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

Mealey's Construction Defects Insurance

October 16, 2023
Insurer Appeals Ruling That Negligence Claim Against Engineer Is Time-Barred

CHEYENNE, Wyo. — A subrogated homeowners insurer has appealed to the 10th Circuit U.S. Court of Appeals a federal judge in Wyoming’s ruling that its claim against the engineer that designed a home’s plumbing is time-barred by the two-year statute of limitations for professional negligence claims as the claim began to run when the engineer submitted the final design plans.
October 13, 2023
Magistrate Recommends Denying Judgment To Insurer In Sewer Pipe Break Coverage Row

SEATTLE — A federal magistrate judge in Washington recommended denying an insurer’s motion for summary judgment in a coverage dispute related to a contractor’s alleged faulty construction of a conveyance pipe for a sewer overflow control project, finding that the insurer failed to show that there is no coverage pursuant to the policy.
October 11, 2023
No Professional Services Alleged To Trigger Coverage For Lawyer, 2nd Circuit Says

NEW YORK — The Second Circuit U.S. Court of Appeals on Oct. 10 affirmed a lower court’s ruling in favor of a professional liability insurer in a declaratory judgment and breach of contract lawsuit brought by a lawyer insured, agreeing with the lower court that the insurer has no duty to defend the insured’s construction management company against a lawsuit arising from a home renovation project because the underlying complaint fails to allege professional services that the insured provided as a lawyer to trigger coverage.
October 10, 2023
California Federal Judge Finds Contractor Cannot Bring Bad Faith Claim

LOS ANGELES — Because there has been no excess judgment in underlying arbitration proceedings stemming from a general contractor’s alleged failure to properly secure a building under construction in advance of a hurricane, the contractor cannot state a claim against a commercial general liability insurer for bad faith, a federal judge in California ruled in granting the insurer’s motion for partial summary judgment on the claim.
October 10, 2023
Magistrate Finds Insurer Had Duty To Defend Mutual Insured In Defects Suit

EL PASO, Texas — A commercial general liability insurer had a duty to defend its electrical contractor insured in an underlying construction defects action, but genuine issues of material fact preclude a ruling on whether it had a duty to indemnify the contractor, a federal magistrate judge in Texas found, recommending that the insurer be required to pay its share of defense costs as sought by the insured’s other CGL insurers.
October 05, 2023
11th Circuit: District Court Had Jurisdiction, Appeal Against Insurer May Proceed

ATLANTA — The 11th Circuit U.S. Court of Appeals has determined that the dismissal of a contractor from an insurer’s declaratory judgment action related to an underlying construction defect action was valid and that the parties were diverse in the first instance, allowing the project owner’s appeal of the lower court’s ruling granting judgment on the pleadings to the insurer, which was noticed in December, to proceed.
October 05, 2023
Summary Judgment Granted For Insurer; Bad Faith Claim Dismissed With Prejudice

NEWARK, N.J. — A federal judge in New Jersey granted an insurer’s motion for summary judgment in part, dismissing with prejudice a condominium association’s bad faith claim against the insurer but otherwise denying the insurer’s motion, ruling that the question of whether the insurer is liable for $113 million for water damage to a property allegedly caused by an engineering firm the association hired “contains genuine issues of material fact best reserved for a jury.”
October 05, 2023
Judge Rules Subcontractor’s ‘Faulty Workmanship’ Not Covered By Insurer

ROME, Ga. — A federal judge in Georgia granted an insurer’s motion for summary judgment and denied a masonry company’s cross-motion, ruling that a subcontractor’s “faulty workmanship” was not covered because of a business risk exclusion in the insurer’s policy.
October 05, 2023
Oregon High Court Urged To ‘Quash Confusion,’ Clarify ‘Occurrence’ Requirement

SALEM, Ore. — Saying a commercial general liability insurer’s respondents’ brief “illustrates precisely why clarification of Oregon law on the interpretation of ‘occurrence’ is needed,” homeowners urge the state Supreme Court to “clarify that ‘occurrence’ is interpreted by the words used to define it and that ‘accident’ and ‘exposure’ turn on the facts of what happened, without regard to the legal theory of liability that might be later applied to those facts in a legal proceeding.”
October 05, 2023
Parties In Design Defects Coverage Suit Over Parking Deck Resolve Dispute

WASHINGTON, D.C. — The parties in a coverage lawsuit stemming from repairs a building owner was required to make on structural supports in a parking garage based on its faulty design and construction on Oct. 4 stipulated to the dismissal of both the suit in District of Columbia federal court and the owner’s appeal, noting that they have “resolved all disputes” in the case.
October 05, 2023
Alabama Federal Judge: Court Has Jurisdiction In Insurer’s Declaratory Action

BIRMINGHAM, Ala. — A federal judge in Alabama has denied contractors’ motion to dismiss for lack of jurisdiction a declaratory judgment action filed against them by their preferred business insurer, finding that the court has subject matter jurisdiction because the parties are diverse and the cost of defending the underlying state court action against them exceeds the $75,000 amount in controversy and that the lack of a judgment in the underlying action does not mean that the federal court lacks standing under Article III of the U.S. Constitution.
October 04, 2023
Judge Finds Insurer Breached Contract In Denying Bridge Damage Coverage Claims

WASHINGTON, D.C. — A federal judge in the District of Columbia granted a bridgebuilder summary judgment on its breach of contract claim against its builders risk insurer, finding that the policy’s definition of “damage” includes its 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.
October 03, 2023
Judgment Stayed After Builders Risk Insurer Appeals Verdict, Post-Trial Rulings

DENVER — A federal judge in Colorado on Oct. 2 stayed the execution of final judgment in a condominium developer’s suit against its builders risk insurer pending resolution of all appellate proceedings after the insurer appealed the judgment, all rulings and orders related to the jury’s award of $2.54 million in damages to the developer and a number of post-trial rulings to the 10th Circuit U.S. Court of Appeals.
October 03, 2023
Judge Finds Insurers Have Duty To Defend Contractor For Faulty Roof Installation

HOUSTON — Because there is a question of fact regarding whether a general contractor knew before the policy periods that property damage had occurred as a result of leaks in a roof it constructed, there is a potential for coverage under its commercial general liability policies and its insurers have a duty to defend it in an underlying breach of contract case, a federal judge in Texas found in denying the insurers’ motion for summary judgment and granting the contractor’s competing motion.
October 03, 2023
Pollution Exclusion Bars Coverage For Damages Caused By Stormwater Runoff

ATLANTA — A Georgia federal judge granted a homebuilder liability insurer’s motion to dismiss an insured’s breach of contract suit after determining that no coverage is afforded for an underlying suit alleging property damages caused by stormwater runoff created by the insured’s construction of a townhome development because the policy’s pollution exclusion bars coverage for stormwater runoff.
September 27, 2023
Federal Jury Finds Sprinkler Subcontractor Failed To Perform Work In Good Manner

LAKE CHARLES, La. — Following a three-day trial, a federal jury in Louisiana found that a sprinkler subcontractor failed to perform its work on a sprinkler system in a newly constructed fitness club in a good, workmanlike manner but also decided that the subcontractor was not the cause-in-fact of damages sustained by the club’s owner.
September 27, 2023
1 Insurer Wins, 1 Loses In Competing Summary Judgment Motions Over Pavement Failure

CHICAGO — After first finding that Illinois law applies to a coverage dispute over the failure of pavement at a Michigan outlet mall, a federal judge in that state granted summary judgment to one subcontractor’s insurer and denied the competing summary judgment motion of another subcontractor’s insurer, finding that because the underlying complaint seeks only the costs of repairing the general contractor’s work, it does not allege an “occurrence” or “property damage” to trigger the first insurer’s duty to defend.
September 26, 2023
Federal Judge Dismisses Insurer’s Suit As ‘Shotgun Pleading’ With Leave To Amend

ORLANDO, Fla. — A federal judge in Florida partially granted two motions to dismiss from a homeowners’ association and a contracting company and sua sponte dismissed claims against a builder on the ground that an insurer’s complaint alleging liability for construction-related damages from a condominium development was a “shotgun pleading” that failed to separate each claim into a different count and to specify which claim applied to which defendant.
September 26, 2023
Contractor Denied Summary Judgment In Dispute With Subcontractor’s Insurer

FORT LAUDERDALE, Fla. — A federal judge in Florida denied a contractor’s motion for summary judgment on all claims against it in a declaratory suit filed by its subcontractor’s commercial general liability insurer and on its breach of contract counterclaim against the insurer, finding that the contractor has failed to prove that there are no genuine disputes of material fact.
September 20, 2023
Insurer, Insureds, Amici Debate ‘Occurrence’ Requirement Before Oregon High Court

SALEM, Ore. — A commercial general liability insurer urged the Oregon Supreme Court to affirm lower court rulings that it owed no duty to indemnify its insured contractor for damages awarded in an underlying construction defect arbitration, rejecting the homeowners’ argument that the high court should distinguish or clarify Oak Crest Construction v. Austin Mut. Ins. Co., on which the lower courts relied in finding that because that contractor’s liability arose from a breach of contract, there was no “occurrence” and, thus, no coverage for the property damage.
September 20, 2023
Illinois Panel Reverses Judgment For Engineer, Finds Insurer Entitled To Subrogation

CHICAGO — An Illinois appellate panel on Sept. 19 reversed a lower court’s grant of summary judgment to an engineering firm in a builders risk insurer’s suit seeking subrogation damages for the flooding of a building under construction, finding that the lower court erred in finding that the insurer did not meet the prerequisites for equitable subrogation because the insurer’s right to subrogate stemmed from the insurance contract.
September 19, 2023
Insurer Moves To Transfer Leaky Roof Suit After Winning Partial Summary Judgment

AUSTIN, Texas — A week after winning partial summary judgment in a breach of contract case related to its bankrupt and deceased subcontractor insured’s responsibility for damages stemming from work on a roof, a commercial general liability insurer filed an unopposed motion to transfer a breach of contract suit against it from one federal court in Texas to another.
September 14, 2023
Massachusetts Panel: Court Lacked Jurisdiction Over Insurer In Contractor’s Suit

BOSTON — The Massachusetts Appeals Court on Sept. 14 found that a lower court lacked personal jurisdiction over a commercial general liability insurer in a general contractor’s suit over its subcontractor’s faulty work, vacating the trial court’s award of summary judgment to the insurer and remanding for entry of a new judgment dismissing the complaint.
September 13, 2023
Judge Says Insurer Has No Duty To Defend In Wrongful Death Suit Against Architect

TAMPA, Fla. — A Florida federal judge granted an insurer’s request for declaratory judgment that it has no duty to defend or indemnify its insured architect in a wrongful death suit filed against the architect by the family of a man who died while working on a construction project, finding that the architect “made material misrepresentations on the policy application that voided the policy under the rescission doctrine.”
September 08, 2023
Builders Risk Insurer’s JMOL, New Trial Motions Denied; $7.62M Judgment Entered

DENVER — A federal judge in Colorado denied a builders risk insurer’s renewed motion for judgment as a matter of law (JMOL) and motion for a new trial following a jury’s award of $2.54 million in breach of contract damages to its condominium developer insured, rejecting the insurer’s arguments that the developer failed to prove that it suffered “resulting loss” damages and that the jury rendered an inconsistent verdict.