UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Fletch’s Sandblasting and Painting, Inc.

v. Case No. 15-cv-490-PB Opinion No.

Colony Insurance Company

MEMORANDUM AND ORDER

Fletch’s Sandblasting and Painting, Inc., seeks a

determination in this declaratory judgment action that it is

entitled to coverage under a commercial general liability

insurance policy issued by Colony Insurance Company. Colony has

filed a motion for summary judgment arguing that Fletch’s cannot

claim coverage for what amounts to a claim of defective

workmanship.

I. BACKGROUND

A. The Insurance Policy

Colony sold Fletch’s a standard-form commercial general

liability (“CGL”) insurance policy. See Doc. No. 16-3

[hereinafter “Ex. B”]. The policy provides in pertinent part

that Colony “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.” Ex. B at

16, § I(1)(a). Coverage is available under the policy, however, only if the “bodily injury” or “property damage” is caused by an

“occurrence.” See Ex. B at 16, § I(1)(b)(1). An “occurrence”

is defined as “an accident, including continuous or repeated

exposure to substantially the same general harmful conditions.”

Ex. B at 29, § V(13). The policy also contains an exclusion for

“property damage” to “[t]hat particular part of any property

that must be restored, repaired or replaced because ‘your work’

was incorrectly performed on it.” Ex. B at 17, 19–20, §

I(2)(j)(6). “Your work” includes “[w]ork or operations

performed by you or on your behalf.” Ex. B. at 31, §

V(22)(a)(1).

B. The Underlying Action1

Fletch’s seeks a defense and indemnification with respect

to a complaint filed against it by Thick Tech Systems, Inc., in

the United States District Court for the District of Maine. See

Amended Complaint, Thick Tech Systems, Inc. v. Methuen

Construction Co., No. 2:15-cv-00076-DBH (D. Me. June 3, 2015);

see also Doc. No. 16-2 [hereinafter “Ex. A”] (copy of Maine

complaint). The complaint alleges that the United States Navy

hired Methuen Construction Company as a general contractor to

make repairs at the Portsmouth Naval Shipyard. Ex. A at 2–3.

1 I describe the facts as alleged in the underlying action without assessing their veracity. Cf. Broom v. Cont’l Cas. Co.,

(2005).

2 Methuen subcontracted with Fletch’s to “strip, repair, prime and

finish [certain structures] with an intumescent fireproofing

product known as Albi Clad 800.” Ex. A at 3. Fletch’s, in

turn, subcontracted with Thick Tech to apply the fireproofing

material, while Fletch’s remained responsible for preparing

(e.g., repairing and priming) the structures’ surfaces

beforehand. Ex. A at 3.

Fletch’s allegedly performed the surface preparation work

“negligent[ly],” “in an unworkmanlike manner,” and “[not] in

accordance with the job specifications.” Ex. A at 4. As a

result, when Thick Tech later applied the fireproofing material,

it failed to adhere. Ex. A at 4. “Fletch’s [then] induced

[Thick Tech] to expend and commit further time and resources

needed to correct defects caused by [Fletch’s] poor workmanship

by promising [Thick Tech] that it would be paid for the

additional work and supplies furnished . . . .” Ex. A at 4.

But “Fletch’s had no intention of paying,” and after Thick Tech

“devote[d] significant additional time and resources [to]

performing corrective work made necessary due to Fletch’s

failure of performance,” Fletch’s failed to pay Thick Tech in

full. Ex. A at 4–5.

Thick Tech has sued Fletch’s for breach of contract,

quantum meruit, fraudulent inducement, and a claim “sounding in

3 negligence.” See Ex. A at 5-8.2 Only the negligence claim is

relevant here. That claim asserts that “[a]s a contractor

responsible for completing all surface preparation work . . .

Fletch’s owed [Thick Tech] a duty to complete said work in a

competent manner.” Ex. A at 7. Fletch’s was allegedly

negligent because it “failed to properly prepare the surfaces,”

“failed to follow the job specifications,” “made

misrepresentations to [Thick Tech] concerning the adequacy and

compatibility of the products Fletch’s applied to [the]

surfaces,” and “failed to adequately protect the work while in

progress from weather elements.” Ex. A at 7.

II. STANDARD OF REVIEW

Summary judgment is appropriate when the record reveals “no

genuine dispute as to any material fact and [that] the movant is

entitled to judgment as a matter of law.” Fed. R. Civ. P.

56(a). The evidence in the record must be considered in the

light most favorable to the nonmoving party, drawing all

reasonable inferences in its favor. See Navarro v. Pfizer

Corp.,

(1st Cir. 2001).

2 The Maine complaint also brings claims against Methuen and Liberty Mutual Insurance Company, but those claims are irrelevant here.

4 A party seeking summary judgment must first identify the

absence of any genuine dispute of material fact. See Celotex

Corp. v. Catrett,

(1986). A material fact

“has the potential to change the outcome of the suit.” See

Borges ex rel. S.M.B.W. v. Serrano-Isern,

(1st

Cir. 2010). If the moving party satisfies this burden, the

nonmoving party must then “produce evidence on which a

reasonable finder of fact, under the appropriate proof burden,

could base a verdict for it; if that party cannot produce such

evidence, the motion must be granted.” See Ayala–Gerena v.

Bristol Myers–Squibb Co.,

(1st Cir. 1996); see

also Celotex, 477 U.S. at 322–24.

III. ANALYSIS

Colony presents several arguments in support of its summary

judgment motion, two of which I consider in this Memorandum and

Order. First, it contends that Thick Tech’s negligence claim is

not covered under Fletch’s policy because the property damage

that gave rise to the claim was not caused by an “occurrence.”

Alternatively, Colony argues that Fletch’s is not entitled to

coverage because its claim stems from a type of property damage

that is expressly excluded from coverage, even if it was caused

by an occurrence.

5 I begin by describing the background law governing

insurance coverage disputes. I then apply that law to Colony’s

summary judgment arguments.

A. Background Insurance Law

Fletch’s policy entitles it to both a defense and

indemnification for covered claims. The duty to defend is

broader than the duty to indemnify: whereas the duty to

indemnify arises only when the insured is actually held liable,

the duty to defend turns on the nature of the allegations

against the insured. See Great Am. Dining, Inc. v. Phila.

Indem. Ins. Co.,

(2013). The duty to defend

“is determined by whether the cause of action against the

insured alleges sufficient facts in the pleadings to bring it

within the express terms of the policy.” Broom v. Cont’l Cas.

Co.,

(2005).

The interpretation of an insurance policy presents a

question of law. See Hunt v. Golden Rule Ins. Co.,

(1st Cir. 2011). A court must “construe the [insurance

policy] as would a reasonable person in the position of the

insured based upon a more than casual reading of the policy as a

whole.”

at 86 (quoting Concord Gen. Mut. Ins. Co. v. Doe,

(2010)). “If an insurance policy’s terms are

clear and unambiguous, then the policy’s language must be

accorded its natural and ordinary meaning.”

On the other

6 hand, if a policy is ambiguous and one reasonable interpretation

requires coverage, the court will find coverage. See

But

courts “‘will not perform amazing feats of linguistic gymnastics

to find a purported ambiguity’ simply to construe the policy

against the insurer and create coverage where it is clear that

none was intended.” Colony Ins. Co. v. Dover Indoor Climbing

Gym,

, 630–31 (2009) (quoting Hudson v. Farm Family

Mut. Ins. Co.,

(1997)). The burden of proof

remains with the insurer. Concord Gen. Mut. Ins. Co. v. Green &

Co. Bldg. & Dev. Corp.,

(2010).

B. Application

1. Is the underlying claim based on property damage that was caused by an occurrence?

Thick Tech alleges in the underlying action that the costs

it seeks to recover from Fletch’s were incurred because Fletch’s

negligently performed the surface preparation work on the

structures Thick Tech agreed to fireproof. The New Hampshire

Supreme Court has repeatedly recognized that “defective work,

standing alone, does not constitute an occurrence,” Concord

Gen.,

, because “[t]he fortuity implied by

reference to accident or exposure is not what is commonly meant

by a failure of workmanship,” McAllister v. Peerless Ins. Co.,

(1984); see also 9A Steven Plitt et al., Couch

on Insurance § 129:4 (3d ed. 2016). Instead, coverage is

7 triggered only when the defective workmanship causes damage “to

property other than the work product.” Concord Gen.,

.

Given the complaint’s framing, I can only reasonably

construe Thick Tech’s claim as one for the labor and material

costs that it incurred to strip the unsuccessfully fireproofed

surfaces, redo the surfaces, and reapply the fireproofing

material. See Ex. A at 4 (“As a result of Fletch’s negligent

acts or omissions, [Thick Tech] was required to devote

significant additional time and resources in performing

corrective work . . . .”); Doc. No. 17–1 at 9 (Fletch’s

concession that Thick Tech’s claim is not for damage to real

property); Ex. A at 8 (“As a proximate cause of Fletch’s

negligent acts and omissions, [Thick Tech] incurred significant

damages and losses.” (emphasis added)); see also Incur,

Merriam-Webster.com, https://www.merriam-

webster.com/dictionary/incur (last visited June 2, 2017)

(contrasting meaning of “incur” with “occur,” where “incur”

connotes a subject bringing a burden onto herself, and “occur”

connotes an event that “presents itself”). So construed, Thick

Tech’s claim is a noncovered claim for defective workmanship

because the costs it seeks to recover were incurred to repair

Fletch’s defective work rather than to compensate Thick Tech for

damage to other property that resulted from the defective work.

8 Fletch’s heavy and exclusive reliance on High Country

Assocs. v. New Hampshire Ins. Co.,

(1994), is

misplaced. In that case, homeowners brought a claim for damage

to condominium units based on negligent design, materials

selection, construction, supervision, and inspection. See

. The negligence asserted in the underlying action

allegedly caused the buildings to suffer actual damage when

water seeped into the walls, resulting in mildew, rotting, and

diminished structural integrity. See

. On the

basis of that accidental damage to real property, the court

identified an occurrence triggering coverage. See

at 43–44.

Here, in contrast, Thick Tech and Fletch’s are contractors

embroiled in a dispute over corrective work. Whereas the claim

in High Country was “not [for] the diminution in value or cost

of repairing work of inferior quality,”

, that is the

nature of Thick Tech’s claim here. Thick Tech’s negligence

claim is for the time and other costs it incurred to remediate

Fletch’s defective surface preparation work. See Ex. A at 4, 7–

8; Doc. No. 17–1 at 9; see also McAllister,

(concluding that no accident, i.e., fortuitous event, was

presented by claim seeking merely to correct defective

landscaping and construction). Accordingly, Thick Tech’s claim

is distinguishable from the claim for accidental, fortuitous

damage to real property in High Country.

9 The purpose of CGL insurance underscores why Thick Tech’s

complaint does not present a covered occurrence. CGL policies

are designed to insure against fortuitous, unanticipated events

that give rise to “tort liability for physical injury to the

person or property of others.” Plitt et al., supra, § 129:5.

Such accidental property damage, which may occasionally occur in

the course of running a business, is covered. See Plitt et al.,

supra, § 129:1. But CGL policies are not designed to cover

business risk itself, which “occurs as a consequence of the

insured not performing well and is a component of every business

relationship that is necessarily borne by the insured in order

to satisfy its customers.” Plitt et al., supra, § 129:1; see

Lyman Morse Boatbuilding, Inc. v. N. Assur. Co. of Am.,

, 968–69 (1st Cir. 2014) (explaining the difference between

noncovered “business risk” and covered “occurrence of harm

risk”). In a contracting relationship such as the one between

Fletch’s and Thick Tech, the events against which a CGL policy

insures do not include a contractor’s failure of workmanship,

even where another contractor detrimentally relies on or

remediates it. Guaranteeing a contractor’s performance is the

purpose of a performance bond, not a CGL policy insuring against

accidents causing property damage.

10 For these reasons, the costs that Thick Tech is seeking to

recover from Fletch’s were not incurred because of property

damage caused by an occurrence.

2. Is Thick Tech’s negligence claim grounded in excluded property damage?

Fletch’s policy does not apply to claims that stem from

property damage to “[t]hat particular part of any property that

must be restored, repaired or replaced because ‘your work’ was

incorrectly performed on it.” Ex. B at 17, 19–20, § I(2)(j)(6).

Colony argues that Thick Tech’s negligence claim is excluded

under this provision because the costs it is attempting to

recover from Fletch’s were incurred to repair Fletch’s defective

work.

Fletch’s offers the following in response to this argument:

Paragraph (6) concerns only damage to property that was damaged because Fletch’s work was improperly performed on it. Again, all of Fletch’s work was performed on the real property owned by the United States Navy. There is no claim for damage to any property on which Fletch’s performed any work. Indeed, all of Fletch’s work was done before [Thick Tech] even began its work, so Fletch’s could not have performed any work on [Thick Tech’s] work product.

This exclusion thus has no application to this case.

Doc. No. 17-1 at 9.

Fletch’s’ response is based on the mistaken premise that

the property damage exclusion applies only if the damaged

property that gives rise to a claim against an insured is owned

11 by the party that brings the claim. Fletch’s cites no case to

support this premise and I find no support for it in the

language of the policy itself. Here, it is quite clear that

Thick Tech’s negligence claim is seeking compensation for costs

that Thick Tech incurred to repair Fletch’s incorrectly

performed work. Under these circumstances, the exclusion

applies regardless of whether Thick Tech owns the property it

repaired. Because Fletch’s does not present any other argument

to support its position that the exclusion is inapplicable, I

agree with Colony that Thick Tech’s negligence claim is excluded

from coverage even if the property damage that gave rise to the

claim was caused by an occurrence.3

IV. CONCLUSION

For the reasons stated in this Memorandum and Order, I

grant Colony’s motion for summary judgment (Doc. No. 16). The

3 Perhaps Fletch’s is instead attempting to argue that, regardless of who owns the structures that Thick Tech prepared for fireproofing, the property damage exclusion is inapplicable because Thick Tech is seeking to recover for the cost of repairing Fletch’s defective work rather than for damage to the underlying structures. I decline to consider any such argument because it has not been adequately briefed. A single sentence in a one paragraph argument that is supported by neither case law nor legal reasoning is simply not sufficient to warrant the court’s attention.

12 clerk is directed to enter judgment accordingly and close the

case.4

SO ORDERED.

/s/Paul Barbadoro___________ Paul Barbadoro United States District Judge

June 6, 2017

cc: Michael H. Darling, Esq. William L. Boesch, Esq.

4 In addition to the claim for declaratory relief, Fletch’s action against Colony also includes a claim for breach of contract for denying coverage. Doc. No. 1-1 at 4. For the reasons stated in this Memorandum and Order, Colony is entitled to summary judgment on that claim as well.

13