Unpublished Disposition, 888 F.2d 130 (9th Cir. 1989)

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U.S. Court of Appeals for the Ninth Circuit - 888 F.2d 130 (9th Cir. 1989)

Dennis BIEBER, Sheila Bieber, Plaintiffs-Appellants,v.INSURANCE COMPANY OF NORTH AMERICA, Defendant-Appellee.

No. 88-3827.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Sept. 15, 1989.Decided Oct. 5, 1989.

Before WRIGHT, WALLACE, and DAVID R. THOMPSON, Circuit Judges.


This appeal arises from the inclement effect of Montana weather upon vinyl house siding. Dennis and Sheila Bieber sought enforcement of a state court judgment against Energy Design--the installer of the ill-fated siding and an insured of Insurance Company of North America (INA). The district court granted summary judgment in favor of INA based upon exclusions within the policy. We affirm.

In 1984 the Biebers were contacted by a salesman from Energy Design Ltd. about installing vinyl siding on their home. The salesman told them vinyl siding was appropriate for Montana's diverse climate and assured them Energy Design possessed many years of experience with its installation. The Biebers contracted for installation.

After installation, the siding buckled and began falling off. The Biebers learned that vinyl siding is particularly inappropriate for Montana's extreme temperature fluctuations and that Energy Design had no previous experience installing it.

The Biebers sued in state court for Energy Design's negligence in recommending the siding and for its use of an incompetent installation crew. INA knew of the action but elected not to defend. In a default judgment, the state court awarded the Biebers $24,780 in damages for Energy Design's negligent recommendation and installation.

A separate state action was then brought by the Biebers against INA to enforce the state court judgment. INA removed it to federal court on diversity grounds and argued on motion for summary judgment that the claims were excludable under the terms of the policy. The magistrate and district court agreed, granted INA summary judgment and refused the Biebers' request for certification of the coverage issue to the Montana Supreme Court.

On appeal, the Biebers argue (i) the damages awarded by the state court fall within INA's policy, (ii) INA's denial of coverage argument is either collaterally estopped or barred by res judicata for its failure to defend the action below, and (iii) in the alternative, the coverage issue should be certified to the Montana Supreme Court. These arguments are addressed seriatim.

We review de novo the district court's granting of summary judgment. State Farm Mut. Auto. Ins. Co. v. Khoe, No. 88-1709, slip op. 9603, 9610 (9th Cir. April 24, 1989; as amended August 16, 1989). Montana law controls this diversity case and we review de novo the district court's interpretation of Montana law and of the policy provisions. Id. at 9611.

The district court held the Biebers' claims for property damage, bodily injury and personal injury as excludable under the policy. We agree.

INA's policy gives Energy Design public liability insurance against property damage and personal or bodily injury. The policy, however, does not protect against liability arising from Energy Design's work in installing its products or damage to the products themselves. This type of work/product exclusion in insurance contracts has been approved by the Montana Supreme Court and held to be unambiguous. Taylor-McDonnell v. Commercial Union Ins., 744 P.2d 892, 894-95 (Mont.1987).

The property damage in this case was confined to the vinyl siding itself. The Bieber's house was unharmed by the buckling siding and the state court awarded damages only for the cost and replacement of the siding. This type of damage falls squarely within the policy's exclusion provision which reads:

"We won't protect against claims for property damage to your products where the damage arises out of the products themselves or any part of them. And we won't protect against claims for property damage to completed work you performed where the damage arises out of the work."

Policy at 24. (emphasis supplied). The property damage in this case arose from Energy Design's work and product. Coverage was correctly denied.

Nor are the false representations made by Energy Design to the Biebers any basis for coverage. The policy includes in its definitions of "work" and "product" any representations made by Energy Design about its work and products. Policy at 33, 36. Energy Design's representations to the Biebers are excluded under the policy.

The Biebers also contend the state court's award of damages for embarrassment, anxiety, and aggravation is covered by the policy. They reason that these emotional injuries fall within the coverage for bodily and personal injury. This argument fails.

Embarrassment, anxiety, and aggravation are not cognizable injuries under the policy. They are not property damage. Nor do they meet the policy definition for bodily injury. The policy defines bodily injury as "injury to someone's body or any sickness or disease." Policy at 22. The Biebers' emotional trauma over the demise of their vinyl siding did not injure them bodily or cause them sickness or disease.

These emotions also do not meet the policy's definition of personal injury. That definition requires, inter alia, "mental suffering caused by the fact that someone else was killed or suffered bodily injury." Id. As no one has been killed or suffered bodily injury, the Biebers may not claim mental suffering under the policy.1 

The Biebers next argue that INA is precluded by collateral estoppel and res judicata from denying coverage because it failed to defend in the action below.2  This argument must fail because the issue of coverage was not litigated below. In Montana, collateral estoppel is available only where the precise question has been litigated in the previous action. Stapleton v. First Security Bank, 675 P.2d 83, 89 (Mont.1983). Any res judicata effect from the previous decision simply is irrelevant to the question of insurance coverage. Neither collateral estoppel nor res judicata precludes INA from raising a successful defense of no coverage.

Finally, the Biebers contend that the district court erred in failing to utilize the procedure of certification to the Montana Court. We review for abuse of discretion. Lehman Bros. v. Schein, 416 U.S. 386, 391 (1974); see McNeely v. Arave, 842 F.2d 230, 232 (9th Cir. 1988).

Montana Rule of Appellate Procedure 44 states that a federal court may certify a question of law if "it shall appear that there is a controlling question of Montana law as to which there is a substantial ground for difference of opinion." Here, there exists no controversy about the controlling law. The policy excludes work/product liability. The Montana Court has held such exclusions to be proper and unambiguous. Taylor, 744 P.2d at 894-95. The district court properly declined to certify.



This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Ninth Circuit Rule 36-3


The Biebers' damage award for overcharging also does not fall within the policy as overcharging fits no definition within it


The Biebers rely upon a potpourri of cases from assorted states in support of this proposition. These cases, however, do not involve claims of collateral estoppel but forms of equitable estoppel. Neither review of the briefs nor oral argument has revealed what form of estoppel the Biebers seek to rely upon. In any event, all of the cases are inapposite as they concern situations where an insurer wrongfully or unjustifiably refused to defend. Here, INA's decisions was both correct and justifiable as there was no coverage. This court expresses no opinion as to whether Montana imposes upon insurers a duty to defend in every case. That issue is not before us