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Heldor Industries Inc. v. Atlantic Mutual Insurance Co.12/13/1988
[229 NJSuper Page 392] Plaintiff Heldor Industries, Inc. (Heldor), appeals from orders for summary judgment dismissing its declaratory judgment action against defendants Atlantic Mutual Insurance Company (Atlantic), Lincoln Insurance Company (Lincoln), and Puritan Insurance Company (Puritan). In its suit, Heldor demanded that defendants provide coverage under their general liability policies issued to Heldor for a claim made against Heldor by Piper Pools, Inc. (Piper). In granting summary judgment, the motion judge concluded that Piper's claim against Heldor fell within the business risk exclusion of the policy. On appeal Heldor contends that coverage exists because its product caused damage to property of third parties. It also argues that defendants had a duty to defend against Piper's claim because Piper alleged a cause of action in its complaint against Heldor for which coverage is afforded. We now affirm.
The policies issued by defendants indemnified Heldor against loss from the liability imposed by law for bodily injury and property damages caused by an "occurrence." "Occurrence" is defined as:
Each policy contained the following exclusions:
(m) to loss of use of tangible property which has not been physically injured or destroyed resulting from
(1) a delay in or lack of performance by or on behalf of the named insured of any contract or agreement, or
(2) the failure of the named insured's products or work performed by or on behalf of the named insured to meet the level of performance, quality, fitness or durability warranted or represented by the named insured;
(n) to property damage to the named insured's products arising out of such products or any part of such products;
(o) to property damage to work performed by or on behalf of the named insured arising out of the work or any portion thereof, or out of materials, parts or equipment furnished in connection therewith;
(p) to damages claimed for the withdrawal, inspection, repair, replacement, or loss of use of the named insured's products or work completed by or for the named insured or of any property of which such products or work form a part, if such products, work or property are withdrawn from the market or from use because of any known or suspected defect or deficiency therein[.]
Heldor, a manufacturer of swimming pool components, filed an action against Piper on a past due book account for products Heldor had sold to Piper. Piper counterclaimed, alleging that Heldor breached its contract and express and implied warranties by selling and delivering defective "coping" to Piper, a product used to hold pool liners to the walls of swimming pools, and to provide a safe, non-slip surface surrounding the edge of the pool. Piper alleged that it spent substantial monies in repairing swimming pools it had sold to homeowners and that its reputation and good will were damaged, resulting in substantial loss of profits.
After defendants refused to provide a defense to Heldor in the Piper litigation, it filed the present declaratory judgment
action against defendants demanding a defense and coverage. Thereafter, Piper's damage claim in the underlying action against Heldor for the cost of repairing the swimming pools was dismissed. As a result, Piper and Heldor entered into an agreement under which Heldor agreed to pursue the present declaratory judgment action, and to pay Piper $250,000 as settlement for Piper's remaining claims if defendants were ordered to provide Heldor coverage.
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