The opinion of the court was delivered by: GOURLEY
This is an action for damages brought by the insured, Pittsburgh Bridge & Iron Corporation, against the insurer, Liberty Mutual Insurance Company, resulting from defendant's failure to assume the defense of a claim brought by Fort Brannaum, Inc. and Colorado Fuel & Iron Corporation against plaintiff and for defendant's failure to pay the settlement and expenses incurred by plaintiff in defending the claim.
Following the parties' compliance with the pre-trial procedures prescribed in Local Rule 5 of this Court, the matter was heard non-jury. The essential facts have been set forth in a Pretrial Stipulation of the parties and supplemented by exhibits offered at trial. No oral testimony was offered. On the basis of the facts before the Court, and outstanding arguments and briefs presented by counsel for the respective parties, I find that judgment should be entered in favor of the defendant and against the plaintiff.
In the Pretrial Stipulation filed, the parties agreed to the following facts:
(1) That at all times relevant to this cause of action, plaintiff was an insured of defendant under a Comprehensive General Liability Insurance Policy, designated Policy No. LPI-181-001368-023.
(2) That the policy provided that the insurer would "pay on behalf of the insured, all sums which the insured shall become legally obligated to pay as damages because of injury to or destruction of property, including the use of loss thereof, caused by the accident".
(3) The policy further provided that the insurer would "defend any suit against the insured alleging such injury, sickness, disease or destruction and seeking damages on account thereof; even if such suit is groundless, false or fraudulent".
(4) That the policy included "products hazard" insurance, products hazard insurance being partially defined as follows in paragraph 3c(2):
"The term, 'products hazard' means operations, if the accident occurs after such operations have been completed or abandoned and occurs away from premises owned, rented or controlled by the named insured; provided, operations shall not be deemed incomplete because improperly or defectively performed or because further operations may be required pursuant to an agreement."
(5) That under Exclusions Section (h) of the policy no coverage was provided for injury to or destruction of "any goods, products or containers thereof manufactured, sold, handled, distributed, premises alienated by the named insured or work completed by or for the named insured out of which the accident arises".
(6) That in 1963, plaintiff erected a tramway system in Kentucky for Fort Brannaum, Inc. under a subcontract with John A. Roebling Sons Division of the Colorado Fuel & Iron Corporation.
(7) Pursuant to its obligations under the contract, Pittsburgh Bridge & Iron Corporation, had fabricated and installed in the tramway system a "saddle", which specifications deviated from the plans submitted to Pittsburgh Bridge & Iron by Colorado Fuel & Iron Corporation.
(8) That the cable utilized in the tramway system was manufactured and sold by Colorado Fuel & Iron Corporation. The same cable was installed in the tramway of Pittsburgh Bridge & Iron.
(9) Upon the completion of the tramway system in 1963, the tramway began to operate.
(10) In 1965, Fort Brannaum, Inc. notified plaintiff and Colorado Fuel & Iron Corporation that two of the outer strands of a cable had broken.
(11) That Pittsburgh Bridge & Iron notified defendant Liberty Mutual of Fort Brannaum's claim against Pittsburgh Bridge & Iron and that Liberty Mutual caused an ...