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

Mealey's Construction Defects Insurance

January 26, 2024
Construction Firm Ineligible For Defense From Excess Insurers, Federal Judge Rules

OAKLAND, Calif. — A federal judge in California on Jan. 25 granted two excess insurers’ motion for partial summary judgment, finding in part that a construction company and related entities were not entitled to a defense from the insurers because the primary $5 million policy had not been exhausted by judgments or settlements as required by the excess insurance policy.
January 26, 2024
Insurer Failed To Show Homebuilder’s Discovery Requests Are Not Relevant

AUSTIN, Texas — A Texas federal magistrate judge denied a general liability insurer’s motion for a protective order and to quash subpoenas served on three insurance brokers after determining that the insurer does not have standing to challenge the subpoenas served on the insurance brokers and failed to meet its burden of showing that the information sought by the insured homebuilder is not relevant to the construction defects coverage dispute.
January 26, 2024
Washington High Court To Decide Whether Condo’s Water Damage Is Covered By Policy

OLYMPIA, Wash. — The Washington Supreme Court heard arguments from an all-risk insurer seeking the reversal of an appeals court ruling that reversed a lower court’s grant of summary judgment in the insurer’s favor in a coverage dispute stemming from condensation damage to a condominium’s roof, along with arguments from the condominium company that the reversal should be upheld.
January 25, 2024
Homeowners Again Appeal Dismissal Of Defects Coverage Suit To 9th Circuit

TACOMA, Wash. — More than seven months after the Ninth Circuit U.S. Court of Appeals dismissed for failure to prosecute homeowners’ appeal of various rulings in their suit against insurers in a coverage dispute stemming from a construction defects lawsuit over the construction of homes in a housing development, the homeowners filed a new notice of appeal in a federal court in Washington, appealing the same rulings as well as a December order dismissing the case with prejudice.
January 24, 2024
Dismissal Of Construction Defects Suit Again Appealed After Reconsideration Denied

PHILADELPHIA — A property owner has appealed to the Third Circuit U.S. Court of Appeals a district court’s second denial of his motion for reconsideration of a ruling dismissing his suit against the commercial general liability insurer of a construction company found to have performed defective renovation work on his property, adding the reconsideration denial to the appeal he filed of the lower court’s ruling granting the insurer’s motion for summary judgment.
January 24, 2024
Federal Judge: Construction Contract Did Not Require Continuing Coverage

SANTA ANA, Calif. — Finding that an insurer had no duty to defend a construction company as an additional insured in a dispute over damages to a Hard Rock Hotel location because the terms of the original contract included no requirements to maintain insurance beyond the final payment date for the project, a federal judge in California granted the insurer’s motion for summary judgment in a dispute brought by another insurer.
January 24, 2024
Vague Policy Terms Sink Insurer’s Summary Judgment Bid In Faulty Concrete Dispute

MIAMI — Finding that a policy’s language is vague regarding the difference between a “repair” and an “improvement,” a federal magistrate judge in Florida denied summary judgment to an insurer that argued that a contractor’s work on defective bridge concrete constituted an “improvement” not covered by the policy.
January 23, 2024
Insurer Became Real Party In Interest After Construction Firm Settled, Judge Finds

DENVER — An insurance company will be allowed to amend its complaint against all defendants remaining in a dispute stemming from faulty construction of homes within a Colorado country club community after the main contractor settled its counterclaims with the insurer and assigned to it the prosecution of all its claims, a federal judge in Colorado ruled.
January 22, 2024
High Court Refuses To Consider If Damage Caused By Insured’s Work Is Occurrence

WASHINGTON, D.C. — The U.S. Supreme Court denied a petition for a writ of certiorari on Jan. 22, refusing to consider whether the Third Circuit U.S. Court of Appeals rewrote Pennsylvania insurance law in its application of the faulty workmanship doctrine when it found that damages to natural gas wells caused by an insured’s fracking work does not constitute an occurrence under a commercial general liability policy.
January 22, 2024
Bridgebuilder, Insurer Stipulate To Dismissal Of Damage Coverage Claims

WASHINGTON, D.C. — A bridgebuilder and its builders risk insurer have agreed to the dismissal with prejudice of the builder’s breach of contract and bad faith suit against the insurer; the builder last year had been granted summary judgment on the breach of contract claim after a federal judge in the District of Columbia found that the policy’s definition of “damage” includes the builder’s claim for reimbursement for repair costs necessitated by defects in the concrete of the bridge and that the insurer failed to demonstrate that any exclusions apply.
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.