United States District Court, W.D. Virginia, Roanoke Division
MEMORANDUM OPINION 
S. BALLOU UNITED STATES MAGISTRATE JUDGE.
insurance dispute between plaintiff, Western World Insurance
Company (“Western World”) and its insured,
defendant Air Tech, Inc. (“Air Tech”) relates to
a claim against Air Tech for damage to a piece of equipment
Air Tech provided for a construction project. Because I find
that the Western World insurance policy does not provide
coverage for the claim asserted against Air Tech, I
GRANT Western World's motion for summary
judgment and DENY Air Tech's
cross-motion for summary judgment.
February 2015, Air Tech entered into a subcontract agreement
with Hall's Construction Corp. (“Hall's
Construction”) to supply a Solvent Recovery Chiller
(the “Chiller”) as part of a construction project
Hall's Construction had undertaken for BAE Ordinance
Systems, Inc. Compl. ¶ 6, Dkt. No. 1. The Chiller was
delivered and installed, though the parties disagree about
whether Air Tech had a role in installation. Thereafter, the
Chiller failed to work properly, which required Hall's
Construction to replace the Chiller. In February 2017,
Hall's Construction filed suit against Air Tech in state
court to recover the cost of replacing the Chiller (the
“state court action”). In an amended complaint in
August 2017, Hall's Construction added Johnson Controls,
Inc. (“Johnson Controls”) as a defendant, and
added allegations of negligence against both Air Tech and
Johnson Controls. Compl. ¶ 15. Specifically, Hall's
Construction alleges that the Chiller did not operate
properly because Air Tech breached its duty “to provide
the material and equipment and provide for the installation
of a Chiller.” State Court Am. Compl. ¶ 4, Dkt.
No. 1-5. The state court amended complaint further alleges
[T]he equipment procured from Johnson [Controls] by Air Tech
and the manuals provided by Air Tech and Johnson [Controls]
negligently failed to accurately describe the equipment, the
components and the required electrical connections, which
negligent failure and breach of warranty were the proximate
cause in the malfunction of the equipment resulting in the .
. . destruction of the said equipment.
Id. at ¶ 9. Hall's Construction further
alleges that the “failure of the manuals to accurately
describe the work to be performed” and the
“negligent failure” of Air Tech and Johnson
Controls to correctly install the Chiller resulted in the
failure of the Chiller, requiring replacement, which cost
Hall's Construction $121, 629.76. Id. at ¶ 10,
Dkt. No. 1-5.
World issued a policy of commercial insurance to Air Tech
with effective dates from June 18, 2016 through June 18, 2017
(the “Western World policy”). Compl. ¶ 5,
Dkt. No. 1; Western World policy attached as Ex. 1 to Compl.
Air Tech made a claim under the Western World policy for a
defense in the state court action and indemnity for any
damages awarded in favor of Hall's Construction. Compl.
¶ 13, Dkt. No. 1. Western World initially declined to
provide a defense to Air Tech, but is currently providing a
defense in the state court action under a reservation of
rights. D's Mem. in Supp. of Summ. J. at 1, Dkt. No. 22.
World filed this action seeking a declaration that it has no
duty under the Western World policy to defend or indemnify
Air Tech in the state court action. Compl. at 17, Dkt. No. 1.
The parties have filed cross-motions for summary judgment
which are fully ripe. Dkt. Nos. 19, 21.
law determines the procedural aspects of summary judgment in
this case, while Virginia law governs the substantive
aspects. See Erie R.R. v. Tompkins, 304 U.S. 64, 58
(1938). Summary judgment is proper when “there is no
genuine issue as to any material fact and the movant is
entitled to a judgment as a matter of law.”
Fed.R.Civ.P. 56(a). Resolving this matter through summary
judgment is “especially appropriate” because the
construction of insurance contracts is a legal question.
W. Am. Ins. Co. v. Johns Bros., Inc., 435 F.Supp.2d
511, 513-14 (E.D. Va. 2006) (quoting Clark v. Metro. Life
Ins. Co., 369 F.Supp.2d 770, 774 (E.D. Va. 2005)).
case arising under diversity jurisdiction, the forum
state's choice-of-law rules apply, and for insurance
disputes, Virginia applies “the law of the place where
an insurance contract is written and delivered.”
Buchanan v. Doe, 431 S.E.2d 289, 291 (Va. 1993);
See CACI Int'l, Inc. v. St. Paul Fire & Marine
Ins. Co., 566 F.3d 150, 154-55 (4th Cir. 2009). Here,
Virginia law applies as the Western World policy was issued
and delivered to Air Tech in Virginia See Compl.
¶ 4, Dkt. No. 1.
Western World Policy
Western World policy contains the following pertinent
provisions concerning coverage:
I - COVERAGES
A BODILY INJURY AND PROPERTY DAMAGE LIABILITY
a. We 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. We will have the right and duty to defend
the insured against 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.
b. This insurance applies to “bodily injury” and
“property damage” only if:
(1) The “bodily injury” or “property
damage” is caused by an “occurrence” that
takes place in the “coverage territory”;
See Western World policy at 32, Ex. 1 to the Compl.,
Dkt. No. 1-2.
insurance does not apply to:
a. Expected or Intended Injury “Bodily
injury” or “property damage” expected or
intended from the standpoint of the insured.
b. Contractual Liability “Bodily injury”
or “property damage” for which the insured is
obligated to pay damages by reason of the assumption of
liability in a contract or agreement. This exclusion does not
apply to liability
(1) That the insured would have in the absence of the
contract or agreement; or
(2) Assumed in the contract or agreement that is an
“insured contract, ” provided that the
“bodily injury” or “property damage”
occurs subsequent to ...