 |
 |
to fill out a simple form to connect to Personal Injury Lawyers in your area.
|
|
|
|
|
Schaefer/Karpf Productions v. CNA Insurance Companies6/18/1998
's Christmas program, caused "physical injury" within the meaning of the CGL property damage coverage.
For the reasons explained below, we conclude incorporation of a harmful or defective product into the product of another can cause "physical injury " to the recipient product within the meaning of the standard CGL policy. CNA's argument fails to distinguish between a physical injury and the measure of damages for that injury.
The first case to hold incorporating a defective or harmful product into another product results in covered property damage to the recipient product was Hauenstein v. Saint Paul-Mercury Indem. Co. (Minn. 1954) 65 N.W.2d 122.
In Hauenstein, plaintiff, the insured, sold its customers a new type of plaster for use on walls and ceilings. Upon application, the plaster shrunk and cracked and had to be removed. The customers sued plaintiff for damages and plaintiff turned to its insurance company for indemnity under its standard CGL policy. The insurance company refused to assume any responsibility for the claims and plaintiff commenced a declaratory relief action against the company to determine coverage.
Plaintiff's CGL policy provided coverage for "injury to or destruction of property" but did not define those terms. It excluded coverage for injury to "goods or products manufactured, sold, handled or distributed by the insured." (65 N.W.2d at p. 124.) The court held this exclusionary clause precluded recovery under the policy for damage to the plaster itself. But this did not end the case. The court went on to inquire whether the buildings to which the defective plaster was applied were "injured and damaged by its application[.]" (65 N.W.2d at p. 125.) The court concluded the buildings were damaged within the meaning of the policy:
"No one can reasonably contend that the application of a useless plaster, which has to be removed before the walls can be properly replastered, does not lower the market value of a building. Although injury to the walls and ceilings can be rectified by removal of the defective plaster, nevertheless, the presence of the defective plaster on the walls and ceilings reduced the value of the building and constituted property damage. The measure of the damages is 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 lesser." (Ibid.; fn. omitted; italics added.) As the highlighted portion of the Hauenstein opinion demonstrates,
the court held the plaintiff suffered two distinct injuries as a result of applying the defective plaster: injury to the walls and ceilings to which the plaster was applied and reduced value of the building so long as the defective plaster remained on it. The court then went on to hold one measure of the damages resulting from these injuries is the diminution in the market value of the building. In other words, according to the Hauenstein court, diminution in the market value of the building was both property damage and the measure of property damage.
This unnecessary blurring of the distinction between the type of injury covered and the measure of damages for that injury has caused some courts, including the court that decided Hauenstein, to back away from the position incorporating a defective product into the product of another causes physical injury to the recipient product. (Federated Mut. Ins. Co. v. Concrete Units (1985) 363 N.W.2d 751, 756-757.) In California, however, where the distinction between an injury and the measure of damages for the injury has always been recognized, incorporation-related injuries continue
Page 1 2 3 4 5 6 7 8 9 10 11 12 California Personal Injury Attorneys
Personal Injury Lawyers
|
| |
to fill out a simple form to connect to Personal Injury Lawyers in your area.
|
|