Opinion ID: 175543
Heading Depth: 1
Heading Rank: 3

Heading: The Insurance Dispute

Text: Appellee Amerisure insured Microplastics from July 2003 to July 2007 under a series of commercial general liability policies (the CGL policies). The CGL policies required Amerisure to pay Microplastics if it should ever be legally obligated to pay damages to any third party as a result of property damage or personal injury caused by an occurrence. The CGL policies also required Amerisure to defend Microplastics against any lawsuit seeking such covered damages. The CGL policies defined property damage as: 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. Amerisure was first notified of the Valeo counterclaim on March 1, 2007 by Microplastics' insurance broker. On April 13, 2007, Amerisure sent a letter to Microplastics with the heading Reservation of Rights. Amerisure acknowledged receipt of the Valeo counterclaim and advised that it was unable to provide [Microplastics] with a defense until we have completed our investigation. The letter cited the relevant coverage provisions and stated that there appears to be a question as to whether or not this incident is a covered claim under the general liability policies issued to Microplastics, Inc. It does not appear that there has been any `property damage' caused by an `occurrence.' In a June 21, 2007 letter, Amerisure informed Microplastics that it was declining coverage and would not defend Microplastics against the Valeo counterclaim. Amerisure then filed this action on July 9, 2007, seeking a declaration that it had no duty to defend or indemnify Microplastics with respect to the Valeo counterclaim. Without the aid of Amerisure's defense, Microplastics sought to settle the pending claims. On September 12, 2007, Microplastics and Valeo entered into a settlement agreement to resolve all claims between them. No cash changed hands under the agreement, but Microplastics issued a credit memo for the amount that Microplastics had billed Valeo for its supply of the allegedly defective supply parts, more than $500,000. The record does not reveal that Microplastics or Amerisure gained any new knowledge of the nature of the customer costs referenced in Valeo's counterclaim. Meanwhile, the present action between Amerisure and Microplastics proceeded. The parties filed cross-motions for partial summary judgment on whether Amerisure had a duty to defend. The district court granted summary judgment for Amerisure, finding that the Valeo counterclaim did not trigger a duty to defend because it did not allege property damage or bodily injury under the CGL policies. Microplastics appealed. [2]