Opinion ID: 1488007
Heading Depth: 1
Heading Rank: 9

Heading: Naquin

Text: Naquin, however, presents a closer question. The original Naquin complaint, filed May 26, 2000 in Louisiana state court, potentially stated a claim for bodily injury and sought damages because of the alleged injuries. The putative class consisted of all owners of cellular phones manufactured and/or distributed by any of the defendants. The complaint alleged that the phones expose[d] plaintiffs to risk of damage and injury to their health and well being and potentially very significant long term health problems due to transmissions which direct[ed] potentially damaging transmission waves directly into the user's ear and brain. The complaint asserted that users had to purchase headsets or risk extreme adverse long term health care consequences including, but not limited to, anticipated anxiety, fear of brain damage and/or cancer. Plaintiffs asserted product liability, breach of warranty, misrepresentation, unfair trade practice, and redhibition [15] claims, and they sought, among other things, damages in an amount sufficient to purchase a headset, pay for the costs of medical monitoring, and compensate users for emotional distress. After the case was transferred to the MDL, the Naquin plaintiffs amended their complaint, deleting all claims under the Louisiana Unfair Trade Practices Laws, all claims for medical monitoring, all claims for emotional distress, pain and suffering, and ... all claims for any individualized physical injury. The complaint, however, retained a product liability claim and still sought funds based on the allegations therein. Moreover, the complaint still complained of bodily injury, with allegations of nerve damage, cellular damage, cellular dysfunction and/or other injury to humans, including interference with calcium and ion distributions, melatonin production, neurological effects, DNA single and double strand breaks and chromosome damage, enzyme activities, cell stress and gene transcription, and interference with function of the blood brain barrier. Although the plaintiffs disclaimed recovery for individualized physical injury, the allegations included claims of classwide harm, including claims that the WHHPs emit unseen RFR which enters the users' brain through the location of the antenna proximate to the users' bones, skull, head and brain exposing plaintiffs and all users to... injury to their health and well-being and unexpected changes in their physiology. Under our duty-to-defend law, because the amended complaint potentially stated a claim seeking damages because of bodily injury, the insurers still had a duty to defend the case. The second amended complaint, however, changed that. While many of the allegations remained the same, the plaintiffs amended paragraph VI to read: All of the allegations of plaintiffs original Petition and Amended Complaint make claim solely in redhibition, and breach of warranty and under the Magnuson-Moss Warranty Improvement Act; 15 U.S.C. 35 et seq. All allegations which set forth or identify lack of warnings and other wrongs describe factual conduct but do not set forth claims. Plaintiffs do not make a products liability claim. The legal claims in the First Supplemental and Amending Complaint are solely those based upon redhibition, breach of warranty and the Magnuson-Moss Act. We must decide whether this disclaimer precludes a duty to defend here. By deleting the product liability claims and asserting only Magnuson-Moss claims and Louisiana redhibition and breach of warranty claims  none of which permit recovery of personal-injury damages [16]  and by clarifying that the remaining allegations summarize the facts but do not set forth claims, the second amended complaint unambiguously excludes coverage under the policies. 22 HOLMES' APPLEMAN ON INSURANCE 2d § 136.4(B). While the complaint is not a model of precision ( e.g., it asserts claims for fraud by concealment and civil conspiracy despite this initial disclaimer), plaintiffs have clearly alleged that their claims sound only in redhibition, breach of warranty, and under the Magnuson-Moss Act. We recognize that damages because of bodily injury is susceptible to a broad definition. At least one court of appeals has concluded that the phrase is ambiguous: One interpretation suggests that the insured is entitled to recover any damages that arise because of bodily injury; another suggests that the insured is only entitled to recover damages that are derived from the bodily injury.  State Farm Mut. Auto. Ins. Co. v. Shaffer, 888 S.W.2d 146, 148-49 (Tex.App.-Houston [1st Dist.] 1994, writ denied). We recently held that prejudgment interest was recoverable under an insurance policy requiring the insurer to pay all sums the insured was legally entitled to recover because of bodily injury or property damage. Brainard v. Trinity Universal Ins. Co., 216 S.W.3d 809, 814 (Tex.2006). We rejected the insurer's argument that prejudgment interest was compensation for lost use of money, not damages from bodily injury, and noted that such a rigid reading ... would entail splitting hairs even among purely compensatory damages, such as those for mental anguish and loss of society. Id. Instead, we noted that the phrase merely underscored the fact that the insurance was compensatory, and we concluded that while it is true that prejudgment interest accrues over time because of lost use of money, it is equally accurate to say that it constitutes additional compensatory damages for the insured's bodily injury and property damage. Id. But even assuming that the Naquin plaintiffs' redhibition, Magnuson-Moss, and warranty claims seek damages because of bodily injury, the policies exclude coverage for these claims because the only damages sought are economic ones relating to the allegedly defective product. The policies' business risk exclusions, [17] while inapplicable to personal injury claims, preclude coverage for economic loss claims based on product defects: Coverage under a commercial general liability insurance policy is for tort liability for physical damages to others and not for contractual liability of the insured for economic loss because the product or work is not that for which the damaged person bargained. Pursuant to this understanding, certain exclusions have been included within the standard commercial general liability policy for the express purpose of excluding coverage for risks relating to the repair or replacement of the insured's faulty work or products, or defects in the insured's work or product itself. These business risk exclusions, as they are commonly called, are intended to provide coverage for tort liability, not for the contractual liability of the insured for loss which takes place due to the fact that the product or completed work was not that for which the other party had bargained. 9A COUCH ON INSURANCE § 129:16; see also T.C. Bateson Constr. Co. v. Lumbermens Mut. Cas. Co., 784 S.W.2d 692, 694-95 (Tex.App.-Houston [14th Dist.] 1989, writ denied) (The purpose of comprehensive liability insurance coverage is to provide protection to the insured for personal injury or for property damage caused by the completed product but not for the replacement and repair of that product.), La Marche v. Shelby Mut. Ins. Co., 390 So.2d 325, 326 (Fla.1980) (noting that [t]he majority view holds that the purpose of this comprehensive liability insurance coverage is to provide protection for personal injury or for property damage caused by the completed product, but not for the replacement and repair of that product); W. Cas. & Sur. Co. v. Brochu, 105 Ill.2d 486, 86 Ill.Dec. 493, 475 N.E.2d 872, 878 (1985) (noting that `the policy in question does not cover an accident of faulty workmanship but rather faulty workmanship which causes an accident') (quoting Weedo v. Stone-E-Brick, Inc., 81 N.J. 233, 405 A.2d 788, 796 (1979)). Here, the disclaimer makes clear that the only injury complained of is a warranty-based economic loss asserted under Louisiana and federal law, and those claims are excluded from coverage. Thus, the duty to defend Naquin ended when the plaintiffs filed the second amended complaint. [18] 22 HOLMES' APPLEMAN ON INSURANCE § 136.2(D) ([W]hen there are covered and non-covered claims in the same lawsuit, the insurer is obligated to provide a defense to the entire suit, at least until it can limit the suit to those claims outside of the policy coverage.). [19]