OAKLAND, Calif. — A California federal judge on March 12 granted summary judgment in a construction defect insurance coverage lawsuit, finding that the underlying issue was not one of property damage but one of defective construction (Webcor Construction, LP, et al. v. Zurich American Insurance Company, et al., No. 17-2220, N.D. Calif., 2019 U.S. Dist. LEXIS 39834).
SACRAMENTO, Calif. — An insurer’s subrogation claim against a company accused of manufacturing a faulty valve that caused an insured to sustain water damages is not subject to arbitration because the insurer’s subrogation claim was filed after a change was made to the arbitration agreement that excluded product liability claims from mandatory arbitration, the Third District California Court of Appeal said March 8 (State Farm General Insurance Co. v. Watts Regulator Co., No. C082125, Calif. App., 3rd Dist., 2019 Cal. App. Unpub. LEXIS 1653).
DENVER — A commercial general liability insurer had a duty to defend a general contractor against a construction defects case, a Colorado federal judge ruled March 7 (KB Home Colorado Inc. v. Peerless Indemnity Insurance Co., No. 17-2441, D. Colo., 2019 U.S. Dist. LEXIS 36827).
ATLANTA — The 11th Circuit U.S. Court of Appeals on March 8 affirmed a lower judge’s dismissal of a commercial general liability insurer’s declaratory relief lawsuit regarding its duty to indemnify an insured against construction defect claims because that duty is not ripe for adjudication until the underlying case is resolved (Mid-Continent Casualty Co. v. Delacruz Drywall Plastering & Stucco Inc., et al., No. 18-14195, 11th Cir., 2019 U.S. App. LEXIS 6976).
ORLANDO, Fla. — A Florida federal judge on March 5 held that “considerations of practicality and wise judicial administration” persuade him to exercise hi discretion not to issue a declaration on a commercial general liability insurer’s duty to defend and duty to indemnify a general contractor against an underlying design and construction defects lawsuit (Harleysville Worcester Insurance Company v. CB Contractors, LLC, et al., No: 17-258, M.D. Fla., 2019 U.S. Dist. LEXIS 34988).
PITTSBURGH — A Pennsylvania federal judge on March 6 refused to dismiss an assignee’s breach of contract and bad faith claims against an insurer in a coverage dispute regarding a $2.4 million settlement over defective concrete used in a bridge construction project (Brayman Construction Corp. v. Westfield Insurance Company Inc., No. 18-CV-00457, W.D. Pa., 2019 U.S. Dist. LEXIS 36432).
PHOENIX — Finding that one insurer had a duty to indemnify a settlement of a water damage claim while another insurer did not, an Arizona federal judge on March 4 held that the second insurer is entitled to amounts paid to settle the claim against the mutual insured (Amerisure Mutual Insurance Co. v. Houston Casualty Co., No. 17-02269, D. Ariz., 2019 U.S. Dist. LEXIS 33873).
LOS ANGELES — A California appeals panel on March 1 upheld judgment to a subrogated insurer in its case seeking recovery from another insurer for a $1.5 million default judgment against a subcontractor regarding an arbitration dispute over construction defects in homeowners’ property (The Insurance Company of the State of Pennsylvania v. American Safety Indemnity Co., B283684, Calif. App., 2nd Dist., Div. 8, 2019 Cal. App. LEXIS 171).
By Thomas F. Segalla, Michael T. Glascott, Ashlyn M. Capote and Brandon D. Zeller
SAN DIEGO — Lawsuits arising out of a joint venture’s failed development project clearly do not come under a member of that venture’s individual insurance policy, but because the insurer never challenged the breach of contract claim, summary judgment would be inappropriate, a federal judge in California said Feb. 21 (Reno Contracting Inc. v. Crum & Forster Specialty Insurance Co., No. 18-450, S.D. Calif., 2019 U.S. Dist. LEXIS 27896).
STATESVILLE, N.C. — A North Carolina federal judge on Feb. 26 granted a homeowners insurer’s motion for summary judgment in a water damage coverage dispute after determining that no coverage is owed because the water damage did not cause an abrupt collapse as required for coverage to exist under the policy (Eileen Hunter v. State Farm Fire & Casualty Co., No. 17-224, W.D. N.C., 2019 U.S. Dist. LEXIS 32755).
RICHMOND, Va. — The Fourth Circuit U.S. Court of Appeals on Feb. 28 found that Virginia Code § 38.2-2226 does not apply to an insurer’s denial of coverage for an underlying $910,148 default judgment entered against its design company insured, finding the insurer may deny coverage despite the insurer’s failure to give the plaintiff notice of the insured’s late reporting of the claim (Gateway Residences at Exchange, LLC v. Illinois Union Insurance Company, No. 18-1491, 4th Cir., 2019 U.S. App. LEXIS 6044).
BOSTON — A Massachusetts federal judge on Feb. 26 held that a purchase and sale agreement for a 24-unit residential apartment building is enforceable and forecloses an insurer’s negligence claim against the property’s developer, granting the developer’s motion for summary judgment in the insurer’s subrogation lawsuit seeking recovery for the amount it paid for a water damage claim (Aspen American Insurance Company v. Covenant Fire Protection Inc., et al., No. 17-10221, D. Mass., 2019 U.S. Dist. LEXIS 29981).
BRIDGEPORT, Conn. — A Connecticut federal judge on Feb. 26 denied a motion to amend a complaint to add a bad faith claim against two homeowners insurers that denied the insureds’ coverage claim arising out of cracking in their basement walls caused by the use of defective concrete because Connecticut state courts have rejected bad faith claims against insurers who have denied coverage in similar suits (Dennis and Erica Moura v. Harleysville Preferred Insurance Co., et al., No. 18-422, D. Conn., 2019 U.S. Dist. LEXIS 29848).
NEW ORLEANS — The Fifth Circuit U.S. Court of Appeals on Feb. 26 found that a commercial general liability insurance policy’s Professional Liability Endorsement (PLE) covers an entire underlying $1.6 million judgment against a contractor insured, reversing a lower court in part (Mid-Continent Casualty Company v. Petroleum Solutions, Incorporated, No. 17-20652, 5th Cir., 2019 U.S. App. LEXIS 5688).
BOSTON — A First Circuit U.S. Court of Appeals panel on Feb. 22 upheld a federal magistrate judge in Massachusetts’ ruling awarding summary judgment to an insured in a suit seeking a declaration that its insurer wrongfully denied coverage for damages resulting from a ceiling collapse, finding that ambiguity in the policy regarding the definition of the word “decay” warranted a finding in favor of the insured (Easthampton Congregational Church v. Church Mutual Insurance Co., No. 18-1881, 1st Cir., 2019 U.S. App. LEXIS 5273).
WILLIAMSPORT, Pa. — Under a builder’s “all-risk” insurance policy, an ensuing loss clause restores coverage to insureds’ indemnification claim despite a faulty workmanship exclusion, a Pennsylvania federal judge ruled Feb. 21 (Griggs Road, L.P., et al. v. Selective Way Insurance Company of America, No. 17-00214, M.D. Pa., 2019 U.S. Dist. LEXIS 27170).
JACKSONVILLE, Fla. — A federal judge in Florida on Feb. 14 ruled in favor of Amerisure Insurance Co. in its declaratory judgment action against Landmark American Insurance Co. regarding the duty to defend a claim for damage from water intrusion on a construction project, ruling that the damage was an occurrence that took place when Landmark was the primary insurer (Amerisure Insurance Company v. The Auchter Company, et al., No. 15-235, M.D. Fla.).
CHARLESTON, S.C. — A South Carolina federal judge on Feb. 19 dismissed claims for declaratory judgment for unreasonable failure to settle, a violation of the South Carolina Unfair Trade Practices Act (SCUTPA) and reformation against insurers in a dispute over coverage for an underlying $33.8 million construction defects judgment (Church Creek Construction LLC, et al. v. Mt. Hawley Insurance Co., et al., No. 17-1339, D. S.C., 2019 U.S. Dist. LEXIS 25711).
AUSTIN, Texas — An insurer alleges in a Feb. 4 complaint filed in a Texas federal court that it does not owe an insured complete indemnity for an underlying $1.1 million arbitration award regarding damages from the insured’s construction work to a custom home (Mid-Continent Casualty Co. v. Zbranek & Holt Custom Homes Ltd., No. 19-00083, W.D. Texas).