Black & Veatch Corp. v. Aspen Ins. (Uk) Ltd. (378 F. Supp. 3d 975, 2019)

Citations

378 F. Supp. 3d 975

Full opinion text

Sam A. Crow, U.S. District Senior Judge This insurance dispute over coverage and amount of recovery comes before the court on a second wave of summary judgment motions following the Tenth Circuit's order (ECF# 329) vacating and remanding this court's prior summary judgment order and the United States Supreme Court's denial of the defendants' petition for certiorari (ECF# 349), Black & Veatch Corp. v. Aspen Insurance (Uk) Ltd. , 882 F.3d 952 (10th Cir.), cert. denied , --- U.S. ----, 139 S.Ct. 151, 202 L.Ed.2d 35 (2018). The plaintiff Black & Veatch Corporation ("B & V") has filed a motion for partial summary judgment (ECF# 337) and a motion to amend the pretrial order (ECF# 339). The defendants Aspen Insurance (UK) Ltd. and Lloyd's Syndicate 2003 (collectively "Aspen" or "Excess Insurers") have filed a motion for summary judgment. ECF# 340. The motions are fully briefed and ripe for decision. For the sake of brevity and convenience, the court will incorporate by reference from its prior order the summary judgment standards (ECF# 230, pp. 2-3) and general New York law governing interpretation of insurance contracts and the respective burdens of establishing coverage, exclusions and exceptions (ECF# 230, pp. 11-17).

FACTUAL BACKGROUND

The plaintiff B & V is suing the defendants who are first layer excess umbrella liability insurers under a manuscript commercial general liability ("CGL") policy for coverage of B & V's claimed liability for damages to seven Jet Bubble Reactors ("JBRs"). B & V contracted with American Electric Power ("AEP") "to engineer, procure and construct ["EPC"] wet flue gas desulfurization systems (JBRs) for eight installations." (ECF# 294, ¶ 1, PTO). "Under an EPC contract, B & V delivers services under a single contract. It supervises the project and typically subcontracts most-if not all-of the actual procurement and construction work." 882 F.3d at 954.

B & V procured CGL policies to cover its JBR work. Zurich American Insurance Company ("Zurich") provided the primary layer of coverage having the following limits: $ 2,000,000 per occurrence and $ 4,000,000 for general and products-completed operations aggregate limits. Aspen provided the first layer of excess/umbrella liability coverage with per occurrence and aggregate limits of $ 25,000,000.

As for the property damage claim made against B & V, the Tenth Circuit summarizes it in these terms:

For at least seven of these JBRs, which were located at four different power plants in Ohio and Indiana, B & V subcontracted the engineering and construction of the internal components to Midwest Towers, Inc. ("MTI"). Deficiencies in the components procured by MTI and constructed by MTI's subcontractors caused internal components of the JBRs to deform, crack, and sometimes collapse.

After work on three of the JBRs was completed, and while construction of four others was ongoing, AEP alerted B & V to the property damage arising from MTI's negligent construction. AEP and B & V entered into settlement agreements resolving their disputes relating to the JBRs at issue here. Under the agreements, B & V was obligated to pay more than $ 225 million in costs associated with repairing and replacing the internal components of the seven JBRs.

882 F.3d at 954. The parties also stipulate in the pretrial order to the following facts that are relevant to these motion proceedings:

11. After Black & Veatch completed construction of the Cardinal 1 and 2 and Conesville JBRs, the Owners alleged deficiencies in the work.

12. Cardinal 1 was completed and began operating in March 2008. Deficiencies in the JBR components were discovered as early as August 2008, and Cardinal 1 had to be shut down and repaired.

13. Cardinal 2 was completed and began operating in December 2007. Deficiencies in the JBR components were discovered as early as May 2008, and Cardinal 2 had to be shut down and repaired.

14. Conesville was completed and began operating in January 2009. In the fall of 2009, it was determined that the gas risers installed at Conesville, as well as the gas risers installed at each of the other six JBRs, were deficient and required removal.

15. Because of defective gas risers and other deficiencies in the JBRs, the Owners demanded that Black & Veatch make repairs.

16. At the time the Owners made their demands on Black & Veatch, the Cardinal 1 and 2 projects, and the Conesville project were completed operations.

17. During the summer of 2010, Black & Veatch and the Owners of the JBRs, entered into settlement agreements resolving their disputes relating to eight JBRs, including the seven at issue here.

18. As part of the settlements, Black & Veatch agreed, among other things, to replace most internal components of the JBRs.

19. In replacing the internal components, Black & Veatch has obtained contribution from various parties responsible for the costs incurred.

(Dk. 294, pp. 4-5).

As it did in the prior summary judgment order, the court sets out the general nature of the plaintiff's claims deferring to its characterization. The plaintiff is claiming coverage for property damage resulting directly from the work of the subcontractors on behalf of B & V and from B & V's failure to deliver professional services both of which resulted in the installation of defective risers. For the three completed and operating JBRs, Cardinal 1 and 2 and Conesville, B & V's claim is for the property damage resulting from alleged deficiencies with the installation and errors with the design and supervision of the risers that "resulted in excessive mineral deposits accumulating on the decks and other internal components of the JBRs, the weight of which in turn caused those components to deform, crack, and, in some cases, collapse entirely." ECF# 294, Pretrial Order, p. 7. Cardinal 1 and 2 JBRs were so badly damaged that the owners no longer considered them viable. Id. at p. 8. The owners demanded complete replacement of the badly damaged internal components. Id. Thus, B & V is making a coverage claim for its liability incurred to repair or replace the property damaged from the occurrence of the continual, ongoing and unforeseen buildup of deposits in the JBRs. ECF #297-3, Wood Dep. pp. 14-17. For the uncompleted JBRs, B & V's claim is for property damage to other non-defective internal components that resulted from work done to access, remove and replace the installed defective gas risers. Thus, B & V is making a coverage claim for its liability for the damage done to non-defective internal components from being removed based on the occurrence of the defective gas risers being installed and then needing to be torn out. Id. at 297-3, pp. 29-30; ECF# 297-8, Miller Dep. p. 157-158.

ASPEN'S MOTION FOR SUMMARY JUDGMENT (ECF# 340)

Aspen advances numerous arguments, and the court will follow the order used by Aspen in its original memorandum. At the outset, some of Aspen's arguments trigger deciding whether these matters were resolved by the Tenth Circuit on appeal and are subject to the law of the case doctrine or the mandate rule. The law of the case doctrine recognizes that, " '[w]hen a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case.' " Mason v. Texaco, Inc. , 948 F.2d 1546, 1553 (10th Cir. 1991) (quoting Arizona v. California , 460 U.S. 605, 618, 103 S.Ct. 1382, 1391, 75 L.Ed.2d 318 (1983) ), cert. denied , 504 U.S. 910, 112 S.Ct. 1941, 118 L.Ed.2d 547 (1992). "[W]hen a case is appealed and remanded, the decision of the appellate court establishes the law of the case and ordinarily will be followed by both the trial court on remand and the appellate court in any subsequent appeal." Rohrbaugh v. Celotex Corp. , 53 F.3d 1181, 1183 (10th Cir. 1995) (citation omitted). The doctrine "applies to all issues previously decided, either explicitly or by necessary implication." Rohrbaugh , 53 F.3d at 1183 (internal quotation marks and citation omitted). "The law of the case doctrine is intended to prevent 'continued re-argument of issues already decided,' Gage v. Gen. Motors Corp. , 796 F.2d 345, 349 (10th Cir. 1986), and to preserve scarce court resources-to avoid 'in short, Dickens's Jarndyce v. Jarndyce syndrome,' McIlravy v. Kerr-McGee Coal Corp. , 204 F.3d 1031, 1035 (10th Cir. 2000)." Huffman v. Saul Holdings Ltd. Partn. , 262 F.3d 1128, 1132 (10th Cir. 2001).

"An 'important corollary' to the law of the case doctrine, 'known as the "mandate rule," provides that a district court must comply strictly with the mandate rendered by the reviewing court.' " Id. (quoting Ute Indian Tribe v. Utah , 114 F.3d 1513, 1520-21 (10th Cir. 1997) ). Put another way, the law of the case doctrine "requires a trial court to follow an appellate court's previous ruling on an issue in the same case.... This is the so-called 'mandate rule.' " United States v. Quintieri , 306 F.3d 1217, 1225 (2d Cir. 2002) (footnote omitted), cert. denied , 539 U.S. 902, 123 S.Ct. 2246, 156 L.Ed.2d 110 (2003). Thus, an issue decided on appeal may not be relitigated in the same case and "there must be compliance with the reviewing court's mandate." Grigsby v. Barnhart , 294 F.3d 1215, 1218 (10th Cir. 2002). In this circuit, "[t]he mandate consists of our instructions to the district court at the conclusion of the opinion, and the entire opinion that preceded those instructions." Procter & Gamble Co. v. Haugen , 317 F.3d 1121, 1126 (10th Cir. 2003) ; cf. Quintieri , 306 F.3d at 1225 n.5 ("Technically, the 'mandate' of this Court consists of a 'certified copy of [our] judgment, a copy of the opinion, and any direction as to costs.' ") (quoting United States v. Reyes , 49 F.3d 63, 66 (2d Cir. 1995) ).

Tenth Circuit's Holding on the Meaning of the CGL Policy

On pages two and three above, the court has already the Tenth Circuit's summary of B & V's claim for property damages under the CGL policy. see Black & Veatch Corp. v. Aspen Ins. (Uk) Ltd. , 882 F.3d at 954. As far as the terms of the basic insuring agreement, the panel noted that the CGL policy obligated Aspen to pay on behalf of B & V its legal obligation for " 'Property Damage' ... caused by an 'Occurrence.' " 882 F.3d at 955. The Policy defines "Occurrence" to be an "accident, including continuous or repeated exposure to substantially the same general harmful conditions, that results in ... 'Property Damage' that is not expected or intended by the 'Insured.' " Id. The Policy defines "Property Damage" as "physical injury to tangible property of a 'Third Party.' " Id. "Third Party" is defined as "any company, entity, or human being other than an 'Insured.' " Id.

On the issue of whether the damage done to the JBRs was an occurrence, the Tenth Circuit analyzed it as follows, in relevant part:

We start with the Policy terms and definitions, which are materially identical to the ISO's standard-form CGL policy. Under the Policy, an "occurrence" is an "accident ... that results in 'Bodily Injury' or 'Property Damage' that is not expected or not intended by the 'Insured.' " An occurrence triggers coverage. We examine each part of this definition.

a. Accidental damages

The Policy does not define "accident," but the New York Court of Appeals has explained that a CGL policy covers damages only when they were "unexpected and unintentional." Cont'l Cas. Co. , 593 N.Y.S.2d 966, 609 N.E.2d at 510 (holding that these terms are to be construed narrowly as barring coverage "only when the insured intended the damages"); see also Consol. Edison Co. of N.Y. v. Allstate Ins. Co. , 98 N.Y.2d 208, 746 N.Y.S.2d 622, 774 N.E.2d 687, 692 (2002) ("Insurance policies generally require 'fortuity' and thus implicitly exclude coverage for intended or expected harms."). A policyholder might take a "calculated risk"-such as hiring a subcontractor-without "expecting" damages to occur. See Cont'l Cas. Co. , 593 N.Y.S.2d 966, 609 N.E.2d at 510. "[I]n fact, people often seek insurance for just such circumstances." Id.

Whether or not B & V took a "calculated risk" by delegating work on the JBRs to a subcontractor, Aspen does not argue-nor does the record support-that B & V "expected or intended" MTI or any other subcontractor to cause damage. Nor is there evidence that B & V increased the likelihood of such damages through reckless cost-saving or other measures. See [George A.] Fuller [Co. v. U.S. Fidelity and Guar. Co.] , [200 A.D.2d 255,] 613 N.Y.S.2d [152,] at 155 [ (1994) ] (finding no "occurrence" where damages arose from "intentional cost-saving or negligent acts"). Thus, the damages at issue here satisfy the Policy's accidental requirement.

b. Property damage to a third party

The Policy covers costs arising from property damage. "Property Damage" is defined as "physical injury to tangible property of a 'Third Party.' " ROA, Vol. 1 at 72. A "Third Party" is defined as "any company, entity, or human being other than an 'Insured.' " Id. The damage to the JBRs was physical injury to tangible property. Aspen argues, however, that the Policy designates AEP-the energy company that hired B & V to construct the JBRs-as an "Additional Insured," and thus AEP cannot be a third party. See Aplee. Br. at 45 (citing ROA, Vol. 7 at 1311). This argument fails.

Under the Policy, an "Insured" is defined as any entity listed as a "Named Insured" or designated as an "Additional Insured." The Policy lists B & V as the "Named Insured." ROA, Vol. 1 at 63. Under Endorsement 33, AEP is designated as an "Additional Insured," thereby adding AEP to B & V's existing insurance policy. See id. at 114. Granting one party additional insured status on another's CGL policy is a "common risk-shifting technique" used in construction contracts. Samir Mehta, Additional Insured Status in Construction Contracts and Moral Hazard , 3 Conn. Ins. L.J. 169, 170 (1997). But it does not mean the Policy precludes coverage of the damages at issue here.

First, AEP is an "Additional Insured" only with respect to liability for property damage "arising out of operations performed by the Named Insured. " ROA, Vol. 1 at 114 (emphasis added). But here the work performed by a subcontractor (MTI), not by the "Named Insured" (B & V), caused the damages.

Second, Endorsement 33 contains a "separation of insureds" condition, which provides that the Policy "applies separately to each Insured against whom claim is made or suit is brought." Id. Its purpose is to preserve coverage for damage claims made by one insured (here, AEP) against another (B & V). See West Am. Ins. Co. v. AV & S , 145 F.3d 1224, 1227 (10th Cir. 1998) (providing that under a "separation of insureds" condition, each insured is "entitled to have the [p]olicy construed as to it as if the [p]olicy were issued only as to it alone"); see also Greaves v. Pub. Serv. Mut. Ins. Co. , 5 N.Y.2d 120, 181 N.Y.S.2d 489, 155 N.E.2d 390, 392 (1959) (same). In other words, when AEP claimed damages against B & V, the separation of insureds clause rendered AEP a third party with respect to its claims for property damage against B & V. This understanding of the Policy aligns with common sense: The principle risk B & V faced as an EPC contractor, and thus a main reason for obtaining CGL insurance, was the potential for claims alleging damages made by the property owner-AEP.

Black & Veatch Corp. v. Aspen Ins. (Uk) Ltd. , 882 F.3d at 962-64 (footnotes omitted). The majority plainly intended its analysis and conclusion to be the rule of law on the meaning of "Occurrence" with its composite elements as applied to B & V's claim of property damages. See id. at p. 957 n. 6 ("The district court held only that the damages at issue here could not constitute a coverage-triggering 'occurrence' under the Policy, so it did not proceed to the next step of determining the effect of any Policy exclusions or exceptions to the exclusions. It should do so on remand.").

In sum, the Tenth Circuit has held as a matter of law the following. B & V's property damage claims "satisfy the Policy's accidental requirement." Id. at 963. "[T]he separation of insureds clause rendered AEP a third party with respect to its claims for property damage against B & V." Id. at 964. The subcontractor exception and Endorsement 4 would be rendered surplusage under Aspen's proposed meaning of occurrence. Id. at 964-65. The majority summarized its holding in this way:

In sum, the property damages at issue were caused by an "occurrence," as that term is defined in the Policy, because (1) B & V neither intended nor expected that its subcontractor would perform faulty work, so the damages were accidental, (2) the damages involved physical harm to the property of a third party, and (3) a contrary conclusion would render various Policy provisions meaningless in violation of New York's rule against surplusage.

Black & Veatch Corp. v. Aspen Ins. (Uk) Ltd. , 882 F.3d at 965. The majority concluded its opinion making it unmistakably clear that it considered the following to be the settled law of the case:

Under the Policy, the damages at issue here were caused by a coverage-triggering "occurrence." First, the damages were accidental and resulted in harm to a third-party's property, thus meeting the Policy's definition of an "occurrence." Second, the district court's interpretation would violate New York's rule against surplusage by rendering the "subcontractor exception" meaningless. Third, the changes ISO has made to standard-form CGL policies demonstrate that the policies can cover the damages at issue here. Fourth, the overwhelming trend among state supreme courts has been to recognize such damages as "occurrences." Fifth, New York intermediate appellate decisions are distinguishable, outdated, or otherwise inapplicable. We predict the New York Court of Appeals would decline to follow these decisions and instead would join the clear trend among state supreme courts holding that damage from faulty subcontractor work constitutes an "occurrence" under the Policy. For the foregoing reasons, we vacate the district court's summary judgment decision and remand for reconsideration in light of this opinion.

Black & Veatch Corp. v. Aspen Ins. (Uk) Ltd. , 882 F.3d at 971 (footnote omitted).

The court will apply the law of the case doctrine to all issues explicitly ruled upon in the majority's opinion as well as those issues necessarily decided by implication. Pursuant to the mandate rule, the court appreciates that the panel's opinion regards the coverage issues under the basic insuring agreement to be decided and for the district court on remand to move onto the next step of determining the Policy's exclusions and exceptions. see 882 F.3d at 957 n. 6 ; Procter & Gamble Co. , 317 F.3d at 1126 (the mandate includes the panel's entire opinion preceding its final instructions).

Physical Harm to Uncompleted Plants

Aspen first argues against coverage under the basic insuring agreement because the components later replaced in the four uncompleted JBRs were not damaged or physically injured. "Removal and replacement of the new components is not physical injury or property damage." ECF# 342, p. 37. Aspen asks this court to find that property damage "occurs" only if the defective work physically injures other parts of the project.

To take up this issue now would first require this court to limit the Tenth Circuit's ruling on appeal that, "The damage to the JBRs was physical injury to tangible property." 882 F.3d at 963. Indeed, the panel in holding that the "damages were caused by a coverage-triggering 'occurrence' " had to conclude that "the damages were accidental and resulted in harm to a third-party's property." Id. at 971. The law of case doctrine extends to issues decided explicitly or by necessary implication. Dobbs v. Anthem Blue Cross and Blue Shield , 600 F.3d 1275, 1280 (10th Cir. 2010). For a prior appeal to have implicitly resolved an issue, this Circuit looks to three circumstances:

"(1) resolution of the issue was a necessary step in resolving the earlier appeal; (2) resolution of the issue would abrogate the prior decision and so must have been considered in the prior appeal; and (3) the issue is so closely related to the earlier appeal its resolution involves no additional consideration and so might have been resolved but unstated."

Id. (quoting McIlravy v. Kerr-McGee Coal Corp. , 204 F.3d 1031, 1036 (10th Cir. 2000) ). There is no plain statement or any clear indication that the Tenth Circuit was limiting its "occurrence" analysis to the completed JBRs or was excepting or reserving the uncompleted JBRs from its "occurrence" analysis. Without such a statement or indication, the court regards the appellate panel's "occurrence" findings as necessarily incorporating by implication all seven plants, completed and uncompleted.

Aspen asks the court to limit the panel's occurrence finding to the completed plants based on this language in the panel's opinion:

Deficiencies in the components procured by MTI and constructed by MTI's subcontractors caused internal components of the JBRs to deform, crack, and sometimes collapse .

882 F.3d at 954 (bolding added). The above bolded terms are certainly active verbs that describe the damage done to the three completed plants. But, it is immediately followed by the description of AEP alerting B & V to property damage that involved all seven JBRs and resulted from the subcontractor's negligent construction. The Tenth Circuit concludes its discussion of B & V's property damage claim by noting that in the settlement with AEP, B & V "was obligated to pay more than $ 225 million in costs associated with repairing and replacing the internal components of the seven JBRs ." Id. (bolding added). As fairly understood on its face, the Tenth Circuit's opinion addresses B & V's claim for property damages to include all seven JBRs without distinguishing between completed and uncompleted plants. Thus, the Tenth Circuit's ruling that property damages occurred here is subject to the law of the case doctrine, and the mandate rule requires this court is follow it.

In the alternative, the court is persuaded that New York follows the incorporation theory in holding that an injury occurs when a defective component is integrated into a larger product. See, e.g., Sturges Mfg. Co. v. Utica Mut. Ins. Co. , 37 N.Y.2d 69, 72-73, 332 N.E.2d 319, 371 N.Y.S.2d 444 (1975) ("When one product is integrated into a larger entity, and the component product proves defective, the harm is considered harm to the entity to the extent that the market value of the entity is reduced in excess of the value of the defective component." (citation omitted)); see, e.g. , Adler & Neilson Co. v. Insurance Co. of N. Am. , 56 N.Y.2d 540, 542-543, 434 N.E.2d 1335, 449 N.Y.S.2d 957 (1982) (repair and replacement costs incurred for non-defective components were property damage as they resulted from repairing the defective parts); Franco Belli Plumbing & Heating and Sons, Inc. v. Liberty Mut. Ins. Co. , 2012 WL 2830247 at *8 (E.D.N.Y. Apr. 19, 2012) (citing in part, Chubb Ins. Co. of N.J. v. Hartford Fire Ins. Co., No. 97 Civ. 6935, 1999 SL 760206, at *8 (S.D.N.Y. 1999) ("Under New York case law, when an insured is unaware, as here, of a defect in its component of a product, which defect diminishes the value of the product into which it is incorporated, resulting in damage, such damage is considered to arise out of an 'occurrence.' "), aff'd , 229 F.3d 1135 (2d Cir. 2000).). The court's interpretation and application of the Tenth Circuit's ruling on property damage is consistent with New York law.

Damage to Third Party Property and "Particular Part" in Endorsement 4

Aspen contends the replaced components were B & V's property, not the property of a third party, by reading the construction contract to say that B & V "owns" the components until completion of the plant. Aspen extends this argument relying on Exclusion D that carves out property damage to property "owned" by the "Insured" and on Endorsement 8 that makes the policy inapplicable to property damage "to real property leased to, rented to, occupied or managed by any Insured except as respects coverage provided by ... Endorsement 4." ECF# 342, pp. 40-41. Aspen also points to subparagraph (3) of Exclusion D as reaching "that particular part of real property on which the 'insured' or any contractors or subcontractors working directly or indirectly on the 'insured's' behalf are performing 'your work', if the 'property damage' arises out of 'your work.' " ECF# 284-1, p. 23. Aspen reads this subparagraph to exclude coverage not just for the defective work but for the "entire scope of B & V's work." Aspen says New York law supports its reading. ECF# 342, p. 41.

To take up these issues now, the district court again would be forced to limit an express ruling made by the Tenth Circuit on appeal and again would have no grounds in that opinion for doing so. In finding there was an "occurrence" under the policy, the Tenth Circuit also had to find there was "property damage" which the policy defined as "physical injury to tangible property of a third party." 882 F.3d at 962-63. On the third-party question, the Tenth Circuit explicitly addressed one of Aspen's arguments that AEP was an insured under the policy, not a third party. The Circuit panel concluded:

In other words, when AEP claimed damages against B & V, the separation of insureds clause rendered AEP a third party with respect to its claims for property damage against B & V. This understanding of the Policy aligns with common sense: The principle risk B & V faced as an EPC contractor, and thus a main reason for obtaining CGL insurance, was the potential for claims alleging damages made by the property owner-AEP.

Id. at 964. The Tenth Circuit expressly found above that AEP was the owner and third party with respect to its claims for property damage against B & V.

Aspen does not reply to B & V's arguments that the Tenth Circuit's rulings are the law of the case doctrine on the issue of third-party damages. This court is required to follow the Tenth Circuit's ruling on this issue. And even if this issue had not been decided on appeal, this court would have decided that AEP owned the JBRs at the time of property damage based on the "31.0 Title and Risk of Loss" provision in the AEP contract.

As for the "particular part" in Endorsement 4, the Tenth Circuit discussed it in these terms:

The second exclusion, known as "Endorsement 4," excludes coverage for property damage to the "particular part of real property" that B & V or its subcontractors were working on when the damage occurred. Id. at 83. This exclusion pertains only to ongoing , rather than completed, work.

....

In the context of ongoing work, the standard-form CGL policy excludes coverage for property damage to "[t]hat particular part of real property on which you or any contractors or subcontractors working ... on your behalf are performing operations, if the 'property damage' arises out of those operations." CGL Coverage Guide , App. B: 1986 Occurrence Form, at 298; see also ISO 1986 Circular (explaining that the policy covers "damage caused by faulty workmanship to ... parts of work in progress" other than what the contractor or subcontractors were working on). In other words, the policy excludes damage to "that particular part" of the project upon which the insured's operations were being performed at the time the damage occurred, but it covers damage to property other than "that particular part." This is the current understanding of the phrase "that particular part" in the insurance industry today. Scott C. Turner, "That particular part" limitation, Insurance Coverage of Construction Disputes § 29:7 (2d ed. 2017).

....

Aspen's interpretation of an "occurrence" would also render "Endorsement 4" surplusage. As described above, "Endorsement 4" pertains to ongoing work and excludes coverage for property damage to "that particular part of real property" on which B & V or its subcontractors were actively working. See ROA, Vol. 1 at 83 (emphasis added). If faulty workmanship resulting in damage to B & V's own work could never trigger coverage as an "occurrence," this part of "Endorsement 4" would be meaningless. In other words, there would be no reason for "Endorsement 4" to exclude coverage only for damage to a "particular part" of the JBRs if the Policy could never cover damage to the insured's work in the first instance.

Black & Veatch Corp. , 882 F.3d at 955-56, 960, 965. In discussing Endorsement 4, the Tenth Circuit interpreted it to exclude coverage "for damage to a 'particular part' of the JBRs." Id. at 965. This interpretation necessarily precludes Aspen's interpretation that the exclusion covers the "entire scope of B & V's work," that is, the entire plant.

Aspen does reply to B & V's argument that the Tenth Circuit has interpreted the "particular part" language of Endorsement 4. Aspen singles out the Tenth Circuit's opinion at page 960 as no more than a comment on one treatise writer's opinion about this exclusionary language in CGL policies. Aspen also argues the Tenth Circuit's discussion of Endorsement 4 was not a final ruling but was only to show how this provision would be rendered superfluous if the insuring agreement could not "cover damage to the insured's work in the first instance." 882 F.3d at 965. The above quote from the Tenth Circuit's opinion plainly shows the majority did interpret "that particular part" in Endorsement 4 as applying only to ongoing work and only "to a 'particular part' of the JBRs, " not the entire JBRs plant. For the court to rule in favor of Aspen on this argument, the district court would have to interpret "particular part" contrary to the appellate court's opinion. The Tenth Circuit's narrow reading of "particular part" was important in drawing its conclusion on surplusage. A broader reading of "particular part" would have certainly weakened the surplusage rationale behind its ruling. The law of the case doctrine forecloses the court's consideration of Aspen's argument on this issue.

Property Damage to Cardinal 3 Occurring During Policy Period

Under the basic insuring agreement, Aspen is to pay B & V for its legal obligations to pay " 'Property Damage' occurring during the Policy Period stated in Item 4 of the Declarations." ECF# 284-1, p. 7. Declaration Item 4 specifies a policy period from November 1, 2007, to November 1, 2008. Citing the testimony of B & V's corporative representative, Sheldon Wood, Aspen argues that the "property damage" for the Cardinal 3 plant was the removal and replacement of JBR internal components and that the rebuilding of Cardinal 3 did not begin until 2010 or after the policy expired. The issue here is whether property damage occurred during the policy period as to trigger coverage.

Applying New York's "injury in fact" test for determining the trigger date of CGL coverage, B & V argues the injury here occurred when the defective gas risers were installed or when B & V was negligent in providing proper professional services related to gas risers. B & V also points to New York case law finding property damage as occurring when a defective part was installed. B & V believes there are genuine issues of material fact here that preclude summary judgment.

In reply, Aspen comes forward with the following new argument:

B & V argues that there is a question of fact on when the installation of the defective risers occurred at Cardinal 3: thus this Court should deny Aspen/Catlin's Motion for Summary Judgment as to this plant....

However, Paragraph 38 of the Consent Decree in the MTI Litigation recited that "Construction at Cardinal 3 did not begin until 2008. There, gas risers were installed without proper inspection by MTI from January 2009 through March 2009, in breach of its duties as construction and project manager." (Dkt. # 311-1, Ex. B). This is outside Defendants' policy period and, therefore, summary judgment for Defendants as to Cardinal 3 is appropriate.

ECF# 348, p. 17. Because these installation dates are outside the policy period, Aspen argues it is entitled to summary judgment on Cardinal 3.

Aspen waited until its reply brief to make this argument and present these additional facts. Generally, issues raised for the first time in a reply brief are not considered with an exception for new issues raised in reply to the respondent's arguments. In re Gold Resource Corporation Securities Litigation , 776 F.3d 1103, 1118 (10th Cir. 2015). Aspen's new argument replies to B & V's position on the "injury-in-fact" occurring when defective risers were installed or when B & V negligently performed its professional services. "The Court will not consider arguments raised for the first time in a reply brief, particularly where the arguments could have been made in the first instance." Swimwear Solution, Inc. v. Orlando Bathing Suit, LLC , 309 F. Supp. 3d 1022, 1044 (D. Kan. 2018) (internal quotation marks and citation omitted). As the following discussion of New York's law on triggering events makes clear, Aspen could have made this argument in its opening memorandum. Therefore, the court will not consider Aspen's new factual arguments first made in its reply brief.

"New York law follows the 'injury-in-fact' test which 'rests on when the injury, sickness, disease or disability actually began.' " Maxum Indemn. Co. v. A One Testing Laboratories, Inc. , 150 F. Supp. 3d 278, 285 (S.D.N.Y. 2015) (quoting Downey v. 10 Realty Co., LLC , 78 A.D.3d 575, 911 N.Y.S.2d 67, 67 (2010) (internal quotation omitted)). The New York Court of Appeals has held:

In Maryland Cas. Co. v Grace & Co. , 23 F.3d 617 (2nd Cir.1993) the Second Circuit, applying New York law, held that, in an asbestos property damage claim, the "trigger date" for insurance coverage purposes is the date of installation, for it is at that point that the building owner sustains an injury in fact. This Court reached a similar conclusion in Sturges Mfg. Co. v Utica Mut. Ins. Co. , 37 N.Y.2d 69, 72-73, 371 N.Y.S.2d 444, 332 N.E.2d 319, holding that "[w]hen one product is integrated into a larger entity, and the component product proves defective" the larger entity has sustained an injury in fact.

MRI Broadway Rental, Inc. v. U.S. Mineral Products Co. , 92 N.Y.2d 421, 427-28, 704 N.E.2d 550, 681 N.Y.S.2d 783 (1998). "When one product is integrated into a larger entity, and the component product proves defective, the harm is considered harm to the entity to the extent that the market value of the entity is reduced in excess of the value of the defective component." Sturges Mfg. Co. v. Utica Mut. Ins. Co. , 37 N.Y.2d 69, 72-73, 332 N.E.2d 319, 322, 371 N.Y.S.2d 444 (1975). "When faulty workmanship in building materials is the gravamen of an allegation of property damage, 'under an injury-in-fact analysis, the injury may be said to occur at the time of installation.' " Maxum Indemn. Co. , 150 F. Supp. 3d at 285 (quoting Stonewall Ins. Co. v. Nat'l Gypsum Co. , No. 86 Civ. 9671 (JSM), 1992 WL 123144, at *14 (S.D.N.Y. May 27, 1992), aff'd in part and rev'd in part on other grounds , 73 F.3d 1178 (2d Cir. 1995) ); see Hoechst Celanese Corp. v. Certain Underwriters at Lloyd's London , 673 A.2d 164, 169 (Del. 1996) ("[U]nder New York law, an injury-in-fact or property damage may occur at different points in time along the continuum from initial exposure or installation to actual manifestation. (citations omitted). Accordingly, ..., property damage sufficient to trigger insurance coverage may occur as early as installation of the plumbing systems into housing units.").

New York law recognizes the triggering event of coverage for property damage from a component part, like the defective risers, can occur as early as the part's installation. Therefore, Aspen is not entitled to summary judgment on its argument that coverage was not timely triggered because the removal and replacement of Cardinal 3's non-defective internal parts occurred after the policy period.

Coverage for Replacing Non-Damaged Parts in Completed Plants

Aspen argues that B & V cannot recover as property damage a claim for physical injury to property caused by its "intentional act of removing perfectly good components to access 'defective' components." ECF# 342, p. 44. "Under New York law, insurance policies require fortuity and exclude coverage for expected or intended property damage." Id. (citing Consolidated Edison Co. of N.Y. v. Allstate Ins. Co. , 98 N.Y.2d 208, 220, 774 N.E.2d 687 (2002)). Aspen argues B & V's intentional demolition of the JBRs is not a fortuitous loss and is not property damage.

The court again believes it must find that this issue has been decided by the Tenth Circuit. The majority concluded that "the damages at issue here satisfy the Policy's accidental requirement." 882 F.3d at 962. To reach that conclusion, the panel squarely addressed the requirements of "unexpected and unintentional" damages and "fortuity," and it even cited Consolidated Edison :

Whether or not B & V took a "calculated risk" by delegating work on the JBRs to a subcontractor, Aspen does not argue-nor does the record support-that B & V "expected or intended" MTI or any other subcontractor to cause damage. Nor is there evidence that B & V increased the likelihood of such damages through reckless cost-saving or other measures. See Fuller , 613 N.Y.S.2d at 155 (finding no "occurrence" where damages arose from "intentional cost-saving or negligent acts"). Thus, the damages at issue here satisfy the Policy's accidental requirement.

882 F.3d at 962-63. The law of the case doctrine forecloses this court from deciding this issue on remand.

Replacing Good Products to "Get to" Damaged Products is not Physical Injury

Aspen denies there is coverage "for costs to remove non-defective products to access defective products and/or the 'property damage' resulting from the replacement of defective product." ECF# 342, p. 45. Aspen notes these are called "get to" or "access" damages but denies that they constitute "physical injury" or "property damage." Id. After citing and discussing case law from other jurisdictions, Aspen asks the court to find "that the removal of the conforming components is not covered, and the replacement materials and rebuild costs are not covered either." Id. at p. 46-47.

Again, the Tenth Circuit's ruling on "property damage" is the law of the case, and it prevents this court from considering yet another attempt by Aspen to get around the majority's conclusions. The court also refers to its prior discussion of New York law on the incorporation theory which holds that an injury occurs when a defective component is integrated into a larger product and which allows for the recovery of various damages.

Warranty Claims are not Covered "Property Damages"

Aspen argues that B & V is making a claim "for the expense of making warranty repairs" and that this expense is not "any 'physical injury' " to be covered as "property damage" under this policy. ECF# 343, p. 47. B & V responds that Aspen's labels and characterizations do not change that they were for costs which B & V was legally obligated to pay as repairs for property damage.

The Tenth Circuit's ruling on "property damage" is the law of the case. This court is not at liberty to entertain yet another attempt to argue the case law from lower New York courts which the Tenth Circuit has already distinguished and rejected in predicting what the New York Court of Appeals would hold to be an occurrence under this CGL policy. The Tenth Circuit unquestionably concluded that, "Under the Policy, the damages at issue here were caused by a coverage-triggering 'occurrence.' " 882 F.3d at 971.

Under this heading, Aspen also makes an argument legally unrelated to the issue of "property damage." Specifically, Aspen contends that B & V settled with AEP through a credit of $ 14.3 million in "backcharges" on Cardinal 1 and 2 before Aspen received notice of B & V's claim from B & V's London broker. According to Aspen, these circumstances make B & V's settlement a voluntary payment under New York law and subject to coverage denial in that the payment was made before the insurer was notified. B & V denies accepting liability without first providing notice to Aspen and further shows there are genuine issues of material fact concerning this issue. While there may be evidence that AEP had charges for work done on Cardinal 1 and 2 as of July 30, 2009, the parties' submissions show a genuine issue of material fact remains over whether B & V voluntarily paid or assumed those charges without first notifying or obtaining Aspen's consent. Aspen is not entitled to summary judgment on these issues.

EXCLUSIONS

Aspen's motion puts forward four exclusions as barring coverage for all or part of the claim presented for the completed and uncompleted plants. Aspen notes the Tenth Circuit remanded the case with instructions for this court to determine "the effect of any Policy exclusions or exceptions to the exclusions." 882 F.3d at 957 n.6.

Intentional Acts

Exclusion A provides that the policy does not apply to " 'Property Damage' expected or intended from the standpoint of the 'Insured.' " ECF# 284-1, p. 14. Aspen argues that B & V cannot recover for the costs associated with purposefully demolishing and harming other non-defective internal components to gain access, remove and replace the defective risers. Because B & V acted intentionally to cause these damages, Aspen argues they are excluded in the same way that "get to" damages are excluded.

B & V argues this exclusion is foreclosed by the Tenth Circuit's following finding of accidental damages. Specifically, the appellate panel found:

Whether or not B & V took a "calculated risk" by delegating work on the JBRs to a subcontractor, Aspen does not argue-nor does the record support-that B & V "expected or intended" MTI or any other subcontractor to cause damage. Nor is there evidence that B & V increased the likelihood of such damages through reckless cost-saving or other measures. See Fuller , 613 N.Y.S.2d at 155 (finding no "occurrence" where damages arose from "intentional cost-saving or negligent acts"). Thus, the damages at issue here satisfy the Policy's accidental requirement.

882 F.3d at 962-963 (footnote omitted). B & V argues the Tenth Circuit's ruling by necessary implication forecloses the possibility of this exclusion. In reply, Aspen argues the Tenth Circuit's ruling does not address B & V's deliberate decisions to "rip out and replace" the non-defective components. Because B & V, as the insured, expected or intended these resulting damages from its deliberate actions, Aspen insists this exclusion bars all recovery of the "get to" damages.

The court has discussed when an appellate court's ruling by necessary implication constitutes a decision of an issue on remand. The Tenth Circuit here did reserve for remand the trial court's consideration of exclusions and exceptions. Still, the question is whether the panel's findings of an occurrence and accidental damages, as not "expected or intended" by B & V, are so closely related to the intentional act exclusion as to involve no additional consideration and as to be a matter that could have been resolved on appeal. See Dobbs , 600 F.3d at 1280.

The Policy's definition of "occurrence" is "an accident, ..., that results in 'Bodily Injury' or 'Property Damage' that is not expected or not intended by the 'Insured. ' " ECF# 284-1, p. 10 (italics added). The italicized language is indistinguishable from Exclusion A's terms excluding coverage for " 'Property Damage' expected or intended from the standpoint of the 'Insured'." ECF# 284-1, p. 14. Both require the same determination: what damages did the insured expect or intend? The Tenth Circuit expressly found that the property damages here "were caused by an 'occurrence,' as that term is defined in the Policy, because (1) B & V neither intended nor expected that its subcontractor would perform faulty work, so the damages were accidental." 882 F.3d at 965. The operation of Exclusion A is indistinguishable from the Policy's definition of occurrence. New York case law applies the same analysis to the accidental character issue and the intentional exclusion issue and considers the ruling on one issue as determinative of the other:

But courts construing similar policy exclusions have concluded that the analysis applicable to the question whether a loss was accidental is the same as that conducted in analyzing the effect of the exclusion. See, e.g., O'Connell v. State Farm Fire & Cas. Co. , No. 03-CV-880, 2005 WL 1576793, at *4 (W.D.N.Y. July 1, 2005) ("Although the first disclaimer denies the existence of coverage in the first instance, while the second relies upon an [intentional act] exclusion [disclaiming coverage for injury expected or intended by the insured], the analysis is the same because the exclusion is 'nothing more than a restatement of the requirement that the harm be the result of an accident for there to be coverage.' ") (quoting Jubin [v. St. Paul Fire and Marine Ins. Co., ] 236 A.D.2d 712, 653 N.Y.S.2d [454] at 455 [ (N.Y. App. Div. 1997) ] ), adopted by 2005 WL 2133600 (W.D.N.Y. Aug. 31, 2005) ; see also 1 M. Jane Goode, Law & Practice of Insurance Coverage Litigation § 6:20 (2017) ("Many liability policy forms contain exclusions for bodily injury 'which is expected or intended by the insured.' ... Not surprisingly, the courts tend to use substantially the same approach in interpreting the exclusion as they have in interpreting the same or similar terms contained in the definition of occurrence. Indeed, it is sometimes impossible to determine whether a court has based its decision concerning coverage on the existence or nonexistence of an occurrence or on application of an intentional injury exclusion." (footnotes omitted)).

Since the Court holds that the Schillaci Complaint alleged an occurrence under the Homeowners Policy, Met P & C cannot rely on the intentional act exclusion to disclaim coverage. See 670 Apartments Corp. [v. Agricultural Ins. Co. ,] 1996 WL 559942, at *5 n.3 [ (S.D.N.Y. Oct. 2, 1996) ] (concluding that, because the underlying complaint alleged a covered occurrence even though the insured received warnings about potential harms resulting from its conduct before commencement of the underlying lawsuit, the policy's intentional loss exclusion did not bar coverage).

Metro. Prop. and Cas. Ins. Co. v. Sarris , 2017 WL 3252812, at *10-*11 (N.D.N.Y. July 28, 2017), appeal withdrawn , 2017 WL 5714502 (2d Cir. Sept. 19, 2017). Thus, the court finds itself again applying the law of the case doctrine, but this time by necessary implication. Aspen's Exclusion A is foreclosed by the Tenth Circuit's finding of an "occurrence."

Your Product

Exclusion E states that the policy does not apply to, " 'Property Damage' to 'Your Product', arising out of it or any part of it." ECF# 284-1, p. 14. Aspen argues this exclusion prevents coverage because B & V's claim is seeks damages for having supplied an insufficient product and for having replaced "components at any uncompleted plants." ECF# 342, p. 50. Aspen cites the unpublished and brief decision of Tradin Organics USA, Inc. v. Maryland Cas. Co. , 325 Fed. Appx. 10 (2nd Cir. Apr. 16, 2009). In a single paragraph which does not describe the defect or the product, the court applies the "Your product" exclusion summarily concluding that "Tradin's claim was based on damage to Tradin's product-a risk specifically excluded by the "Your Product" provision." 325 Fed. Appx. at 11.

The Second Circuit panel in Tradin Organics , however, cited and relied upon Lowville Producer's Dairy Co-op., Inc. v. American Motorists Ins. Co. , 198 A.D.2d 851, 604 N.Y.S.2d 421, 422-23 (N.Y. App. Div. 1993). In that decision, the court applied the product exclusion and denied coverage for the loss of contaminated milk that the plaintiff insured, a cooperative association of dairy farmers, had supplied to a cheese manufacturing plant, but it allowed coverage for the cost of removing and disposing the contaminated milk from the purchaser's silo. "The policy was clearly intended to cover the possibility that the insured's product, once sold, would cause bodily injury or damage to property other than the product itself." Id. at 423 (citations omitted). See Hartog Rahal Partnership v. American Motorists Ins. Co. , 359 F. Supp. 2d 331, 332-32 (S.D.N.Y. 2005) ; Federal Ins. Co. v. Marlyn Nutraceuticals, Inc. , 2013 WL 6796162, at *8 (E.D.N.Y. Dec. 19, 2013) ("Where, as here, the damage is to the insured's property, which was not incorporated into any larger entity, courts have found that exclusions such as the 'your product' exclusion in the Policy defeat any duty to defend." (citations omitted)).

B & V denies its claim is based on a defective product but rather is based on its construction project which constitutes real property. B & V refers to the policy's definition of "Your Product" as "any goods or products, other than real property, manufactured, sold, handled, distributed or disposed of by" insured. ECF# 284-1, p. 11. The JBRs are "massive, permanent fixtures that constitute 'real property.' " ECF# 345, p. 77 (citing Scott C. Turner, Insurance Coverage of Construction Disputes , § 27:8 (2d ed. 2015)). B & V contends that if this exclusion covered all property damage arising out of its construction project, then the Policy would be ineffective in meeting what the Tenth Circuit said was B & V's "main reason for obtaining CGL insurance ... the potential for claims alleging damages made by the property owner-AEP." 882 F.3d at 964. B & V argues a "common sense reading" of the exclusion makes it inapplicable. In reply, Aspen argues for this being a product claim because the risers were insufficient as manufactured. Aspen adds that because the risers' insufficiency did not change with their installation, so B & V's claim should not change in nature either.

"To negate coverage by virtue of an exclusion, an insurer must establish that the exclusion is stated in clear and unmistakable language, is subject to no other reasonable interpretation, and applies in the particular case." Continental Cas. C. v. Rapid-American Corp. , 80 N.Y.2d 640, 652, 609 N.E.2d 506, 593 N.Y.S.2d 966 (1993). Aspen has not carried its burden. The definition of "Your Product" excludes real property. The general rule for this exclusion is that, "[t]he work performed by contractors on dwellings, buildings, structures, and any other form of realty is therefore not considered to be the product of the insured." 9A Steven Plitt, et al., Couch on Ins. § 129:20 (3rd ed. 2018 update). Aspen has not shown that B & V's work in managing and directing the construction of the JBRs results in a product rather than services related to real property. It seems this exclusion "was always intended by the insurers and brokers to apply to manufacturing that produces 'products' rather than companies like contractors, subcontractors, and construction managers that perform services." Scott C. Turner Insurance Coverage of Construction Disputes § 27:8 (2d ed. Nov. 2018 update) (citations and authorities omitted). By excepting "real property" from the definition of "your product," "construction work of a contractor is not 'your product'." Id. As for a product that is built into a structure, the general rule is:

What would otherwise be an insured manufacturer's product, or an insured material supplier's product, may lose that designation once it is incorporated into a building project if it thereby becomes real property under that jurisdiction's law of fixtures. In such cases, if property damage to it occurs after being built into the project, it no longer fits within the definition of "your product," so the exclusion should not apply.

Id. at § 27:10. Case law supporting this rule includes, Travelers Property Casualty Company of America v. Northwest Pipe Company , 2017 WL 2687652, at *1 (W.D. Wash. Jun. 22, 2017), which involved a claim of damages suffered "in the construction of a large water pipeline" and caused by "the alleged failure of circumferential welds that were being used to attach grout plugs to a large steel pipe liner." The court similarly quoted this treatise and noted:

The Ninth Circuit has relied upon this rule, albeit in an unpublished decision. Mid-Continent Cas. Co. v. Titan Const. Corp. , 281 Fed.Appx. 766, 768-69 (9th Cir. 2008) (quoting Black's Law Dictionary , 1254 (8th ed. 2004)) ("Since 'real property' is not defined in the CGL, we adopt the common meaning of the term, 'land and anything growing on, attached to, or erected on it, excluding anything that may be severed without injury to the land.' "). Other courts have likewise reached the same conclusion. See Scottsdale Ins. Co. v. Tri-State Ins. Co. of MN. , 302 F. Supp. 2d 1100, 1104-08 (D.N.D. 2004).

Travelers Prop. Cas. Co. of Am. , 2017 WL 2687652, at *7. The court then looked to whether the steel liner met the criteria for a fixture under state law:

Upon installation of the grout plugs, the steel liner was cemented into the underground Twin Tunnels project. Dkt. 30 at 2. This establishes that the steel liner was sufficiently annexed to the realty to satisfy the first prong of the fixture criteria. Additionally, there is no dispute that the steel liner was applied to the purpose of the Twin Tunnels project for which the portion of realty is appropriated. See Dkt. 30; Dkt. 18-12 at 5. Finally, the underlying complaint by the Water District states that the steel liner was "installed at the ends of each of the tunnels as a permanent lining ... that prevents water from travelling into or out of the tunnels," thereby establishing the third prong of the fixture criteria. Dkt. 18-12 at 5 (emphasis added). Pursuant to this analysis, the steel liner is real property, or at least it was real property at the time that the alleged defects resulted in the failure of the circumferential welds.

Travelers Prop. Cas. Co. of Am. v. N.W. Pipe Co. , 2017 WL 2687652, at *7. This approach certainly seems consonant with the CGL policy at issue here, with the allegation here of injury occurring with the risers' installation, and with New York law.

New York law on the criteria of a fixture matches the law applied in Travelers Prop. : "To meet the common-law definition of fixture, the personalty in question must: (1) be actually annexed to real property or something appurtenant thereto; (2) be applied to the use or purpose to which that part of the realty with which it is connected is appropriated; and, (3) be intended by the parties as a permanent accession to the freehold." Matter of Metromedia, Inc. (Foster & Kleiser Div.) v. Tax Commn. of City of N.Y. , 60 N.Y.2d 85, 90, 455 N.E.2d 1252, 468 N.Y.S.2d 457 (1983) (citations omitted). The parties have not employed this test, identified these fixture criteria, or presented the facts necessary for determining this exclusion. Based on the summary judgment record to date, the risers would appear to meet this fixture definition. Because "real property" is expressly eliminated from the definition of "Your Product," the defendant Aspen is not entitled to summary judgment on this exclusion as argued in its original memorandum, ECF# 342.

Impaired Property

Exclusion G states that the policy does not apply to:

"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 G 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.

ECF# 284-1, p. 14. The Policy defines "Impaired Property" in this way:

"Impaired Property" means tangible property, other than "Your Product", or "Your Work", that

(1) 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; and

(2) can be restored to use by:

(a) the repair, replacement, adjustment, or removal of "Your Product" or "Your Work"; or

(b) your fulfillment of the terms of such contract or agreement.

ECF# 284-1, p. 9.

Aspen argues that, "[a]ny non-damaged product is either 'Impaired Property' (as defined above) or 'property which has not been physically injured' and is therefore excluded under the 'Impaired Property' exclusion." ECF# 342, p. 52. Aspen also notes that the exclusion's exception for property put to its intended use "does not apply to the four uncompleted plants" because they were not used. Id. Aspen wants this exclusion to bar all coverage for replacement damages, "because the removal of undamaged product was caused by a defect in the risers." Id. Aspen emphasizes that this exclusion operates whether the defective work was done by a subcontractor or not, citing Pavarini Constr. Co., Inc. v. Continental Ins. Co., 304 App. Div. 2d 501, 759 N.Y.S.2d 56 (2003). As authority for this exclusion's applicability, Aspen relies on two unpublished decisions: Big-D Constr. Midwest, LLC v. Zurich Am. Ins. Co. , 2018 WL 3025066 (D. Utah Jun. 18, 2018), corrected and superseded by , 2018 WL 3849923 (D. Utah Aug. 13, 2018) ; and Acceptance Ins. Co. v. Ross Contractors, Inc. , 2008 WL 2796593 (Minn. App. Jul. 22, 2008), rev. denied , (Oct. 1, 2008).

B & V first summarily argues the exclusion does not apply because the property damaged was the JBRs which is B & V's work, and "Impaired Property" is defined above as "tangible property, other than ... 'Your Work.' " ECF# 284-1, p. 9. B & V string cites authorities showing the agreement between commentators and courts, "that where non-defective work or property must be damaged to remove defective property, the impaired property exclusion does not apply." ECF# 345, p. 78. B & V distinguishes Pavarini as involving a different policy with an unknown definition of "Impaired Property." Finally, B & V points out that the broad application of this exclusion means, "several policy provisions would be rendered superfluous-a prohibited result under the Tenth Circuit's reasoning." Id. at p. 79.

In reply, Aspen goes through several of the B & V's citations denying they discussed the "impaired property" ex