In The Cincinnati Ins. Co. v. Transport Graphics, Inc., No. 09-04259 (W.D. Mo. May 19, 2011), claimant Arning sued insured Transport alleging that colored vinyl graphic panels Arning purchased from Transport faded. The complaint alleged causes of action for breach of contract, breach of warranties, and negligent misrepresentation. Transport’s CGL insurer Cincinnati filed a declaratory judgment action. The federal district trial court granted Cincinnati’s motion for summary judgment, holding that Cincinnati had no duty to defend or indemnify Transport against the Arning lawsuit. Applying Missouri law, the court first held that the breach of contract and warranty causes of action did not allege an “occurrence” or, assuming an “occurrence,” fell within the “contractual liability” exclusion. The court did not address the “assumption of liability” requirement of the contractual liabliity exclusion. The court next held that, even assuming the negligent misrepresentation cause of action alleged an “occurrence,” which was unsettled under Missouri law, all of the alleged “property damage” fell within the “sistership exclusion” – exclusion n. – which applies to:
Any liability or damages claimed for any loss, cost or expense incurred by you or others for the loss of use, withdrawal, recall, inspection, repair, replacement, adjustment, removal or disposal of:
(1) “Your product”;
(2) “Your work”;
(3) “Impaired property”;
if such product, work, or property is withdrawn or recalled from the market or from use by any person or organization because of a known defect, deficiency, inadequacy or dangerous condition in it.