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The Celina Mutual Ins. Co. v. Gallas

United States District Court, N.D. Indiana, South Bend Division

January 30, 2017

THE CELINA MUTUAL INSURANCE COMPANY, a member of a pool of companies known as Celina Insurance Group, Plaintiff,
v.
DANIEL L. GALLAS, CATHERINE D. GALLAS, FINISHING TOUCH CLEANING SERVICE, INC., GEOFFREY WENDT, NADIA WENDT, and WINDAM BREMER as Trustee of The Zenonas Puzinauskas Daughters' Family Trust, Defendants.

          OPINION AND ORDER

          RUDY LOZANO, Judge United States District Court

         This matter is before the Court on the Motion for Summary Judgment filed by Plaintiff, The Celina Mutual Insurance Company (“Celina”), on March 3, 2016 (DE #49). For the reasons set forth below, Celina's Motion for Summary Judgment (DE #49) is GRANTED. The Clerk of the Court is DIRECTED to enter a DECLARATORY JUDGMENT in favor of Celina declaring that under insurance policy number 7114353-0, The Celina Mutual Insurance Company has no duty to defend or indemnify Daniel L. Gallas, Catherine D. Gallas, and/or Finishing Touch Cleaning Service, Inc., against claims asserted by Geoffrey Wendt, Nadia Wendt and Windham Bremer as trustee of The Zenonas Puzinauskas Daughters' Family Trust (whether individually or jointly) in case number 46D02-1303-CT-508 in the LaPorte County, Indiana, Superior Court.

         BACKGROUND

         Celina filed this declaratory judgment action seeking a determination as to whether it owes a duty to defend or indemnify Defendants Finishing Touch Cleaning Service, Inc. (“Finishing Touch”), Daniel L. Gallas, and Catherine D. Gallas (together, “Gallas Defendants”) for claims brought by Defendants Geoffrey Wendt, Nadia Wendt, and Windam Bremer as Trustee of The Zenonas Puzinauskas Daughters' Family Trust (together, “Wendt Defendants”) in a lawsuit pending in Indiana state court. In that lawsuit, the Wendt Defendants allege that they hired Finishing Touch to clean the glass in the windows and doors of their home in Beverly Shores, Indiana, and that Finishing Touch damaged parts of the windows and doors in doing so. Celina is defending the Gallas Defendants in the underlying lawsuit under a reservation of rights.

         Celina filed a motion for summary judgment on the issue of whether it is obligated to defend and indemnify the Gallas Defendants in the underlying lawsuit. Celina argues that the claims in the underlying lawsuit are excluded from coverage under the insurance policy at issue. The Wendt Defendants and the Gallas Defendants (together, “Defendants”) filed responses to the motion, maintaining that the claims are not excluded from coverage. The Gallas Defendants also argue that Celina waived its right to deny coverage or is estopped from denying coverage.

         SUMMARY JUDGMENT STANDARD

         Summary judgment must be granted when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A genuine issue of material fact exists when “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Not every dispute between the parties makes summary judgment inappropriate; “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Id. To determine whether a genuine dispute of material fact exists, the Court must construe all facts in the light most favorable to the non-moving party and draw all reasonable inferences in that party's favor. See Ogden v. Atterholt, 606 F.3d 355, 358 (7th Cir. 2010). A party opposing a properly supported summary judgment motion may not rely on allegations in his own pleading, but rather must “marshal and present the court with the evidence [it] contends will prove [its] case.” Goodman v. Nat'l Sec. Agency, Inc., 621 F.3d 651, 654 (7th Cir. 2010). “[I]nferences relying on mere speculation or conjecture will not suffice.” Stephens v. Erickson, 569 F.3d 779, 786 (7th Cir. 2009) (citation omitted).

         The party with the burden of proof on an issue can obtain a summary judgment “only where the evidence is so one-sided that it points inescapably” in the movant's favor, and “every reasonable jury” would decide that the movant has met its burden of proof. Thorne v. Member Select Ins. Co., 899 F.Supp.2d 820, 824 (N.D. Ind. 2012) (citations omitted). If the non-moving party fails to establish the existence of an essential element on which he bears the burden of proof at trial, summary judgment is proper. Massey v. Johnson, 457 F.3d 711, 716 (7th Cir. 2006).

         FACTS

         The Underlying Lawsuit

         Geoffrey Wendt (“Wendt”) and Nadia Wendt (together, the “Wendts”) hired Finishing Touch to clean the glass in the windows and doors of their home in Beverly Shores, Indiana, in June 2011.[1]After Finishing Touch's employees finished their work at the Wendts' home, Wendt noticed white stains and spots on the glass, though the glass itself was not damaged. He contacted Daniel Gallas (“Gallas”), the owner of Finishing Touch, and asked that the employees return to the home and remove the spots from the glass in the windows and doors. According to Wendt, his agreement with Gallas was only for removing the spots on the glass, it was not to wipe down or clean, or perform any work on any portions of the home other than the glass. (DE #55-2, ¶7.)

         In August 2011, two of Finishing Touch's employees returned to the Wendts' home. Gallas testified that he told the employees to use a liquid product called OneRestore to remove the spots from the glass. The label of the OneRestore container instructs the user to “[a]lways test a small area first to determine applications and dwell time, ” “not allow product to dry on surface, ” and rinse the product off by using “a thorough, high pressure rinse.” (DE #55-6 at 7.) Gallas testified that he instructed the employees to “spray the window [with OneRestore], and use your window apparatus tools to apply water to rinse it off the window, and clean the window like you would normally clean the window, squeegee it off and wipe it off, wipe off the frames with their rags.” (DE #50-5 at 5.) He testified that Finishing Touch “was hired to clean glass, ” and that while he instructed the employees “to clean the windows, ” this meant “to clean the glass” to them. (Id. at 6.) He also testified that when the employees “do a window-cleaning job, the water is gonna get on the frame, no matter what you do. So, they're trained to wipe off the frame. . . . That's where the water drips.” (Id. at 7.)

         One of the Finishing Touch employees explained the process he used to clean the glass with OneRestore:

[We] [g]ot our spray bottle, we sprayed the window, the glass part, and as soon as we got done spraying the window we used our sponge with the soapy water and we used a squeegee to get it off. And, you know, we wiped where the water sits on - like, because when we wiped with the squeegee, water usually goes down, right, so we wiped the bottom frame.

(DE #50-4 at 6.) He did his “best just to spray the glass.” (Id. at 7.) The other employee testified that “[w]e just spray on the glass and right away with the sponge with the water and so we try to clean it up and then squeegee. And just dry a little bit of water that runs in the frame and that's it.” (DE #50-3 at 7.) When asked what precautions were taken to prevent OneRestore from coming into contact with the window frames, sills, or cladding, he testified that “[w]e just dried it off with a towel. Any water or liquid that comes out, we dried it off with a towel.” (Id. at 8.) The Finishing Touch employees removed the spots from the glass using OneRestore without damaging the glass.

         After the Finishing Touch employees had left the home, Wendt observed that the glass was clean and the water spots had been removed, but that the paint around the glass in the windows and doors was bubbling and blistering, and some paint was sliding off. He also observed that the silicone seals and caulking of the windows had “turned to a soft rubbery bubblegum-like consistency and br[oke] into strands.” (DE #55-2, ¶11.) The Wendts' home subsequently experienced condensation in the windows, and on cold days and nights, condensation would drip from the windows and form small puddles inside the home. (Id., ¶13.) The Wendts contacted Pella Windows and various contractors regarding these problems, and were advised that replacing the windows and doors would be less expensive than repairing them. The Wendts replaced the windows and doors, which caused damage to the siding shingles covering the home's exterior, some interior woodwork and other parts of the home's interior. The Wendts replaced the damaged siding shingles, damaged interior woodwork and repainted and re-stained parts of the home's interior.

         The Wendt Defendants filed a lawsuit against the Gallas Defendants in LaPorte County Superior Court No. 2 under Cause No. 46D02-1303-CT-508 (“underlying lawsuit”). The complaint in the underlying lawsuit alleges that the Gallas Defendants carelessly and negligently allowed chemicals intended to clean the glass in the windows of their home to come in contact with the other portions of the windows and damaged them, including the window frames, casings, trim and sills. While the complaint only addresses the windows of the Wendts' home, it is undisputed that the Wendt Defendants also allege damage to the glass doors of the home in the underlying lawsuit. The Wendt Defendants seek to recover the cost to remedy and repair the damage to the windows, doors, siding shingles, interior woodwork and interior trim, and all other damages they suffered.

         The Gallas Defendants submitted a claim to Celina for the defense of and indemnity for the underlying lawsuit. On April 22, 2013, Celina agreed to provide defense for the allegations in the underlying lawsuit, subject to Celina's reservation of rights. On June 6, 2014, Celina filed its complaint for declaratory judgment seeking a declaration that it is not legally obligated to defend or indemnify the Gallas Defendants in the underlying lawsuit.

         The Policy

         Celina had issued an all business coverage insurance policy number 7114353-0 to Finishing Touch as the named insured for the policy period of July 14, 2011, through July 14, 2012 (“Policy”). (DE #50-9.) Gallas and Catherine Gallas were also insureds under the Policy as executive officers, directors and/or stockholders of Finishing Touch. (Id. at 100.) The commercial general liability (“CGL”) coverage in the Policy states in relevant part:

We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” and “property damage” to which this insurance applies. We will have the right and duty to defend the insured in any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury” or “property damage” to which this insurance does not apply. . . .

(Id. at 92.) The Policy contains two relevant exclusions, which state that the insurance does not apply to:

j. Damage to Property “Property damage” to: . . .
(6) That particular part of any property that must be restored, repaired or replaced because “your work” was incorrectly performed on it. . . .
Paragraph (6) of this exclusion does not apply to “property damage” included in the ...

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