Chief Industries, Inc. v. Great Northern Insurance Company

Summary

The Nebraska Supreme Court considered whether Great Northern Insurance had a duty to defend and indemnify Chief Industries in litigation arising from the collapse of grain bins in Saudi Arabia. The court held that a foreign-suits-only amendment relieved Great Northern of its duty to defend a lawsuit filed in the United States but did not eliminate coverage for otherwise covered losses arising from an occurrence within the policy territory. The court affirmed the exclusion of damages to the silos and their components, reversed the coverage determination for inspection and silo-wreckage removal costs, and affirmed coverage for the cost of removing corn.

Holdings

1. The foreign-suits-only amendment relieved Great Northern of its contractual duty to defend Chief once ARASCO filed suit in the United States, even though claims had previously been made within the policy territory.
2. The foreign-suits-only amendment limited the duties to investigate, settle, and defend suits outside the policy territory, but did not eliminate Great Northern's duty to indemnify Chief for otherwise covered losses arising from an occurrence within the policy territory.
3. The entire silo structure, including components manufactured by third parties and components manufactured by Chief's Caldwell division, constituted the named insured's products and was subject to the policy exclusion for property damage to the named insured's products arising out of those products or any part of them.
4. The $43,420 awarded for inspection of the silo wreckage and removal of the silo wreckage was excluded from coverage because those damages were necessarily related to damage to the named insured's product.
5. The policy covered the $29,871 cost of removing corn from the wreckage site, the $4,500 in outbuilding damage, and the $10,136 in increased rail contract penalties, resulting in a judgment of $44,507.

Questions Presented

1. Whether the foreign-suits-only amendment relieved Great Northern of a duty to defend a lawsuit filed in the United States when the underlying claim originated within the policy territory.
2. Whether the foreign-suits-only amendment excluded indemnity coverage for losses arising from an occurrence within the policy territory.
3. Whether components manufactured by third parties and by Chief's Caldwell division constituted the named insured's products subject to the policy's product-damage exclusion.
4. Whether inspection, silo-wreckage removal, and corn-removal costs were covered property damage under the policy.

Disposition

reversed_and_remanded