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

Mealey's Construction Defects Insurance

March 14, 2023
Lack Of Water Damage Timeline Absolves Insurer Of Coverage, Duty To Defend

ATLANTA — An insurer owes no duty to cover, defend or indemnify a general contractor or subcontractor for underlying construction defects lawsuits filed against the contractors stemming from water intrusion damages at a hotel construction project because no evidence was provided showing that the property damage took place during the policy periods, a federal judge in Georgia ruled.
March 10, 2023
Policy Endorsement Bars Coverage To Subcontractor In Faulty Installation Suit

WEST PALM BEACH, Fla. — A commercial general liability insurer is entitled to summary judgment on its declaratory judgment claims in a lawsuit stemming from a subcontractor’s alleged faulty installation of cladding and glazing systems in a construction project because the policy’s “course-of-construction” exclusion bars coverage, a federal judge in Florida ruled.
March 10, 2023
Damages Claim Remains In Coverage Suit Over Faulty Breaker Installation

SAN DIEGO — A federal judge in California ruled that an insured has sufficiently pleaded its claim for punitive damages in a coverage dispute over its insurer’s refusal to indemnify the insurer in an underlying property damage lawsuit stemming from the sale and installation of defective circuit breakers under California law because, at this stage of the litigation, the insured is not required to show “with ‘clear and convincing evidence’” that the insurer acted with “‘oppression, fraud, or malice.’”
February 27, 2023
COMMENTARY: Construction Defect Claims: A 2022 Update Part II

By Thomas F. Segalla, Michael T. Glascott, Ashlyn M. Capote, Adam R. Durst, Sean P. Hvisdas and Samantha M. McDermott
March 09, 2023
Contractor Relieved Of Liability For Independent Contractor’s Negligence

NEW YORK — A New York trial court did not err in dismissing a complaint brought by an insurer as subrogee of a homeowner whose home was damaged after wiring that was cut during renovation work in a garage started a fire because the damage was caused by an independent contractor and, thus, the contractor performing the renovations cannot be held liable, a Second Department New York Supreme Court Appellate Division panel ruled in affirming the dismissal March 8.
March 09, 2023
Insurer Has No Duty To Defend Subcontractor Based On New Construction Exclusions

SEATTLE — An insurer did not breach its duty to defend a subcontractor in an underlying construction defects lawsuit brought by homeowners because the subcontractor’s policy excluded coverage for the damages the homeowners sought under a series of new construction exclusions, a federal judge in Washington ruled.
March 09, 2023
Lack Of Property Damage Precludes Contractor From Coverage Over Faulty Welds

CHICAGO — A federal judge in Illinois ruled that insurers do not owe a general contractor coverage as an additional insured in a coverage dispute stemming from a subcontractor’s defective welding work at O’Hare International Airport because claims made by the general contractor in an underlying lawsuit were not for “property damage.”
March 08, 2023
Subrogation Waiver Absolved Contractor Of Liability, Indiana High Court Rules

INDIANAPOLIS — An Indiana trial court erred in granting summary judgment in favor of an insurer and tenants of a office complex in a coverage and subrogation dispute against a sprinkler installation contactor because a subrogation waiver barred coverage for the insurer, while the contactor owed no contractual duty to the other tenants, a divided Indiana Supreme Court ruled in reversing and remanding.
March 03, 2023
Insurer’s Bid To Place Other Insurer On The Hook For Damages Coverage Denied

SAN FRANCISCO — An excess liability insurer is not entitled to summary judgment on its claims for equitable indemnity and/or equitable subrogation against other insurers involved in a construction defects lawsuit against the builder in charge of the Millennium Tower project because the insurer has failed to show that coverage it paid should have been paid by another insurer based on the timeline for when the alleged damages were first discovered, a federal judge in California ruled.
March 01, 2023
Warranty Exclusion Barred Contractor From Seeking Defense In Defects Suit

SAN FRANCISCO — A California trial court correctly found that an insurer owed no duty to defend or indemnify its insured contractor in a construction defects lawsuit stemming from its building of a home because the claims brought against the contractor are barred by the policy’s contractors warranty exclusion, a California appellate court panel said Feb. 28 in affirming judgment in favor of the insurer.
March 01, 2023
Condo Association Not Entitled To New Trial Over Late Notice Jury Instruction

SEATTLE — A jury was presented with sufficient evidence to determine whether a condominium’s apartment owners association’s late notice of water intrusion damage caused by construction defects resulted in both actual and substantial prejudice to an insurer and the jury’s finding in favor of the insurer was not precluded by the insurer’s coverage determination, a federal judge in Washington ruled in denying the association’s motion for a partial new trial.
March 01, 2023
Panel: Insurer Did Not Waive Exclusion In Denying Coverage In Water Runoff Suit

ATLANTA — A federal district court’s finding that an insurer’s failure in its denial letter to state that a pollution exclusion barred coverage for a contractor in a lawsuit stemming from grading work performed by the contractor did not amount to a waiver of the insurer’s argument against coverage in an ensuing coverage dispute with the contractor because the damage claimed in the lawsuit “squarely falls” under the exclusion, an 11th Circuit U.S. Court of Appeals panel said in affirming summary judgment for the insurer.
February 27, 2023
CGL Insurer’s Claims Against Contractor In Coverage Suit Deemed Not Ripe

DALLAS — A commercial general liability insurer’s claims in a coverage dispute against a contractor stemming from construction defects alleged by a developer in an underlying construction defects and breach of contract lawsuit are not ripe for adjudication because the insurer seeks declaratory relief that it owes the contractor no duty to indemnify even though the underlying lawsuit has not been resolved, a federal judge in Texas ruled in dismissing the insurer’s claims.
February 24, 2023
Panel: Insurer Not Required To Indemnify Contractor For Water Main Repairs

DES MOINES, Iowa — An insurer does not owe a contractor a duty to indemnify for damages incurred by the contractor to repair a water main that was broken during excavation work at a construction site by an insured subcontractor because no claim has been made against the contractor for the damages, and the contractor has not obtained a judgment against the subcontractor, an Iowa Court of Appeals panel ruled in affirming summary judgment for the insurer.
February 23, 2023
Insureds’ Liability Does Not Equal An Occurrence Under Policies For Coverage

ROCHESTER, N.Y. — A federal magistrate judge in New York found that insurers have no duty to defend former homeowners in a lawsuit stemming from the former homeowners’ alleged failure to disclose structural and environmental issues in connection with a home they sold because the former homeowners have failed to provide facts supporting their argument that their liability as former homeowners equates to an occurrence under the insurance policies.
February 22, 2023
Insurer On The Hook For Defense Costs, Settlement In Underlying Defects Suit

LOS ANGELES — A California appellate panel found that a state trial court did not err in ruling that a property management company’s insurer owed a duty to defend and indemnify the company in an underlying construction defects lawsuit because the claims brought against the company fell within the coverage included in the policies issued.
February 17, 2023
CGL Policy Did Not Provide Coverage For Homeowners’ Contract Breach Claims

SALEM, Ore. — An insurer owed no duty to indemnify either its insured contractor or homeowners in a coverage dispute over faulty work performed in building a home because the breach of contract claim brought by the homeowners in an arbitration proceeding was not covered under the contractor’s commercial general liability (CGL) policy, an Oregon Court of Appeals panel ruled in affirming.
February 16, 2023
Judge: Coverage Suit Stay Pending Arbitration Appeal Dwarfs Prejudice To Contractor

HONOLULU — A federal judge in Hawaii granted a stay of proceedings in a coverage dispute over whether insurers owe a contractor and developer a duty to defend in a lawsuit over construction defects discovered at a condominium project, ruling that the potential for wasted resources in not staying proceedings outweighs any prejudice to the contractor if the suit were stayed pending the outcome of the contractor’s appeal of an arbitration award.
February 14, 2023
Policy Exclusion Bars Contractor’s Claim For Faulty Concrete Work

WHITE PLAINS, N.Y. — A contractor’s builders risk policy contained an exclusion barring coverage for faulty work performed on a construction project, and the contractor failed to show that an insurer’s error in failing to provide the contractor with a copy of the exclusion in the policy was anything more than scrivener’s error, a federal judge in New York ruled Feb. 13 in granting a pair of summary judgment motions.
February 14, 2023
Appeals In Coverage Dispute Over Water Intrusion Claims Voluntarily Dismissed

RICHMOND, Va. — Without providing detail, the Fourth Circuit U.S. Court of Appeals granted a stipulated motion for voluntary dismissal of a consolidated appeal between a contractor and insurer in the contractor’s coverage dispute against the insurer and others stemming from water intrusion and other construction defect issues at a mixed-use development project.
February 13, 2023
Policy Exclusions Bar Coverage To Parking Garage Owner For Design Defects

WASHINGTON, D.C. — A federal judge in Washington ruled that a business failed to show that its commercial general liability (CGL) insurer owes the business coverage for repairs of cracks discovered on structural supports in a parking garage based on alleged faulty design and construction because policy exclusions bar coverage for damages resulting from design defects.
February 13, 2023
Judge: Insurer Failed To Show It Relied On Law Firm’s Alleged Misstatements

LEXINGTON, Ky. — A federal judge in Kentucky on Feb. 10 ruled that an insurer failed to state its fraudulent and negligent misrepresentation claims against a law firm in a alleging that a contractor and inspector were negligent in their repair of a parking garage, which led to the garage’s collapse, because the insurer did not show that its insured relied on any false or misleading statements in entering into an agreement to purchase the parking garage.
February 10, 2023
Policy Language Requires Insurer To Defend Contractor In Property Damage Suit

NEW YORK — A commercial general liability (CGL) insurer is required to provide its insured contractor with a defense in an underlying lawsuit stemming from a subcontractor’s striking of an electrical conduit at a construction project because allegations made in the underlying lawsuit “clearly relate to an occurrence,” as defined in the policy, pertaining to property damage, a New York state court justice ruled.
February 09, 2023
Insurer’s Summary Judgment Bid In Water Damage Suit Deemed Premature

NEW YORK — A New York justice ruled that a contractor’s filing of a motion for summary judgment in an insurer’s lawsuit seeking to recover damages paid to its insured stemming from the contractor’s allegedly negligent work in a bathroom renovation project is premature because no depositions have been taken and discovery has not been scheduled.
February 09, 2023
Subcontractor Was Not An Additional Insured Under Policy, Insurer Argues

ATLANTA — An 11th Circuit U.S. Court of Appeals panel should overturn a federal district court judge’s reduced attorney fee award in favor of a contractor’s counsel in a coverage lawsuit stemming from the law firm’s representation of the contractor in an underlying lawsuit over a subcontractor’s alleged defective stucco work on several homes in a subdivision because the subcontractor is not an additional insured under the contractor’s policy, the contractor’s insurer argues in an appellant brief filed in the 11th Circuit.