1 In a separate order the court will consider cross motions

for summary judgment between USF&G and Mactec.

UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF NEW HAMPSHIRE

Windham Environmental

Corporation, et al.

v. Civil No. 06-cv-367-JM

United States Fidelity

and Guaranty Company

O R D E R

Windham Environmental Corporation (“Windham”) has filed a

partial motion for summary judgment (Document no. 45). United

States Fidelity and Guaranty Company (“USF&G”) has also filed a

motion for summary judgment against Windham.1 (Document no. 42)

Standard of Review

Summary judgment is appropriate only “if the pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party

is entitled to a judgment as a matter of law.” Fed. R. Civ. P.

56(c). A genuine issue is one “that properly can be resolved

Case 1:06-cv-00367-JM Document 88 Filed 09/29/08 Page 1 of 12
2

only by a finder of fact because [it] may reasonably be resolved

in favor of either party.” Anderson v. Liberty Lobby, Inc., 477

U.S. 242, 250 (1986). A material fact is one “that might affect

the outcome of the suit.” Id. at 248.

In ruling on a motion for summary judgment, the court

construes the evidence in the light most favorable to the

nonmovant. See Navarro v. Pfizer Corp., 261 F.3d 90, 94 (1st

Cir. 2001). The party moving for summary judgment “bears the

initial responsibility of . . . identifying those portions of

[the record] which it believes demonstrate the absence of a

genuine issue of material fact.” Celotex Corp. v. Catrett, 477

U.S. 317, 323 (1986). Once the moving party has met its burden,

the burden shifts to the nonmovant to “produce evidence on which

a reasonable finder of fact, under the appropriate proof burden,

could base a verdict for it; if that party cannot produce such

evidence, the motion must be granted.” Ayala-Gerena v. Bristol

Myers-Squibb Co., 95 F.3d 86, 94 (1st Cir. 1996) (citing Celotex,

477 U.S. at 323; Anderson, 477 U.S. at 249). Neither conclusory

allegations, improbable inferences, nor unsupported speculation

are sufficient to defeat summary judgment. Carroll v. Xerox

Corp., 294 F.3d 231, 236-37 (1st Cir. 2002).

Case 1:06-cv-00367-JM Document 88 Filed 09/29/08 Page 2 of 12
3

When parties file cross-motions for summary judgment,

ordinarily the court must consider the motions separately to

determine whether summary judgment may be entered under the Rule

56 standard. Pac. Ins. Co., Ltd. v. Eaton Vance Mgmt., 369 F.3d

584, 588 (1st Cir. 2004); Bienkowski v. Northeastern Univ., 285

F.3d 138, 140 (1st Cir. 2002). When parties submit cross motions

for summary judgment in a non-jury case on stipulated or

materially undisputed facts, the case is submitted and the court

must determine the inferences to be drawn from those facts. See

Garcia-Ayala v. Lederle Parenterals, Inc., 212 F.3d 638, 643-44

(1st Cir. 2000).

In this case, the parties submitted a Joint Statement of

Agreed Facts (“J.A.”), namely that the twenty-nine (29) documents

filed under seal are true and correct copies of those documents. 

In addition, in compliance with LR 7.2, USF&G provided a

Statement of Material Facts (Document no. 42-1). Windham’s

objection to USF&G’s motion for summary judgement (Document no.

51), and its motion for summary judgement (Document no. 45),

provide neither its own Statement of Material Facts nor any

opposition to USF&G’s Statement of Material Facts. Therefore

“[a]ll properly supported facts set forth in ...[USF&G’s] factual

Case 1:06-cv-00367-JM Document 88 Filed 09/29/08 Page 3 of 12
2 The precise statement of the scope of work, Attachment

D, to J.A. Exhibit 4, is blank in the parties’ joint filing, so

the exact scope of work is not before me.

4

statement shall be deemed admitted.” LR 7.2 (G)(2). 

Background

Windham contracted as a subcontractor of Mactec “to furnish

professional services in connection with the Savage Well

Superfund Site.” Joint Statement of Agreed Facts (“J.A.”) Ex. 4.2

The owners of the site Hitchiner and Thomas & Bette (“Hitchiner

partner”), lured Mactec to assist with the design of a

groundwater remediation system. Mactec retained Windham

specifically to develop, test and apply a “sequestration agent,”

which was a chemical formula used to prevent “iron fouling” the

system’s injection wells. The underlying counterclaim against 

Windham asserted that Windham did not act “with professional

skill and care”. J.A. Ex. 19, ¶¶ 1, 134, 136-138, 141-42, 146

and 149. Specifically, Windham

did not perform with professional skill and care when it

held out the sequestration agent as being of a common type,

in use at hundreds of sites, when it was custom made for

this site, and experimental in nature, when it failed to

insist on carrying out its recommendation for further

testing of the sequestering agent, when it applied a

deficient dosage of sequestering agent to the system, and

when its custom blend sequestering agent could not

adequately perform to avoid iron fouling in the system and

out into the aquifer.

Case 1:06-cv-00367-JM Document 88 Filed 09/29/08 Page 4 of 12
3 The sequestration agent designed by Windham was

intended to prevent iron fouling of the injection wells.

5

Id. ¶ 134 (emphasis added); see also id. ¶¶ 136, 141, 146, 149

(reincorporating these allegations by reference); id. ¶¶ 137-138,

142 (identical allegations). 3

Upon start up of the remediation system in the late fall of

2004, the system failed to operate as required by the contract.

The Windham-designed sequestration agent crystallized and caused

significant iron fouling of both the injection wells and the

surrounding aquifer formation, which it was supposed to prevent.

J.A. Ex. 19, ¶¶ 47-48, 57. 

In an arbitration proceeding, the Hitchiner Parties sought

various damages arising out of the repair of the system. These

damages as it relates to Windham included:

the amount of money spent to re-perform work that Windham

was obligated to perform under its contract with MACTEC

[i.e., the Subcontract]; the amount of money paid for

Windham’s work which was not performed properly prior to the

remedial system failure; the amount of money spent to

investigate the remedial system failure; the amount spent to

repair, replace, and re-design the remedial system following

the failure; the incremental amounts required for additional

testing, monitoring, and analysis, meetings, and

communications with federal and state regulators,

permitting, governmental oversight costs; additional letter

of credit expense; consultant fees and expenses and all

other activities and expenses incident to the failure of

Windham’s work ...

Case 1:06-cv-00367-JM Document 88 Filed 09/29/08 Page 5 of 12
6

Id. ¶ 135 (emphasis added); id. ¶¶ 136, 141, 146 149

(reincorporating these allegations by reference); id. ¶¶ 140,

144, 148 (identical allegations). The Hitchiner Parties alleged

that to meet EPS requirements, ultimately they had to redesign

and build a new water treatment system.

Discussion

Windham maintains that USF&G owes it a defense against the

Hitchiner arbitration claims and seeks partial summary judgment

on that issue. USF&G, for its part, claims that it has neither a

duty to defend nor to indemnify Windham because Windham’s claims

are barred by the policy terms as follows:

a. the claims do not constitute an “Occurrence” as defined

by the policy;

b. the professional services exclusion bans coverage;

c. the business risk and contractual liability exclusions

bar coverage; and

d. the pollution exclusion bars coverage.

“It is well-settled law in New Hampshire that an insurer’s

obligation to defend its insured is determined by whether the

cause of action against the insured alleges sufficient facts in

the pleadings to bring it within the express terms of the

Case 1:06-cv-00367-JM Document 88 Filed 09/29/08 Page 6 of 12
7

policy.” Broom v. Cont’l Cas. Co., 152 N.H. 749, 753, 887 A.2d

1128, 1131 (2005). Any doubt or ambiguity in the allegations in

the underlying complaint must be resolved in favor of the

insured. Id. at 754. “The interpretation of the language of an

insurance policy, like any contract language, is ultimately an

issue for the court to decide.” Merchants Mut. Ins. Co. v.

Laighton Homes, LLC, 153 N.H. 485, 487, 889 A.2d 271, 273 (2006).

USF&G issued four general liability insurance policies

covering the period from September 29, 2001 through September 29,

2005. They were:

1. USF&G policy no. BK00929705 covered the period from

September 29, 2001 to September 29, 2002 (the “2001

Policy”) (J.A. Ex.3);

2. USF&G policy no: BK01220973 covered the period from

September 29, 2002 to September 29, 2003 (the “2002

Policy”) (J.A. Ex. 6); 

3. USF&G policy no: BK01664189 covered the period from

September 29, 2003 to September 29, 2004 (the “2003

Policy”) (J.A. Ex. 9); and

4. USF&G policy no: BK01664189 covered the period from

September 29, 2004 to September 29, 2005 (the “2004

Policy”) (J.A. Ex. 13).

Each policy insured against damages which occurred only during

the policy period. The damages Hitchiner alleges occurred after

the failure of the system in November of 2004. The only relevant

Case 1:06-cv-00367-JM Document 88 Filed 09/29/08 Page 7 of 12
8

policy, if any, therefore, is the policy in effect in 2004. That

policy was USF&G policy no. BK01664189, which was modified

effective September 29, 2004. See J.A. Ex. 9 and Ex. 13.

Liability arising out of professional services is

specifically excluded from the USF&G policy as follows:

This insurance does not apply to ... [b]odily injury,’

‘property damage,’ personal injury,’ or ‘advertising injury’

due to rendering or failure to render any professional

service by or on behalf of any insured.

J.A. Ex. 9, 13 USF&G 10478, 10482. “Professional service”

included, among other things:

(1) ...consulting or architectural services; (2) Preparing,

approving, or failing to prepare or approve maps, drawings,

opinions, reports, surveys, change orders, designs or

specifications; (3) Supervisory, claim, investigation,

adjustment, appraisal, survey, audit, inspection or

engineering services[.]

Id.

The exclusionary language is clear and unambiguous, see

MacMillin Co., Inc. v. Aetan Cas. and Sur. Co., 135 NH 189, 191-

92, 601 A.2d 169, 171 (1991), and unequivocally precludes

coverage for those Hitchiner Counterclaims which allege, in

pertinent part, that Windham was “the party responsible for

developing, [and] testing ... the sequestration agent.” J.A. Ex.

19, 133-34 (emphasis added). Windham has not and cannot argue

that this exclusion does not exclude all coverage for its

Case 1:06-cv-00367-JM Document 88 Filed 09/29/08 Page 8 of 12
4 Windham also throws in a catch-all attempt to

incorporate by reference Mactec’s motion for summary judgment. LR

7.1, however, prohibits combining multiple motions in a single

motion.

9

professional services. 

Instead, Windham relies on the “Products-Completed

Operations” coverage, which provides coverage for:

...all...’property damage’ occurring away from premises you

own or rent and arising out of ‘your product’ or ‘your

work’. 

J.A. Ex. 9 at USF&G 0010497. Windham asserts that Hitchiner’s

damages from the deficiencies in the testing, application and

operation of its sequestering agent and the sequestering agent

‘itself’ are covered as Windham’s ‘work’ and ‘product’.4 USF&G 

denies the applicability of this coverage to the claim and relies

on a number of coverage exclusions. USF&G also requests further

discovery under Fed. R. Civ. P. 56(f), because the affidavit of 

Brad Horn, Windham’s founder and vice president, raises facts not

set forth in Windham’s answer to the interrogatories. Since I

find that the exclusions preclude coverage, it is not necessary

to stay the motion to permit Rule 56(f) discovery.

The language in the arbitration claim, -- “the amount of

money paid for Windham’s work which was not performed properly

prior to the remedial system failure,” J.A. Ex. 19, ¶ 140 --

Case 1:06-cv-00367-JM Document 88 Filed 09/29/08 Page 9 of 12
5 Section 1.A.2.m(6) does not apply to property damage

covered by Product-Completed Operations Hazard. J.A. Ex. 9, USF&G

0010483.

10

suggests strongly that Windham’s work on the job had not been

completed at the time the system failed. Work which is not

completed and which was not put to use in treating wastewater is

not covered by the “Product-Completed Operations Hazard.”

Furthermore, any damage to the real property (e.g., “fouling

the aquifer, clogged aquifer formation”) is excluded by the

exclusion in Section 1, A, 2, Mm (5). See J.A. Ex. 9 at USF&G

0010482.5 Damage to Windham’s own work is excluded by the

“Damage to ‘Your Work’ Exclusion” clause J.A. Ex. 9 at USF&G

0010483. The allegations that neither the system nor any part of

it could be used, or that it was less useful because it

incorporated Windham’s product, e.g. the fouled well, is property

damage to impaired property, which falls directly within the

property damage exclusion. See J.A. Ex. 9 at USF&G 0010483. 

Damage to “impaired property” because of a failure to perform the

contract in accordance with its terms is also excluded. See J.A.

Ex. 9 at USF&G 0010483.

The last “business risk” exclusion provides that insurance

coverage does not apply to:

Case 1:06-cv-00367-JM Document 88 Filed 09/29/08 Page 10 of 12
11

[d]amages claimed for any loss, cost or expense incurred by

others for the loss of use ... inspection, repair,

replacement ... of (1)’your product’; (2) ‘your work’, or

(3) ‘Impaired property’ if such product is withdrawn ...

from use ... because of a known ... defect.

J.A. Ex. 9 at USF&G 0010483. Again, the damages because of

impairment of property are excluded. Taken together the

professional services exclusion, together with the business

exclusions, completely preclude coverage of the counterclaims

against Windham.

Windham’s motion (Document no. 45) is denied and USF&G’s

motion (Document no. 42) is granted.

SO ORDERED.

____________________________________

James R. Muirhead

United States Magistrate Judge

Date: September 29, 2008

cc: Daniel P. Luker

 Steven A. Solomon

 John Wolkowski

 Jeffrey T. Edwards

 Roy T. Pierce

 Joshua E. Menard

 Russell F. Hilliard

 Christopher R. Blazajewski

 Eric B. Hermanson

Case 1:06-cv-00367-JM Document 88 Filed 09/29/08 Page 11 of 12
12

Case 1:06-cv-00367-JM Document 88 Filed 09/29/08 Page 12 of 12