United States Court of Appeals

For the Eighth Circuit 

___________________________ 

No. 20-1855 

___________________________ 

Selective Way Insurance Company, a New Jersey corporation

 Plaintiff - Appellee

v. 

CSC General Contractors, Inc., a Georgia corporation; CSC General Contractors, 

ND LLP, a North Dakota limited liability partnership

 Defendants - Appellants

____________ 

Appeal from United States District Court 

for the District of North Dakota - Western

____________ 

Submitted: March 18, 2021

Filed: April 21, 2021

____________ 

Before GRUENDER, BENTON, and GRASZ, Circuit Judges. 

____________ 

BENTON, Circuit Judge.

Selective Way Insurance Company sought a declaration that a subcontractor’s

policy did not require it to defend or indemnify CSC General Contractors, Inc. CSC 

counter-claimed, asserting Selective owed these duties and denied them in bad faith. 

The district court granted summary judgment to Selective. Having jurisdiction under 

28 U.S.C. § 1291, this court reverses and remands. 
-2-

In 2012, CSC contracted to build a store—including a parking lot—for Acme 

Electric Tools, Inc. In 2013, CSC subcontracted for 3,000-psi concrete for the lot. 

To construct the parking lot—mixing and pouring the concrete—CSC also 

subcontracted with Glosson Group, LLC. This subcontract required that CSC be an 

“additional insured” on Glosson’s general liability policy. Glosson’s policy was 

with Selective. It was effective from February 26, 2014 to 2015. 

In 2014, inspecting the parking lot, Acme reported scaling, cracking, and popouts across the surface. Acme sued CSC in 2015. The claims centered on the 

selection of 3,000-psi—instead of 4,000-psi—concrete. CSC tendered defense of 

the suit to Selective. Selective denied coverage on two grounds: CSC was not an 

additional insured, and Glosson had no contractual duty to defend or indemnify. 

CSC filed a third-party complaint against Glosson, asserting it caused the damage 

by adding too much water to its concrete. The third-party complaint went to 

arbitration. In 2017, the arbitrator determined Glosson owed CSC indemnification 

for all Acme’s damages. Nine days later, Selective filed this federal case. CSC 

settled with Acme. In this case, the parties cross-moved for summary judgment. 

The district court granted summary judgment to Selective.

“This court reviews de novo a grant of summary judgment.” Torgerson v. 

City of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc). “Summary 

judgment is proper ‘if the pleadings, the discovery and disclosure materials on file, 

and any affidavits show that there is no genuine issue as to any material fact and that 

the movant is entitled to judgment as a matter of law.’” Id., citing Fed. R. Civ. P. 

56(c)(2). 

I.

A.

The district court decided that Selective did not owe a duty to defend and 

indemnify CSC (though ruling that CSC was an “additional insured”). Selective 

agrees with the judgment but does not defend the district court’s reasoning. Rather, 
-3-

Selective defends the judgment by arguing only that CSC is not an additional insured 

under Glosson’s policy. Selective did not cross-appeal.

CSC contends that by failing to cross-appeal, Selective waived its right to 

challenge the district court’s decision that CSC is an additional insured. “It is wellsettled that failure to file a cross-appeal prohibits an appellee from attempting to 

enlarge her rights or to lessen her adversary’s rights.” Bethea v. Levi Strauss & Co., 

916 F.2d 453, 456 (8th Cir. 1990). “[A]n appellee who does not cross-appeal may 

not ‘attack the decree with a view either to enlarging his own rights thereunder or of 

lessening the rights of his adversary.’” Jennings v. Stephens, 574 U.S. 271, 276 

(2015), quoting United States v. Am. Ry. Express Co., 265 U.S. 425, 435 (1924). 

“This Court, like all federal appellate courts, does not review lower courts’ opinions, 

but their judgments.” Id. at 277. “An appellee who does not take a cross-appeal 

may urge in support of a decree any matter appearing in the record, although his 

argument may involve an attack upon the reasoning of the lower court.” Id. at 276 

(quotation omitted). 

 The district court’s judgment dismissed CSC’s claim with prejudice. CSC’s 

right to relief under that judgment would not change if this court would affirm on 

the additional insured issue. Cf. Waller v. Groose, 38 F.3d 1007, 1008 (8th Cir. 

1994) (“We may affirm the judgment on any grounds supported by the record, even 

if not relied upon by the district court.”). Thus, this court may consider whether

CSC is an additional insured. 

B.

Like the district court ruled, CSC believes it is an additional insured under 

Glosson’s policy. Selective counters that CSC is not an additional insured because, 

by the policy’s terms, Glosson did not handle a “product,” but only constructed “real 

property.” 

 “Our goal when interpreting insurance policies, as when construing other 

contracts, is to give effect to the mutual intention of the parties as it existed at the 
-4-

time of contracting.” Wisness v. Nodak Mut. Ins. Co., 806 N.W.2d 146, 148 (N.D. 

2011). “We look first to the language of the insurance contract, and if the policy 

language is clear on its face, there is no room for construction.” Id. “While we 

regard insurance policies as adhesion contracts and resolve ambiguities in favor of 

the insured, we will not rewrite a contract to impose liability on an insurer if the 

policy unambiguously precludes coverage.” Id. “We will not strain the definition 

of an undefined term to provide coverage for the insured.” Id. 

The plain language of the policy covers Glosson’s cement-mixing error. The 

policy extends blanket insurance for: 

liability for “bodily injury” or “property damage” . . . caused, in whole 

or in part, by: 

1. Your ongoing operations, “your product”, or premises owned or used 

by you.

These three potential bases for additional-insured coverage are in the disjunctive, 

separated by “or.” “[T]he term ‘or’ . . . is disjunctive in nature and ordinarily 

indicates an alternative between different things or actions.” Narum v. Faxx Foods, 

Inc., 590 N.W.2d 454, 460 (N.D. 1999). If damages were caused by any of the three 

bases, then CSC is an additional insured. 

At least one basis—“your product”—includes Glosson’s cement mixing. The 

policy defines “your product”:

21. “Your product”:

a. Means:

(1) Any goods or products, other than real property, manufactured, 

sold, handled, distributed or disposed of by:

(a) You . . . .
-5-

Glosson mixed and poured cement for CSC. Cement is a product that Glosson 

handled. Thus, the property damage caused, at least in part, by the cement Glosson 

mixed is covered under the policy. 

Selective argues Glosson’s mixed cement was real property, since it became

real property once mixed, poured, and hardened. True, real property may include

“improvements to land,” like a parking lot. See Overboe v. Overboe, 160 N.W.2d 

650, 653-54 (N.D. 1968) (distinguishing “improvements which were permanent 

additions to or constituted betterment of the property” from “ordinary repairs”). But

Glosson damaged the parking lot through its handling of the cement (adding too 

much water) before it hardened. Thus, the damage was caused, at least in part, by 

handling of the cement, not handling of real property. CSC is an additional insured 

for the property damage Glosson caused. 

II.

Granting summary judgment, the district court focused at length on five

coverage issues not stated in Selective’s coverage denial. The district court erred in 

looking beyond the denial letter. 

The district court did not properly apply North Dakota’s estoppel law on 

insurance coverage. “[A]n insurer which disclaims liability on one ground, thereby 

misleading claimants to their prejudice, may be estopped from raising other grounds 

for denying liability.” D.E.M. v. Allickson, 555 N.W.2d 596, 600 (N.D. 1996). 

“The crucial elements of estoppel in this context are the insurer’s stated reliance 

upon one ground for denying liability without stating additional known grounds, and 

resulting prejudice to the claimant.” Id. at 601. “[T]he notice of disclaimer must 

promptly apprise the claimant with a high degree of specificity of the ground or 

grounds on which the disclaimer is predicated.” Id. at 600, quoting Gen. Acc. Ins.

Grp. v. Cirucci, 387 N.E.2d 223, 225 (N.Y. 1979). North Dakota does not “sanction 

the functional equivalent of a ‘shell game’” with coverage. Id. at 601.
-6-

CSC meets both elements for coverage estoppel. Selective asserted two 

grounds for denial and rested on them until after the underlying settlement. The 

district court granted summary judgment based on five grounds not in Selective’s 

denial. Selective cannot now rely on grounds raised for the first time in this case, if 

CSC detrimentally relied on its denial letter. CSC responded in weeks to Selective’s 

coverage denial letter. CSC then completed two lawsuits in reliance on Selective’s 

stated grounds before Selective, in this case, changed its position. Selective knew 

throughout the arbitration and settlement that CSC believed the grounds in the denial 

letter were all that prevented Selective from covering CSC’s losses. For over two 

years, CSC relied on Selective’s stated grounds to craft its litigating position against 

Glosson and to settle with Acme. Selective is estopped from asserting grounds other 

than those in its denial letter—both of which Selective lost. 

III.

CSC argues that because it is an additional insured, Selective denied its claim 

in bad faith. The district court granted Selective summary judgment because, even 

if CSC is an additional insured, Selective reasonably denied CSC’s tender of the 

Acme claims. 

 “An insurer has a duty to act in good faith in its relationships with its 

policyholders.” Dvorak v. Am. Fam. Mut. Ins. Co., 508 N.W.2d 329, 331 (N.D. 

1993). “[A]n insurer’s duty to its policyholders to negotiate a settlement of a 

potential claim in good faith and with fair dealing does not extend to injured third 

parties with potential claims against insureds.” Id. at 330. “Absent a clause in the 

insurance contract bestowing the right to bring a direct action against the insurer, an 

injured party’s claim must be asserted against the tortfeasor, not the tortfeasor’s 

insurer.” Id. at 331. “The insurer’s obligation to defend must be measured by the 

terms of the insurance policy and the pleading of the claimant who sues the insured.” 

Kyllo v. Northland Chemical Co., 209 N.W.2d 629, 634 (N.D. 1973). “[A]n insurer 

is not guilty of bad faith for denying a claim if the claim is fairly debatable, or if 

there is a reasonable basis for denying the claim or delaying payment.” Hartman v. 
-7-

Est. of Miller, 656 N.W.2d 676, 681 (N.D. 2003). As discussed, CSC is an 

additional insured, so Selective owes it a duty of good faith and fair dealing.

 “The mere fact that an insurer’s position is held invalid by the courts does not 

necessarily mean it acted in bad faith.” Hart Const. Co. v. Am. Fam. Mut. Ins. Co., 

514 N.W.2d 384, 391 (N.D. 1994). “The test for an insurer’s bad faith is whether 

the ‘insurer has acted unreasonably in handling an insured’s claim by failing to 

compensate the insured, without proper cause, for a loss covered by the policy.’” Id. 

(quotation omitted). “Whether an insurer has acted in bad faith in refusing to pay 

amounts claimed under an insurance policy is [a] question of fact.” Id. (alteration 

added). The North Dakota Supreme Court reversed and remanded summary 

judgment on a bad faith claim where the district court’s judgment was premised on 

lack of coverage, but the Court found coverage existed. Id. at 392. 

North Dakota has “formulated the duty to defend to require a liability insurer 

to defend an underlying action against its insured if the allegations in the complaint 

give rise to potential liability or a possibility of coverage under the insurance policy.” 

Schultze v. Cont'l Ins. Co., 619 N.W.2d 510, 513 (N.D. 2000). “Only if there is no 

possibility of coverage is the insurer relieved of its duty to defend.” Tibert v. Nodak

Mut. Ins. Co., 816 N.W.2d 31, 43 (N.D. 2012). “The insurer's duty to defend is set 

by the pleadings and must be determined as of the time the defense it tendered; it is 

not affected by the course and outcome of the litigation.” Id. at 44 (quotation 

omitted). 

To show Selective failed to reasonably handle CSC’s claims, CSC cites the 

Acme complaint, another subcontractor’s report, and Selective’s statement in the 

denial letter that there is “potentially coverage.” Selective counters that the Acme 

complaint and the terms of the policy are “fairly debatable,” so it had a reasonable 

basis to deny the claims. Whether the denial was reasonable is a disputed issue of 

material fact. See Hartman, 656 N.W.2d at 681 (“Whether an insurer acts in bad 

faith is ordinarily a question of fact.”). Summary judgment was not appropriate on 

the bad faith claim. 
-8-

* * * * * * *

The judgment is reversed and remanded for further proceedings consistent 

with this opinion. 

______________________________