Hallmark Specialty Insurance Company v. Kamflex Conveyor Corporation

• Court: District Court, N.D. California
• Decided: February 5, 2021
• Docket: 3:20-cv-05563
• Status: Unknown

Opinion

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

HALLMARK SPECIALTY INSURANCE Case No. 20-cv-05563-VC COMPANY,

Plaintiff, ORDER GRANTING MOTION FOR DEFAULT JUDGMENT v. Re: Dkt. No. 17 KAMFLEX CONVEYOR CORPORATION, et al., Defendants.

The Eitel factors support entry of default judgment in this case. Eitel v. McCool, 782 F.2d 1470 (9th Cir. 1986). Notably, exclusion m. of Kamflex’s insurance policy bars coverage. Exclusion m precludes coverage for “‘[p]roperty damage’ to ‘impaired property’ . . . arising out of: (1) A defect, deficiency, inadequacy or dangerous condition in ‘[the insured’s] product’ or ‘[the insured’s] work’; or (2) A delay or failure by [the insured] or anyone acting on [the insured’s] behalf to perform a contract or agreement in accordance with its terms.” Impaired property is elsewhere defined as tangible property “that cannot be used or is less useful because: a. It incorporates ‘[the insured’s] product’ or ‘[the insured’s] work’ that is known or thought to be defective, deficient, inadequate or dangerous; or b. [The insured] ha[s] failed to fulfill the terms of a contract or agreement . . . .” This is precisely what Desserts on Us alleges in the underlying action—it claims that it is unable to use a new building because that building contains Kamflex’s defective cookie packaging system; and that Kamflex failed to fulfil its contractual obligation to install a working system. Accordingly, there no potential for indemnity, and Hallmark has no duty to defend Kamflex. See, e.g., All Green Electric, Inc. v. Security National Ins. Co., 22 Cal. App. 5th 407, 413 (2018). The motion for default judgment is therefore granted.

IT IS SO ORDERED. Dated: February 5, 2021 : VINCE CHHABRIA United States District Judge