SAPA EXTRUSIONS, INC. f/k/a ALCOA Extrusions, Inc., Appellant
LIBERTY MUTUAL INSURANCE COMPANY; NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA; GERLING KONZERN ALLEGEMEINE VERSICHERUNGS-AG a/k/a Gerling Konzern General Insurance Company; PACIFIC EMPLOYERS INSURANCE COMPANY; ACE AMERICAN INSURANCE COMPANY; ARCH SPECIALTY INSURANCE COMPANY f/k/a Rock River Insurance Company; GREAT AMERICAN ASSURANCE COMPANY; INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA
Argued: May 1, 2019
Appeal from the United States District Court for the Middle
District of Pennsylvania No. 3:13-cv-02827 District Judge:
Hon. Malachy E. Mannion
C. Martin, REED SMITH LLP, Luke E. Debevec, Jenna Farr, REED
SMITH LLP, Michael Conley, Meghan K. Finnerty, OFFIT KURMAN,
Counsel for Appellant Sapa Extrusions, Inc.
Ficken Sachs, William C. Foster, Audrey J. Copeland, MARSHALL
DENNEHEY WARNER, COLEMAN & GOGGINS, Counsel for Appellee
Liberty Mutual Insurance Company.
Phillip R. Earnest, Adam J. Tragone, PIETRAGALLO GORDON
ALFANO, BOSICK & RASPANTI LLP, Agelo L. Reppas, Allyson
C. Spacht, BATESCAREY LLP, Counsel for Appellees National
Union Fire Insurance Company of Pittsburgh, PA, and Insurance
Company of the State of Pennsylvania.
R. Heskin, WHITE AND WILLIAMS LLP, Counsel for Appellee
Gerling Konzern Allegemeine Versicherungs AG, a/k/a Gerling
Konzern General Insurance Company.
Stephen A. Cozen, Deborah M. Minkoff, Stephen S. Kempa, COZEN
O'CONNOR, Counsel for Appellees Pacific Employers
Insurance Company and Ace American Insurance Company.
Jonathan P. McHenry, Thomas M. Wester, CONNELL FOLEY LLP,
Counsel for Appellee Arch Specialty Insurance Company.
Michael A. Kotula, Michael E. Buckley, RIVKIN RADLER LLP,
Counsel for Appellee Great American Assurance Company.
G. Koch, WEISBROD MATTEIS & COPLEY PLLC, Counsel for
Amicus Curiae United Policyholders.
Maureen M. McBride, James C. Sargent, LAMB MCERLANE PC,
Counsel for Amici Curiae American Property Casualty Insurance
Association and Insurance Federation of Pennsylvania.
C. Long, THOMAS, THOMAS & HAFER, Counsel for Amicus
Curiae Pennsylvania Defense Institute.
J. Cosgrove, WADE CLARK MULCAHY, Counsel for Amicus Curiae
Philadelphia Association of Defense Counsel.
Before: RESTREPO, PORTER, and FISHER, Circuit Judges.
PORTER, CIRCUIT JUDGE.
appeal asks whether, under Pennsylvania insurance law, a
manufacturer may recover from its liability insurers the cost
of settling a lawsuit alleging that the manufacturer's
product was defective. Consistent with longstanding
precedent, we hold that recovery turns on the language of the
specific insurance policies at issue. We will thus affirm in
part and vacate in part the District Court's judgment and
remand for further consideration consistent with this
Extrusions, Inc. manufactures aluminum extruded profiles,
which are formed by pushing a hot billet of aluminum alloy
through a metal die with a hydraulic press. After forming,
but before delivering, the extrusions, Sapa pre- treats the
metal and coats it with primer and topcoat. As Sapa describes
it, "[t]his pretreatment coating process is done in
multiple stages, involving cleaning and degreasing to remove
organic and inorganic materials, chemical etching, and
finally chemical coating to assist with paint
adherence." Appellant's Br. 11.
decades, Sapa supplied "organically coated extruded
aluminum profiles" to Marvin Lumber and Cedar Company
and Marvin Windows of Tennessee, Inc. (together,
"Marvin"). App. 155-56. Marvin incorporated these
extrusions with other materials to "manufactur[e]
aluminum clad windows and doors and related products."
App. 156. This process was permanent, so if an extrusion was
defective for some reason, it was not feasible to swap out
only that extrusion. Instead, the whole window or door would
have to be replaced. Between 2000 and 2010, Sapa sold about
28 million extrusions to Marvin, which Marvin incorporated in
about 8.5 million windows and doors.
agreed to Marvin's "Aluminum Extrusion Coating
Specification" in 1996. App. 157. This contract provided
that "the coating used on aluminum extrusions used on
Marvin window and door products shall meet or exceed all of
the requirements" of a relevant industry standard.
Id. Sapa later agreed to revisions of Marvin's
specification that incorporated the updated industry
the course of its relationship with Sapa, Marvin sometimes
received complaints from customers that the aluminum parts of
its windows and doors would oxidize or corrode. At first,
Sapa and Marvin worked together to determine the nature of
these complaints and how to fix them. In the mid-2000s,
however, there was an uptick in these complaints, most of
which came from people who lived within a mile or so from the
2010, Marvin sued Sapa in the United States District Court
for the District of Minnesota (the "Underlying
Action"), alleging that Sapa had sold it extrusions that
failed to meet Marvin's specifications. Marvin asserted
claims for (1) breach of contract, (2) breach of express
warranty, (3) breach of implied warranty of merchantability,
(4) breach of implied warranty of fitness for a particular
purpose, (5) fraud, (6) negligent misrepresentation, (7)
unlawful trade practices, (8) consumer fraud, (9) fraudulent
concealment, and (10) contribution/indemnity.
are the relevant allegations in the Marvin Complaint.
• Sapa made specific warranties to Marvin about its
extrusions, including that they would "meet the
applicable [industry] specifications for superior performing
organic coatings on aluminum extrusions." App. 157.
• Sapa "changed its processes, procedures, and
materials for the pretreatment of organically coated extruded
aluminum profiles without notifying Marvin of this
significant and material change." App. 158.
• Sapa assured Marvin that the changes to the
pre-treatment process would not affect the quality of the
extrusions, even though Sapa knew (and intentionally
concealed from Marvin) that the extrusions did not meet
Marvin's specifications. Sapa "represented to Marvin
that it would fully stand behind its organically coated
extruded aluminum profiles if they failed to perform or were
otherwise defective." App. 161.
• Marvin's products that incorporated Sapa's
extrusions "prematurely failed in coastal installations
in the field at an abnormal rate." App. 161. In
particular, surface finishes were "peeling, losing
adhesion, or otherwise degrading in a manner which far
exceed[ed] the minimal corrosion occasionally experienced on
aluminum clad windows and doors installed near the
• Marvin "expended in excess of $75, 000 in
repairing and/or replacing Sapa's organically coated
extruded aluminum profiles [that] experienced surface
cracking, checking, peeling and/or loss of adhesion in
installations in the field." App. 162.
sought monetary damages for "economic losses stemming
from 'investigating and responding to' consumer
complaints, 'identifying and qualifying alternative'
extrusion suppliers, 'repairing' and
'replacing' the failed extrusions, rebuilding its
'valuable reputation,' and experiencing lost
'sales and profits.'" App. 10.
and Sapa engaged in nearly three years of discovery. They
then cross-moved for summary judgment. Among other things,
the Minnesota district court held that:
• Genuine disputes of material facts precluded summary
judgment on whether (1) Sapa provided Marvin with an express
performance warranty, (2) Sapa's terms and conditions
applied to the parties' extrusion deals, and (3) Sapa
breached its contract with Marvin for the extrusions that
Marvin had not yet incorporated into its products. Marvin
Lumber & Cedar Co. v. Sapa Extrusions, Inc., 964
F.Supp.2d 993, 998-1003 (D. Minn. 2013).
• Marvin's choice to provide Sapa with detailed
specifications for the extrusions precluded Marvin's
claim for breach of implied warranties. Id. at
1005-06. ("Marvin may pursue a breach of warranty for
Sapa's alleged failure to meet its specifications, but
its decision to provide those specifications precludes any
implied warranties that might have otherwise arisen between
• Marvin's claim for negligent misrepresentation
failed because, under Minnesota's "independent duty
rule," "Sapa owed Marvin no extra-contractual duty
of care." Id. at 1006.
• Under Minnesota's economic-loss rule, Marvin could
not assert tort claims for any of Sapa's alleged
misrepresentations "based on conduct that would
constitute a breach of contract." Id. at 1008
("[A]ny tort claim premised on Sapa's failure to
conform to [Marvin's] specifications is premised on a
breach of contract (or rather, breach of warranty) and barred
under Minnesota law.").
eve of trial in 2013, Sapa and Marvin settled their dispute
for a large sum.
the period implicated by Marvin's allegations, Sapa
maintained twenty-eight commercial general liability (CGL)
insurance policies through eight insurance carriers
(together, the "Insurers"). Combined, these policies
supposedly blanketed the relevant period with liability
coverage. Each policy required an "occurrence"-a
term specifically defined in each policy-to trigger coverage.
tendered Marvin's claims to another carrier, Zurich
American Insurance Company, which accepted the defense under
a reservation of rights. But the Insurers disclaimed
coverage. So Sapa sued them all in late 2013, asserting
breach of contract under the twenty-eight policies and
seeking a declaratory judgment to recover the cost of the
underlying settlement. The parties engaged in extensive
discovery before each moved for summary judgment.
District Court first held that, to determine whether coverage
existed under any of the policies for Marvin's claims and
the resultant settlement, it could rely only on how Marvin
had framed its claims in its underlying complaint. The
District Court thus did not rely on any evidence uncovered in
the three years of discovery in the Underlying Action. On the
merits, the District Court analyzed coverage under all
twenty-eight policies as a group. Agreeing with the Insurers,
the Court held that Marvin's claims in the Underlying
Action were not an "occurrence" that triggered
coverage under any of the policies. The District Court also
rejected Sapa's ancillary arguments on other