LOS ANGELES — A California federal judge on April 21 granted an insurer’s motion to remand after determining that removal was improper because complete diversity of citizenship may not exist as there is a possibility that several defendants in the construction defects suit, originally filed in California state court, are citizens of California (Ironshore Specialty Insurance Co. v. Maison Reeves Homeowners Association, et al., No. 17-1704, C.D. Calif., 2017 U.S. Dist. LEXIS 61241).
SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals on April 20 determined that a district court erred in granting summary judgment in favor of two insurers because it was reasonable for the assignees of the insured to assume that the damage sustained as the result of an insured’s negligent repair is not a continuation of the assignee’s original damage (Adrianus Alkemade and Rachelle Alkemade v. Quanta Indemnity Co. and General Fidelity Insurance Co., No. 14-35605, 9th Cir., 2017 U.S. App. LEXIS 6896).
DENVER — The 10th Circuit U.S. Court of Appeals on April 21 affirmed a lower federal court’s finding that a homeowners insurer did not violate its policy when it depreciated labor costs in determining the actual cash value of an insured’s loss following hail and water damage (Margaret Graves v. American Family Mutual Insurance Co., No. 15-3187, 10th Cir., 2017 U.S. App. LEXIS 6980).
ATLANTA — A commercial general liability insurer had no duty to defend or indemnify a home inspector against allegations that an insufficient inspection failed to discover defective conditions prior to a home sale, the 11th Circuit U.S. Court of Appeals affirmed April 17, finding that the inspector’s negligence did not cause any covered “property damage” (Auto-Owners Insurance Co. v. Ralph Gage Contracting Inc., et al., No. 16-15442, 11th Cir., 2017 U.S. App. LEXIS 6528).
ST. LOUIS — A settlement agreement between an association and an insured general contractor over allegations of defective construction violated an insurance policy’s cooperation clause and, thus, is unenforceable, the Eighth Circuit U.S. Court of Appeals affirmed April 17 (James River Insurance Co. v. The Interlachen Propertyowners Association and Kuepers Construction Inc., No. 16-2994, 8th Cir.).
TACOMA, Wash. — In a coverage dispute between a condominium association and several “all-risk” insurers, a Washington federal judge on April 12 granted in part and denied in part summary judgment on two insurers’ late notice defense but granted summary judgment entirely on their suit limitations defense (Eagle Harbour Condominium Association v. Allstate Insurance Co., et al., No. 15-5312, W.D. Wash., 2017 U.S. Dist. LEXIS 56292).
TRENTON, N.J. — Factual issues remain on whether damage caused by a window subcontractor manifested before or after an insurer’s policy periods, a New Jersey federal judge ruled April 12, denying summary judgment to two insurers in a contribution lawsuit over defense costs incurred by the one insurer in a construction defects case (American Fire and Casualty Co. v. Crum & Forster Specialty Insurance Co., No. 14-04696, D. N.J., 2017 U.S. Dist. LEXIS 56450).
CHICAGO — In an insured’s breach of contract and bad faith lawsuit against its commercial general liability insurer, an Illinois federal judge ruled April 11 that the parties failed to provide evidence to clear up genuine issues of material fact regarding whether independent counsel should be appointed for an insured in an underlying construction defects case (DePasquale Steel Erectors Inc. v. Gemini Insurance Co., No. 16-10892, N.D. Ill., 2017 U.S. Dist. LEXIS 54917).
PHOENIX — An insurer is estopped from asserting a coverage defense to a homeowner’s breach of contract and bad faith lawsuit based on the subcontractors exclusion because the information relevant to that defense was improperly disclosed by an insured contractor’s counsel, a visiting Alaska federal judge to the Arizona federal court ruled April 10 (Karen Cosgrove v. National Fire & Marine Insurance Co., No. 14-2229, D. Ariz., 2017 U.S. Dist. LEXIS 54479).
PHILADELPHIA — Commercial general liability insurers have no duty to defend or indemnify an insured in a shoddy workmanship lawsuit filed by the former owner of an apartment complex, the Third Circuit U.S. Court of Appeals ruled April 11, affirming summary judgment for the insurers (Mega Construction Corp. v. XL America Group, et al. v. Travelers Casualty Insurance Company of America v. Ohio Casualty, No. 16-2639, 3rd Cir., 2017 U.S. App. LEXIS 6210).
TACOMA, Wash. — Questions of fact exist on whether a covered peril caused continuous damage to a condominium association’s common areas and buildings under several “all-risk” insurance policies, a Washington federal judge ruled April 10, denying summary judgment to the association and insurers (Eagle Harbour Condominium Association v. Allstate Insurance Co., et al., No. 15-5312, W.D. Wash., 2017 U.S. Dist. LEXIS 54761).
CHARLESTON, S.C. — An additional insured may offer layman testimony about the cause of damages or cost of repairs at a condominium association for purposes of its bad faith lawsuit against an insurer, a South Carolina federal judge ruled April 6 (UFP Eastern Division Inc. f/k/a Universal Forest Products Eastern Division Inc. v. Selective Insurance Company of South Carolina, No. 15-2801, D. S.C., 2017 U.S. Dist. LEXIS 53190).
By Howard K. Glick and Daniel S. Weber
RICHMOND, Va. — A professional liability insurance policy provided coverage for a general contractor’s liability for defective design of a building’s foundation, which resulted in the contractor becoming responsible to pay $1.77 million as part of the costs to repair, the Fourth Circuit U.S. Court of Appeals held April 4, affirming summary judgment on an insured’s breach of contract counterclaim (Westchester Surplus Lines Insurance Co. v. Clancy & Theys Construction Co., Nos. 15-2299 & 15-2373, 4th Cir., 2017 U.S. App. LEXIS 5796).
DES MOINES, Iowa — Fifteen lawsuits against insureds for alleged negligently designed or installed windows constitute separate “occurrences” under comprehensive general liability policies, an Iowa federal judge ruled March 31, granting partial summary judgment to the insureds (Pella Corp., et al. v. Liberty Mutual Insurance Co., No. 11-00273, S.D. Iowa).
CHARLESTON, S.C. — An excess insurer waived the attorney-client privilege on communications contained in its claim files with regard to the denial of a claim arising out of construction defects, a South Carolina federal judge held March 31 (ContraVest Inc., et al. v. Mt. Hawley Insurance Co., No. 15-00304, D. S.C., 2017 U.S. Dist. LEXIS 48638).
JACKSONVILLE, Fla. — An insurer’s declaratory judgment action against an insured contractor and a condominium association regarding the duty to indemnify an underlying construction defects suit is premature, a Florida federal judge ruled March 31, staying rather than dismissing the action pending the outcome of the underlying suit (Mid-Continent Casualty Co. v. Nassau Builders Inc., et al., No. 16-921, M.D. Fla., 2017 U.S. Dist. LEXIS 48526).
HOUSTON — Granting a motion for final entry of judgment, a Texas federal judge ruled March 29 that a commercial general liability insurer owes a contractor $187,604.17 for costs associated with an insured subcontractor’s work on a fuel tank (Mid-Continent Casualty Co. v. Petroleum Solutions, Inc., et al., No. 09-0422, S.D. Texas, 2017 U.S. Dist. LEXIS 46285).
MIAMI — An insurance policy’s water exclusion precludes payment to insureds for water damage and other repairs stemming from their collapsed and backed-up pipe, a Florida federal judge ruled March 28, granting summary judgment to the insurer (Ken Cameron and Michelle Cameron v. Scottsdale Insurance Co., No. 16-21704, S.D. Fla., 2017 U.S. Dist. LEXIS 45474).
PHILADELPHIA — A homeowners insurer paid the entire amount it owed to insureds for damage to their home because the insureds failed to offer expert reports to rebut the insurer’s evidence that the unpaid portions were not covered, a Pennsylvania federal judge ruled March 22, granting summary judgment to the insurer on a breach of contract claim (Scot Fazio and Dawn Fazio v. State Farm Fire and Casualty Co., No. 16-1987, E.D. Pa., 2017 U.S. Dist. LEXIS 41604).