silo was defectively constructed and required repairs.” Contrary to th is conclusion, Woodsboro insists its evidence demonstrates the damage was from wind and weather that caused the silos’ metal parts to degrade, bend , and fatigue. Although AJC’s faulty workmanship exposed the silos’ metal parts to harm, Woodsboro incurred Case: 23-40435 Document: 65-1 Page: 9 Date Filed: 09/20/2024No. 23-40435

10 repair and reconstruction costs because the wind and weather damaged the parts to such an extent they became unusable. TIG questions whether any evidence regarding the silos’ deterior ation was before the arbitration panel, 4 and, even if it were, TIG states it wa s not the reason for the damage award. We start with the “facts actually es tablished in the underlying suit,” which is the arbitration in this case. D.R. Horton , 300 S.W.3d at 744 (citation omitted). The arbitration panel found the silos “were defectively constructed and could not be placed into service either as constructed or as repaired by Erwin.” Erwin had “sol e control of the means and methods of construction,” and the “erection work performed by AJ[C] was negligently performed.” This “defective work re sulted in damages to Woodsboro.” Based on testimony and evidence, the pane l found the silo bins “as originally constructed by AJ[C], were defectiv e.” It also found that “Erwin was unwilling or unable to repa ir [the bins] and [they] required deconstruction, repair, and proper reerection” by Pitcock Supply. Although the district court’s interp retation might be reasonable on the face of the arbitration decision, itfailed to make all inferences in Woodsboro’s favor as the nonmoving party. See A.A. , 951 F.3d at 684. True, the panel found that the silo bins were defective “as originally constructed,” but that does not mean it found Wood sboro’s damages were exclusive of physical injury to the silos’ parts caused by the wind and weather. The panel also found that the silos “required deconstruction, repair, and proper reerection.” Pitcock testified in the arbitration proceedings that the defects

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4 The necessity for evidence to have been presented to the arbitration panel before it could be considered by the district court for indemnity purposes was not resolved. TIG moved to strike Woodsboro’s su mmary judgment evidence because it “was not in evidence at the arbitration proceeding.” The district co urt mentioned the motion to strike when it decided TIG’s duty to defend, but the motion was denied “at this time.” The court did not later rule on the issue. Case: 23-40435 Document: 65-1 Page: 10 Date Filed: 09/20/2024No. 23-40435

11 in the silo roofs’ construction left them unsecure and “free to move around” and “the roof superstructure was moving and shifting in the wind and weather.” This caused the roofs’ metalparts to “fatigue, and then bend,” damaging the roof to such an extent th at an entirely new Brock roof kit had to be purchased. Pitcock observed similar degradation to the rest of the structure. Pitcock estimated “60% of the new parts that ha d to be purchased were to replace parts that had been da maged from the working of [the] silo[s] in [the] wind,” while the other 40% were needed to bring the silos up to code. Pitcock’s invoices to deconstruct, repa ir, and reconstruct the silos amounted to $805,642.74, the exact amount the arbitration panel awarded Woodsboro for its repair costs. Viewing the facts in this light, th is case is distinguishable from precedent involving repairs to defective work with no damages resulting from the work. In the principa l authority on which the di strict court relied, U.S. Metals sold ExxonMobil Corp. faulty flanges that were installed in nonroad diesel units; 5 the flanges had to be replac ed because they did not meet industry standards and caus ed the units to leak. U.S. Metals , 490 S.W.3d at 21–22. The Supreme Court of Texas held that inst allation of the faulty flanges did not constitute “physical in jury”; the flanges diminished the use or function of the diesel units but did not physically injure them. Id. at 24, 28. The Supreme Court of Texas quoted with approval a case from the Illinois Supreme Court that described what was need ed to show physical injury apart from “intangible damage, such as diminution in value”: “a harmful change in appearance, shape, composition, or some other physical

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5 Nonroad engines are combustion engines that are not used in motor vehicles or vehicles used solely for competition, such as engines used in equipment. 42 U.S.C. § 7550(10); 40 C.F.R. § 1068.30. Case: 23-40435 Document: 65-1 Page: 11 Date Filed: 09/20/2024No. 23-40435

12 dimension to the claimants’ property.” Id. at 25 (quoting Travelers Ins. Co. v. Eljer Mfg., Inc. , 757 N.E.2d 481, 496–97 (Ill. 2001)). Because the faulty flanges were replaced before any leaking could damage the diesel units, their mere installation did not result in physical injury to Exxon’s property. Id. The district court likened AJC’s defe ctive construction of the silos to the installation of U.S. Metal’s faulty flanges because, in the court’s view, both had “ future potential to cause harm or injury to other property but was replaced before it could actually do so.” Here, though, there was evidence that the damage to the s ilos was not just potential but had actua lly occurred due to the force of the wi nd and other weather, caus ing the silos’ metal parts to bend, fatigue, and deteriorate to the point where the silos were not structurally sound. This constitute s “a harmful change in appearance, shape, composition, or some other physical dimension to the claimants’ property.” Id. We conclude this case is more analogous to Lamar Homes , in which the Supreme Court of Texas held that the faulty construction of a home’s foundation caused the home’s sheet ro ck and stone veneer to crack, constituting “physical inju ry” to “tangible property .” 242 S.W.3d at 10. Further, the district court and TIG appear to take issu e with the fact that the damaged property was the silos th emselves, not “other” property. Lamar Homes suggests this is irrelevant to wh ether there is “property damage,” but is instead an issue addre ssed by policy exclusions. Id. We will discuss that, but we have one more issue to address first. At oral argument, TIG’s counsel a sserted there was no evidence or suggestion that damage to the silos fr om wind and weathe r occurred during Erwin’s effective policy period of Februa ry 2013 to February 2014. Counsel further argued that whatever wear and fatigue was found when Case: 23-40435 Document: 65-1 Page: 12 Date Filed: 09/20/2024No. 23-40435

13 reconstructing the silos was irrelevantto liability because reconstruction occurred years after the policy expired.
The record reveals at least some evidence of wind and weather damage during the policy period. In a deposition taken during the underlying arbitration proceedings, Erwin testifie d there was a storm in late September or early October 2013 that had “so me wind,” and he guessed “the wind moved the bins around” and caused th e silos to “start[] leaking all over again.” Emails during the policy period corroborate the ongoing problem of leaks following storms in October 20 13, and the problem persisted past November 2013. Thus, although the de graded state of the metal parts was not observed until Pitcock’s May 2014 inspection, there is evidence that damage to the silos occurred, at leas t partially, during the policy period. As a matter of law, it is irrelevant that the damage to the metal parts was first observed after the policy period expired. According to the Supreme Court of Texas, when analyzing “‘ property damage’ which occur[red] during the policy period,” as we do here, “[o]ccurred means when damage occurred, not when discovery occurred.” Don’s Bldg. Supply, Inc. v. OneBeacon Ins. Co. , 267 S.W.3d 20, 30–31 (Tex. 2008) (emphasis in original). This is called the “actual injury” rule. Id. at 25. In that case, the court rejected the “manifestation rule” th at supports TIG’s argument. The manifestation rule permits coverage “only if the property damage became evident or discoverable during the policy term.” Id. at 26–29. The court endorsed the “actual injury” rule instea d because it is more faithful to the language of CGL policies, such as the one here. Id. at 29–30. Case: 23-40435 Document: 65-1 Page: 13 Date Filed: 09/20/2024No. 23-40435

14 Satisfied that the evidence, when view ed in the light most favorable to Woodsboro, supports the determinatio n that “property damage” occurred, we move on to consider the exclus ions that might negate coverage. 6 b. Exclusion j(5) Section I(2)(j)(5) (“exclusion j(5) ”) of Erwin’s CGL policy excludes from coverage “property damage” to “[t] hat particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performi ng operations, if th e ‘property damage’ arises out of those operations.” The use of the present tense in “performing operations” means the exclusion applies to property damage caused during “the active perfor mance of work.” Mid-Continent Cas. Co. v. JHP Dev., Inc. , 557 F.3d 207, 213 (5th Cir. 2009). Although the district court determined there was no “property damage,” it assumed arguendothat there was “loss of use” of non-injured property. It then concluded exclusion j(5) precludes coverage because the loss of use was “a direct re sult of negligence during the construction process, not by some force post-construction.” Italso concluded “the entirety of the project” was the “particular part” of pr operty subject to Erwin’s and AJC’s defective work. On appeal, Woodsbor o does not challenge the district court’s “particular part” reasoning, but it does argue that the exclusion does

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6 We do not address the district court’s conclusion that Woodsboro suffered no “property damage” via “loss of use” of property that is not physically injured. That is because Woodsboro abandoned any argument agai nst it by failing to raise the issue on appeal. Sindhi v. Raina , 905 F.3d 327, 334 (5th Cir. 2018). Further, we do not address the exclusion found in Section I(2)(m) of Erwin’s policy because it only excludes from coverage “property damage” to “impaired property” or “property that has not been physically injured.” No party argues that this case in volves “impaired property,” and the district court seemingly agreed. Our determination that there is at least some evidence of physical injury, therefore, makes it unnecessary to address this exclusion. Case: 23-40435 Document: 65-1 Page: 14 Date Filed: 09/20/2024No. 23-40435

15 not apply because the property damage did not occur until after “operations” were complete. We agree there is evidence to suppor t that view. AJC’ s operations in the project concluded in June or early July 2013. At that point, Erwin only noticed some cosmetic defects, but the silos otherwise appeared structurally sound. There is evidence suggesting that sometime between AJC’s exit from the project and Pitcock’s assessment in May 2014, wind and weather damaged the silos. Thus, damage fr om the wind and weather could have occurred after AJC’s “activ e performance of work.” Id. Moreover, although Erwin is the insured and was responsible for overseeing the entirety of the project, it is uncontested that any damage was the result of AJC’s negligent work. Thus, “those operations” from which the damage from wind and weather “a rose” do not include Erwin’s postassembly millwright an d electrical work. See Gonzalez v. Mid-Continent Cas. Co. , 969 F.3d 554, 561 (5th Cir. 2020) (s egmenting the operations for which the insured was and was not hired). When viewed in the light most favorable to Woodsboro, the evidence suggests exclusion j(5) does not apply because the property damage occurred after AJC completed its operations. c. Exclusion j(6) and its exceptions Section I(2)(j)(6) (“exclusion j( 6)”) excludes from coverage “property damage” to “[t]ha t particular part of any property that must be restored, repaired or replaced be cause ‘your work’ was incorrectly performed on it.” This exclusion app lies “only for property damage to parts of a property that were themselves th e subject of defective work by the insured” and “does not bar coverage fordamage to parts of a property that were the subject of only nondefective work by the insured and were damaged as a result of defective work by the in sured on other parts of the property.” Mid-Continent, 557 F.3d at 215. Case: 23-40435 Document: 65-1 Page: 15 Date Filed: 09/20/2024No. 23-40435

16 Like with exclusion j(5), the districtcourt determined the entirety of the project was Erwin’s and AJC’ s defective work, and therefore exclusion j(6) applied because the entirety of the silos had to be “restored, repaired or replaced.” Woodsboro argues this was error because AJC’s defective work was limited to improper installation, tightening, and securing of the silos’ bolts and roof ve nt covers. Woodsboro argu es this case is similar
to Mid-Continent, in which we held that exclusion j(6) did not apply where an insured failed to seal exterior fi nishes and the retaining walls of a condominium properly, leading to wate r damage to the “interior drywall, stud framing, electrical wiring, an d wood flooring” of the condos. Id. at 217. It is difficult to extend Mid-Continent ’s rationale to this case. Brock silos are assembled from kits consisti ng of prefabricated metal walls, roofing sheets, and other items necessary forconstruction. AJC’s job was to assemble these pieces, including bolting together the metal walls to form rings that are attached to the roof an d jacked up section by section until the entire silo is assembled. It is true , as Woodsboro argues, that the damaged metal parts were not literally the subj ect of AJC’s work because it did not manufacture or further proc ess them; it put the pre- made pieces together. Nevertheless, AJC was hired to assemb le the silos completely using the provided parts. Thus, this is not a case where faulty construction of one “distinct component part[]” of a projec t led to damage to other distinct parts, such as defective exterior fi nishes and retaining walls ultimately damaging “interior drywall, stud fr aming, electrical wiring, and wood flooring.” Id. ; see also Gore Design Completions, Ltd. v. Hartford Fire Ins. Co. , 538 F.3d 365, 371–72 (5th Cir. 2008). 7

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7If, for example, AJC’s faulty assembly damaged other parts of the silos, such as the electrical work or foundation, this argume nt might fare better. The arbitration panel, Case: 23-40435 Document: 65-1 Page: 16 Date Filed: 09/20/2024No. 23-40435

17 Regardless, even if exclusion j(6) ap plies, there is anexception that negates it. Under Erwin’s CGL policy, exclusion j(6) does not apply to “‘property damage’ included in the ‘products-completed operations hazard.’” “Products-comp leted operations hazard” includes, as relevant, all “‘property damage’ occurring away from premises you own or rent and arising out of ‘your product’ or ‘your wo rk’ except . . . [w]ork that has not yet been completed or abandoned.” Moreover, “[w]ork that may need service, maintenance, correction, re pair or replacement, but which is otherwise complete, will be treated as completed.” The district court determined that this exception to exclusion j(6) applies because the damage to the sil os did not occur on Erwin’s rented or owned property, arose from its work away from its prop erty, and occurred after the project was “completed” because the need for repair or replacement does not affect the proj ect’s completed status. This is consistent with the exception’s plain te xt and, even if th e policy’s language were ambiguous, Texas law would requir e we construe the policy in favor of coverage. Mid-Continent, 557 F.3d at 212. Accordin gly, the district court did not err in concluding the exception to exclusion j(6) applies, assuming that the exclusion itself applies. III. Woodsboro’s cross-motion for summary judgment We conclude summary judgment for TIG should not have been granted. Woodsboro seeks more from us , though, and that is to hold that summary judgment for Woodsboro should have been granted, at least in part. In its cross-motion for summary judgment, Woodsboro allocated its costs between the costs allegedly covered an d those that were not. Of the

_____________________ however, denied Woodsboro’s claims for damages to the foundation and a concrete ramp arising from AJC’s and Erwin’s work. Case: 23-40435 Document: 65-1 Page: 17 Date Filed: 09/20/2024No. 23-40435

18 $805,642.74 arbitration award for decons truction, repair, and reconstruction costs, Woodsboro asserted $786,868 is covered because it consists of “all labor and materials necessary for deco nstructing, repairing and replacing damaged parts, and then reconstructing the bins.” 8 Woodsboro correctly states that TIG does not provide othe r record evidence that would refute Woodsboro’s factual contentions; TIG on ly refers to the language of the arbitration award and the districtcourt’s conclusions from it. The problem for Woodsboro is the am biguity of the arbitration panel’s award and the lack of a record or transc ript from the arbitration proceedings. As mentioned, the arbitration panel foun d that the silos were “defectively constructed” because AJC’s erection work was “negligently performed.” The discussion above explai ns inferences that could be made in Woodsboro’s favor. Still, inferences could be made in TIG’s favor, which is required when reviewing Woodsboro’s summary judgment motion. A.A. , 951 F.3d at 684. For example, Pitcock’s affidavit consis tently states that he testified in the underlying proceeding as to the fa cts asserted therein. Woodsboro also provided deposition transcripts of nu merous witnesses, including Pitcock, from the underlying proceeding. In its decision, the arbitration panel said it relied on “testimony” and “evidence submitted” regarding the costs of repairing and replacing the silos, bu t it did not say whose testimony it credited and on what evidence it relie d. Notably absent from the panel’s decision is any mention of wind or weather damaging the metal parts of the silos. This supports an inference thatthe arbitration panel found Erwin liable

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8 The remaining $18,774.74 is not covered be cause it relates to repairs to parts of the project AJC never worked on; specifica lly, a “platform/catwalk” and the “grain elevator.” Case: 23-40435 Document: 65-1 Page: 18 Date Filed: 09/20/2024No. 23-40435

19 only for AJC’s initial negligent construc tion and not for any property damage from the elements. With respect to the $167,209 lost “profit for late delivery of [the] project” award, the panel was a little mo re specific as to what evidence it credited because there was “conflicting testimony regarding the losses.” That said, the award was sp ecific to Woodsboro’s inab ility to “place the grain bins in service for the 2013 harvest se ason.” The record suggests the harvest season covers the summer months, whic h is when Erwin initially represented the project would be complete and we ll before Erwin certified the project’s completion in November. If this we re the case, any “loss of use” from delayed delivery would not be a “resul ting loss” from property damage attributable to AJC’s faulty constructi on, or at least not exclusively. Of course, we do not resolve this factual di spute at this stage; we merely note its existence.
* * * Genuine disputes of material facts ex ist, making the district court’s grant of summary judgment improper. Absent additional evidence of what was before the arbitration panel, there may be a gap in the facts adduced in the underlying proceeding and those ne cessary to determine TIG’s duty to indemnify. “The underlying case often does not resolve all the factual issues necessary to determine coverage because issues relevant to the question of coverage can be irrelevant to the qu estion of the insured’s liability.” National Union Fire Ins. Co. of Pittsbu rgh v. Puget Plastics Corp. , 532 F.3d 398, 404 (5th Cir. 2008).
Texas law allows the introduction of evidence in coverage litigation where necessary facts are not established in the underlying liability litigation. D.R. Horton , 300 S.W.3d at 745. For exampl e, the arbitration panel was not required to find that AJC’s negligent co nstruction caused physical injury to Case: 23-40435 Document: 65-1 Page: 19 Date Filed: 09/20/2024No. 23-40435

20 the silos; it only had to find that AJC was negligent in its performance and that Erwin and AJC were in breach of their respective contracts. As Woodsboro notes, “physical injury ca n be inferred from [the panel’s] findings and the evidence,” but that is inappropriate at this stage. Accordingly, additional factual develo pment of the record is needed, which may or may not include a trial.
REVERSED and REMANDED

. Case: 23-40435 Document: 65-1 Page: 20 Date Filed: 09/20/2024