dissenting:
I do not believe that the components manufactured or sold by SEECO were so “intertwined” with the crane that damage to a new or different product, a “pile driving rig,” occurred under the reasoning of Pittway Corp. v. American Motorists Insurance Co. (1977), 56 Ill. App. 3d 338, 370 N.E.2d 127, and Elco Industries, Inc. v. Liberty Mutual Insurance Co. (1980), 90 Ill. App. 3d 1106, 414 N.E.2d 41, and cases therein cited. The attachment of the components manufactured or supplied by SEECO to the crane, which suffered no damage, did not result in “incorporation” or “integration” into a new structure or product which suffered damage. Elco Industries, Inc. v. Liberty Mutual Insurance Co. (1977), 46 Ill. App. 3d 936, 361 N.E.2d 589; Timberline Equipment Co. v. St. Paul Fire & Marine Insurance Co. (1978), 281 Or. 639, 576 P.2d 1244.
There has been no property damage within the coverage afforded by the policy, as the only property damage was to the insured’s products, which are all excluded from coverage under Exclusion (f). Unless there has been damage to tangible property within the policy coverage, there can be no recovery for economic loss occasioned by “down-time,” including those items included in count II of the Joint Venture’s complaint. Exclusion (e) excludes from coverage loss of use of tangible property which has not been physically injured or destroyed from the failure of the insured’s products to perform in a satisfactory manner.
I do not consider the pile-driving rig to be tangible property as an entity different from the components supplied by SEECO. Under Hogan v. Midland National Insurance Co. (1970), 3 Cal. 3d 553, 476 P.2d 825, 91 Cal. Rptr. 153, which discusses and explains the holdings of the earlier cases of Geddes & Smith, Inc. v. Saint Paul Mercury Indemnity Co. (1959), 51 Cal. 2d 558, 334 P.2d 881, and Geddes & Smith, Inc. v. Saint Paul Mercury Indemnity Co. (1965), 63 Cal. 2d 602, 407 P.2d 868, 47 Cal. Rptr. 564, there can be no recovery for intangible or economic loss under California law unless there is damage to tangible property other than that which has been manufactured or supplied by the insured.
In Hamilton Die Cast, Inc. v. United States Fidelity & Guaranty Co. (7th Cir. 1975), 508 F.2d 417, the court reasoned that the inclusion of a defective component, where no physical harm to the other parts results, did not constitute property damage under a general liability policy insuring against product liability property damage. In Yakima Cement Products Co. v. Great American Insurance Co. (1980), 93 Wash. 2d 210, 608 P.2d 254, the supreme court of Washington concluded that no intangible damage to tangible property within the policy coverage occurs unless there is proof that the value of the structure or entity into which the insured’s product was integrated was in some way diminished. This is in accord with the law of Hlinois. Sentry Insurance Co. v. S & L Home Heating Co. (1980), 91 Ill0. App. 3d 687, 414 N.E.2d 1218; Chambers Gasket & Manufacturing Co. v. General Insurance Co. of America (1975), 29 Ill. App. 3d 998, 331 N.E.2d 203.
The question of coverage aside, it seems to me that Fremont has demonstrated prejudice as a matter of law and should be relieved of any responsibility under the policy. It never received notice of the actions filed against SEECO, which suffered a default judgment to be entered against it. Fremont had no opportunity to contest the amount of damages assessed against it. In Pittway Corp. v. American Motorists Insurance Co. (1977), 56 Ill. App. 3d 338, 370 N.E.2d 1271, the court held that the facts established prejudice as a matter of law where the insured failed to notify the company to enable it to make an effective investigation of the claim asserted against the insured. I consider the conduct of the insured here much more egregious.