Full opinion text
MEMORANDUM OPINION AND ORDER REGARDING PARTIES’ CROSS-MOTIONS FOR PARTIAL SUMMARY JUDGMENT AND APPEAL OF MAGISTRATE’S ORDER DENYING MOTION FOR A PARTIAL STAY BENNETT, Chief Judge. TABLE OF CONTENTS I. INTRODUCTION. ZD cr A. Procedural Background. ZD oí B. Factual Background. ZD cr II. LEGAL ANALYSIS. *D ai CR A. Motion to Strike. ZD üi CR B. Standards For Summary Judgment .958 C. General Insurance Principles.959 1. Interpretation of policy language.959 2. An Insurer’s general duty to defend.962 D. Coverage Under Travelers’s Insurance Policies.963 1. The CGL coverage part of the primary policy .963 a. Claims for covered property damage.963 b. Exclusions to coverage.966 2. The Umbrella policy.967 E. Travelers’s Duty To Defend Wells.967 1. An Insurer’s general duty to defend.967 2. Travelers’s duty to defend here.968 F. Wells’s Bad Faith Claim.968 G. Proper Defendants.973 II. Appeal Of Magistrate’s Order Denying Motion For Partial Stay.975 III.CONCLUSION.977 I. INTRODUCTION A. Procedural Background On August 7, 2001, plaintiff Wells Dairy, Ine. (“Wells”) filed this lawsuit in the Iowa District Court In And For Plymouth County against several of its insurers, Travelers Indemnity Company of Illinois, Travelers Insurance Company, and Travelers Property Casualty Corporation (collectively “Travelers” unless otherwise indicated). Travelers removed this case to this court on September 13, 2001, pursuant to 28 U.S.C. § 1441. On January 17, 2002, Wells filed an amended complaint. On September 5, 2002, Wells filed a sécond amended complaint. In its second amended complaint, Wells asserts claims for breach of contract, declaratory judgment, promissory estoppel and bad faith against Travelers. Specifically, Wells asserts that Travelers has breached a commercial general liability policy, a commercial excess insurance policy, and a deluxe income business policy by failing to defend or agree to indemnify Wells against claims made by two customers, Pillsbury Company (“Pillsbury”) and Eskimo Pie Corporation (“Eskimo Pie”), resulting from an explosion and fire that occurred at Wells’s South Ice Cream Plant in Le Mars, Iowa, on March 27, 1999. Wells also seeks declarations that Travelers has an obligation under the policies to defend Wells against lawsuits brought by Pillsbury and Eskimo Pie. Wells further asserts a claim of promissory estoppel based on Travelers’s representations that certain costs would be covered as “extra expenses” under the Business Income Policy. Finally, Wells contends that Travelers acted in bad faith in failing to afford Wells any defense in the litigation with Eskimo Pie and Pillsbury. On July 17, 2002, Travelers filed a motion for partial summary judgment. In its motion, Travelers moves for summary judgment on the claims alleged in Counts I, II, IV, V, and VII of the amended complaint. On August 30, 2002, Wells filed its motion to strike the affidavit of Richard Jensen and cross-motion for partial summary judgment. In its motion for partial summary judgment, Wells seeks summary judgment on its claims alleged in Counts I, II, and part of Counts IV, V, and VIII of the second amended complaint on the ground that Travelers is obligated as a matter of law to defend Wells in the underlying lawsuits. The parties subsequently filed their respective resistances. O n August 30, 2002, Wells filed its Motion For A Partial Stay, requesting the court to stay discovery and adjudication of all aspects of this case other than those issues raised in the parties’ cross-motions for partial summary judgment regarding Travelers’s duty to defend. In its motion, Wells contends that an insured should not be required to litigate issues of indemnity in a declaratory judgment action with its insurer while engaged in litigation with entities asserting legal claims against it. On September 27, 2002, United States Magistrate Judge Paul A. Zoss denied Wells’s Motion For A Partial Stay, concluding that Wells had failed to establish an adequate basis for the requested stay. On October 11, 2002, Wells filed an appeal of Judge Zoss’s order denying Wells’s Motion For A Partial Stay. In the alternative, Wells filed a motion to bifurcate. Travelers filed a resistance to Wells’s appeal and alternative motion to bifurcate on October 29, 2002. Pursuant to the parties’ requests, the court held oral arguments on the parties’ respective cross-motions for summary judgment and Wells’s appeal of Judge Zoss’s denial of Wells’s Motion For A Partial Stay on January 21, 2003. At the oral arguments, plaintiff Wells was represented by Mary Rose Alexander and Adam S. Ryan of Latham & Watkins, Chicago, Illinois, and Richard H. Moeller of Beren-stein, Moore, Berenstein, Heffernan & Moeller, L.L.P., Sioux City, Iowa. Defendant Travelers was represented by Stephen G. Goldman and Gerald P. Dwyer, Jr. of Robinson & Cole, L.L.P., Hartford, Connecticut, and Jaki K. Samuelson of Whitfield & Eddy, P.L.C., Des Moines, Iowa. The parties have filed thorough and extensive briefs in support of their respective positions and the oral arguments were among the finest this court has ever heard. The court turns first to Wells’s motion to strike the affidavit of Richard Jensen. Upon resolution of that motion, the court will turn to a discussion of the undisputed facts as shown by the record, then to the standards applicable to motions for summary judgment and, then, to the legal analysis of whether either of the parties are entitled to summary judgment on any of the claims at issue in this litigation. Finally, the court will consider Wells’s appeal of Judge Zoss’s decision on Wells’s Motion For A Partial Stay, and Wells’s alternative motion to bifurcate. B. Factual Background The following facts are undisputed. Wells Dairy, Inc. is a manufacturer of dairy products and frozen deserts including ice cream. Wells is incorporated under the laws of the State of Iowa, and has its principal place of business in Le Mars, Iowa. Travelers issued a primary insurance policy (“Primary Policy”) and a commercial excess insurance policy (“Umbrella Policy”) to Wells for the period of September 15, 1998 to September 15, 2001. The Primary Policy includes a commercial general liability coverage part (“CGL coverage part”) and a first-party property damage part (“property coverage part”). The CGL coverage part, subject to its terms and conditions, provides liability coverage, for among other things, “bodily injury,” “property damage,” “advertising injury” and “personal injury.” The CGL coverage part provides coverage for “property damage” pursuant to the following clause: We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury” or “property damage” to which this insurance does not apply. Defendants’ App. at 123. Property damage is defined under the CGL coverage part 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. Defendants’ App. at 122. The CGL coverage part also contains a number of exclusions under which the insurance policy does not apply. Section I(2)(b) of the CGL coverage part excludes coverage for certain contractual liability: “Bodily injury” or “property damage” for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages: (1) Assumed in a contract or agreement that is an “insured contract,” provided the “bodily injury” or “property damage” occurs subsequent to the execution of the contract or agreement; or (2) That the insured would have in the absence of the contract or agreement. Defendants’ App. at 112. Section j of the CGL coverage part excludes, in pertinent part coverage for: “Property damage” to: (1) Property you own, rent, or occupy; (4) Personal property in the care, custody or control of the insured; Defendants’ App. at 114. Section I(m) of the CGL coverage part excludes coverage for: m. Damage to Impaired Property or Property Not Physically Injured. “Property damage” to “impaired property” or property that has not been physically injured arising out of: (1) A defect, deficiency, inadequacy or dangerous condition in “your product” or “your work”; or (2) A delay or failure by you or anyone acting on your behalf to perform a contract or agreement in accordance with its terms. This exclusion does not apply to the loss of use of other property arising out of sudden and accidental physical injury to “your product” or “your work” after it has been put to its intended use. Defendants’ App. at 114. The umbrella policy, like the CGL coverage part, provides liability coverage for, among other things, “bodily injury,” “property damage,” “advertising injury” and “personal injury.” Defendants’s App. at 157. The Umbrella Policy provides coverage for property damage pursuant to the following insuring clause: We will pay on behalf of the insured the “ultimate net loss” in excess of the “applicable underlying limit” which the insured becomes legally obligated to pay as damages because of “bodily injury,” “property damage,” “personal injury” or “advertising injury” to which this insurance applies. Defendants’ App. at 157. The umbrella policy defines “property damage” as follows: “Property damage” means physical injury to tangible property, including all resulting loss of use of that property. Defendants’ App. at 165. Like the CGL coverage part, the umbrella policy contains a number of exclusions under which the insurance policy does not apply. Section I(m) of the umbrella policy excludes coverage for: m. “Property damage” to “impaired property” or property that has not been physically injured, arising out of: (1) A defect, deficiency, inadequacy or dangerous condition in “your product” or “your work”; or (2) A delay or failure by you or anyone acting on your behalf to perform a contract or agreement in accordance with its terms. This exclusion does not apply to the loss of use of other property arising out of sudden and accidental physical injury to “your product” or “your work” after it has been put to its intended use. Defendants’ App. at 160. The umbrella policy defines “impaired property” as follows: “Impaired property” means tangible property other than “your product” or “your work,” that cannot be used or is less useful because: a. It incorporates “your product” or “your work” that is known or thought to be defective, deficient, inadequate or dangerous; or b. You have failed to fulfill the terms of a contract or agreement... Defendants’ App. at 165. An endorsement to the umbrella policy entitled “EXCLUSION-REAL AND/OR PERSONAL PROPERTY” provides that: .. .this insurance does not apply to “property damage” to: 1.property you own, rent, or occupy; 2. property loaned to you; or 3. property in your care, custody, or control. Parts 2. and 3. above do not apply to liability assumed under a sidetrack agreement. Defendants’ App. at 167. On March 27, 1999, an explosion and resulting fire damaged Wells’s South Ice Cream Plant in Le Mars, Iowa. At the time of the explosion and fire, Wells was under contract to manufacture and package ice cream products for Eskimo Pie and Pillsbury, among others. Both Eskimo Pie and Pillsbury claimed damages resulting from the explosion and fire at Wells’s plant. Eskimo Pie and Pillsbury each subsequently brought suit against Wells in the United States District Court for the Northern District of Iowa (“the underlying lawsuits”). On June 5, 2000, the first of the underlying lawsuits was filed, CGU Ins. Co. v. Wells Dairy, Inc., C00-4056-MWB (N.D.Iowa), in which CGU Insurance Company (“CGU”) sued Wells as the subrogee of Eskimo Pie (“the Eskimo Pie Lawsuit”). The Eskimo Pie Lawsuit complaint alleges in part that on or before March 27, 1999, Eskimo Pie delivered to Wells “various ingredients, packaging, materials and special components to be used by [Wells] in the manufacture of products for Eskimo Pie.” Defendants’ App. at 28. Count I of the complaint in the Eskimo Pie Lawsuit alleges that Wells breached its obligations under its ice cream manufacturing contract with Eskimo Pie on the following grounds: (a) Defendant failed to have and/or maintain adequate machinery and equipment for the production of the product; (b) Defendant failed to comply with the warranties and guarantees made in the Contract; (c) Defendant failed to operate and maintain a modern manufacturing facility; (d) Defendant failed to assume full responsibility and liability for the losses; (e) Defendant failed to reimburse Eskimo Pie for the losses sustained and claimed by Plaintiff. Defendants’ App. at 29. In Count II, it is alleged that Wells was negligent, careless or reckless in the following ways: (a) failing to purchase, design or specify an appropriate freezer system; (b) failing to properly inspect, service, and/or maintain the freezer system; (c) failing to act when it knew or should have known of an incipient malfunction of the freezer system; (d) failing to act when it knew or should have known of an ammonia hammer within the freezer system; (e) improperly running a hot gas defrost cycle of the freezer system; (f) failing to upgrade the freezer system with appropriate safeguards to prevent the danger of explosion. Defendants’ App. at 29. The Eskimo Pie Lawsuit complaint further alleges that as a result of the March 27, 1999, fire and explosion: Eskimo Pie sustained damages to ingredients, packaging, materials and special components, damages for monies expended in promotion, and damages of anticipated loss of revenues from product sales, the aforesaid damages exceeding $75,000. Defendants’ App. at 29. On October 23, 2000, CGU withdrew the Eskimo Pie Lawsuit without prejudice. On July 17, 2000, Pillsbury’s parent company filed Diago, P.L.C. v. Wells Dairy, Inc., C00-4078-MWB (N.D.Iowa), and amended the lawsuit on August 30, 2000 to substitute Pillsbury as the named plaintiff (“the Pillsbury Lawsuit”). The complaint in the Pillsbury Lawsuit sets out two causes of action, one for breach of contract and one for negligence. Count I of the complaint in the Pillsbury Lawsuit alleges that Wells breached its obligations under its ice cream manufacturing contract with Pillsbury on the following grounds: (a) Defendant failed to have the equipment, facilities and personnel necessary and suitable to manufacture the product; (b) Defendant failed to operate its facility in accordance with applicable law; (c) Defendant failed to reimburse Plaintiff for the losses sustained and claimed by Plaintiff; and; (d) Defendant failed to indemnify Plaintiff for the losses sustained and claimed by Plaintiff. Defendants’ App. at 46. In Count II, it is alleged that Wells was negligent, careless or reckless in the following ways: (a) failing to purchase, design or specify an appropriate freezer/production system; (b) failing to properly inspect, service, and/or maintain the freezer/production system; (c) failing to act when it knew or should have known of an incipient malfunction of the freezer/production system; (d) failing to act when it knew or should have known of an ammonia hammer within the freezer/production system; (e) improperly running a hot gas defrost cycle of the freezer/production system; (f) failing to upgrade the freezer/production system with appropriate safeguards to prevent the danger of explosion. Defendants’ App. at 47. The Pillsbury Lawsuit complaint alleges that Pillsbury sustained “damage to [Pillsbury’s] property and loss of revenues...” Defendants’ App. at 46. The complaint, however, does not reference or describe any alleged physical injury to Pillsbury’s tangible property or any alleged loss of use of any tangible property. Pillsbury’s reference to “damage to Plaintiffs property” in paragraph 18 of the First Amended Complaint relates entirely to $24,821.40 in expenses incurred by Pillsbury to have consultants inspect the site of the explosion and advise Pillsbury about the explosion’s impact on Pillsbury’s business. Pillsbury is seeking the recovery of these consulting expenses. Pillsbury, however, has not sustained any loss of use of its tangible property as a result of the explosion. Pillsbury is not seeking damages in the Pillsbury Action for physical injury to or loss of use of its tangible property. The Pillsbury Lawsuit complaint further alleges that: “As a result of the aforementioned explosion, Plaintiff sustained damages from loss of revenues from product sales, the aforesaid damages exceeding $75,000.00.” Defendants’ App. at 45. Wells tendered the underlying lawsuits to Travelers seeking a defense and coverage. Travelers denied coverage and any obligation to defend the underlying lawsuits. II. LEGAL ANALYSIS A. Motion to Strike Before the court can consider the merits of the parties’ summary judgment motions, the court must first consider the preliminary matter of Wells’s motion to strike the affidavit of Richard Jensen in its entirety. This is so, because the motion to strike goes to what record the court can consider in its resolution of the parties’ cross-motions for partial summary judgment. Wells seeks to strike the affidavit of Richard Jensen on three grounds: (1) that the affidavit is self-serving; (2) that the affidavit is not in the record of the Pillsbury Lawsuit; and, (3) that the affidavit merely contains legal conclusions. The court recognizes that an affidavit which fails to meet the standards of Rule 56(e) of the Federal Rules of Civil Procedure is subject to a motion to strike. Federal Rule of Civil Procedure 56(e) provides: Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein. Sworn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto or served therewith. The court may permit affidavits to be supplemented or opposed by depositions, answers to interrogatories, or further affidavits. When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party’s pleading, but the adverse party’s response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If the adverse party does not so respond, summary judgment, if appropriate, shall be entered against the adverse party. Fed. R. Civ. P. 56(e). Jensen’s affidavit was filed in support of Travelers’s motion for partial summary judgment, and as such, it must comport with the requirements of the Federal Rules of Civil Procedure. Rule 56(e) of the Federal Rules of Civil Procedure provides that an affidavit in support of a motion for summary judgment “shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein.” Fed. R. Civ. P. 56(e). Because affidavits proffered in support of a motion for summary judgment must be based upon personal knowledge, an affidavit based upon “information and belief’ is insufficient as a matter of law. Automatic Radio Mfg. Co. v. Hazeltine Research, 339 U.S. 827, 831, 70 S.Ct. 894, 94 L.Ed. 1312 (1950) (affidavit in support of motion for summary judgment made on information and belief does not comport with Rule 56(e)); accord Sellers v. M.C. Floor Crafters, Inc., 842 F.2d 639 (2d Cir.1988); Tavery v. United States, 32 F.3d 1423, 1426 n. 4 (10th Cir.1994). Furthermore, the court may consider only that evidence that would be admissible at trial. Samuels v. Doctors Hosp., Inc., 588 F.2d 485, 486 n. 2 (5th Cir.1979). Hearsay statements which cannot be categorized as a hearsay exception, conclusory allegations, legal arguments, and statements not based upon personal knowledge, may be stricken. See Sellers v. M.C. Floor Crafters, Inc., 842 F.2d 639, 643 (2d Cir.1988) (lack of personal knowledge); Kamen v. American Tel. & Tel. Co., 791 F.2d 1006, 1011 (2d Cir.1986) (conclusory allegations and legal arguments). With respect to the first argument, the court does not find that the Jensen affidavit is self-serving. Courts have recognized that “conclusory allegations and self-serving affidavits, without support in the record, do not create a triable issue of fact.” Hall v. Bodine Elec. Co., 276 F.3d 345, 354 (7th Cir.2002) (citing Patterson v. Chicago Ass’n for Retarded Citizens, 150 F.3d 719, 724 (7th Cir.1998)); accord Albiero v. City of Kankakee, 246 F.3d 927, 933 (7th Cir.2001); see Drake v. Minnesota Mining & Mfg. Co., 134 F.3d 878, 887 (7th Cir.1998); Murray v. City of Sapulpa, 45 F.3d 1417, 1422 (10th Cir.1995); Slowiak v. Land O’Lakes, Inc., 987 F.2d 1293, 1295 (7th Cir.1993). Jensen is currently employed by Pillsbury’s successor in interest and was employed by Pillsbury for eleven and one-half years as an engineering manager. Jensen’s affidavit acknowledges limits on the types of damages that Pillsbury is seeking from Wells. While such averments may be beneficial to Travelers, they do not benefit Pillsbury and therefore cannot be considered self-serving. Therefore, the court denies this portion of Wells’s motion to strike. Wells also seeks to have the Jensen affidavit stricken on the ground that it is not in the record of the underlying lawsuit between Pillsbury and Wells. This court has noted that: An insurer has a duty to defend whenever there is potential or possible liability to indemnify the insured based upon the facts appearing at the outset of the case. First Newton Nat’l Bank v. General Casualty Co. of Wis., 426 N.W.2d 618, 623 (Iowa 1988) (citing McAndrews v. Farm Bureau Mut. Ins. Co., 349 N.W.2d 117, 119 (Iowa 1984)); see also Yegge v. Integrity Mut. Ins. Co., 534 N.W.2d 100, 102 (Iowa 1995) (duty to defend whenever potential liability to indemnify based upon facts appearing at outset of the case; however, duty to defend and duty to indemnify are coextensive duties in that there is no duty to defend unless there is a duty to indemnify); Essex Ins. Co. v. Fieldhouse, Inc., 506 N.W.2d 772, 774 (Iowa 1993) (in analyzing the potential duty to defend, which is broader than the duty to indemnify, the appropriate starting point is the allegations contained in the petition); Weber v. IMT Ins. Co., 462 N.W.2d 283, 285 (Iowa 1990); Kartridg Pak Co. v. Travelers Indem. Co., 425 N.W.2d 687, 688 (Iowa Ct.App.1988) (to determine whether insurer had duty to defend, court construes the policy and looks to the pleadings and all other admissible and relevant facts in the record to determine whether coverage exists under the policy). Although courts should look first and primarily to the petition for the “facts at the outset of the case,” it is sometimes necessary to expand the scope of inquiry to any other admissible and relevant facts in the record. First Newton Nat’l Bank, 426 N.W.2d at 623 (citing McAndrews, 349 N.W.2d at 119). On the other hand, an insurer is not required to provide a defense when no facts presently available to it indicate coverage of the claim, merely because such facts might later be added by amendment or introduced as evidence at the trial. McAndrews v. Farm Bureau Mut. Ins. Co., 349 N.W.2d 117, 119 (Iowa 1984). Furthermore, “[t]he insurer has no duty to defend if after construing both the policy in question, the pleadings of the injured party and any other admissible and relevant facts in the record, it appears the claim made is not covered by the indemnity insurance contract.” Weber, 462 N.W.2d at 285 (quoting McAndrews, 349 N.W.2d at 119, in turn, citing Central Bearings Co. v. Wolverine Ins. Co., 179 N.W.2d 443, 445 (Iowa 1970)). If the totality of facts fail to disclose potential coverage, an insurer might proceed in two ways: it could initiate a declaratory judgment action against its insured, or it might elect to do nothing, running the risk, of course, that its insured will seek indemnity if coverage is established at trial. McAndrews, 349 N.W.2d at 119 (citations omitted). Coulter v. CIGNA Property & Cas. Cos., 934 F.Supp. 1101, 1113 (N.D.Iowa 1996). Thus, this court has previously recognized that relevant evidence outside of the complaint of the underlying lawsuit may be considered in determining whether a duty to defend and indemnify exists. See McAndrews v. Farm Bureau Mut. Ins. Co., 349 N.W.2d 117, 119 (Iowa 1984) (noting that “[t]he scope of inquiry, however, must sometimes be expanded beyond the petition, especially under ‘notice pleading’ petitions which often give few facts upon which to assess an insurer’s duty to defend.”); Central Bearings Co. v. Wolverine Ins. Co., 179 N.W.2d 443, 445 (Iowa 1970) (recognizing the need to supplement the facts in the pleadings saying that the insurer has no duty to defend “if after construing both the policy in question, the pleadings of the injured party and any other admissible and relevant facts in the record, it appears the claim made is not covered by the indemnity insurance contract....”). Therefore, the court denies this portion of the motion to strike. Finally, Wells seeks to strike Jensen’s affidavit on the ground that the affidavit merely contains legal conclusions. The court concludes, upon review of Jensen’s affidavit, that it contains admissible factual assertions regarding Pillsbury’s damage claims. Jensen explains in his affidavit the factual basis underlying Pillsbury’s claim for “damage to Plaintiffs property” contained in paragraph 18 of the first amended complaint in the underlying lawsuit between Pillsbury and Wells: 5. In the Pillsbury Action, Pillsbury’s reference to “damage to Plaintiffs property” in paragraph 18 of the First Amended Complaint relates entirely and solely to the $24,821.40 in expenses incurred by Pillsbury to have consultants inspect the site of the explosion and advise Pillsbury about the explosion’s impact on Pillsbury’s business. Pillsbury is seeking the recovery of these consulting expenses in the Pillsbury Action. Pillsbury, however, has not sustained any loss of use of its tangible property as a result of the explosion. Pillsbury, therefore, is not seeking damages in the Pillsbury Action for physical injury to or loss of use of its tangible property. Defendants’s App. at 173. These allegations are factual in nature and are relevant to the dispute before the court. Jensen asserts that these allegations are based on his personal knowledge. Additionally, from the materials contained in the affidavit, Jensen is competent to testify regarding the materials contained in his affidavit. Therefore, the court denies Wells’s motion to strike Jensen’s affidavit. B. Standards For Summary Judgment This court has considered in some detail the standards applicable to motions for summary judgment pursuant to Federal Rule of Civil Procedure 56 in a number of prior decisions. See, e.g., Swanson v. Van Otterloo, 993 F.Supp. 1224, 1230-31 (N.D.Iowa 1998); Dirks v. J.C. Robinson Seed Co., 980 F.Supp. 1303, 1305-07 (N.D.Iowa 1997); Laird v. Stilwill, 969 F.Supp. 1167, 1172-74 (N.D.Iowa 1997); Rural Water Sys. # 1 v. City of Sioux Ctr., 967 F.Supp. 1483, 1499-1501 (N.D.Iowa 1997), aff'd in pertinent part, 202 F.3d 1035 (8th Cir.2000), cert. denied, 531 U.S. 820, 121 S.Ct. 61, 148 L.Ed.2d 28 (2000); Tralon Corp. v. Cedara6pids, Inc., 966 F.Supp. 812, 817-18 (N.D.Iowa 1997), aff'd, 205 F.3d 1347, 2000 WL 84400 (8th Cir.2000) (Table op.); Security State Bank v. Firstar Bank Milwaukee, N.A., 965 F.Supp. 1237, 1239-40 (N.D.Iowa 1997); Lockhart v. Cedar Rapids Community Sch. Dist., 963 F.Supp. 805 (N.D.Iowa 1997). Thus, the court will not consider those standards in detail here. Suffice it to say that Rule 56 itself provides, in pertinent part, as follows: Rule 56. Summary Judgment (a) For Claimant. A party seeking to recover upon a claim, counterclaim, or cross-claim or to obtain a declaratory judgment may, at any time after the expiration of 20 days from the commencement of the action or after service of a motion for summary judgment by the adverse party, move with or without supporting affidavits for a summary judgment in the party’s favor upon all or any part thereof. (b) For Defending Party. A party against whom a claim ... is asserted ... may, at any time, move for summary judgment in the party’s favor as to all or any part thereof. (c) Motions and Proceedings Thereon.... The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a)-(c) (emphasis added). Applying these standards, the trial judge’s function at the summary judgment stage of the proceedings is not to weigh the evidence and determine the truth of the matter, but to determine whether there are genuine issues for trial. Quick v. Donaldson Co., 90 F.3d 1372, 1376-77 (8th Cir.1996); Johnson v. Enron Corp., 906 F.2d 1234, 1237 (8th Cir.1990). An issue of material fact is genuine if it has a real basis in the record. Hartnagel v. Norman, 953 F.2d 394 (8th Cir.1992) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)). As to whether a factual dispute is “material,” the Supreme Court has explained, “Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Beyerbach v. Sears, 49 F.3d 1324, 1326 (8th Cir.1995); Hartnagel, 953 F.2d at 394. If a party fails to make a sufficient showing of an essential element of a claim with respect to which that party has the burden of proof, then the opposing party is “entitled to judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); In re Temporomandibular Joint (TMJ) Implants Prod. Liab. Litig., 113 F.3d 1484, 1492 (8th Cir.1997). In reviewing the record, the court must view all the facts in the light most favorable to the nonmoving party and give that party the benefit of all reasonable inferences that can be drawn from the facts. See Matsushita Elec. Indus. Co., 475 U.S. at 587, 106 S.Ct. 1348; Quick, 90 F.3d at 1377 (same). With these standards in mind, the court turns to consideration of the parties’ cross-motions for partial summary judgment. C. General Insurance Principles 1. Interpretation of policy language Because the issue of Travelers’s duty to defend and indemnify Wells in the underlying lawsuits requires an analysis of whether the claims in those lawsuits involve “property damage,” as defined in the Travelers’s policies, the court must determine whether the definition of “property damage” is ambiguous as it is worded in the policy. The question of whether any term in an insurance policy is ambiguous must be determined by the standards for determination of the ambiguity of terms in an insurance contract. The court therefore will review those standards for determining ambiguity. The standards for determination of the ambiguity of terms in an insurance contract were summarized by the Iowa Supreme Court in Morgan v. American Family Mut. Ins. Co., 534 N.W.2d 92 (Iowa 1995): The construction and interpretation of an insurance policy is a question of law for the court to decide. Johnson v. Farm Bureau Mut. Ins. Co., 533 N.W.2d 203, 206 (Iowa 1995). The policy is to be construed as a whole, giving the words used their ordinary, not technical meaning to achieve a practical and fair interpretation. Gracey v. Heritage Mut. Ins. Co., 518 N.W.2d 372, 373 (Iowa 1994). When the terms of an insurance policy are ambiguous, we will construe them against the insurer. Id. However, the mere fact that the parties disagree on the meaning of a particular term does not establish ambiguity. Id. We will not give a strained or unnatural reading to the words of the policy to create ambiguity where there is none. West Trucking Line, Inc. v. Northland Ins. Co., 459 N.W.2d 262, 263 (Iowa 1990). Morgan, 534 N.W.2d at 99. The standards stated in Morgan are mirrored in innumerable decisions by Iowa courts. See, e.g., Iowa Comprehensive Petroleum Underground Storage Tank Fund Board v. Federated Mut. Ins. Co., 596 N.W.2d 546, 550 (Iowa 1999); LeMars Mut. Ins. Co. v. Joffer, 574 N.W.2d 303, 306-307 (Iowa 1998); AMCO Ins. Co. v. Rossman, 518 N.W.2d 333, 334 (Iowa 1994) (holding that policy terms given ordinary meaning as reasonable person would understand them, and disagreement between parties over meaning does not establish ambiguity); Farm Bureau Mut. Ins. Co. v. Sandbulte, 302 N.W.2d 104, 108 (Iowa 1981) (holding that disagreement between parties as to terms meaning does not establish ambiguity); Pappas v. Bever, 219 N.W.2d 720, 721 (Iowa 1974) (concluding that terms must be given their plain and ordinary meanings); Tom Riley Law Firm, P.C. v. Tang, 521 N.W.2d 758, 759 (Iowa Ct.App.1994) (disagreement of parties as to meaning does not establish ambiguity and terms must be given their ordinary meaning). In addition to the standards set out in Morgan, a few other points regarding determinations of ambiguities in insurance contracts need to be mentioned. Under Iowa contract law, “ ‘[a]n ambiguity exists if, after the application of pertinent rules of interpretation to the policy words, a genuine uncertainty exists as to which of two or more meanings is the proper one.’ ” Joffer, 574 N.W.2d at 306 (quoting Ferguson v. Allied Mut Ins. Co., 512 N.W.2d 296, 298 (Iowa 1994)); Jensen v. Jefferson County Mut. Ins. Ass’n, 510 N.W.2d 870, 871 (Iowa 1994) (quoting Connie’s Constr. Co., Inc. v. Fireman’s Fund Ins. Co., 227 N.W.2d 207, 210 (Iowa 1975)); Motor Club of Iowa Ins. Co. v. Iowa Mut. Ins. Co., 508 N.W.2d 634, 636 (Iowa 1993); A.Y. McDonald Indus., Inc. v. Insurance Co. of N. Am., 475 N.W.2d 607, 619 (Iowa 1991); Iowa Fuel & Minerals v. Board of Regents, 471 N.W.2d 859, 863 (Iowa 1991); Nepstad Custom Homes Co. v. Krull, 527 N.W.2d 402, 405 (Iowa Ct.App.1994); Tom Riley Law Firm, P.C., 521 N.W.2d at 759 (noting that ambiguity exists when a genuine uncertainty exists over two or more meanings of the terms of the contract). The test for ambiguity is an objective one: “Is the language fairly susceptible to two interpretations?” Joffer, 574 N.W.2d at 308 (citing A.Y. McDonald Indus., Inc., 475 N.W.2d at 619); Met-Coil Sys. Corp. v. Columbia Casualty Co., 524 N.W.2d 650, 658 (Iowa 1994) (same standard) (citing North Star Mut. Ins. Co. v. Holty, 402 N.W.2d 452, 454 (Iowa 1987)); Cincinnati Ins. Co. v. Hopkins Sporting Goods, Inc., 522 N.W.2d 837, 839 (Iowa 1994) (same standard); Iowa Fuel, 471 N.W.2d at 863; North Star Mut. Ins. Co. v. Holty, 402 N.W.2d 452, 454 (Iowa 1987) (same standard); Sandbulte, 302 N.W.2d at 108 (same standard); see also Farm & City Ins. Co. v. Anderson, 509 N.W.2d 487, 491 (Iowa 1993) (formulating the test for ambiguity in an insurance policy as “whether a reasonable person would read more than one meaning into the words,” citing Smithway Motor Xpress, Inc. v. Liberty Mut. Ins. Co., 484 N.W.2d 192, 194 (Iowa 1992)). It is a “fundamental rale” for interpreting insurance policies that when the meaning of a term in an insurance policy is ambiguous, it must be construed in the light most favorable to the insured. Cincinnati Ins. Co., 522 N.W.2d at 839; AMCO Ins. Co., 518 N.W.2d at 334 (“When the meaning of terms of an insurance policy is susceptible to two interpretations, the one favoring the insured is adopted.”); Jensen, 510 N.W.2d at 871; A.Y. McDonald Indus., Inc., 475 N.W.2d at 619; North Star Mut. Ins. Co., 402 N.W.2d at 454; Rich v. Dyna Technology, Inc., 204 N.W.2d 867, 872 (Iowa 1973) (“Where insurance contracts are ambiguous, require interpretation, or are susceptible to equally proper constructions, the court will adopt the construction most favorable to the insured.”); The Travelers v. Mays, 434 N.W.2d 133, 134 (Iowa Ct.App.1988) (quoting Rich). The reason underlying this rule is that insurance contracts are contracts of adhesion. Joffer, 574 N.W.2d at 306; Cincinnati Ins. Co., 522 N.W.2d at 839; Jensen, 510 N.W.2d at 871; A.Y. McDonald Indus., Inc., 475 N.W.2d at 619. Again, however, this rule applies only when the terms of the policy are ambiguous or unclear. Joffer, 574 N.W.2d at 307; Farm & City Ins. Co., 509 N.W.2d at 490-91. When interpreting insurance policies, a court must “ ‘seek to ascertain from its words the intent of the insurer and insured at the time the policy was sold.’ ” Jensen, 510 N.W.2d at 871 (quoting Grinnell Mut. Reinsurance Co. v. Voeltz, 431 N.W.2d 783, 785 (Iowa 1988)). 2. An Insurer’s general duty to defend Because the issue of whether Travelers had or has a duty to defend Wells is raised in Wells’s motion for partial summary judgment, the court will examine Iowa law regarding an insurer’s duty to defend one of its insureds. An insurer has a duty to defend whenever there is potential or possible liability to indemnify the insured based upon the facts appearing at the outset of the case. First Newton Nat’l Bank v. General Casualty Co. of Wis., 426 N.W.2d 618, 623 (Iowa 1988) (citing McAndrews v. Farm Bureau Mut. Ins. Co., 349 N.W.2d 117, 119 (Iowa 1984)); see also Yegge v. Integrity Mut. Ins. Co., 534 N.W.2d 100, 102 (Iowa 1995) (duty to defend whenever potential liability to indemnify based upon facts appearing at outset of the case; however, duty to defend and duty to indemnify are co-extensive duties in that there is no duty to defend unless there is a duty to indemnify); Essex Ins. Co. v. Fieldhouse, Inc., 506 N.W.2d 772, 774 (Iowa 1993) (noting that in analyzing the potential duty to defend, which is broader than the duty to indemnify, the appropriate starting point is the allegations contained in the petition); Kartridg Pak Co. v. Travelers Indem. Co., 425 N.W.2d 687, 688 (Iowa Ct.App.1988) (to determine whether insurer had duty to defend, court construes the policy and looks to the pleadings and all other admissible and relevant facts in the record to determine whether coverage exists under the policy). Although courts should look first and primarily to the petition for the “facts at the outset of the case,” it is sometimes necessary to expand the scope of inquiry to any other admissible and relevant facts in the record. First Newton Nat’l Bank, 426 N.W.2d at 623 (citing McAndrews, 349 N.W.2d at 119). On the other hand, an insurer is not required to provide a defense when no facts presently available to it indicate coverage of the claim, merely because such facts might later be added by amendment or introduced as evidence at the trial. McAndrews, 349 N.W.2d at 119. Moreover, the Iowa appellate courts have noted that “[t]he insurer has no duty to defend if after construing both the policy in question, the pleadings of the injured party and any other admissible and relevant facts in the record, it appears the claim made is not covered by the indemnity insurance contract.” Weber v. IMT Ins. Co., 462 N.W.2d 283, 285 (Iowa 1990) (quoting McAndrews, 349 N.W.2d at 119, in turn, citing Central Bearings Co. v. Wolverine Ins. Co., 179 N.W.2d 443, 445 (Iowa 1970)). If the totality of facts fail to disclose potential coverage, an insurer might proceed in two ways: it could initiate a declaratory judgment action against its insured, or it might elect to do nothing, running the risk, of course, that its insured will seek indemnity if coverage is established at trial. McAndrews, 349 N.W.2d at 119 (citations omitted). With these standards in mind, the court proceeds to an analysis of the parties’ arguments regarding the language of the Travelers’s insurance policies at issue in this litigation. D. Coverage Under Travelers’s Insurance Policies 1. The CGL coverage part of the primary policy The CGL coverage part of the Primary Policy provides that Travelers will indemnify Wells for certain liabilities that Wells incurs to third-parties for “bodily injury,” “property damage,” “advertising injury,” and “personal injury.” Only the coverage with respect to property damage is at issue before the court. Travelers contends that neither Pillsbury nor Eskimo Pie have asserted claims for property damage which would be covered under the CGL coverage part of the Primary Policy. Wells, on the other hand, asserts that the claims asserted against it in the underlying lawsuits by Pillsbury and Eskimo Pie fall within the provisions of the CGL coverage part of the Primary Policy. a. Claims for covered property damage Wells contends that Pillsbury and Eskimo Pie assert claims against it for damages for injury to or loss of use of their own personal property. Wells contends that these claims clearly fall within the scope of the CGL coverage part of the Primary Policy. Travelers responds that the only tangible property that Pillsbury or Eskimo Pie could be seeking damages for must be either damage to personal property of Pillsbury or Eskimo Pie that was in the possession of Wells at its plant, or lost Pillsbury and Eskimo Pie profits that resulted from their inability to sell the ice cream products that Wells was unable to supply as a result of the explosion at its plant. Travelers contends that the former claims are barred under the policy’s “care, custody, and control” exclusion while the latter claims are barred because they , do not involve tangible property. Wells responds that Pillsbury is claiming damages for loss of use of certain equipment at its Tulare plant, “shrink” damages for the destruction or loss of use of raw materials due to decreased production, and “qualification” damages for raw materials and components lost during “qualification” of alternative production facilities made necessary due to the explosion at Wells’s plant. Wells also contends that certain Eskimo Pie ingredient inventory was not used and became obsolete as a result of the explosion at the Wells plant. In the CGL coverage part of the Primary Policy, “property damage” is defined to include “the loss of use of tangible property that is not physically injured.” Thus, to -prevail on its claim that Travelers is obligated to defend Wells in connection with the underlying actions, Wells must establish the possibility that the injury alleged in the underlying actions constitutes “property damage” as defined in the CGL coverage part of the Primary Policy. This question turns on whether the damages allegedly suffered by Pillsbury and Eskimo Pie constitute “loss of use” damages as that term is used in the CGL coverage part of the Primary Policy. The Third Circuit Court of Appeals has observed that: The classic example of a loss of use injury is a case in which a manufacturer of construction cranes sells a defective crane which collapses in front of a restaurant, thereby impairing the restaurant’s income. If the restaurant sues the manufacturer and recovers the lost income, the manufacturer would be covered by the “loss of use” component of the CGL policy. Lucker Mfg. v. Home Ins. Co., 23 F.3d 808, 815 n. 6 (3rd Cir.1994). The Iowa Supreme Court addressed a question similar to that presented here in Yegge v. Integrity Mut. Ins. Co., 534 N.W.2d 100, 102 (Iowa 1995). In Yegge, an insurer, having provided a general business liability policy to a building contractor, was sued by homeowners in a dispute arising from construction of a residence. Yegge, 534 N.W.2d at 101. The underlying lawsuit alleged damages resulting from breach of contract, breach of express and implied warranty, negligence, and fraud against a builder. Id at 102. The homeowners sought damages for cost of labor, material, and supplies necessary to complete their residence to their satisfaction, disruption of their lives, impairment of their business, increased expenses, diminished investment value, and emotional distress. Id The insurer refused to defend its insured, the contractor, in the underlying lawsuit, determining that because it had no duty to indemnify on the homeowners’s claims, it had no duty to defend. Id at 101. The general business liability policy provided coverage for “property damage” caused by an “occurrence,” as defined by the policy. The policy defined “property damage” as: (1) 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 (2) Loss of use of tangible property that is not physically injured. Id. at 102. The Iowa Supreme Court found that the subjects of the counts in the underlying lawsuit were intangible economic losses; as such, these losses did not qualify as “property damage,” apparently under either definition provided in the policy. Id. (citing Kartridg Pak Co. v. Travelers Indem. Co., 425 N.W.2d 687, 690 (Iowa Ct.App.1988)) (“intangible damages, such as diminution in value, do not constitute physical injury to or destruction of tangible property”). The court found that the underlying lawsuit was, “from beginning to end, a claim for poor performance in constructing a residence. [The homeowners] would convert a routine business liability policy into a performance bond, clearly a risk [the insurer] did not undertake.” Id. at 103. Here, Travelers asserts that diminution in the value of Eskimo Pie’s ingredient inventory is economic loss, not property damage. There is case law from other states supporting the general premise that “[diminution in value-even to the point of worthlessness-is not the same as ‘loss of use damages.’ ” Vogel v. Russo, 236 Wis.2d 504, 613 N.W.2d 177, 184 (2000); see Smartfoods, Inc. v. Northbrook Prop. & Cas. Co., 35 Mass.App.Ct. 239, 618 N.E.2d 1365, 1368 (1993); see also Nutmeg Ins. Co. v. Pro-Line Corp., 836 F.Supp. 385, 388 (N.D.Tex.1993) (holding that loss of sales of plaintiffs product did not constitute the “loss of use of tangible property” within property damage definition); Hawaiian Ins. & Guar. Co. v. Blair, Ltd., 6 Haw.App. 447, 726 P.2d 1310, 1313 (1986) (holding that allegations showing diminution in value of plaintiffs “product-line” did not constitute the “loss of use of tangible property” within property damage definition). The court will briefly examine several of these cases. In Vogel, plaintiff homeowners sued their builder and his insurer on grounds of negligence and breach of contract. Plaintiffs claimed that faulty masonry work damaged their new home. The builder impleaded the masonry subcontractor and its insurer which had issued a standard comprehensive general liability (CGL) policy. A jury found for the plaintiffs and awarded damages under two theories: cost of repair and diminution in value. The trial court accepted the diminution in value as the measure of damages. The Wisconsin Supreme Court reversed on the ground that most of the damages were excluded by the CGL policy. Construing the CGL coverage at issue, the court held that it applied only to the “collateral property damage associated with the defective masonry work, not the defective masonry itself, the cost to repair it, or any effect on the home’s value it may have had.” Id. at 185. In Smartfoods, Inc. v. Northbrook Property & Cas. Co., 35 Mass.App.Ct. 239, 618 N.E.2d 1365, the insured sought a declaratory judgment regarding the duty of several insurers to defend it under respective insurance policies which it argued covered various tort and contract claims brought against it by former distributors of its cheese popcorn products. With respect to the distributors’ claims that they had been harmed by excess capacity in personnel and equipment, the court held that: Smartfoods attempts to fit into the “loss of use” category the distributors’ claim that they were entitled to damages because Smartfoods’ cancellation left them with surplus display racks and excess capacity in a van and five trucks bought to help handle the Smartfoods product. To cast an insufficiency of demand for the use of property to its fullest potential as a loss of use of that property is an exercise in turning language inside out. The property was there to be used. Economic loss incident to inability to exploit that available property profitably is not within the scope of property damage coverage. Id. at 1368. Wells directs the court’s attention to the Third Circuit Court of Appeals’s decision in Lucker Mfg. v. Home Ins. Co., 23 F.3d 808, 816-17 (3rd Cir.1994). The Lucker case involved the issue of whether a clause providing for the “loss of use of tangible property that has not been physically injured” covered the costs of correcting a defective component part which had been designed and was to be incorporated into a product which had not yet been manufactured. The Third Circuit Court of Appeals opined that the plain language of the clause covered the decreased value of the product caused by a wrongful act not accompanied by physical injury and explained: The loss of a non-physical use of a product, such as offering it for sale, should be considered a “loss of use” and ... the decreased value of a product because of loss of customer acceptance of the product is a “loss of use” within the meaning of the standard CGL policy. Lucker, 23 F.3d at 816. Thus, the court concluded that the loss of a product made for a particular purpose caused by a change in the customer’s acceptance of it constituted a loss of use of property. The court went on to hold, however, that at the time customer acceptance was lost, the component part still was being designed and thus it was a form of intangible property which had “no intrinsic marketable value of its own,” similar to “investments,” “good will” or “economic interest” in the form of profits, investment value and productivity. Id. at 819. Because the insured sought coverage for damages from the loss of the design itself, an intangible thing, the loss of use did not constitute covered property damage. Id. at 820-21. Here, the loss of use to Eskimo Pie of tangible property, i.e., the spoliation of the perishable ingredient inventory, is manifest. It is the nature of the tangible property here, the perishable inventory components, that renders the diminution in value in this case distinct from those cases involving non-perishable tangible property. In the non-perishable cases, the tangible property remains in existence and capable of use, although at diminished value. With perishable tangible property, the diminution in value is caused by the spoilation of the tangible property thereby rendering the property useless. The court therefore holds Wells’s possible liability to Eskimo Pie could be based on “property damage,” as that term is defined in the CGL coverage part of the Primary Policy. Thus, it is clear that the scope of the CGL coverage part of the Primary Policy covers Eskimo Pie’s claim for damages for loss of use to tangible property. Wells also asserts that Pillsbury is claiming damages for loss of use of certain equipment at its Tulare plant, “shrink” damages for the destruction or loss of use of raw materials due to decreased production, and “qualification” damages for raw materials and components lost during “qualification” of alternative production facilities made necessary due to the explosion at the Wells plant. Although the precise nature of Pillsbury’s “shrink” damages cannot be ascertained from the record presented, at minimum, a material question of fact has been generated by Wells that Pillsbury’s “shrink” damages appear to mirror, at least in part, Eskimo Pie’s loss of use damages to tangible property. Thus, summary judgment is inappropriate here with respect to Pillsbury’s claim for “shrink” damages. b. Exclusions to coverage Travelers contends that several exclusions significantly limit the coverage for property damage. Because the court has already determined that certain coverage exists, with respect to the Eskimo Pie lawsuit, and that a material question of fact exists regarding coverage, with respect to Pillsbury’s lawsuit, and, as discussed below, concludes that Travelers has a duty to defend Wells in the underlying lawsuits, the court believes that resolution of the other coverage issues is best left for determination following the resolution of the underlying lawsuits. Iowa law applies, but, admittedly, there is no case or statutory law in the State of Iowa which is applicable to the questions here. To determine the questions involved, this court would be required to declare the law of Iowa in a case of first impression. Under our judicial system, it is preferable that cases of first impression be decided by the highest tribunal of the state. It appears to the court that it is neither necessary nor desirable that the questions here involved be determined by this court at this time. If the underlying lawsuits result in a judgment of no liability on the part of Wells, it may not be necessary for this court in this case to determine the question presented to it. Moreover, it is also possible that between now and the time that final judgment is entered in the underlying lawsuits, the Supreme Court of Iowa will have rendered an opinion or opinions determinative of the questions raised here. 2. The Umbrella policy The parties have reiterated the same arguments discussed above with respect to the Umbrella policy. Because the terms of the Umbrella policy are indistinguishable in any meaningful way from the terms of the CGL coverage part of the Primary Policy, the court’s conclusions with respect to the CGL coverage part of the Primary Policy also are applicable to the Umbrella policy. E. Ti-avelers’s Duty To Defend Wells Wells argues that Travelers had and continues to have a duty to defend it in the underlying lawsuits and seeks summary judgment on this issue. Travelers contends that it has no duty to defend Wells in the underlying lawsuits, in part, because the damages alleged in the underlying lawsuits do not constitute covered damages under the CGL coverage part of the Primary Policy or the Umbrella policy. Because the issue of whether Travelers had or has a duty to defend Wells is raised in Wells’s motion for partial summary judgment, the court will examine Iowa law regarding an insurer’s duty to defend one of its insureds. 1. An Insurer’s yeneral duty to defend An insurer has a duty to defend whenever there is potential or possible liability to indemnify the insured based upon the facts appearing at the outset of the case. First Newton Nat’l Bank v. General Casualty Co. of Wis., 426 N.W.2d 618, 623 (Iowa 1988) (citing McAndrews v. Farm, Bureau Mut. Ins. Co., 349 N.W.2d 117, 119 (Iowa 1984)); see also Yegge v. Integrity Mut. Ins. Co., 534 N.W.2d 100, 102 (Iowa 1995) (duty to defend whenever potential liability to indemnify based upon facts appearing at outset of the case; however, duty to defend and duty to indemnify are co-extensive duties in that there is no duty to defend unless there is a duty to indemnify); Essex Ins. Co. v. Fieldhouse, Inc., 506 N.W.2d 772, 774 (Iowa 1993) (noting that in analyzing the potential duty to defend, which is broader than the duty to indemnify, the appropriate starting point is the allegations contained in the petition); Kartridg Pak Co. v. Travelers Indem. Co., 425 N.W.2d 687, 688 (Iowa Ct.App.1988) (to determine whether insurer had duty to defend, court construes the policy and looks to the pleadings and all other admissible and relevant facts in the record to determine whether coverage exists under the policy). Although courts should look first and primarily to the petition for the “facts at the outset of the case,” it is sometimes necessary to expand the scope of inquiry to any other admissible and relevant facts in the record. First Newton Nat’l Bank, 426 N.W.2d at 623 (citing McAndrews, 349 N.W.2d at 119). On the other hand, an insurer is not required to provide a defense when no facts presently available to it indicate coverage of the claim, merely because such facts might later be added by amendment or introduced as evidence at the trial. McAndrews, 349 N.W.2d at 119. Moreover, the Iowa appellate courts have noted that “[t]he insurer has no duty to defend if after construing both the policy in question, the pleadings of the injured party and any other admissible and relevant facts in the record, it appears the claim made is not covered by the indemnity insurance contract.” Weber v. IMT Ins. Co., 462 N.W.2d 283, 285 (Iowa 1990) (quoting McAndrews, 349 N.W.2d at 119, in turn, citing Central Bearings Co. v. Wolverine Ins. Co., 179 N.W.2d 443, 445 (Iowa 1970)). If the totality of facts fail to disclose potential coverage, an insurer might proceed in two ways: it could initiate a declaratory judgment action against its insured, or it might elect to do nothing, running the risk, of course, that its insured will seek indemnity if coverage is established at trial. McAndrews, 349 N.W.2d at 119 (citations omitted). 2. Travelers’s duty to defend here As noted above, the court has determined that Eskimo Pie has made a claim for a loss of use of tangible property and thus that there is coverage under the policies at issue. The court has also concluded that a material question of fact has been generated regarding whether Pillsbury’s claim against Wells includes a claim for a loss of use of tangible property. Pillsbury’s complaint clearly states that it is seeking to recover for “damage to [Pillsbury’s] property...” Defendants’s App. at 46. Because the Pillsbury suit brought against Wells possibly seeks damages based on a physical injury to or a loss of use of tangible property, potential liability to indemnify Wells has been established and these liability policies require Travelers to defend Wells in the suits brought against it by Eskimo Pie and Pillsbury. See Yegge, 534 N.W.2d at 102; Essex Ins. Co., 506 N.W.2d at 774; First Newton Nat’l Bank, 426 N.W.2d at 623; McAn-dreivs, 349 N.W.2d at 119. It must be remembered that the potential duty to defend is broader than the duty to indemnify. Essex Ins. Co., 506 N.W.2d at 774. Therefore, the court grants this portion of Wells’s motion for partial summary judgment. F. Wells’s Bad Faith Claim Travelers seeks summary judgment on Wells’s claim of bad faith. Travelers asserts that because it has no obligation to defend or indemnify Wells, its denial of coverage and refusal to defend Wells was fairly debatable. Wells responds that at the time Travelers denied Wells’s claim for a defense of the Eskimo Pie and Pillsbury lawsuits, Travelers had no reasonable basis for denying the request. Wells further argues that the facts surrounding its bad faith claim are in dispute between the parties making summary judgment inappropriate on this issue. The Iowa Supreme Court has recognized both “first-party” and “third-party” bad faith claims against insurers. See Dolan v. Aid Ins. Co., 431 N.W.2d 790 (Iowa 1988). In Kooyman v. Farm Bureau Mut. Ins. Co., 315 N.W.2d 30, 33-34 (Iowa 1982), the Iowa Supreme Court recognized the “third-party” variety of the tort — that is, a cause of action by a third party against an insurer asserting that the insurer ac