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Patriot Insurance Co. v. Holmes Carpet Center, LLC

United States District Court, D. New Hampshire

October 24, 2017

Patriot Insurance Company
v.
Holmes Carpet Center, LLC, et al.

          MEMORANDUM AND ORDER

          Paul Barbadoro United States District Judge.

         This declaratory judgment action concerns a commercial general liability insurance policy issued by Patriot Insurance Company (“Patriot”) to Holmes Carpet Center, LLC (the “Carpet Center”). Patriot seeks a determination that it has no duty to defend or indemnify the Carpet Center in an underlying action asserting claims for breach of contract and violation of New Hampshire's Consumer Protection Act because the action seeks damages only for uncovered defective workmanship. The matter is before me on Patriot's motion for summary judgment.

         I. BACKGROUND

         A. The Insurance Policy

         The insurance policy at issue in this case provides in pertinent part that Patriot “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.” Doc. No. 12-2 at 115, § I(1)(a). The policy goes on to explain that coverage is available only if the “bodily injury” or “property damage” is caused by an “occurrence.” See Id. at 115, § I(1)(b)(1). An “occurrence, ” in turn, is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Doc No. 12-3 at 8, § V(13). “Property damage” is further defined as “[p]hysical injury to tangible property, including all resulting in loss of use of that property” or “[l]oss of use of tangible property that is not physically injured.” See Id. at 9, § V(17).

         B. The Underlying Action

         1. Underlying Complaint

         Patriot seeks a declaratory judgment that it has no duty to defend or indemnify the Carpet Center in a suit filed against it by Red Oak Apartments, LLC (“Red Oak”), in Hillsborough County Superior Court.[1] See Complaint, Red Oak Apartments, LLC v. Holmes Carpet Center, LLC, et al., No. 216-2015-CV-00807 (N.H. Super. Ct. Nov. 11, 2016); see also Doc. No. 12-1 (copy of state court complaint). The complaint in the underlying action alleges that Red Oak, which owns and manages several rental properties, hired the Carpet Center to install Versalic vinyl plank flooring in approximately 195 of its apartment units. Doc. No. 12-1 at 2. Red Oak purportedly paid the Carpet Center more than $272, 000 for materials and labor in connection with the flooring installation. Id. Shortly after the Carpet Center completed its work, flooring planks in several units began to shift and slide out of place, creating large gaps between the planks. Id. at 2-3. Red Oak notified the Carpet Center of the issue and it subsequently performed repair work in some of the units. Id. at 3. Red Oak, however, was ultimately dissatisfied with the Carpet Center's remedial efforts, and sued for breach of contract and violation of the New Hampshire Consumer Protection Act, N.H. R.S.A. Chapter 358-A. See Id. at 3.

         The underlying complaint alleges that the Carpet Center “failed to complete the contract work in a workmanlike manner in accordance with accepted flooring installation practices . . . [and] failed, refused, and neglected to repair the flooring in a good and workmanlike manner.” Id. at 4. The complaint further alleges that the Carpet Center “deceptively misrepresented the quality and character of [its] services” in connection with the flooring installation, in violation of Chapter 358-A. Id. at 4-5. As a result, Red Oak claims it suffered unspecified damages.

         Upon receiving the complaint, the Carpet Center submitted an insurance claim to Patriot requesting a defense and indemnification. Doc. No. 12 at 3. Patriot, in turn, commenced the instant declaratory judgment action.

         2. Anticipated Damage to Apartment Units, Due to Removal

         As part of its supplemental briefing in this case, the Carpet Center produced correspondence from Red Oak's counsel and its retained expert “indicating that property damage is an aspect of the underlying claim.” Doc. No. 24 at 2. Red Oak's expert identified specific areas in the apartment units that he anticipates will be damaged during the removal of the vinyl flooring and its attendant components. See Doc. No. 24-3. According to the expert, Red Oak should “expect door jambs, baseboards and any vertical surface between the moldings to be scrapped, scratched and marred” during the removal process. See Id. Such damage will apparently require spackling, sanding, and painting to repair. See Id. Expected damage to drywall will require similar repairs. See Id. He further opined that, in most cases, moldings will likely be “fractured, broken and damaged beyond repair; requiring full replacement, priming and painting.” See id.

         II. STANDARD OF REVIEW

         This case concerns both Patriot's duty to defend and its duty to indemnify. The duty to defend is broader than the duty to indemnify: whereas the duty to indemnify arises only when the insured is actually liable, the duty to defend turns on the nature of the allegations against the insured. ...


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