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

Mealey's Construction Defects Insurance

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.
November 28, 2023
Insurer Argues That It Owes No Coverage For Judgment Against Contractor

WILMINGTON, Del. — An insurer that filed a complaint for declaratory judgment in a federal court in Delaware against a contractor and homeowners association filed an answer to counterclaims by the association on Nov. 27, arguing that it owes no coverage for more than $8 million in damages awarded to the association in its underlying case against the contractor for excessive water infiltration and other issues.
November 27, 2023
2nd Circuit Refuses To Rehear Professional Liability Coverage Dispute

NEW YORK — The Second Circuit U.S. Court of Appeals issued a mandate on Nov. 27 after it denied a lawyer insured’s petition for rehearing en banc seeking to reverse its ruling that a professional liability insurer has no duty to defend the insured’s construction management company against a lawsuit arising from a home renovation project, standing by its conclusion that the underlying complaint fails to allege professional services that the insured provided as a lawyer to trigger coverage.
November 22, 2023
Hawaii High Court: Express Reimbursement Provision Needed To Recover Defense Costs

HONOLULU — Insurers “may not recover defense costs for defended claims unless the insurance policy contains an express reimbursement provision. A reservation of rights letter will not do,” the Hawaii Supreme Court said in answering a question certified to it by a federal district court 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.
November 20, 2023
Electrical Contractor’s CGL Insurers Settle Dispute Over Coverage For Defects Suit

EL PASO, Texas — An electrical contractor’s commercial general liability insurers on Nov. 17 notified a federal court in Texas that they had reached a settlement in their dispute over their responsibility to cover their mutual insured in an underlying construction defects action and requested that the case, which was set for a bench trial on Dec. 4, be removed from the court’s docket while they finalize dismissal documents.
November 16, 2023
Flooring Subcontractor Appeals No Coverage Ruling In Gym Floor Spat To 8th Circuit

LITTLE ROCK, Ark. — A flooring subcontractor on Nov. 15 notified a federal court in Arkansas that it is appealing to the Eighth Circuit U.S. Court of Appeals the lower court’s ruling granting summary judgment to its insurer in its breach of contract and declaratory relief action seeking coverage for the replacement of a gym floor.
November 08, 2023
Louisiana Panel: Professional Liability Insurer Of Engineer Cannot Be Held Liable

BATON ROUGE, La. — A Louisiana appeals court panel concluded 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, affirming 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.
November 06, 2023
Contractor, Insurer Object To Recommendations In Sewer Pipe Coverage Row

SEATTLE — An insurer and a contractor have filed objections to a magistrate judge’s recommendations related to several summary judgment motions in a coverage dispute over the contractor’s alleged faulty construction of a conveyance pipe for a sewer overflow control project, with the contractor arguing that a Washington federal judge should find that it owes no duty to defend the contractor because there is no coverage available to the contractor as an additional insured and that summary judgment should be denied for the contractor’s insurer, and the contractor objecting to the magistrate’s recommendation on defense costs owed by the insurer.
November 02, 2023
Arkansas Federal Judge Finds No Coverage Owed For Gym Floor Replacement

LITTLE ROCK, Ark. — A flooring subcontractor’s insurance policy excludes losses caused by defects in workmanship or construction, and damage to a newly installed vinyl gym floor was caused by a painting subcontractor’s misapplication of paint, rather than a covered peril, so the policy’s ensuing loss provision was not triggered, a federal judge in Arkansas ruled Nov. 1, granting summary judgment to the flooring subcontractor’s insurer.
November 02, 2023
Subcontractor’s Insurer Dismissed From Insurer’s Duty To Defend, Contribution Suit

FAYETTEVILLE, Ark. — The Texas Anti-Indemnity Act (TAIA) applies to an insurance policy issued to a subcontractor and, therefore, policy provisions providing additional insured coverage or requiring the insurer to indemnify a contractor for the contractor’s own negligence or fault are unenforceable, a federal judge in Arkansas ruled Nov. 1 in granting the subcontractor’s insurer’s dismissal motion.
November 01, 2023
Texas Panel Affirms Insurer Must Indemnify Concrete Contractor For $2.2M Judgment

EL PASO, Texas — A Texas appellate panel on Oct. 31 affirmed that a commercial general liability insurer must indemnify its concrete contractor insured for an underlying $2.2 million judgment, rejecting the insurer’s arguments that the contractual liability, your product and your work exclusions in the policy bar coverage.
November 01, 2023
Stay Granted In Insurance Rescission Suit Due To Overlap With Underlying Case

SAN FRANCISCO — A California federal judge granted a stay in an insurer’s suit against its insured and a lessee contracting with the insured for a remodeling project, seeking rescission of policies and a declaratory judgment that there is no duty to defend and indemnify the insured in an underlying negligence suit regarding the remodeling project, finding that factors weigh in favor of a stay, including the overlapping facts in the underlying action and the declaratory judgment suit.