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

Mealey's Construction Defects Insurance

May 03, 2023
Dismissal Of Faulty Stucco Coverage Suit Appeal Sought After Settlement Reached

ATLANTA — A contractor and its insurer asked the 11th Circuit U.S. Court of Appeals to dismiss with prejudice the insurer’s appeal of a federal district court’s issuance of a reduced attorney fee award 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, stating that the parties have reached “a full and final settlement of the dispute between them.”
May 03, 2023
Insurer Says District Court Correctly Found No Coverage For Mold, Water Damage

ATLANTA — The 11th Circuit U.S. Court of Appeals should affirm a district court’s ruling that no coverage is owed for mold damage discovered in an insured hotel because the hotel has a long and documented history of water leaks and mold growth due to faulty construction that incepted prior to the applicable policy period, the insurer says in its appellee brief.
May 03, 2023
Contractor Appeals Summary Judgment In Rain Damage Coverage Suit To 9th Circuit

SAN FRANCISCO — A contractor has appealed to the Ninth Circuit U.S. Court of Appeals a federal judge in Washington’s grant of summary judgment in favor of insurers in a coverage dispute stemming from water intrusion damages caused by snow and rainfall during the construction process after ruling that the insurers’ denial of the claim was proper based on the policies’ rain exclusion.
May 01, 2023
Welding Coverage Suit Axed After Subcontractor Withdraws Defense Demand

ATLANTA — Without providing detail, a federal judge in Georgia issued an order dismissing a coverage dispute stemming from a lawsuit filed against a subcontractor related to faulty welding work performed at a construction project (Middlesex Insurance Co. v. Dixie Mechanical Inc., et al., No. 20-4971, N.D. Ga.).
April 28, 2023
Court Lacks Jurisdiction To Hear Suit Against Contractor In Attorney Fees Suit

BIRMINGHAM, Ala. — A federal district court lacks the necessary jurisdiction to hear an insurer’s lawsuit seeking reimbursement of attorney fees and costs associated with representing a contractor in an underlying construction defects lawsuit because the insurer has failed to show that while none of the parties resides within the state of Alabama, the court still has jurisdiction to hear the insurer’s claims, a federal judge in Alabama ruled in dismissing without prejudice.
April 27, 2023
Contractor’s Defective Work Coverage Suit Dismissed After All Parties Settle

ALBUQUERQUE, N.M. — A federal judge in New Mexico brought an end to a contractor’s lawsuit against commercial general liability insurers in a coverage dispute stemming from allegedly defective work performed by insured subcontractors on a residential subdivision, dismissing the action with prejudice after the contractor notified the court that it had settled its claims with all remaining defendants.
April 27, 2023
Judge: Direct Action Statute Bars Insurer’s Damages Claim In Water Damage Suit

NEW ORLEANS — An insurer proceeding as subrogee of its insured contractor cannot sue a subcontractor’s insurer to recover damages the subrogee insurer paid stemming from water damage caused by the subcontractor’s negligence in performing work on a home’s roof because, under Louisiana’s Direct Action Statute, neither the subrogee insurer nor the contractor is a tort victim, a federal judge in Louisiana ruled in dismissing the insurer’s suit.
April 26, 2023
Court Erred In Rejecting Concurrent Cause Argument, Subrogee Insurer Argues

ATLANTA — The 11th Circuit U.S. Court of Appeals should reverse a federal district court’s grant of summary judgment in favor of an insurer in a coverage dispute over payment of policy claims made by a joint venture that oversaw a construction project at a water reclamation facility because a subrogee insurer is seeking to recover damages not solely for design defects, but for damages caused by a combination of policy-excluded design defects and “covered hydrostatic pressure,” the subrogee insurer argues in a reply brief filed in the appellate court.
April 21, 2023
Lack Of Notice, Policy Exclusions Bar Coverage For Builder’s Faulty Work

BALTIMORE — An insurer owes no damages to homeowners for a judgment issued against its contractor, based on the contractor’s faulty workmanship in the construction of a home, because the insurer failed to provide adequate notice of the homeowners’ claims against it and because the damages were barred under the policy’s “your work” exclusions, a federal judge in Maryland ruled in granting the insurer’s motion for summary judgment and denying a cross-motion filed by the homeowners.
April 20, 2023
Judge: Homeowner’s Personal Injuries Excluded Under Contractor’s Policy

PHILADELPHIA — An insurer does not owe coverage to homeowners under the terms of a policy it provided to a contractor for personal injuries one of the homeowners sustained as a result of mold infestation caused by the contractor’s negligent workmanship because the injuries are excluded under at least one of the policy’s exclusions, a federal judge in Pennsylvania ruled.
April 18, 2023
Judge Sets Aside Default Entry Against Contractor In Defects Coverage Suit

GREENVILLE, Tenn. — A federal judge in Tennessee adopted a magistrate judge’s recommendation that a subcontractor’s motion to set aside an entry of default in a coverage dispute stemming from a construction defects lawsuit be granted, ruling that the report and recommendation “properly analyzes the issues presented."
April 17, 2023
Remaining Claims In Home Construction Defects Coverage Suit Dismissed

SEATTLE — A federal judge in Washington dismissed all remaining claims and counterclaims in a coverage suit stemming from an insurer’s denial of a defense to its insured subcontractor in an underlying construction defects lawsuit brought by homeowners after the parties moved to dismiss those claims in light of the homeowners’ filing of a notice of appeal to the Ninth Circuit U.S. Court of Appeals.
April 12, 2023
Washington Panel Reverses Spoliation Sanction In Design Defect Coverage Dispute

SEATTLE— A Washington appeals court held that although an insured owed a contractual duty to the Washington State Department of Transportation to preserve evidence relating to a change order request, it had no duty to its builders risk insurers and, therefore, the insurers are not entitled to an adverse inference jury instruction as a sanction in a coverage lawsuit stemming from damage to a tunnel boring machine used in the construction of the State Route 99 tunnel.
April 07, 2023
Settlement Leads To Dismissal Of Coverage Suit Against Hotel Developer

SEATTLE — Without providing further detail, a federal judge in Washington dismissed an insurer’s coverage lawsuit against a hotel developer stemming from losses related to construction delays and water intrusion damages after the parties filed a stipulated motion to dismiss.
April 07, 2023
Policy Breach, Bad Faith Claims Dismissed In Building Roof Coverage Lawsuit

CHEYENNE, Wyo. — A federal judge in Wyoming ruled that an insurer and its claims service manager are entitled to summary judgment on a building owner’s breach of contract claim in a coverage suit stemming from a building’s faulty design and construction because the building owner failed to show that the defendants were the cause of its filing of the claim outside the two-year statute of limitations period.
April 07, 2023
Cross-Appeals In Condo Water Intrusion Damage Coverage Suit Dismissed

SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals dismissed a pair of appeals in an insurance dispute in which a condominium’s apartment owners association sought coverage for water intrusion damages caused by construction defects during the construction of the condominiums after the parties agreed to not pursue their appeals any further.
April 06, 2023
Masonry Contractor’s Coverage Suit Dismissed After Parties Agree To Settlement

SAN FRANCISCO — A federal judge in California dismissed a construction defects insurance coverage dispute stemming from faulty masonry and waterproofing work on a retail shopping center after the parties agreed to dismiss the action with prejudice after reaching a settlement.
April 06, 2023
6th Circuit Dismisses Church’s Appeal Over Water Damage No-Coverage Ruling

CINCINNATI — The Sixth Circuit U.S. Court of Appeals granted a stipulated motion to dismiss with prejudice filed by parties in an appeal of a federal district court’s finding that an insurer did not breach its contract with a church by failing to provide coverage for water damage stemming from a leaky roof based on the policy’s negligent work exclusion, which bars coverage for the claim.
April 06, 2023
Ruling Freeing Insurer Of Duty To Defend In Defects Suit Appealed To 9th Circuit

SEATTLE — Homeowners will appeal a federal judge’s ruling that an insurer did not breach its duty to defend a subcontractor in an underlying construction defects lawsuit based on a policy exclusion that barred coverage for the damages the homeowners sought in bringing the suit under a series of new construction exclusions, the homeowners stated in a notice of appeal filed in Washington federal court.
April 06, 2023
Builder Failed To Show Insurer Lacked Diligence In Defective Wall Investigation

GREENBELT, Md. — A federal judge in Maryland granted an insurer’s motion for dismissal of statutory and common-law bad faith claims brought by a general contractor in a coverage dispute over a faulty wall system installed in a construction project, ruling that the contractor failed to show that the insurer failed to provide the necessary diligence in investigating and, ultimately, denying the claim.
April 06, 2023
Parking Garage Owner Appeals Ruling In Design Defects Suit To D.C. Circuit

WASHINGTON, D.C. — A business appealed a grant of summary judgment in favor of commercial general liability (CGL) insurers in a coverage lawsuit stemming from crack repairs the business was required to make on structural supports in a parking garage based on faulty design and construction of the garage, according to a notice of appeal the business filed in District of Columbia federal court.
April 06, 2023
Suit Seeking Coverage For Alleged Negligent Installation Of Sewage Pipeline Stayed

SEATTLE — A Washington federal judge granted a joint motion to stay a coverage dispute arising out of an insured’s alleged negligent installation of a sewage pipeline until the underlying suit filed against the insured by an individual who was injured as a result of contact with raw sewage from the pipeline is resolved.
April 06, 2023
Excess Insurer Granted Summary Judgment In Highway Construction Coverage Suit

AUSTIN, Texas — A federal judge in Texas issued an order adopting a magistrate judge’s report and recommendation that an excess insurer’s motion for summary judgment in its coverage dispute with its insured engineering firm stemming from claims made against the insurer and others over a faulty highway construction project be granted, ruling that he found “no clear error” in the recommendation.
April 06, 2023
Insurer Makes No Showing Why Default Should Be Overturned, Contractor Says

FLORENCE, S.C. — A South Carolina federal judge should deny a motion for relief from default judgment and to set aside entry of default filed by an insurer in a contractor’s coverage dispute stemming from water intrusion and other construction defect issues at a mixed-use development project because the insurer failed to provide a “satisfactory explanation for the default much less establish the ‘mistake, inadvertence, excusable neglect, or surprise’” as required, the contractor argues in an opposition brief.
April 05, 2023
Jury Awards Developer More Than $2.5M In Damages In Concrete Slab Coverage Suit

DENVER — A federal jury in Colorado on April 4 found that a real estate developer proved by a preponderance of the evidence that its insurer breached the terms of a builders risk policy in denying coverage for a cracked concrete slab at a condominium project and awarded the developer $2,541,218 based on three categories of asserted damages.