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

Mealey's Construction Defects Insurance

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.
February 07, 2023
Judge: Damage From Faulty Hotel Work Could Have Occurred During Policy Period

LAFAYETTE, La. — A contractor’s insurer is entitled to summary judgment on cross-claims brought against another one of the contractor’s insurers in a coverage dispute stemming from the contractor’s alleged faulty workmanship in the construction of a hotel because the damage could have occurred during the second insurer’s policy period and because the hotel owner’s complaint has been drafted in a way that provides allegations “beyond the scope of the Policies’ exclusions,” a federal judge in Louisiana ruled.
February 07, 2023
Trial Court Erred In Granting Summary Judgment In Insurer Contribution Suit

ANNAPOLIS, Md. — Although a nonsettling insurer may not ultimately prevail on its claim for equitable contribution against settling insurers in a lawsuit brought seeking to hold the settling insurers liable for contribution to defense costs and attorney fees in a construction defects lawsuit, a Maryland trial court erred in granting the settling insurers’ summary judgment motion on the grounds for which it did, a Maryland Appellate Court panel ruled in reversing and remanding.
February 07, 2023
Insurer’s Negligence Claims Against Architect Lack Factual Foundation

NEW YORK — A New York justice ruled that dismissal of negligence claims against an architect in a coverage lawsuit stemming from its role in a faulty HVAC system installation as part of an apartment renovation project is necessary because while the claims against the architect are timely, the allegations made by the insurer that brought the claims “lack the foundation needed” to survive dismissal under the heightened pleading standard of Civil Practice Law and Rule Section 3211(h).
February 03, 2023
Insurer Lacked Ability To Sue Contractors Under Contract’s Subrogation Waiver

HOUSTON — A Texas court did not err in granting summary judgment to contractors in an insurer’s lawsuit stemming from a fire that damaged the property on which the contractors were working because no issue of material fact exists showing the contractors were entitled to such relief based on their affirmative defense of waiver, a Texas appellate court ruled Feb. 2 in affirming.
February 02, 2023
Protective Order Issued In Coverage Dispute Over Sewer Pipe Break

SEATTLE — A federal magistrate judge in Washington granted a stipulated protective order designating certain materials to be submitted as confidential in a coverage dispute stemming from a contractor’s faulty construction of a conveyance pipe for a sewer overflow control project because the coverage suit is proceeding simultaneously with the underlying construction defects lawsuit.
February 02, 2023
Architect Appeals Summary Judgment Ruling In Chimney Fire Suit

NEW YORK — An architect will appeal a New York County Supreme Court justice’s ruling denying his motion for summary judgment on third-party claims brought against him in a subrogation lawsuit filed by an insurer stemming from damage caused by an improperly constructed chimney as part of a home renovation, according to a notice of appeal filed in New York state court.
February 01, 2023
Fire Damage Coverage Suit Remanded Due To Improper 'Snap Removal'

BAY CITY, Mich. — A federal judge in Michigan remanded an insurer’s lawsuit against a contractor and manufacturers of an electric heater that, due to its allegedly faulty manufacturing and installation, caused a fire that damaged an insured’s property, ruling that one of the defendants in the action had improperly engaged in a “snap removal."
January 31, 2023
Subrogation Waivers Bar Majority Of Insurers’ Claims In Gas Explosion Lawsuit

DETROIT — An engineering firm and contractor are entitled to summary judgment on a majority of claims filed against them by subrogee insurers in a lawsuit stemming from a gas explosion at a facility where the defendants were involved in a renovation project because subrogation waivers included in contracts the defendants signed with the building owner apply, barring each of the insurers’ claims, except their claims for gross negligence, a federal judge in Michigan ruled Jan. 30 in granting the motions.
January 31, 2023
Jury Placed Too Much Weight On Scant Late Notice Defense, Condo Owners Argue

CINCINNATI — A condominium’s apartment owners association moved for a new trial in Washington federal court in a coverage dispute with its insurers over water intrusion damage caused by defects in the construction of the property, arguing that a jury verdict improperly found in favor of insurers because the insurers’ “‘late notice’ defense is ‘contrary to the weight of the evidence’” and the jury, thus, failed to reach other issues in rendering the verdict.
January 30, 2023
Pollution Exclusion Is Ambiguous As To Whether Home Heating Oil Is A Pollutant

PROVIDENCE, R.I. — The Rhode Island Supreme Court on Jan. 27 vacated and remanded a trial court’s ruling entered in favor of an insurer in an insured’s suit seeking coverage for an underlying suit arising out of a home heating oil spill because the policy’s pollution exclusion is ambiguous as to whether home heating oil qualifies as a pollutant.
January 30, 2023
Insurer Off The Hook For Builder’s Alleged Damages Under Manifestation Theory

LAFAYETTE, La. — A general liability insurer is entitled to summary judgment on its cross-claims against its insured contractor in a coverage dispute stemming from the contractor’s faulty workmanship in the construction of a hotel because under the manifestation theory, alleged damages caused by the contractor were not discovered during the policy periods, a federal judge in Louisiana ruled in granting the insurer’s motion.
January 27, 2023
Policy Language Required Subcontractor’s Work To Be Done During Policy Period

LOS ANGELES — An insurer had no duty to defend a subcontractor in a construction defects action because the products-completed operations hazard language in a wrap policy the insurer provided to a developer required work to be completed during the policy period, which the subcontractor did not do, a federal judge in California ruled in denying a motion for summary judgment filed by an assignee of the subcontractor and granting a summary judgment motion filed by the insurer.
January 26, 2023
Contractor’s Claims In ‘Complicated’ Water Intrusion Coverage Suit Timely

DENVER — A federal magistrate judge in Colorado recommended that a contractor’s third-party claims in a coverage suit brought by an insurer over the contractor’s alleged construction defects in the building of a commercial and residential development not be dismissed because “the complicated history of how the Project’s alleged construction defects were pursued” allows the derivative claims to remain timely.
January 25, 2023
Claims Against Several More Insurers In Defective Work Coverage Suit Dismissed

ALBUQUERQUE, N.M. — Without providing detail, a federal judge in New Mexico on Jan. 24 issued a pair of orders dismissing with prejudice claims brought by a contractor against commercial general liability insurers in a coverage dispute stemming from allegedly defective work performed by insured subcontractors on a residential subdivision.
January 25, 2023
Indemnification Claim Survives Dismissal Bid In Suit Over Garage Collapse

LEXINGTON, Ky. — A federal judge in Kentucky ruled that partial dismissal of a third-party complaint filed in a lawsuit brought by an insurer alleging that a contractor and inspector were negligent in their repair of a parking garage, which led to the garage’s collapse, is warranted because although the third-party plaintiffs have sufficiently pleaded their indemnification claim, they have failed to do so regarding their claim for contribution.