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).
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).
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).
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).
MIAMI — In a coverage dispute between a contractor’s insurer and a subcontractor’s insurer over the duty to defend a construction defects lawsuit on a primary and noncontributory basis, a Florida federal judge on Feb. 5 ruled that the subcontractor insurer’s policy precludes additional insured coverage under the completed-operations hazard exclusion (Scottsdale Insurance Co. v. Granada Insurance Co., No. 18-21207, S.D. Fla., 2019 U.S. Dist. LEXIS 19240).
PHILADELPHIA — A commercial general liability insurer alleges in a Jan. 24 complaint filed in a Pennsylvania federal court that it has no duty to defend or indemnify a contractor and subcontractor in an underlying construction defects case (Seneca Specialty Insurance Co. v. Top Class Construction Inc., et al., No. 19-363, E.D. Pa.).
ST. LOUIS — A Missouri federal judge on Feb. 1 denied an insured subcontractor’s motion to dismiss its insurer’s dispute regarding coverage for an underlying breach of contract and breach of express warranty case brought by homeowners (Great Lakes Insurance SE v. AMCO Insurance Co., et al., No. 18-631, E.D. Mo., 2019 U.S. Dist. LEXIS 16040).
SAN DIEGO — A commercial general liability insurer showed that its insured must reimburse it $50,000 in deductibles for payments it made in settlement of two construction defects actions, a California appeals panel held Jan. 31 (Lexington Insurance Co. v. Timber Ridge Framing Inc., No. D073412, Calif. App., 4th Dist. Div. 1, 2019 Cal. App. Unpub. LEXIS 802).