Court Opinion

ID: 9672246
Source: CourtListenerOpinion
Date Created: 2023-08-24 03:51:27.302743+00
Date Added: 2024-06-11T11:18:32.911447
License: Public Domain

HANSON, J.,
(dissenting). I am unable to concur.
Although the majority may have arrived at an equitable result it is not supported by any evidence or sustained by any authority. This is not an equitable proceeding and there are numerous recent well considered opinions from other jurisdic*220tions construing identical contractual provisions to similar factual situations and each would deny coverage of plaintiff's claim.
It is evident from the coverage and exclusionary clauses of the policy that it was intended to protect the named insured, against liability for property damaged other than the insured's own goods and products. In the present case the insured's Glazex coated blocks were used in certain exterior wall areas of the Douglas School building. After installation some of the paint on the blocks faded or became mottled in appearance. The defect was confined solely to the painted surface of the blocks. It was corrected by the application of another paint coating called Ev-Rock. None of the original blocks were removed or replaced and the condition complained of was rectified to the apparent satisfaction of the U. S. Government's architects by the application of the Ev-Rock paint to the Glazex block area. There is no> evidence the school building was otherwise affected, damaged, injured or reduced in value by reason of the temporarily discolored condition of the blocks. In this respect the trial court found:
"The pertinent claim made by the said School District was limited solely to the discoloration of the said Glazex Blocks and did not include, nor was claim made for, structural damage or diminution in value, or other injury or damage to or of the involved building or property other than the said block itself. The condition complained of was fully and satisfactorily remedied and corrected by a process and work applied to and performed upon, and solely upon, the Plaintiff's product, namely, the Glazex Blocks. No damage, injury, or diminution in value was occasioned to any property other than the said Glazex Blocks."
Under the circumstances the cost of applying Ev-Rock coating was excluded from coverage as the claim arose out of, and was confined to, an injury of the insured's own product. This is the consensus of all cases on the subject. In Hauenstein v. Saint Paul-Mercury Indem. Co., 1954, 242 Minn. 354, 65 N.W.2d 122, the in*221suxed plaintiffs were distributors of a new type of acoustical plaster. When applied to a hospital it shrunk, cracked, and had to be removed and replaced. In seeking recovery plaintiffs contended that after the plaster was applied it ceased to be goods or products and by the law of accession became an integral part of the realty. The Minnesota court rejected this theory and said the exclusionary clause was "applicable to plaster as a product handled by the plaintiffs without any limitation as to its changed condition by its regular and ordinary use." Nevertheless, apparently because the plaster had to be removed the court concluded the loss was covered and the measure of damages was "the diminution in the market value of the building, or the cost of removing the defective plaster and restoring the building to its former condition plus any loss from deprival of use, whichever is the lesser." The Hauenstein case was followed by the California court in Geddes & Smith, Inc. v. Saint Paul-Mercury Indem. Co., 1959, 51 Cal.2d 558, 334 P.2d 881, which involved 760 defective aluminum doors, doorjambs, and attached hardware which had to be removed and replaced by the insured building contractor. The court allowed recovery for the cost of removing the doors and loss of use of the homes. Other costs of handling the defective doors, their replacement and loss of profits and goodwill were not allowed. The Hauenstein case was likewise cited and followed in Bundy Tubing Company v. Royal Indemnity Company, 1962, 298 F.2d 151, wherein defective steel tubing had been installed in the concrete floors of basementless houses to conduct hot water for radiant heating. The insurer conceded it was liable for damage to household furnishings covered by the leakage of water from the defective tubing. However, the principal damage was for the removal and replacement of concrete flooring in which the tubing was embedded. The court held the value of the defective tubing or the cost of new tubing could not be included as part of the damage, but the cost of removing defective tubing and the cost of installing new tubing was recoverable. A similar result was reached in the case of the Pittsburgh Plate Glass Co. v. Fidelity & Cas. Co. of N. Y., 1960, 3 Cir., 281 F.2d 538, in which the insured plaintiff was a manufacturer of paint used to paint the louvers and other steel parts of outside window jalousies. After installation on *222homes the paint peeled and flaked off in patches. The bare surfaces rusted and deteriorated. As a result the jalousies had to' be removed, returned to the plant, soaked in a chemical bath,, brushed, repaired, rewelded, treated with a rust inhibitor, repainted and reinstalled.
Recovery was not allowed by the California court in Volf v. Ocean Accident and Guarantee Corporation, 1958, 50 Cal.2d 373, 325 P.2d 987, where the loss was occasioned by cracks occurring in the exterior stucco of a new house. The condition was remedied by applying a new stucco coat over the old. The Hauenstein case was distinguished on the grounds that it was not necessary to remove the defective stucco and there was no evidence of any injury to the house itself by reason of the original, defective stucco coat. The same result was reached in Liberty Building Co. v. Royal Indemnity Company, 1959, 177 Cal.App.2d 783, 2 Cal.Rptr. 329, 346 P.2d 444, where the plaintiff contractor constructed and sold a large number of dwellings. After completion the outer stucco covering became cracked, discolored, and flaked away. The defects were caused by an improper mixture which allowed water absorption into the stucco. Because the stucco was alleged to have been damaged by an internal defect rather than an external cause it was the " 'goods or product * * * or work completed * * * out Qf which the accident' arose. Hence there was no liability under the policy." The court said the exclusionary clause in question "means that if the insured becomes liable to replace or repair any 'goods or products' * * * after the same has caused an accident because of a defective condition, the cost of such replacement or repair is not recoverable under the policy. However, if the accident also caused damage to some other property or caused personal injury, the insúred's liability for such damage or injury becomes a liability of the insurer under the policy, and is not excluded." Likewise, coverage was denied in Kendall Plumbing, Inc. v. St. Paul Mercury Insurance Company, 1962, 189 Kan. 528, 370 P. 2d 396, for damages to a refrigeration unit installed by the insured and damaged by reason of a defective starter which also had been installed by the insured.
*223According to such authority, plaintiff's claim should be denied coverage as it was not necessary to remove or replace any block to correct the discolorization and there is no evidence of injury to any other property or to any other part of the school building, or of any diminution in its value, or of any loss of its use. The damages were confined and corrective measures applied to the insured's own product and nothing else.
The court concludes that plaintiff's loss is covered by the policy. The opinion, however, fails to indicate what the measure of damages shall be on retrial. This question will be a matter of concern to the trial court as plaintiff's claim is for the cost of repairing his own product. Such claim is clearly and unequivocally excluded from coverage by the plain and unambiguous language of the exclusionary clause. That claim is the one settled by the insured. Having no interest in the school building it would seem that plaintiff has no standing to ask for or receive damages for its diminution in value if any could possibly be shown on retrial.