
USCA1 Opinion

	




          March 29, 1993   UNITED STATES COURT OF APPEALS                                 FOR THE FIRST CIRCUIT                              _________________________          No. 92-2216                 IN RE:  SAN JUAN DUPONT PLAZA HOTEL FIRE LITIGATION.                              _________________________                         HOLDERS CAPITAL CORPORATION, ET AL.,                             Cross-Claimants, Appellants,                                          v.                     CALIFORNIA UNION INSURANCE COMPANY, ET AL.,                             Cross-Defendants, Appellees.                              _________________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                           FOR THE DISTRICT OF PUERTO RICO                    [Hon. Raymond L. Acosta, U.S. District Judge].                                             ___________________                              __________________________                                        Before                            Selya and Cyr, Circuit Judges,                                           ______________                             and Fuste,* District Judge.                                         ______________                              _________________________               Gary L. Bostwick, with  whom R. Lance Belsome was  on brief,               ________________             ________________          for appellants.               Ralph W. Dau  and Andrew K. Epting, Jr.,  with whom Peter B.               ____________      _____________________             ________          Ackerman,  Jeffrey  W.  Kilduff,   O'Melveny  &  Myers,  Raul  E.          ________   ____________________    ___________________   ________          Gonzalez-Diaz,  A.J. Bennazar-Zequeira,  Gonzalez &  Bennazar, G.          _____________   ______________________   ____________________  __          Trenholm Walker, Wise & Cole, Homer L. Marlow, William G. Liston,          _______________  ___________  _______________  _________________          Marlow, Shofi,  Connelly, Velerius, Abrams, Lowe & Adler, Paul K.          ________________________________________________________  _______          Connolly, Jr., Damian R. LaPlaca,  LeBoeuf, Lamb, Leiby & MacRae,          _____________  _________________   _____________________________          Deborah A. Pitts, Hancock, Rothert & Bunshoft, Lon Harris, Harris          ________________  ___________________________  __________  ______          &  Green, Bethany  K.  Culp, Patrick  McCoy, Oppenheimer  Wolff &          ________  _________________  ______________  ____________________          Donnelly,  Stuart W. Axe, Lester, Schwab, Katz & Dwyer, Francisco          ________   _____________  ____________________________  _________          J.  Colon-Pagan, Adrian  Mercado,  Mercado &  Soto, Marcos  Perez          _______________  _______________   _______________  _____________          Cruz,  Virgilio  Mendez   Cuesta,  Ernesto  Rodriguez-Suris,  and          ____   _________________________   ________________________          Latimer, Biaggi, Rachid, Rodriguez-Suris & Godreau were on brief,          __________________________________________________          for appellees.                              _________________________                                    March 29, 1993                              _________________________          __________          *Of the District of Puerto Rico, sitting by designation.                    SELYA Circuit Judge.  We approach once more the lair of                    SELYA Circuit Judge.                          _____________          the fabled "litigatory  monster," In re Recticel  Foam Corp., 859                                            __________________________          F.2d 1000, 1001 (1st Cir. 1988), spawned by the deadly fire which          engulfed  the San Juan Dupont  Plaza Hotel on  December 31, 1986.          In  this appeal, three  entities interested in  the ownership and          operation of  the hotel  contest the  district  court's entry  of          summary judgment in favor  of a group of seventeen  insurers (the          pre-fire  insurers) whose  comprehensive general  liability (CGL)          and  excess  insurance  policies  had  expired  before  the  fire          occurred.1  Finding no error of law, we affirm.                    We  recently traced the  six-year procedural history of          this gargantuan  litigation, see  In Re Nineteen  Appeals Arising                                       ___  _______________________________          Out of the San Juan Dupont Plaza Hotel Fire Litig., 982 F.2d 603,          __________________________________________________          605-08 (1st Cir. 1992), and it would be pleonastic to repeat that          exercise.  We remind the reader, however, that the district court          segmented  the liability inquiry into  three phases.   See id. at                                                                 ___ ___          606.   This appeal concerns the third, and final, phase   a phase          designed to  "determin[e]  the contractual  liability of  various          insurers."  Id. at 606 n.3.                      ___                    The   district  court  wrote  a  lengthy  opinion  that          describes  the  mechanics of  Phase III  and  we refer  those who          thirst  for greater detail to that rescript.   See In Re San Juan                                                         ___ ______________          Dupont  Plaza Hotel Fire Litig., 802 F. Supp. 624, 629-30 (D.P.R.          _______________________________          1992); see also id. at 652-57 (chronicling partial history of the                 ___ ____ ___                                        ____________________               1The opinion below provides a complete list of  the insurers          in question.   See In Re San Juan Dupont Plaza Hotel Fire Litig.,                         ___ _____________________________________________          802 F. Supp. 624, 628 n.3 (D.P.R. 1992).                                          2          insurance-related litigation).  To  put this appeal into workable          perspective,  it suffices  to relate  that, during  Phase III,  a          covey  of cross-claimants,  comprising  forty-eight entities  who          allegedly owned, operated, or managed the hotel, sought to recoup          from the  pre-fire insurers some $78,000,000  which the entities,          collectively, had contributed to  settlement of victims' claims.           Finding an absence  of coverage,  the district  court denied  the          cross-claimants' requests for indemnification.  See id. at 651.                                                          ___ ___                    At this  juncture, forty-five cross-claimants  threw in          the  towel.   The remaining  three, Holders  Capital Corporation,          Hotel  Systems International, and  Dupont Plaza  Associates, were          arguably  made of  sterner  stuff.   They  appealed, hawking  the          theorem  that   defects  in   the  hotel,  apparent   before  the          ustulation, gave rise to the liability upon which the settlements          were based; and that, therefore, these payments reflect "property          damage"  of a kind covered  under the insuring  agreements of the          policies underwritten by the pre-fire insurers.2                    We believe that appellants' theorem is  utterly without          merit.  To say that damages  for bodily injury and wrongful death          are  really  "property  damage"  within the  ambit  of  carefully          written  insurance  policies, and  then  to  argue that  coverage          attaches  not when  the harm-producing  incident occurs  but when                                        ____________________               2Appellants  chose to  limit their  appeal to  the "property          damage" theory, eschewing  further pursuit  of other  contentions          they  originally  espoused in  the  district  court.   Hence,  we          confine  our  comments to  the single  issue advanced  on appeal,          mindful  that "theories neither briefed nor  argued on appeal are          deemed  to have been waived."   United States  v. Slade, 980 F.2d                                          _____________     _____          27, 30 n.3 (1st Cir. 1992).                                          3          alleged product  defects first become visible, is  to construct a          pyramidal proposition  more reminiscent of Lewis  Carroll than of          the  lexicon  of  insurance law.3    We  cannot  subscribe to  so          fanciful  a  reading of  either  the appellees'  policies  or the          applicable  precedents.    And,  moreover, because  we  find  the          district court's  opinion on this  point to be  well-reasoned and          clearly articulated, see id. at 643-48, we will be brief.  Where,                               ___ ___          as here, a trial court has  produced a first-rate work product, a          reviewing tribunal should hesitate  to wax longiloquent simply to          hear its own  words resonate.  We  therefore affirm the  entry of          summary judgment in this  case substantially on the basis  of the          opinion  below,  embellishing  our  affirmance  with  a decurtate          explanation of why  two recently decided cases, not considered by          the district court, fail to tip the scales in appellants' favor.                    Relying heavily  on Eljer Mfg., Inc.  v. Liberty Mutual                                        ________________     ______________          Ins. Co., 972 F.2d 805 (7th Cir. 1992), appellants argue that the          ________          district  court applied an incorrect rule of law.  Eljer involved                                                             _____          defective  plumbing  systems that  had  been  installed in  homes          throughout the  United States.  Citing  policy language identical          to that  contained in several of the  CGL policies here at issue,                                        ____________________               3One is reminded of Alice who, upon tumbling into the rabbit          hole and finding  the garden  door locked, decided  to solve  her          dilemma by  eating a piece of  cake.  "`Well, I'll  eat it,' said          Alice, `and if it makes me grow larger,  I can reach the key; and          if  it makes  me grow  smaller, I  can creep  under the  door; so          either  way I'll  get into  the garden,  and I  don't care  which          happens!'"   Lewis Carroll, Alice's Adventures  In Wonderland 8-9                                      _________________________________          (Delacorte Press ed.  1966).  Alice  enjoyed her snack    but she          remained  the same size  and the garden  door remained inviolate.          See id. at 9.          ___ ___                                          4          the  manufacturer of the systems sought a declaration that it was          covered  for  damages  flowing  from leaks  occurring  after  its          policies  had lapsed.   A  divided panel  of the  Seventh Circuit          upheld  the insured's  right to  coverage on  the basis  that the          "physical injury" took place when the systems  were implanted not          when  the leakage occurred and the latent harm materialized.  Id.                                                                        ___          at 814.                    We  refuse to  accord  Eljer controlling  weight for  a                                           _____          myriad of  reasons.  In the first  place, the Eljer court decided                                                        _____          the coverage issue  under Illinois law, see  id. at 806,  in part                                                  ___  ___          through the use  of what it  termed "first  principles."  Id.  at                                                                    ___          812.  To the extent that Eljer is good law  in Illinois, a matter                                   _____          about which Judge  Cudahy disagreed, see  id. at 814-17  (Cudahy,                                               ___  ___          J., dissenting),  and  upon which  we do  not opine,  we have  no          occasion  to transplant  its holding  to a  case, like  this one,          which is governed  by state  law requiring  a different  result.4          See, e.g., Albany  Ins. Co. v. Compania de  Desarrollo Comercial,          ___  ____  ________________    _________________________________          90 JTS  19 (P.R. 1990); Maples  v. Aetna Casualty &  Sur. Co., 83                                  ______     __________________________          Cal. App. 3d 641, 148 Cal. Rptr. 80 (1978).                    In the second place, insofar as Eljer purports to claim                                                    _____          nationwide  application,  we   decline  the  invitation,  whether                                        ____________________               4The district court saw no  need to make a choice of  law as          to  whether  the pre-fire  insurers'  policies  were governed  by          Puerto Rico or California law.   See In re Hotel Fire Litig., 802                                           ___ _______________________          F. Supp. at 637 n.31.  Because Puerto Rico law and California law          coincide on the issue  presented in this appeal, we,  too, abjure          such a choice.  See Fashion House, Inc. v. K Mart Corp., 892 F.2d                          ___ ___________________    ____________          1076, 1092 (1st  Cir. 1989)  (recognizing that a  court need  not          make a formal choice of law when nothing would turn on it).                                          5          proffered by appellants or  by the Eljer majority, to  supplant a                                             _____          state's body of  contract law with "federal  general common law."          Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938).          _____________    ________                    In  the third  place, Eljer's  rule of  law  evolved in                                          _____          connection with, and was applied to, a markedly different factual          situation.   The  inherently defective  plumbing system  at issue          there was installed in hundreds of thousands of homes nationwide.          See Eljer, 972 F.2d at 807.  It bore the risk of leaking,  with a          ___ _____          failure  rate   "sufficiently  high   to  mark  the   product  as          defective," from the  moment of installation,  even when used  as          intended.   Id. at 812.   By contrast, the products  found in the                      ___          Dupont  Plaza   Hotel,  although  alleged  to   have  created  an          unreasonable   danger  in  this  particular  instance,  were  not          generally defective.  They functioned  properly, with no risk  of          _________          failure,  upon normal  use  and became  dangerous  only upon  the          outbreak of the conflagration.                    Fourth, and finally, the  property damage caused by the          defective plumbing systems was just that   property damage, e.g.,                                                                      ____          claims for  water damage  to  the victims'  homes, diminution  in          property values,  loss of  use, costs  of replacing  the systems,          etc.   See  id. at  807.   Here,  however, unlike  in Eljer,  the                 ___  ___                                       _____          insureds' expenditures  were made  to recompense  personal injury          and  wrongful death  claims rather  than property  damage claims.          While it is true,  in a metaphysical sense, that  any expenditure          of  funds from  a  party's estate  can  always be  visualized  as          property  damage,  the term  "property  damage"  as  used in  the                                          6          appellees'  policies  is  a term  of  art.5   We  agree  with the          district court that the  term is not ambiguous and,  fairly read,          triggers coverage only when damage to property occurs  during the                                             __ ________          applicable  policy period.  See  In Re Hotel  Fire Litig., 802 F.                                      ___  ________________________          Supp. at 645-46.                    Appellants also cite  Chemstar, Inc. v.  Liberty Mutual                                          ______________     ______________          Ins.  Co., 797  F. Supp. 1541  (C.D. Cal.  1992), as  a basis for          _________          urging that the dismissal of their coverage claims was premature.          In  particular,  they  brandish Chemstar's  acknowledgement  that                                          ________          California   courts  have   adopted  more   than  one   rule  for          ascertaining the date upon which property damage occurs.  See id.                                                                    ___ ___          at  1549.    Arguing  that  the  district  court  "did  not  have          undisputed  material  facts allowing  it  to  decide between  the          various trigger rules and to determine the  proper application of          the one that it chose," appellants maintain that summary judgment          was inappropriate.                    Even assuming that California  law supplies the rule of          decision,  see  supra  note   4,  we  disagree  with  appellants'                     ___  _____          characterization  of the  sufficiency  of the  factual exposition          before  the district  court.   Chemstar  makes  clear that  under                                         ________          California law  "insurance policies  are triggered when  property          damage actually occurs,  rather than when some prior wrongful act          is committed."  Id. at 1548.  Indeed, the Chemstar court embarked                          ___                       ________                                        ____________________               5This  term is precisely defined in most of the policies and          is satisfactorily defined by the structure of the one policy that          does  not contain an explicit  definition.  See  In re Hotel Fire                                                      ___  ________________          Litig., 802 F. Supp. at 645-46.          ______                                          7          upon a  discussion of  various  trigger rules  merely because  it          observed that,  in latent defect  cases, the "date  when property          damage occurs is often difficult to pinpoint."  Id.                                                          ___                    In  the case at bar,  no such difficulty  existed.  The          record makes manifest that none of the hotel's property contained          the type  of latent defect  that would have  set the stage  for a          complex determination of  the date damage  occurred.  Bearing  in          mind the  illogic  of  the  proposition  that  products  fit  for          ordinary use can  be deemed defective  at all, we  are unable  to          conceive of any evidentiary proffer that could alter the  obvious          trigger  date    and  appellants have  not  suggested, let  alone          documented,  a viable scenario for such an alteration.  Here, the          damage  indisputably occurred on the date of the fire, well after          the  expiration of  the  insurance policies  underwritten by  the          appellees.    Hence,  coverage  was  triggered  at  a  time  when          appellees were no longer on the risk.                    We  need go no further.  The supposed defects that were          apparent  in the  Dupont Plaza  Hotel before  the fire  and which          allegedly contributed to  the victims' injuries  were not at  all          representative of the specie of "property damage" contemplated in          the pre-fire insurers' policies.  Because this is so, and because          no  insured  loss took  place  during the  policy  period(s), the          district  court did not  err in  granting the  pre-fire insurers'          motion for brevis disposition.                     ______          Affirmed.          Affirmed.          ________                                          8
