Dist. Ct. did not err in granting defendant-insurance company’s motion for summary judgment in action by plaintiff-insured seeking indemnity for multi-million dollar damage award for lost profits in underlying action in which plaintiff was ordered to pay to disappointed customer, under circumstances where plaintiff sold defective laminate product that on occasion caught fire. Instant commercial general liability policy provided for “property damage to your product arising out of it or any part of it,” and record showed that plaintiff’s customer incurred lost sales after word got out about product’s failure. Generally, though, lost profit is form of business loss that is not covered under commercial general liability policy, and plaintiff was required to show that lost profits at issue in underlying lawsuit were “because of” property damage inflicted by plaintiff’s defective laminate. However, plaintiff could not prevail, where: (1) plaintiff improperly presumed that because its product failed in way as to cause property damage, all losses resulting from failure of product were necessarily “because of” property damage; (2) loss of sales following incidents of property damages could have been caused by customer’s belief that plaintiff had breached implicit or explicit warranties; and (3) fact-finder in underlying action was not called upon to decide whether plaintiff’s defective product resulted in property damage, let alone whether said losses that plaintiff suffered were because of said damage.
Federal 7th Circuit Court
Civil Court
Insurance