No. 24-1121 ___________________________

Sioux Steel Company, a South Dakota corporation

Plaintiff - Appellant

v.

Insurance Company of the State of Pennsylvania

Defendant - Appellee ____________

Appeal from United States District Court for the District of South Dakota - Southern ____________

Submitted: October 24, 2024 Filed: February 6, 2025 ____________ Before LOKEN, SMITH, and GRASZ, Circuit Judges. ____________ SMITH, Circuit Judge.

Sioux Steel Company (Sioux Steel) appeals the district court’s 1 grant of summary judgment to Insurance Company of the State of Pennsylvania (ISOP) on Sioux Steel’s claims for breach of contract and insurance bad faith. ISOP denied

1 The Honorable Karen Schreier, United States District Judge for the District of South Dakota. coverage under a professional services exclusion in its insurance policy after a grain storage bin designed by Sioux Steel catastrophically failed in Mexico. We affirm.

I. Background Sioux Steel is a South Dakota corporation that designs and manufactures commercial grain storage systems. In 2012, Sioux Steel directed its employee Chad Kramer, a licensed professional engineer in South Dakota, to design a new line of hopper bins in various sizes. In designing the hopper bins, Kramer used his engineering skills, consulted technical engineering reference materials, made engineering calculations, and created drawings and specifications.

In addition to Kramer’s services, Sioux Steel also retained KC Engineering to review Kramer’s design. KC Engineering engineers Jason O’Mara and Derek Matthies conducted a structural engineering analysis and design review of the new hopper bins. They approved the drawings and specifications. After approval by KC Engineering, Sioux Steel finalized plans for manufacturing the hopper bins. It then marketed and sold those bins as generic products to the general public.

In March 2014, Sioux Steel entered into a distribution agreement with Molinos Azteca (Molinos) to distribute its products in Mexico. In November 2014, Molinos sold one of the hopper bins designed and manufactured by Sioux Steel to Agropecuaria el Avion (Avion) for handling, storage, and delivery of soybean meal. Molinos installed the hopper bin at Avion’s facility in Tepic, Mexico. On December 23, 2014, Sioux Steel purchased a Foreign Commercial General Liability insurance policy from ISOP covering December 31, 2014, to December 31, 2015. The policy included coverage for Mexico. Relevant to this case, it contained the following professional services exclusion (PSE):

This insurance does not apply to bodily injury, property damage or personal and advertising injury arising out of the rendering of or failure to render any professional services by you or any engineer, architect or surveyor who is either employed by you or performing work on your behalf in such capacity. -2- Professional services include:

1. The preparing, approving, or failing to prepare or approve, maps, shop drawings, opinions, reports, surveys, field orders, change orders or drawings and specifications; and

2. Supervisory, inspection, architectural or engineering activities. R. Doc. 67-1, at 33 (emphases omitted).

On February 2, 2015, the hopper bin sold to Avion catastrophically failed at Avion’s facility in Mexico. Two Avion employees were emptying the bin’s contents when the vertical seam failed a