Swa Painting, Inc. v. Golden Eagle Ins. Co.

MEMORANDUM **

Golden Eagle Insurance Company (“Golden Eagle”) appeals from the district court’s order granting summary judgment to SWA Painting (“SWA”) on the grounds that: (1) the commercial general liability insurance policy (the “Policy”) entered into between Golden Eagle and its insured, Coating Management Systems (“CMS”), a manufacturer and vendor of paint, covered and did not exclude losses resulting from CMS selling defective paint to SWA, a painting contractor; and (2) Golden Eagle was not entitled to challenge the reasonableness of a stipulated settlement entered into between CMS and SWA. We reverse and remand to the district court with the instruction to enter judgment for Golden Eagle dismissing the complaint.

I

We need not decide whether application of defective paint physically injures the walls and/or homes on which the paint was applied under Arizona law because the Policy defines “property damage” to include “Moss of use of tangible property that is not physically injured,” Policy § V.15, and the parties do not dispute that homeowners lost use of their homes while the walls were repainted; thus, the losses incurred by CMS were covered under the “property damage”…