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Essex Ins. Co. v. BloomSouth Flooring Corp.

United States Court of Appeals for the First Circuit

April 16, 2009, Decided

No. 06-2750

Opinion

 [*400]  HOWARD, Circuit Judge. This appeal involves a coverage dispute between Essex Insurance Company and its insured, BloomSouth Flooring Corporation.  [*401]  Essex brought a declaratory judgment action claiming that, pursuant to "business risk exclusions" in its policies, it had neither a duty to defend nor a duty to indemnify BloomSouth in connection with an underlying state court action against BloomSouth. The magistrate judge, presiding by mutual consent, see 28 U.S.C. § 636(c), granted Essex's motion for summary judgment, finding that the pertinent exclusions relieved Essex of both its duties to defend and to indemnify. On appeal, BloomSouth targets only the duty to defend.

Because the exclusions, as applied to the underlying complaint, do not relieve Essex of its duty to defend, we reverse the district court's summary judgment  [**2] ruling in pertinent part.

I. Background

We recite the facts in the light most favorable to BloomSouth, the party against whom summary judgment was granted. See Millipore Corp. v. Travelers Indem. Co., 115 F.3d 21, 25 (1st Cir. 2006).

In 2000, Boston Financial Data Services ("BFDS") retained Suffolk Construction Corporation as general contractor for a tenant improvement project at its offices in Massachusetts. In undertaking the project, Suffolk subcontracted with BloomSouth for the installation of carpet tile and related materials throughout the building. The subcontract required BloomSouth to perform minor preparation work before laying the carpet. This work included testing and cleaning the concrete floor. BloomSouth itself subcontracted out the installation to two other companies. One was charged with supplying the carpet and the other with installing it.

During all material times BloomSouth had commercial general liability policies with Essex. The general contractor Suffolk was an additional insured on the Essex policies that were issued to BloomSouth. BloomSouth's subcontract also required it to defend and indemnify Suffolk for claims against Suffolk arising out of BloomSouth's work.  [**3] Coverage under a first policy began on July 15, 2000 and extended through July 15, 2001; coverage under a second policy began on July 15, 2001 and extended through July 15, 2002.

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562 F.3d 399 *; 2009 U.S. App. LEXIS 7896 **

ESSEX INSURANCE COMPANY, Plaintiff, Appellee, v. BLOOMSOUTH FLOORING CORPORATION, Defendant, Appellant.

Prior History:  [**1] APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS. Hon. Leo T. Sorokin, U.S. Magistrate Judge.

Disposition:  The district court's grant of summary judgment to the insurer was reversed, and the court remanded for proceedings not inconsistent with its opinion.

CORE TERMS

odor, insured, carpet, coverage, duty to defend, concrete floor, physical injury, installation, allegations, permeated, bead-blasting, replacement, property damage, policies, impaired, restored, removal, summary judgment, indemnify, relieve, business risk, real property, cases, reasonably susceptible, tangible property, repair, air, physical loss, subcontractor, subfloor

Civil Procedure, Appeals, Standards of Review, De Novo Review, Summary Judgment Review, Standards of Review, Insurance Law, Claim, Contract & Practice Issues, Policy Interpretation, Question of Law, Judgments, Summary Judgment, Evidentiary Considerations, General Overview, Burdens of Proof, Liability & Performance Standards, Good Faith & Fair Dealing, Duty to Defend, Indemnification, Reasonable Expectations, Reasonable Person, Evidence, Allocation, Burden Shifting, Exclusions, Preliminary Considerations, Federal & State Interrelationships, Erie Doctrine, Commercial General Liability Insurance, Coverage, Choice of Law, Business Insurance, Property Claims, Remedies, Costs & Attorney Fees, Failure to Defend