Mealey's Construction Defects Insurance

  • May 15, 2021

    Magistrate Says Court Should Abstain From Hearing Insurer’s Duty To Defend Suit

    MOBILE, Ala. — A federal magistrate judge in Alabama on April 29 recommended dismissing without prejudice an insurer’s declaratory judgment suit seeking an order saying it has no duty to defend or indemnify a contractor in a state court suit accusing it of defective deck work at a conference center, finding that the federal court should abstain from jurisdiction over the suit because the state court action involves substantially the same parties and similar issues.

  • April 21, 2021

    COMMENTARY: Construction Defect Claims: A 2020 Update Part II

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

  • May 05, 2021

    Illinois Panel Upholds Dismissal Of Insurer’s Suit Over Defective Work

    CHICAGO — An Illinois state court judge’s rulings dismissing claims for breach of contract and negligence brought by the insurer of a building against contractors and subcontractors who allegedly performed defective work for tenants were affirmed April 27 by an Illinois appeals panel after the panel found that the owner was not a third-party beneficiary to the contracts and that its negligence claims were barred by the economic loss doctrine.

  • May 05, 2021

    Tennessee High Court: Contractor Cannot Pursue Claim Against Insurer

    NASHVILLE, Tenn. — In answering one of three questions certified to it by a federal judge in Tennessee, the state’s high court held April 26 that a contractor has no private cause of action under state law against an insurer that failed to name it as a payee for work performed to repair storm damage at a property because while the contractor is an intended beneficiary of the statute, there was no legislative intent to provide it with a cause of action to file suit.

  • May 04, 2021

    Homebuilders Seek Remand Of Bad Faith Suit Over Insurers’ Failure To Repay

    LOS ANGELES — KB Home Nevada Inc. and three of its affiliates on May 3 filed a motion in federal court in California saying that a lawsuit accusing two insurance companies and a man who claimed to be a claims adjuster and third-party administrator (TPA) of failing to repay more than $10 million in self-insurance retention (SIR) payments made as part of homebuilder protection (HBP) policies should be remanded, arguing that the man is not fraudulently joined because the complaint sufficiently pleads claims for negligent misrepresentation and intentional misrepresentation against him.

  • May 04, 2021

    Insurer Says Pollution Exclusion Bars Coverage For Storm Water Runoff Damage

    MACON, Ga. — No coverage is owed for an underlying lawsuit seeking damages caused by storm water runoff as a result of insureds’ property development activities because the policy’s pollution exclusion and the policy’s “your work” exclusion bar coverage for the underlying suit, an insurer asserts in an April 27 complaint filed in Georgia federal court.

  • April 28, 2021

    Judge Says Defects Suits Are Incongruent With Insurer’s Suit Against Homebuilder

    MONTGOMERY, Ala.  — A federal judge in Alabama on April 26 ruled that the court should preside over an insurance company’s declaratory judgment lawsuit against a homebuilder and its owner and five individuals involved in state court construction defects lawsuits against the builder, finding that dismissing or staying the case would be unproductive and waste judicial resources because the insurer’s suit over its duty to defend is related only to the state court actions.

  • April 27, 2021

    Contractor Sues Subcontractor, Insurers Over Cracking Of Fire Suppression Piping

    LEXINGTON, Ky. — A general contractor that oversaw the construction of a six-story mixed-use building sued a subcontracting company and its owner in federal court in Kentucky on April 21, claiming that the subcontractor’s use of a chemical that was incompatible with the chlorinated polyvinyl chloride piping (CPVC) and fittings used in the building’s fire suppression system was negligent and caused cracks and water leaks.

  • April 27, 2021

    Contractor’s Third-Party Claims Against Unit Owner, Business Dismissed

    BALTIMORE — A federal judge in Maryland on April 23 dismissed a second amended third-party lawsuit filed by a contractor seeking indemnification and contribution from the owner of a condominium and a business for water damages that occurred when pipes froze after the contractor removed windows from the unit, finding that the contractor was not an intended beneficiary of an agreement between the owner and the condominium owners association.

  • April 26, 2021

    9th Circuit Dismisses Appeal Due To Judge’s Lack Of Meaningful Participation

    SEATTLE — A Ninth Circuit U.S. Court of Appeals panel on April 21 dismissed a couple’s appeal of rulings awarding summary judgment to an insurer on their counterclaims for breach of contract and violation of the Washington Insurance Fair Conduct Act, finding that the judge did not meaningfully participate in the subsequent dismissal without prejudice of the couple’s remaining claims for bad faith and violation of the Washington Consumer Protection Act (CPA) when the parties agreed to settle the suit.

  • April 23, 2021

    Insurer Says It Has No Duty To Defend Contractor In Wall Collapse Suit

    SOUTH BEND, Ind. — An insurance company sued a policy holder in federal court in Indiana on April 9, arguing that it has no duty to defend or indemnify the contractor in a lawsuit claiming that its negligence during demolition caused a wall to collapse, arguing that exclusions in the policy preclude coverage.

  • April 22, 2021

    8th Circuit Finds Contractor Was Additional Insured, Coverage Denied In Bad Faith

    ST. LOUIS — An Eighth Circuit U.S. Court of Appeals panel on April 21 vacated a ruling awarding summary judgment to an insurer that refused to defend and indemnify a general contractor, finding that the contractor was an additional insured under a policy the company issued to a cement subcontractor and that the insurer did not have a reasonable basis to justify its refusal.

  • April 20, 2021

    Pollution Exclusion Bars Coverage For Injury Caused By Construction Dust

    ATLANTA — A commercial general liability insurer owes no duty to defend or indemnify its insured construction company in an underlying personal injury suit arising out of the accumulation of construction dust in the underlying plaintiff’s apartment because the policy’s pollution exclusion bars coverage for the dust, which qualifies as a pollutant under the pollution exclusion, a Georgia federal judge said March 30 in granting the insurer’s motion for summary judgment.

  • April 19, 2021

    Homebuilder Says 5 Insurers Breached Duty To Defend It In Defects Actions

    JACKSONVILLE, Fla. — KB Home Jacksonville LLC says in a lawsuit filed April 16 in federal court in Florida that five insurance companies that provided commercial general liability policies to subcontractors that performed work breached their duties to provide a defense to the builder in a state court construction defects lawsuit as required by the policies or as an additional insured under the policies.

  • April 19, 2021

    Judge Finds $75,000 Settlement Between Insurer, Builder Made In Good Faith

    LAS VEGAS — A federal judge in Nevada on April 14 approved a $75,000 settlement between an insurer and Centex Homes to resolve the builder’s claims against the insurance company for a portion of  defense costs the builder incurred in defending a negligent construction suit brought by homeowners in the Runvee Hobart development, finding that the amount was the result of a good faith agreement.

  • April 19, 2021

    Judge:  Four-Corners Rule Supports Some Of Builder’s Claims Against Insurer

    PITTSBURGH — A homebuilder sufficiently states claims for breach of contract and bad faith insurance practices against the insurer for a grading services company that has refused to provide a defense to the builder in two state court construction defects lawsuits, a judge in federal court in Pennsylvania ruled April 16, finding that the four-corners rule references the work done by the subcontractor and that it is unclear if the completed work exclusion in the policy is applicable.

  • April 13, 2021

    Insurer Has No Duty To Defend, Indemnify Stucco Subcontractors, Judge Finds

    FORT MYERS, Fla. — An insurer was awarded summary judgment April 9 by a federal judge in Florida who found that it was easy to conclude that the company had no duty to defend and/or indemnify a stucco subcontractor and a stucco and drywall sub-subcontractor in a state court suit brought by a homeowners association accusing them of violating the Florida Building Codes Act because the work occurred before the policy was issued and because the damages were excluded from coverage under the policy.

  • April 12, 2021

    9th Circuit Tosses Ruling Favoring Insurer’s Choice Of Counsel Over Contractor’s

    SAN FRANCISCO — A Ninth Circuit U.S. Court of Appeals panel on April 5 vacated an insurance company’s summary judgment award in a suit claiming that it was not required to provide a defense to a construction company based on its refusal to cooperate with the insurer’s counsel and insistence on using its own counsel, holding that a federal judge in California failed to use a substantial prejudice analysis when deciding in favor of the insurer.

  • April 07, 2021

    Insurer:  Adjuster A Sham Defendant In Homebuilders’ $10M Bad Faith Suit

    LOS ANGELES — An insurer removed a lawsuit to federal court in California on April 2, arguing that homebuilders accusing two insurance companies of bad faith and breach of contract over an alleged failure to reimburse them for more than $10 million in self-insurance retention (SIR) payments made as part of homebuilder protection (HBP) policies improperly named as a defendant a man that was appointed as the third-party claims administrator (TPA) to defeat complete diversity.

  • April 07, 2021

    Insurer Says Numerous Exclusions Preclude Defending Builder From Defects Suit

    FLORENCE, S.C. — Cincinnati Specialty Underwriters Insurance Co. (CSU) says in a lawsuit filed in federal court in South Carolina on April 2 that it has no duty to defend or indemnify a general contractor and a homebuilder in a state court action brought by a homeowners association over construction defects because the alleged damages occurred outside a policy’s coverage period and because the alleged damages are subject to a number of exclusions in other policies provided to the contractor.