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

Mealey's Construction Defects Insurance

January 22, 2024
Contractor, Insurer Settle Construction Defects Suit, File Stipulation Of Dismissal

GREENBELT, Md. — A general contractor and its professional liability insurer filed a corrected stipulation of dismissal with prejudice on Jan. 18 in a Maryland federal court after reaching a settlement in the suit filed by the insured general contractor and alleging that the insurer breached its contract and acted in bad faith by failing to pay the insured for rectification expenses related to a faulty wall system installed as part of a construction project.
January 19, 2024
Suit Over Coverage For Mutual Insured Contractor Dismissed After Settlement

EL PASO, Texas — A federal judge in Texas has issued a final judgment dismissing with prejudice a dispute over an electrical contractor’s commercial general liability insurers’ responsibility to cover their mutual insured in an underlying construction defects action after the insurers stipulated to the dismissal.
January 17, 2024
Federal Judge Won’t Sever Insurer From Contractor’s Case Seeking Indemnity

SEATTLE — A federal judge in Washington denied an insurer’s motion to sever it from underlying contract litigation between a contractor and subcontractor over alleged damage to a construction project, determining that a district court cannot “create subject matter jurisdiction by severing misjoined claims.”
January 16, 2024
Rec Center Construction Coverage Suit Closed After Remaining Defendants Dismissed

LAS VEGAS — A federal judge in Nevada directed the court clerk to close a case in which two homebuilders sued multiple insurers alleging that they breached the terms of policies they issued to various subcontractors by failing to defend the subcontractors or builders in a construction defects lawsuit bought by a homeowners association or by not fully reimbursing the builders for defense costs after the builders voluntarily dismissed their claims against the two remaining defendant insurers.
January 16, 2024
Engineer Tells 10th Circuit Insurer’s Negligence Claim Was Time-Barred

DENVER — A Wyoming federal judge’s order granting summary judgment in an engineering firm’s favor should be affirmed, the firm tells the 10th Circuit U.S. Court of Appeals in an appellee brief, saying the judge correctly found that an insurer’s claim against the engineer that designed a home’s plumbing that allegedly caused water damage to the home is time-barred by the two-year statute of limitations for professional negligence claims.
January 16, 2024
Coverage Owed For Collapse Of Bricks Caused By Hidden Decay, Federal Judge Says

CHATTANOOGA, Tenn. — A Tennessee federal judge determined in a revised opinion that an insurer owes coverage for the collapse of bricks from a wall that occurred during a contractor’s renovations because the collapse was caused by hidden decay, a covered cause of collapse under the policy. However, the judge said questions of fact exist as to whether coverage is owed for the demolition of the remainder of the wall.
January 12, 2024
Parties In Coverage Suit Over Defective Stucco Agree To Dismiss All Claims

JACKSONVILLE, Fla. — All parties in an insurer’s Florida federal court action seeking a declaration that commercial general liability and umbrella liability policies it issued to a subcontractor do not cover allegations in an underlying lawsuit that the subcontractor installed defective stucco during the construction of a resort have stipulated to the dismissal with prejudice of all claims.
January 09, 2024
Insurer Breached Duty To Defend Subcontractor By Withdrawing, Federal Judge Says

SAN DIEGO — An insurer had a duty to defend a subcontractor in a dispute alleging that the subcontractor installed faulty concrete in a parking garage and breached this duty by withdrawing its defense before the resolution of the case, a federal judge in California found Jan. 8, granting a motion for partial summary judgment from another insurer that sought equitable contribution after it was left to defend the subcontractor on its own.
January 08, 2024
Federal Judge Finds No Jurisdiction Over Insurer’s Duty To Indemnify Contractor

CHARLESTON, S.C. — Finding that the court lacked subject matter jurisdiction to rule on a declaratory judgment action brought by an insurance company that sought a declaration that it did not have a duty to indemnify a contractor and a homeowner’s estate while an underlying action is outstanding in state court, a federal judge in South Carolina dismissed the insurer’s complaint without prejudice.
January 05, 2024
Judge: Contractors Don’t Owe Insurer Defense Fees After Hawaii High Court Ruling

HONOLULU — The contractors for a Hawaii condominium project sued for alleged defects can’t be required to reimburse an insurer for defending claims where the policy in question does not contain an express provision requiring reimbursement, a federal judge in Hawaii ruled following a ruling on a certified question in the case by the Hawaii Supreme Court.
January 04, 2024
Judge: Breach Of Contract Exclusion Applies; Insurer Owes No Duty To Contractor

OAKLAND, Calif. — A breach of contract exclusion in consecutive commercial general liability policies applies to an underlying suit alleging defective work on a home renovation project; therefore, the insurer owes no duty to defend or indemnify the insured contracting company and its owner, a federal judge in California found in granting partial summary judgment to the insurer.
January 04, 2024
Contractor’s Insurer Must Show It Was Prejudiced By Timing Of Claim Tender

SEATTLE — An insurer cannot deny coverage to an insured for a professional negligence claim arising out of additional expenses incurred by the insured on a construction project unless the insurer shows that the insured’s failure to tender the claim until after incurring the expenses caused the insurer to suffer actual and substantial prejudice, a Washington federal judge said in denying the insurer’s motion for summary judgment in a breach of contract and bad faith suit filed by the insured.
January 04, 2024
Concrete And Cement-Material Expert Can Testify In Insurance Coverage Spat

MIAMI — While an insurer’s motion to exclude an expert witness retained in a coverage dispute may “demonstrate some soft and dicey parts” of the expert’s opinions and may provide “substantial amount of legal ammunition to fire at” the expert during cross-examination, a federal magistrate judge in Florida ruled that the expert’s testimony is admissible.
January 03, 2024
Insurer Tells 5th Circuit Faulty Grain Silos Excluded From Coverage

NEW ORLEANS — A Texas federal judge was correct to grant summary judgment after finding that an insurer had no duty to indemnify a contractor in a farmers cooperative’s underlying suit alleging defective construction of grain silos because no “property damage” occurred under the terms of the contract, the insurer tells the Fifth Circuit U.S. Court of Appeals in an appellee brief.
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.