Opinion ID: 466346
Heading Depth: 2
Heading Rank: 2

Heading: The Sistership Exclusion

Text: 24 The district court concluded that policy exclusion (c)(iii), a standard exclusion known as the sistership exclusion, applied to this case. This provision excludes coverage for: 25 damage for the withdrawal, inspection, repair, replacement, or loss of use of the Named Insured's products ... or of any property of which such products or work form a part, if such products, work or property are withdrawn from the market or from use because of any known or suspected deficiency therein. 26 The district court correctly noted that the sistership exclusion does not apply to a product that has failed, but only to a sister product withdrawn after failure of the first product. See, e.g., Bigelow-Liptak Corp. v. Continental Insurance Co., 417 F.Supp. 1276, 1281-82 (E.D.Maine 1976); Honeycomb, 567 F.Supp at 1407 (and cases cited therein); R. Long, Law of Liability Insurance at Sec. 11.11 (1979). Thus, the court concluded, any covered damages that arose from windows that actually failed would not be excluded by this provision, but any damages attributable to windows that did not fail, but were rather removed by Pei, would be excluded. American Home, 588 F.Supp. at 771. The court then found that the only covered damage claim--that of loss of use--was all attributable to windows that actually failed. 27 We have some doubts as to whether the sistership exclusion applies to our case. The injury for which Hancock brought suit--consequential damages arising from the breakage and replacement of the windows--could be seen as effectively occurring when the first windows broke and Pei concluded that the windows presented a clear and present danger to the public. Withdrawal of the remaining windows would then not be a curative measure taken to prevent further injury, but rather would be a continuation of the injury that had already occurred. All of the windows would then be considered as one product and no sister products would be involved at all. 28 We are not required, however, to decide definitively whether the sistership exclusion is applicable to our case. The district court assumed, for purposes of summary judgment, that all of the loss of use claim was attributable to the windows that failed and thus no part of the loss of use claim was excluded by the sistership exclusion. We find this assumption to be perfectly valid, particularly because the view most favorable to LOF is to be adopted in considering summary judgment for American Home. Because of its interpretation of the American Home policy, the district court had no need to analyze Hancock's other claims apart from that of loss of use. Nevertheless, the same reasoning of the district court can apply to the other claims. Thus, for purposes of summary judgment, we assume that the remaining Hancock claims are also attributable to the windows that actually failed. Hence, even if the sistership exclusion should apply to this case, we assume that it does not exclude coverage for any of the claimed damages.