Mealey's Construction Defects Insurance : Mealey's : Legal News & Analysis

Mealey's Construction Defects Insurance

January 03, 2024
Default Judgment Entered Against Subcontractor Seeking Defense For Building Work

ALEXANDRIA, Va. — A federal judge in Virginia adopted a federal magistrate judge’s recommendation to enter default judgment against a subcontractor in favor of an insurer and report finding that the subcontractor failed to defend itself in the case and that the subcontractor’s defective work at a U.S. Marine Corps base does not constitute an “occurrence” under the insurance policy.
December 22, 2023
Federal Judge Finds Faulty Work On Apartment Complex Negates Duty To Defend

LOUISVILLE, Ky. — A federal judge in Kentucky granted an insurance company’s motion for judgment on the pleadings in its case against a construction company and a subcontractor, finding that the insurer had no duty to defend because faulty workmanship does not meet the standard of an occurrence under Kentucky law.
December 22, 2023
Sewage Pipeline Installation Coverage Suit Dismissed After Underlying Case Settles

SEATTLE — A Washington federal judge ordered the dismissal with prejudice of a coverage dispute arising out of an insured’s alleged negligent installation of a sewage pipeline after the parties indicated that the underlying suit has settled, rendering the duty-to-defend issue in the coverage dispute moot.
December 21, 2023
5th Circuit Affirms Insurer Is Responsible Only For Damage During Policy Period

NEW ORLEANS — An insurer cannot recover costs it paid to settle a roof repair and water damage suit from another insurer because that insurer is responsible only for property damage that occurred during its policy period, the Fifth Circuit U.S. Court of Appeals has ruled, affirming a trial court’s grant of summary judgment.
December 21, 2023
New Mexico Appeals Court: Duty To Defend Still A Question In Insurance Dispute

ALBUQUERQUE, N.M. — New Mexico law prioritizes the duty to defend over contract defenses, and summary judgment should not be granted when the duty to defend is still a question, the New Mexico Court of Appeals said, reversing a lower court’s grant of summary judgment to insurers based on a contractor’s delayed notification of defect claims after finding that factual disputes remain regarding whether the delay negated the insurers’ duty to defend.
December 20, 2023
Intervention, Dismissal Granted In Insurer’s Declaratory Judgment Case

KNOXVILLE, Tenn. — Homeowners suing their contractor in state court over the construction of a home in Tennessee were granted the right to intervene in a case in a federal court in Tennessee brought by the insurer seeking declaratory judgment as well as dismissal after a federal judge “discretionarily decline[d] to exercise jurisdiction over this action.”
December 20, 2023
Parties Agree To Dismiss Coverage Case After They, Underlying Defects Suit Settle

CHATTANOOGA, Tenn. — An insurer, its subcontractor insured and a general contractor have stipulated to the dismissal with prejudice of all claims in the insurer’s action in a Tennessee federal court, related to coverage for an underlying construction defects action, noting that they “have reached agreement with respect to all matters in controversy between them.”
December 19, 2023
Rebuttal Witness Allowed In Construction Insurance Coverage Dispute

CHARLESTON, S.C. — A rebuttal expert witness can only contradict or rebut evidence presented by the opposing expert, but an insurer in a construction coverage dispute too narrowly focused on the content of its expert’s report, a South Carolina federal judge said Dec. 18 in refusing to strike all of the rebuttal expert’s report.
December 19, 2023
Coverage Suit Over Faulty Breaker Installation Dismissed After Parties Settle

SAN DIEGO — A federal judge in California has dismissed with prejudice an insured’s breach of contract and bad faith suit against its insurer arising from the insurer’s refusal to indemnify the insured in an underlying property damage lawsuit stemming from the sale and installation of defective circuit breakers, granting the parties’ jointly filed motion for dismissal.
December 19, 2023
Water Damage Claim Is Barred Under Property Insurance Policies, Panel Says

SEATTLE — The Ninth Circuit U.S. Court of Appeal on Dec. 18 affirmed a district court’s summary judgment ruling in favor of insurers in a water damage coverage suit, agreeing with the lower court that the insured condominium association failed to bring its claim for coverage within one year of the occurrence and failed to show that the occurrence occurred during the policy period.
December 18, 2023
Panel Affirms More Than $25M Judgment Against Insurer In Construction Defects Suit

COLUMBIA, S.C. — The South Carolina Court of Appeals affirmed a trial court’s judgment of more than $25 million against a commercial general liability insurer, agreeing with the lower court’s finding that an insured breached its contract and acted in bad faith in refusing to defend its insured subcontractor and a general contractor, named as an additional insured, against underlying construction defects suits arising out of water damage to townhomes because the evidence shows that all of the parties believed that the policies provided coverage for completed operations.
December 11, 2023
Water Damage Covered Under Policy But Fact Issues Exist On Faulty Work

ST. JOSEPH, Mo. — An ensuing loss provision provides coverage for water damage losses even if the water damage was caused by faulty workmanship; however, questions of fact exist regarding what work within the home was faulty and contributed to the water damage, a Missouri federal judge said in denying an insurer’s motion for summary judgment.
December 08, 2023
8th Circuit Reverses Ruling In Coverage Dispute Over Construction Site Accident

ST. LOUIS — The Eighth Circuit U.S. Court of Appeals reversed a lower court’s grant of partial summary judgment in favor of an engineer insured in an insurer’s lawsuit disputing coverage for an underlying $2.5 million construction worker injury settlement arising from a bridge deck collapse, finding that summary judgment is unavailable because coverage hangs on the resolution of a factual dispute over the insured’s role on the construction project.
December 08, 2023
Faulty Work Isn’t An Accident, Doesn’t Trigger Policy, Insurer Says

LAS VEGAS — An insurer told the Ninth Circuit U.S. Court of Appeals that neither a contractor found by an arbitrator to have breached a contract nor the homeowner association to which it assigned its rights was entitled to coverage for faulty work and that contrary to their arguments, there was nothing ambiguous about the term “accident.”
December 07, 2023
Insurer To 11th Circuit: Coverage For Project Manager Barred By Exclusion

ATLANTA — An insurance policy’s professional services exclusion eliminates the insurer’s duty to defend where the insured, a construction management company, is being sued for construction defects on an apartment project where it operated as a “construction manager” pursuant to a “Professional Services Agreement,” the insurer argues in an appellee brief filed in the 11th Circuit U.S. Court of Appeals.
December 06, 2023
Contractor To 7th Circuit: Coverage Owed Under Subcontractor’s Policies

CHICAGO — The Seventh Circuit U.S. Court of Appeal should reverse a district court’s ruling that insurers do not owe a general contractor a defense or indemnification as an additional insured in a coverage dispute stemming from a subcontractor’s defective welding work at O’Hare International Airport because the underlying claims are potentially within the coverage of the insurance policies at issue, the general contractor maintains in an appellant reply brief.
December 06, 2023
Subcontractor’s Third-Party Complaint Cannot Proceed, Virginia Federal Judge Says

ROANOKE, Va. — A subcontractor’s third-party complaint against a flooring installer must be dismissed because the contractor’s amended complaint against the subcontractor does not seek damages related to the installation of the flooring, a Virginia federal judge said in noting that the third-party complaint must be derivative of the contractor’s amended complaint to proceed.
December 05, 2023
Illinois High Court: Defects Complaint Shows ‘Property Damage’ Caused By ‘Occurrence’

SPRINGFIELD, Ill. — The Illinois Supreme Court affirmed an appellate court’s reversal of summary judgment in favor of a subcontractor’s insurer in a declaratory judgment action, finding that the underlying complaint contains “allegations [that] sufficiently fall within the initial grant of coverage requirement that there be ‘property damage’ caused by an ‘occurrence,’” which could trigger the insurer’s duty to defend the developer against claims related to its subcontractors’ work.
December 04, 2023
Insurer Of Subcontractor Failed To Show No Duty Due To Inspection No-Show

BUTTE, Mont. — The insurer of a subcontractor on a commercial building that allegedly suffers from damages and defects failed to show that the failure of the subcontractor’s owner to respond to communications and to appear at a building inspection relieved it of its duty to indemnify the subcontractor, a federal judge in Montana ruled.
December 01, 2023
Contractor To 11th Circuit: Insurer’s Exclusions Don’t Bar Defense In Defect Case

ATLANTA — A contractor’s commercial general liability insurer has failed to show that construction defects a Florida couple accused the contractor of causing fall within the exclusions of the policy and thus eliminate the insurer’s duty to defend, the contractor argues in its appellee brief filed in the 11th Circuit U.S. Court of Appeals in what is the third appeal in the case.
December 01, 2023
Entry Of Default Set Aside In Policy Exclusion Case After Concrete Failed

PHOENIX — A federal judge in Arizona set aside a clerk’s entry of default in an insurer’s declaratory judgment action, finding that there was no showing of malicious intent after the insured failed to answer the insurer’s complaint claiming that damages resulting from the insured’s allegedly defective concrete were excluded under the policy.
November 30, 2023
Panel Refuses To Rehear Rulings In Favor Of Professional Liability Insurer, Engineer

BATON ROUGE, La. — A Louisiana appeals panel refused to reconsider its affirmation of a lower court’s summary judgment rulings in favor of the insurer and engineer in a lawsuit arising from a contractor’s claims that plans, specifications and bidding documents were inadequate and insufficient to properly construct a road in Terrebonne Parish, standing by its conclusion that because an engineer insured has no liability to Terrebonne Parish Consolidated Government (TPCG) as a matter of law, the engineer’s professional liability insurer also cannot be held liable to TPCG.
November 29, 2023
Declaratory Action Dismissed As Premature; Insurers Ordered To Pay Attorney Fees

NEW YORK — After dismissing as premature insurers’ action seeking a declaration regarding their obligation to indemnify their insureds in an underlying construction defect suit related to leaky window curtains, a New York justice ordered the insurers to pay the insureds’ attorney fees, concluding that the Second Circuit U.S. Court of Appeals decisions cited by the insurers in opposition “misapprehend the governing precedents in this area of the Court of Appeals and the Appellate Division.”
November 29, 2023
Appeal Ends Jurisdiction Over Construction Defect Case, Federal Judge Says

PHILADELPHIA — A notice of appeal immediately stripped a district court of jurisdiction to hear a subsequent motion for reconsideration of a ruling finding that a man’s construction defect case involved the very types of foreseeable damages that an insurer has no duty to defend, a federal judge in Pennsylvania said Nov. 28.
November 28, 2023
CGL Insurer, Insured Agree To Dismiss Coverage Suit Over Defective Flame Arresters

SEATTLE — A commercial general liability insurer and a manufacturer of fire and explosion mitigation systems on Nov. 27 submitted a stipulated notice of dismissal in the insurer’s declaratory action over its obligation to defend and indemnify its insured for an underlying action alleging that flame arresters the company installed in five paper mills were defective.