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-coverage action, we must decide what constitutes 

“property damage” that would invoke an insurer’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 

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No. 23-40435 

2 

FACTUAL AND PROCEDURAL BACKGROUND 

In March 2013, Woodsboro Farmers Cooperative contracted with 

E.F. Erwin, Inc. to construct two Brock 105’ diameter grain silos in 

Woodsboro, Texas. Erwin hired subcontractor AJ Constructors, Inc. 

(“AJC”) to construct the silos, and Erwin was responsible for supervising 

the work. Though the contracts 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 from 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 constructed section by section, starting with 

the roof. The prefabricated, corrugated metal walls are bolted together to 

form a ring, and the roof is raised and secured 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 assembly. 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 stages, 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 after 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. 

_____________________ 

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. 

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No. 23-40435 

3 

According to Woodsboro, at this time Erwin represented that the silos were 

ready to be used as intended.

Before Woodsboro tendered its final payment, it noticed several 

defects that caused the silos to leak. To address the leaks, Woodsboro and 

Erwin signed an addendum to their original contract in late November 26, 

2013. Woodsboro agreed to make the final payment to Erwin as 

consideration for repairing a list of deficiencies 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 Pitcock 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 unsecured roofing. Pitcock concluded that 

the failure to secure the roofs properly allowed them to “flex and move” in 

the wind and weather, causing the silos’ metal parts to fatigue and bend. As 

the overall condition of the 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, starting with the roof, they had to be 

deconstructed in their entirety to fix the damage and then reconstructed. 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 because 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 an arbitration panel. The 

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4 

panel found AJC had negligently constructed the silos; the silos were 

defective and did not conform to the construction 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 confirm 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 confirming 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 insurer. 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 granted TIG’s motion as to its duty to 

defend, finding the underlying pleadings failed to show that Erwin’s breaches 

resulted in “property damage” 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 indemnity because final judgment in the 

_____________________ 

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. 

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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 2022, 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 court 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 Woodsboro 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 exception. 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 there is no genuine dispute as to any 

material fact and the movant is entitled 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 most 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) (italics added). “[W]e must apply Texas 

law” to this diversity action and, if no authority from the Supreme Court of 

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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. Woodsboro 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 Woodsboro’s alternative argument that the 

district court lacked subject 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 proceeding, and Erwin waived in writing any 

right to seek defense costs from TIG. Second, the issue of indemnity 

allegedly was not ripe for adjudication because, under Texas law, a duty to 

indemnify does not accrue until 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 resolution 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 the “eight-corners rule,” i.e., determined “solely by 

the facts alleged in the petition and the terms of the policy.” Colony Ins. Co. 

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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 “generally cannot be ascertained until the 

completion of litigation.” Id.

Here, the district court had jurisdiction to decide TIG’s duty to 

defend even though the underlying proceedings were not final. An actual 

case or controversy exists in declaratory actions on an insurer’s liability for 

an underlying state-court action while 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 eight-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 filed a petition for breach of contract, 

there existed a potential claim for coverage sufficient to constitute a case or 

controversy and confer standing on TIG as Erwin’s insurer. Id. Further, 

because the duty to defend is “decided separately” from the duty to 

indemnify, federal courts have jurisdiction 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 defense 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 Texas 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. 

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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)). Accordingly, 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 district court’s ruling that TIG had 

no duty to defend, so we do not review that determination. Regardless, TIG 

may have a duty to indemnify. That duty depends on the “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 court’s determination that the damage to 

the silos was not “property damage” covered by Erwin’s insurance policy, 

and even if it were, several exclusions would apply. 

a. Property damage 

Erwin holds a standard Commercial General Liability (“CGL”) 

insurance policy. The policy covers “those sums that the insured becomes 

legally obligated to pay as damages because of ‘bodily injury’ or ‘property 

damage’ to which this insurance applies.” As relevant here, the policy 

insures “property damage” only if it “is caused by an ‘occurrence’ that takes 

place in the ‘coverage territory.’” The district court determined the claimed 

damage was caused by a proper “occurrence.” TIG does not challenge this 

determination on appeal, and we therefore accept it. 

_____________________ 

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). 

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“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 physical injury that caused it; or 

b. Loss of use of tangible property that is not physically injured. 

All such loss of use shall be deemed to occur at the time of the 

“occurrence” that caused it.

Like most CGL policies, Erwin’s does 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 merely upon the installation of a defective 

component in a product or system.” Id. at 27. Thus, “faulty workmanship 

that merely diminishes the value of the [property] without causing physical 

injury or loss of use does not involve ‘property damage.’” Lamar Homes, Inc. 

v. Mid-Continent Cas. Co., 242 S.W.3d 1, 10 (Tex. 2007). On the meaning of 

“property damage” and “physical injury,” the district court and the parties 

agree. The parties dispute, however, whether the problems here were 

defective assembly, or whether Erwin caused tangible, manifest harm to the 

silos. 

The district court determined Erwin’s role was “more akin to 

‘defective installation’ requiring repair 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 this 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 

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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’ deterioration was before the arbitration panel,4

and, even if it were, TIG states it was not the reason for the damage award. 

We start with the “facts actually established 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 “sole control of the means and methods of 

construction,” and the “erection work performed by AJ[C] was negligently 

performed.” This “defective work resulted in damages to Woodsboro.” 

Based on testimony and evidence, the panel found the silo bins “as originally 

constructed by AJ[C], were defective.” It also found that “Erwin was 

unwilling or unable to repair [the bins] and [they] required deconstruction, 

repair, and proper reerection” by Pitcock Supply. 

Although the district court’s interpretation might be reasonable on 

the face of the arbitration decision, it failed 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 Woodsboro’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 

_____________________ 

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 summary judgment evidence because it “was not in evidence 

at the arbitration proceeding.” The district court 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. 

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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’ metal parts to “fatigue, and then bend,” 

damaging the roof to such an extent that 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 had to be purchased 

were to replace parts that had been damaged 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, repair, 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, this case is distinguishable from 

precedent involving repairs to defective work with no damages resulting from 

the work. In the principal authority on which the district court relied, U.S. 

Metals sold ExxonMobil Corp. faulty flanges that were installed in nonroad 

diesel units;5

 the flanges had to be replaced because they did not meet 

industry standards and caused the units to leak. U.S. Metals, 490 S.W.3d at 

21–22. The Supreme Court of Texas held that installation of the faulty 

flanges did not constitute “physical injury”; 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 needed to show physical 

injury apart from “intangible damage, such as diminution in value”: “a 

harmful change in appearance, shape, composition, or some other physical 

_____________________ 

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. 

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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 defective 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 silos was not just potential but had actually occurred 

due to the force of the wind and other weather, causing the silos’ metal parts 

to bend, fatigue, and deteriorate to the point where the silos were not 

structurally sound. This constitutes “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 rock and stone veneer to crack, 

constituting “physical injury” to “tangible property.” 242 S.W.3d at 10. 

Further, the district court and TIG appear to take issue with the fact that the 

damaged property was the silos themselves, not “other” property. Lamar 

Homes suggests this is irrelevant to whether there is “property damage,” but 

is instead an issue addressed by policy exclusions. Id. We will discuss that, 

but we have one more issue to address first. 

At oral argument, TIG’s counsel asserted there was no evidence or 

suggestion that damage to the silos from wind and weather occurred during 

Erwin’s effective policy period of February 2013 to February 2014. Counsel 

further argued that whatever wear and fatigue was found when 

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reconstructing the silos was irrelevant to 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 testified there was a storm in late September 

or early October 2013 that had “some wind,” and he guessed “the wind 

moved the bins around” and caused the silos to “start[] leaking all over 

again.” Emails during the policy period corroborate the ongoing problem of 

leaks following storms in October 2013, and the problem persisted past 

November 2013. Thus, although the degraded state of the metal parts was 

not observed until Pitcock’s May 2014 inspection, there is evidence that 

damage to the silos occurred, at least 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” that 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 instead because it is more faithful to the 

language of CGL policies, such as the one here. Id. at 29–30. 

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14 

Satisfied that the evidence, when viewed in the light most favorable to 

Woodsboro, supports the determination that “property damage” occurred, 

we move on to consider the exclusions 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 performing operations, if the ‘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 performance 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 arguendo that 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 result of negligence during the construction process, 

not by some force post-construction.” It also concluded “the entirety of the 

project” was the “particular part” of property subject to Erwin’s and AJC’s 

defective work. On appeal, Woodsboro does not challenge the district 

court’s “particular part” reasoning, but it does argue that the exclusion does 

_____________________ 

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 against 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 involves “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. 

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15 

not apply because the property damage did not occur until after “operations” 

were complete. 

We agree there is evidence to support 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 from the wind and weather could have 

occurred after AJC’s “active 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 “arose” do not include Erwin’s postassembly millwright and electrical work. See Gonzalez v. Mid-Continent Cas. 

Co., 969 F.3d 554, 561 (5th Cir. 2020) (segmenting 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]hat particular part of any property that must be 

restored, repaired or replaced because ‘your work’ was incorrectly 

performed on it.” This exclusion applies “only for property damage to parts 

of a property that were themselves the subject of defective work by the 

insured” and “does not bar coverage for damage 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 insured on other parts of the property.” 

Mid-Continent, 557 F.3d at 215. 

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16 

Like with exclusion j(5), the district court 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 vent covers. Woodsboro argues 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 finishes and the retaining walls of a 

condominium properly, leading to water damage to the “interior drywall, 

stud framing, electrical wiring, and 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 consisting of prefabricated metal walls, roofing 

sheets, and other items necessary for construction. AJC’s job was to 

assemble these pieces, including bolting together the metal walls to form 

rings that are attached to the roof and 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 subject of AJC’s work because it did not 

manufacture or further process them; it put the pre-made pieces together. 

Nevertheless, AJC was hired to assemble the silos completely using the 

provided parts. Thus, this is not a case where faulty construction of one 

“distinct component part[]” of a project led to damage to other distinct 

parts, such as defective exterior finishes and retaining walls ultimately 

damaging “interior drywall, stud framing, 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

_____________________ 

7

 If, for example, AJC’s faulty assembly damaged other parts of the silos, such as 

the electrical work or foundation, this argument might fare better. The arbitration panel, 

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No. 23-40435 

17 

Regardless, even if exclusion j(6) applies, there is an exception 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-completed operations hazard” includes, as relevant, 

all “‘property damage’ occurring away from premises you own or rent and 

arising out of ‘your product’ or ‘your work’ except . . . [w]ork that has not 

yet been completed or abandoned.” Moreover, “[w]ork that may need 

service, maintenance, correction, repair 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 silos did not occur on Erwin’s rented or 

owned property, arose from its work away from its property, and occurred 

after the project was “completed” because the need for repair or 

replacement does not affect the project’s completed status. This is 

consistent with the exception’s plain text and, even if the policy’s language 

were ambiguous, Texas law would require we construe the policy in favor of 

coverage. Mid-Continent, 557 F.3d at 212. Accordingly, 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 and 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: 09/20/2024
No. 23-40435 

18 

$805,642.74 arbitration award for deconstruction, repair, and reconstruction 

costs, Woodsboro asserted $786,868 is covered because it consists of “all 

labor and materials necessary for deconstructing, repairing and replacing 

damaged parts, and then reconstructing the bins.”8

 Woodsboro correctly 

states that TIG does not provide other record evidence that would refute 

Woodsboro’s factual contentions; TIG only refers to the language of the 

arbitration award and the district court’s conclusions from it. 

The problem for Woodsboro is the ambiguity of the arbitration panel’s 

award and the lack of a record or transcript from the arbitration proceedings. 

As mentioned, the arbitration panel found that the silos were “defectively 

constructed” because AJC’s erection work was “negligently performed.” 

The discussion above explains 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 consistently states that he testified in 

the underlying proceeding as to the facts asserted therein. Woodsboro also 

provided deposition transcripts of numerous 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, but it did not say whose testimony it 

credited and on what evidence it relied. 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 that the arbitration panel found Erwin liable 

_____________________ 

8

 The remaining $18,774.74 is not covered because it relates to repairs to parts of 

the project AJC never worked on; specifically, a “platform/catwalk” and the “grain 

elevator.” 

Case: 23-40435 Document: 65-1 Page: 18 Date Filed: 09/20/2024
No. 23-40435 

19 

only for AJC’s initial negligent construction 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 more specific as to what evidence it 

credited because there was “conflicting testimony regarding the losses.” 

That said, the award was specific to Woodsboro’s inability to “place the grain 

bins in service for the 2013 harvest season.” The record suggests the harvest 

season covers the summer months, which is when Erwin initially represented 

the project would be complete and well before Erwin certified the project’s 

completion in November. If this were the case, any “loss of use” from 

delayed delivery would not be a “resulting loss” from property damage 

attributable to AJC’s faulty construction, or at least not exclusively. Of 

course, we do not resolve this factual dispute at this stage; we merely note its 

existence. 

* * * 

Genuine disputes of material facts exist, 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 necessary 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 question of the insured’s liability.” National 

Union Fire Ins. Co. of Pittsburgh 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 example, the arbitration panel was not 

required to find that AJC’s negligent construction caused physical injury to 

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No. 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 can be inferred from [the panel’s] 

findings and the evidence,” but that is inappropriate at this stage. 

Accordingly, additional factual development 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