Mealey's Construction Defects Insurance

  • March 27, 2020

    Builder’s Failure To Notify, Cooperate Precludes Coverage Insurer Says In Complaint

    DAYTON, Ohio — In a declaratory complaint filed March 24 in Ohio federal court, an insurance provider argues that no coverage is owed to a construction company in a state court dispute over purported defects in the construction of a home addition due to the policyholder’s failure to comply with the policy’s cooperation and notification requirements, as well as applicable policy exclusions (United Ohio Insurance Co. v. Travis Henderson Construction LLC, et al., No. 3:20-cv-00119, S.D. Ohio).

  • March 26, 2020

    Insurer Pursues Recovery Of Costs Tied To Defective Work By Subcontractors

    BATON ROUGE, La. — A commercial excess liability insurer seeks recovery of payments to a general contractor linked to subcontractors’ defective work that caused property damage on an apartment complex project in a March 23 complaint filed in a Louisiana federal court (Endurance American Insurance Co. v. ABG Caulking Contractors, Inc., et al., No. 20-174, M.D. La.).

  • March 26, 2020

    ​​​​​​​Judge Stays Insurance Dispute Over Defective Designs In Courthouse

    SAN JOSE, Calif. — RLI Insurance Co.’s coverage dispute against an insurer and an architecture firm was stayed March 20 by a California federal judge pending resolution of a lawsuit against the firm over alleged defective designs in a courthouse project (RLI Insurance Co. v. ACE American Insurance Co., et al., No. 19-04180, N.D. Calif., 2020 U.S. Dist. LEXIS 50004).

  • March 25, 2020

    5th Circuit Finds Subrogation Waiver Applies To Property Damage From Fire

    NEW ORLEANS — A Fifth Circuit U.S. Court of Appeals panel on March 9 reversed a federal judge’s ruling that a waiver of subrogation did not apply to damages to nonwork property that resulted from a fire that occurred while window restoration work was being done at a building after pointing out that the Mississippi Supreme Court decided Feb. 20 that the subrogation waiver was applicable (Liberty Mutual Fire Insurance Co., as subrogee of Chickasaw County School District v. Fowlkes Plumbing LLC, No. 18-60608, 5th Cir., 2020 U.S. App. LEXIS 7427).

  • March 25, 2020

    Insurer: Court Erred When It Ruled Declaratory Judgment Claim Was Not Ripe

    DENVER — An insurer recently filed an appeal brief in the 10th Circuit U.S. Court of Appeals contending that a district court erred when it ruled that the insurer’s claim for declaratory judgment in a coverage action pertaining to an underlying lawsuit is not ripe (Auto-Owners Insurance Co. v. Bolt Factory Loft Owners Association Inc., et al., No. 19-1233, 10th Cir.).

  • March 20, 2020

    Earth Exclusion Precludes Coverage For $632,180.81 Lawsuit, Insurer Says

    BROOKLYN, N.Y. — A lawsuit against two New York excavation and drilling companies for damages of $632,180.81 is not covered, a commercial general liability insurer says in a March 19 complaint filed in New York federal court, because an earth or land movement exclusion applies (Scottsdale Insurance Co. v. East Coast Drilling NY Inc., et al., No. 20-01462, E.D. N.Y.).

  • March 19, 2020

    Insurer:  No Coverage For $3M Case Over Insured’s Defects In Seminary Project

    LYNCHBURG, Va. — A $3 million breach of contract case over alleged defects in a seminary is not covered, an insurer argues in a March 17 complaint in a Virginia federal court, because there is no property damage caused by an “occurrence” and several business risk exclusions apply (Builders Mutual Insurance Co. v. R. F. Howerton, Inc., No. 20-00010, W.D. Va.).

  • March 19, 2020

    Insurer’s Coverage Action Over Foundation’s ‘Unfit Condition’ Dismissed

    LONDON, Ky. — A Kentucky federal judge on March 17 dismissed an insurer’s coverage case over an insured’s work because deciding whether the insured’s actions constitute an “occurrence” or an “intentional act” requires fact finding on fortuity and intentionality issues (Auto Owners Insurance Co. v. Trip Cat, LLC, et al., No. 19-115, E.D. Ky., 2020 U.S. Dist. LEXIS 45993).

  • March 17, 2020

    Insurers Say Subsidence Exclusion Relieves Them From Defending Subcontractor

    AUSTIN, Texas — Two insurers who provided policies to a subcontractor say in a declaratory judgment action filed in federal court in Texas March 13 that the have no duty to defend or indemnify the insured because claims in an arbitration proceeding fall within the subsidence exclusion in the policies (Depositors Insurance Co., et al. v. Angell Services LLC, et al., No. 20-cv-00271, W.D. Texas).

  • March 16, 2020

    Insurer Owes Equitable Contribution For Defect Coverage, 9th Circuit Says

    SAN FRANCISCO — Liberty Surplus Insurance Corp. owes equitable contribution to another insurer’s defense of their mutual insured in a construction defect case, the Ninth Circuit U.S. Court of Appeals held March 12, finding that the insured’s suspended corporate status did not modify or excuse Liberty’s duty to defend (Travelers Property Casualty Company of America v. Liberty Surplus Insurance Corp., No. 18-15956, 9th Cir., 2020 U.S. App. LEXIS 7847).

  • March 13, 2020

    Panel:  Breach Of Contract Exclusion Relieves Insurer Of Duties Toward Defects Claims

    NEW ORLEANS — The Fifth Circuit U.S. Court of Appeals ruled March 11 that a breach of contract exclusion precludes a commercial general liability insurer’s duty to defend or indemnify an underlying construction defects action despite a general contractor arguing that coverage exists based on the subcontractor exception to the “your work” exclusion (Mt. Hawley Insurance Co. v. Huser Construction Company, Inc., No. 19-20368, 5th Cir., 2020 U.S. App. LEXIS 7875).

  • February 21, 2020

    COMMENTARY: Construction Defect Claims: A 2019 Update Part I

    By Thomas F. Segalla, Michael T. Glascott, Ashlyn M. Capote, Adam R. Durst and Jason E. Rusche

  • March 11, 2020

    Insurers Appeal To 11th Circuit Arbitration Order In Reinsurance Dispute

    ATLANTA — Insurers on March 9 gave notice that they are appealing to the 11th Circuit U.S. Court of Appeals a decision compelling them to arbitrate a claim against a reinsurer for alleged bad faith refusal to pay their reinsurance claim regarding a construction defects case settlement (Builders Insurance, et al. v. Maiden Reinsurance North America, Inc., No. 19-02762, N.D. Ga.).

  • March 05, 2020

    Judge: Nonconforming Soils Constitute ‘Defective Materials’ Under Policy Exclusion

    OAKLAND, Calif. — A federal judge in California on March 3 held that nonconforming soils used by a general contractor insured to fill levees in a flood construction project constitute “defective materials” under a builders’ risk insurance policy's “cost of making good” exclusion, further finding that the definition of “professional loss” under a professional liability insurance policy excluded the insured’s claimed loss (Brosamer & Wall, Inc. v. Indian Harbor Insurance Company, No. 19-872, N.D. Calif., 2020 U.S. Dist. LEXIS 37589).

  • March 04, 2020

    Judge Stays Discovery Pending Ruling On Insured’s Summary Judgment Motion

    SEATTLE — A federal judge in Washington on Feb. 20 granted an insured’s motion for a protective order in a declaratory judgment action brought against it by two insurance companies, holding that the insured’s motion for summary judgment based on the bad faith of the insurers, as well as their lack of standing under Article III of the U.S. Constitution, can be decided without additional discovery (Travelers Property Casualty Company of America, et al. v. H.D. Fowler Co., et al., No. C19-1050-JCC, W.D. Wash., 2020 U.S. Dist. LEXIS 29306).

  • March 03, 2020

    Judge:  Arbitration Award Cannot Be Allocated Between Design, Construction Damages

    DENVER — A federal judge in Colorado on March 2 entered judgment in favor of a defendant company in a declaratory judgment action brought by an insurer that claimed that it had no duty to defend its insured, which was accused of defective design and construction work, holding that the damages in an arbitration award cannot be allocated between design and construction damages (Rockhill Insurance Co. v. CFI Global Fisheries Management, et al., No. 16-2760-RM-MJW, D. Colo., 2020 U.S. Dist. LEXIS 35209).

  • March 03, 2020

    New York Justice: Insurers Fail To Establish Entitlement To Summary Judgment

    NEW YORK — A New York justice on Feb. 21 held that commercial general liability insurers failed to establish their prima facie entitlement to summary judgment in their lawsuit seeking coverage from another insurer for a suit alleging that two units in a condominium building that is owned by the insured were uninhabitable because of noxious odors, water leaks and property damage (Greater New York Mutual Insurance Company, et al. v. Harleysville Worcester Insurance Company, et al., Index No. 151179/2016, N.Y. Sup., New York Co., 2020 N.Y. Misc. LEXIS 799).

  • March 03, 2020

    Uncertified Lumber Claims Fail To Allege ‘Occurrence’ Under Policy, Panel Affirms

    CHICAGO — The Seventh Circuit U.S. Court of Appeals on Feb. 27 affirmed a lower federal court’s ruling that a general liability insurer has no duty to defend its commercial building distributor insured against three underlying lawsuits, finding that the alleged damage “was the natural and ordinary result” of the insured’s “deliberate decision to supply, and conceal that it had supplied, uncertified lumber” (Lexington Insurance Company v. Chicago Flameproof & Wood Specialties Corporation, No. 19-1062, 7th Cir.,  2020 U.S. App. LEXIS 6006).

  • March 02, 2020

    Judge: Insurer’s Damages Exceed $75,000 Based On Facts In Homeowner’s Lawsuit

    SALT LAKE CITY — A federal judge in Utah on Feb. 26 refused to dismiss an insurer’s declaratory judgment suit seeking an order stating that it has no duty to defend or indemnify an insured contractor for lack of subject matter jurisdiction, finding that the insurer sufficiently alleged that it is not sure it will be responsible for indemnifying its insured for damages in excess of $75,000 (State Auto Insurance Co. v. Ann Marie Christensen, et al., No. 19-cv-0751, D. Utah, 2020 U.S. Dist. LEXIS 34503).

  • February 28, 2020

    Judge:  Excess Insurer Had No Duty To Defend, Indemnify Construction Defects Case

    CHARLESTON, S.C. — In a coverage dispute over a defectively constructed project, a South Carolina federal judge on Feb. 25 granted summary judgment to an excess insurer on its insureds’ claims for declaratory judgment, breach of contract and unjust enrichment after finding that no duty to defend or indemnify was owed but denied summary judgment on a bad faith claim (ContraVest Inc., et al. v. Mt. Hawley Insurance Co., No. 15-00304, D. S.C., 2020 U.S. Dist. LEXIS 31976).