                           ----------------
                            No. 94-3283MNST
                           ________________


                                   *
FIREMAN'S FUND INSURANCE           *
COMPANY, a subrogee of Kraus-      *
Anderson Construction Company,     *
a member of the Devco/Kraus-       *
Anderson Joint Venture;            *
                                   *
          Plaintiff,               *
                                   *
DEVCO/KRAUS-ANDERSON JOINT         *   Appeal from the United States
VENTURE, a Minnesota Joint         *   District Court for the
Venture,                           *   District of Minnesota
                                   *
          Plaintiff-Appellant,     *
                                   *
v.                                 *
                                   *
THE HARTFORD FIRE INSURANCE        *
COMPANY,                           *
          Defendant-Appellee.      *
                                   *

                               ----------
                       Submitted: May 17, 1995

                          Filed:   January 11, 1996

                          -----------
Before: FAGG, Circuit Judge, and WOOD, JR.,* and JOHN R. GIBSON,
Senior Circuit Judges.
                          -----------

HARLINGTON WOOD, JR., Senior Circuit Judge:
     This diversity case is a declaratory judgment action to
determine whether appellee Hartford Fire Insurance Company
(Hartford) has any obligation to defend or indemnify appellant


     *
        The Honorable Harlington Wood, Jr., United States Circuit
Judge for the Seventh Circuit Court of Appeals, sitting by
designation.

                                   1
Devco/Kraus-Anderson Joint Venture (DKA) with respect to two
claims arising out of damages to the Piper Jaffray Tower (Tower),
an office building in Minneapolis, Minnesota. The district court
found no duty either to defend or indemnify, and the plaintiffs
appealed.


I.  BACKGROUND & PROCEDURAL HISTORY
     The facts of this case are essentially undisputed. In
November, 1982, DKA began construction of the Tower as the
general contractor. This construction included the installation
of a fire protection system utilizing a six-inch standpipe to
transport water vertically in the Tower's stairwells. On the
sixth floor of the building, the standpipe makes a horizontal run
crossing from one stairwell to another, its weight supported by a
series of hangers and braces. The system also includes two fire
pumps that utilize "trip" settings to determine at what level of
pressure the pumps will engage. These settings require periodic
monitoring.
     Sometime after the Tower was completed in 1985, the trip
settings were improperly reset. This caused a severe "water
hammer" effect in the pipes whenever the system was activated for
routine maintenance or to wash garage floors. This "water
hammer," in turn, perhaps in combination with inappropriate or
defective building materials, caused the hangers and braces
supporting the horizontal section of pipe to loosen and become
bent or displaced. These effects on the standpipe's support
system were noticed by Tower maintenance personnel early in 1988,
and an independent company undertook minor repairs. No one
examined the trip settings, however, so the cycle began again:
"water hammer," support system deterioration, and repair of
symptoms rather than cause. Eventually, sagging under its own
weight, the horizontal standpipe separated at a joint coupling on
May 7, 1989, flooding the Tower with water and causing
significant damage.
     Two lawsuits ensued. The first, brought by the Arkwright

                                2
Mutual Insurance Company (Arkwright) as the subrogee of the
owners of the Tower, sought recovery from DKA and others for the
water damage occurring on May 7, 1989. The second, brought by
Piper Jaffray & Hopwood, Inc. (Piper) as a tenant of the Tower,
sought recovery for water damage on the same set of facts.
     During the initial stages of this series of events, DKA was
insured by Hartford under a comprehensive general insurance
policy. The policy in question provided that:
     [Hartford] will pay those sums that the insured becomes
     legally obligated to pay as damages because of "bodily
     injury" or "property damage" to which this insurance
applies. . . . This insurance applies only to "bodily       injur
                                                             y"
                                                             and
                                                             "prop
                                                             erty
                                                             damag
                                                             e"
                                                             which
                                                             occur
                                                             s
                                                             durin
                                                             g the
                                                             polic
                                                             y
                                                             perio
                                                             d.
                                                             The
                                                             "bodi
                                                             ly
                                                             injur
                                                             y" or
                                                             "prop
                                                             erty
                                                             damag
                                                             e"
                                                             must
                                                             be
                                                             cause
                                                             d by
                                                             an
                                                             "occu
                                                             rrenc
                                                             e.".
                                                             . .
          . . . .

     "Occurrence" means an accident, including continuous or

                                3
     repeated exposure to substantially the same generally
harmful conditions.
          . . . .

     "Property damage" means:
     (a) Physical injury to tangible property, including all
     resulting loss of use of that property; or

     (b) Loss of use of tangible property that is not physically
     injured.

This coverage,1 begun in 1984, was renewed several times but
allowed to expire on December 1, 1988, after the initial minor
repairs to the standpipe but before its ultimate failure. No
claim was filed at the time for the repairs.
     DKA tendered the defense of the Arkwright suit to Hartford
in 1990 and again in 1992, alleging that the water damage in 1989
was related to the earlier "damage" to the hangers and bracing
system that occurred while Hartford was "on the risk." Hartford
rejected both tenders, claiming no coverage for damages occurring
outside the policy period. Fireman's Fund Insurance Company,
which provided coverage to the Kraus-Anderson Construction
Company (a participant in the DKA joint venture) following the
expiration of the Hartford policy and the dissolution of the DKA
joint venture in 1990, ultimately settled both the Arkwright and
Piper suits.
     In the present action, DKA challenges Hartford's denial of
coverage and seeks to recover from Hartford the attorneys' fees
and settlement costs of the two prior actions along with this
one. To accomplish this, DKA sought a declaratory judgment from
the district court to establish Hartford's duty to defend and
indemnify DKA for the underlying suits according to the terms of
the policy described above. On cross motions for summary
judgment, however, the district court held that neither duty
existed. Addressing the duty to indemnify, the district court,

     1
          The policies in force over this period varied somewhat,
but the differences are not raised by either party as significant
to this case.

                                4
applying Minnesota law, found that the "actual injury" rule
determined whether and when coverage is triggered by an
"occurrence" causing damages. The court concluded that since the
actual water damage occurred outside Hartford's policy period and
could be distinguished from the gradual deterioration of the
standpipe's support system, the Hartford policy did not apply.
In terms of the duty to defend, the court found that the Piper
plaintiffs lacked a compensable interest and therefore had no
standing to bring their claims, while the Arkwright plaintiffs
alleged no damages resulting from events prior to the ultimate
failure of the standpipe on May 7, 1989. The court thus
concluded that neither suit was arguably within Hartford's
coverage, thus no duty to defend arose. This appeal followed.


II.  ANALYSIS
     We review the entry of summary judgment de novo, as we do
the district court's determination of Minnesota law. Burnette
Techno-Metrics, Inc. v. TSI, Inc., 44 F.3d 641, 642 (8th Cir.
1994). The parties have agreed to adopt the facts as alleged in
DKA's complaint and statement of the case, therefore our task is
to decide whether summary judgment was proper as a matter of law
considering the terms of the policy at issue and the insurance
law of Minnesota.
A. The Duty to Indemnify
     On appeal, DKA alleges that the district court improperly
characterized the facts involved, misinterpreted the language of
Hartford's policy, and erroneously relied on the "actual injury"
rule of Singsaas v. Diederich, 238 N.W.2d 878 (Minn. 1976), in
deciding that no duty to indemnify existed. These arguments are
mutually dependent, and will be discussed together.
Fundamental to DKA's entire indemnification argument is its
interpretation of the coverage clause of the policy. This
clause, DKA emphasizes, states that Hartford "will pay those sums
that the insured becomes legally obligated to pay as damages
because of 'bodily injury' or 'property damage' to which this

                                5
insurance applies" (emphasis supplied). To summarize its
arguments, DKA would interpret this clause as covering all
consequential damages, including those occurring after the policy
period, resulting from any "injury" sustained by covered property
during the policy period. Reading this coverage clause in
conjunction with prevailing Minnesota cases and considering the
circumstances here, however, we believe this interpretation is
incorrect.
     The policy language on which DKA relies has been, in various
forms, part of standardized comprehensive liability insurance
forms for quite some time. See, e.g., Robert E. Keeton,
Insurance Law §§ 2.11(c), 5.10(d) (1971). Unfortunately, efforts
to clarify the precise intent of the terms and wording of such
policies by shifting phrasing patterns or changing definitions
have often been ineffective. Several cases cited by the parties
have dealt with consequential damage coverage issues similar to
those discussed here, yet the difficulty persists. Hartford
asserts that the wording of the new standard form at issue here,
which does not explicitly require damages to result within the
policy period, was made "more readable" by moving the older
definition of "occurrence" ("an accident resulting, during the
policy period, in bodily injury or property damage") into the
coverage grant ("This insurance applies only to . . . 'property
damage' which occurs during the policy period."). This may be
so, but risking protracted litigation to achieve better
readability is a dubious venture, especially where substantive
issues like consequential damages are potentially affected.
     Nevertheless, though Minnesota courts ordinarily interpret
ambiguous policy language strictly in favor of the insured, see
State Farm Ins. Cos. v. Seefeld, 481 N.W.2d 62, 64 (Minn. 1992),
this is not a case of simple ambiguity. Other factors influence
our decision. First is the question of whether the facts here
trigger an "occurrence" under this policy. The Minnesota Supreme
Court has adopted the "actual injury" test to determine when
coverage applies. See Singsaas v. Diederich, 238 N.W.2d 878

                                6
(1976). In Singsaas, the defendant company negligently performed
work on a "manlift" elevator by using a soft metal part to secure
the lifting cable to the elevator car. Id. at 879. The
plaintiff was severely injured when the soft metal connection
deteriorated and separated from the cable, causing the elevator
to fall. Id. at 880. The defendant was insured while it
performed the repair work and during most of the period of the
connection's deterioration, but terminated the policy before the
elevator's fall. Id. The defendant sought coverage for the
plaintiff's damages on the theory that the "accident" consisted
of the negligent installation and subsequent deterioration of the
part, all occurring during the policy period. Id. at 881. The
Minnesota Supreme Court rejected this theory, however, and
adopted the general rule that "the time of the occurrence is not
the time the wrongful act was committed but the time the
complaining party was actually damaged." Id. at 880 (citations
omitted).
     In this case, the district court found that the alleged
damages to the pipe's support system were similar to the gradual
deterioration involved in the Singsaas case, and that the later
water damage alone was the relevant injury. We find this analogy
persuasive. Against the background of the actual injury rule,
the simple--and tenuously related--issue of causation in this
case is insufficient to trigger the obligation to indemnify. Our
conclusion is supported by the fact that the limited and
inexpensive repairs to the pipe's supporting system could easily
be characterized as measures to prevent unknown future damage
only, and thus would be outside the definition of "property
damage." See Northern States Power Co. v. Fidelity & Casualty
Co. of New York, 504 N.W.2d 240, 245-46 (Minn. Ct. App. 1993)
("Expenditures to prevent future [damage] of a type which has yet
to occur or from a source which has yet to cause [damage],
however, are not covered because these costs are not causally
related to the property damage."), aff'd as modified on other
grounds, 523 N.W.2d 657 (Minn. 1994). No damages were claimed

                                7
when the pipe's support system underwent repair, nor were any
damages to this system claimed as a basis for the underlying
Piper and Arkwright suits, which focused exclusively on the later
water damage.
     Second, turning to the policy language, while the actual
damages rule of Singsaas was accepted in the context of an older
version of the standard policy, more recent cases from the
Minnesota Supreme Court have found the rule applicable to the
newer standard forms as well. See Jostens, Inc. v. CNA Ins., 403
N.W.2d 625, 630 (Minn. 1987), overruled on other grounds by
Northern States Power Co. v. Fidelity & Casualty Co. of New York,
523 N.W.2d 657 (Minn. 1994). DKA cites two cases which rely in
part on different interpretations of policy language similar to
the current form, see Federated Mutual Ins. Co. v. Concrete
Units, Inc., 363 N.W.2d 751 (Minn. 1985); St. Paul Fire & Marine
Ins. Co. v. National Chiropractic Mutual Ins. Co., 496 N.W.2d 411
(Minn. Ct. App. 1993), but these cases are not based on the
precise issues considered here, nor do they involve the same
coverage or triggering requirements.
     Finally, when more than one insurer is involved
(consecutively), as the evidence here indicates, the Minnesota
Supreme Court has stated that the actual damages rule is
"strongly interrelated" to, and must be resolved consistently
with, the allocation issue: "The essence of the actual injury
trigger theory is that each insurer is held liable for only those
damages which occurred during its policy period; no insurer is
held liable for damages outside its policy period." Northern
States Power Co. v. Fidelity & Casualty Co. of New York, 523
N.W.2d 657, 662 (Minn. 1994). While this concern may not dictate
the outcome of every multiple insurer case where causation and
policy language are in question, it is relevant and appropriately
considered here.
     These factors lead us to conclude that no duty of
indemnification existed, and we affirm the district court on this
issue.

                               8
B.  The Duty to Defend
     The duty to defend under an insurance policy is broader than
the duty to indemnify. St. Paul Fire & Marine Ins. Co. v.
Briggs, 464 N.W.2d 535, 539 (Minn. Ct. App. 1990). An insurer's
obligation to defend is contractual in nature and is determined
by the allegations of the complaint; if any part of a cause of
action is arguably within the scope of coverage, the insurer must
defend. Prahm v. Rupp Constr. Co., 277 N.W.2d 389, 390 (Minn.
1979).
      Looking to the complaints in the underlying cases here, the
district court concluded that the Piper claimants, the tenants of
the Tower who had no ownership interest in the building or its
fire protection system, had no standing to bring claims for
damages based on injuries to those items. That finding is not
challenged on appeal.
     The Arkwright complaint alleged that the inadequate support
system for the standpipe directly caused the coupling's
separation and the ultimate water damage. In the "wherefore"
clause of the complaint, the Arkwright plaintiffs sought damages
including:

     (a)   Amounts for the cost of repair and restoration to the
           Piper Jaffray Tower Building structure, including but
           not limited to its structural, mechanical, electrical,
           fire protection, water, elevator, and other building
           systems; . . .


The complaint, however, alleges no specific damages prior to the
May 7, 1989 date of the water damage. DKA asserts that Hartford
knew of its claim for $753 for materials to repair the "fire
protection" (standpipe) system, but these repairs were undertaken
after the pipe separation and water damage on May 7, 1989.
     After discovery had taken place, DKA again submitted a
tender of defense, notifying Hartford of its conclusions and
coverage theory. This theory was similar to that stated above
with respect to indemnification; it rested entirely on an
interpretation of the policy and the facts at odds with the

                                 9
actual damages rule of Singsaas. In view of our discussion of
that theory above, we agree with the district court that claims
based on it were not "arguably within the scope of the policy's
coverage." St. Paul Fire & Marine, 490 N.W.2d at 632.
     For the foregoing reasons, the district court's grant of
summary judgment in favor of Hartford is AFFIRMED.



A true copy.


     ATTEST:


            Clerk, U.S. Court of Appeals, Eighth Circuit.




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