Mealey's Construction Defects Insurance
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March 11, 2019
Panel: Insurer’s Duty-To-Indemnify Issue Not Ripe Until Resolution Of Defects Case
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).
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March 8, 2019
Judge Exercises Discretion Not To Issue Declaration As To Insurer’s Duty To Defend
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).
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March 8, 2019
Judge Declines Dismissal Of Breach Of Contract, Bad Faith Claims Against Insurer
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).
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March 7, 2019
Judge: Insurer Has Duty To Defend, Indemnify Water Damage Settlement
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).
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March 7, 2019
Panel Affirms Ruling In Dispute Between Insurers Over Default Judgment
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).
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February 27, 2019
COMMENTARY: Construction Defect Claims: A 2018 Update Part I
By Thomas F. Segalla, Michael T. Glascott, Ashlyn M. Capote and Brandon D. Zeller
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March 6, 2019
Federal Judge Finds Joint Venture Partner’s Insurance Policy Inapplicable
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).
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March 5, 2019
Water Damage Did Not Cause Abrupt Collapse, North Carolina Federal Judge Says
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).
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March 1, 2019
No Coverage Owed For $910,148 Default Judgment, 4th Circuit Affirms
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).
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March 1, 2019
Agreement Forecloses Insurer’s Negligence Claim Against Developer, Judge Rules
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).
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February 28, 2019
Bad Faith Claim Cannot Be Alleged Against Insurers In Defective Concrete Dispute
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).
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February 27, 2019
Professional Liability Endorsement Covers Entire Judgment, Panel Says In Reversal
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).
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February 26, 2019
1st Circuit: Policy’s Failure To Define Decay Warrants Coverage
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).
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February 22, 2019
Judge: Ensuing Loss Clause Restores Coverage For Insureds’ Indemnity Claim
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).
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February 20, 2019
Judge Grants Insurer’s Motion; Duty To Defend Damage Owed By Different Insurer
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.).
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February 20, 2019
Judge Dismisses Declaratory Judgment, Reformation Claims Against Insurers
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).
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February 14, 2019
No Indemnity Owed For $1.1M Arbitration Award For Defects, Insurer Says
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).
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February 14, 2019
No Coverage Owed For Mold Found In Attic Insulation, Insurer Says In Complaint
SALT LAKE CITY — No coverage is owed to an insured for an underlying claim alleging that the insured’s installation of attic insulation caused mold to develop in attics of condominium buildings because the policy’s fungi or bacteria exclusion clearly precludes coverage, the insurer says in a Feb. 7 complaint filed in Utah federal court (Cincinnati Specialty Underwriters Insurance Co. v. Green Property Solutions LLC, et al., No. 19-100, C.D. Utah).
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February 13, 2019
Judge Declines To Resolve Arbitration Umpire Dispute Between Insurers, Insured
NEW YORK — A New York federal judge on Feb. 6 denied insurers’ request to appoint a neutral umpire and an insured’s request to disqualify two candidates as umpires in a coverage dispute concerning water damage to a Florida condominium building (Certain Underwriters at Lloyd’s, London, et al. v. Vintage Grand Condominium Association Inc., No. 18-10382, S.D. N.Y., 2019 U.S. Dist. LEXIS 22709).
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February 11, 2019
Judge Denies Insurer’s Judgment Motion Based On Wrap-Up Exclusion
OAKLAND, Calif. — Because a subcontractor was not enrolled in a general contractor’s wrap-up policy, a California federal judge on Feb. 7 denied summary judgment to the subcontractor’s insurer on its duty to defend or indemnify the subcontractor against the contractor’s breach of contract claims concerning water damage to a project (Employers Mutual Casualty Co. v. Fast Wrap Reno One LLC, et al., No. 17-03837, N.D. Calif., 2019 U.S. Dist. LEXIS 20298).