Mealey's Construction Defects Insurance : Mealey's : Legal News & Analysis

Mealey's Construction Defects Insurance

July 17, 2023
Homeowners Association Appeals Ruling For Insurer In Suit Arising From Roof Damage

LOS ANGELES — A condominium homeowners association has appealed a California judge’s grant of summary judgment to its insurer in its breach of contract and bad faith lawsuit arising from storm damage to the roof of a Studio City building that housed 31 luxury condominiums.
July 14, 2023
Lacking Jurisdiction, 4th Circuit Dismisses Contractor’s Insurer’s Appeal

RICHMOND, Va. — The Fourth Circuit U.S. Court of Appeals has dismissed an insurer’s appeal of a district court’s ruling that it had a duty to defend a general contractor in an underlying construction defects action, finding that even if the interlocutory order was injunctive and required the insurer to take action, because the underlying case has settled, it has no jurisdiction to hear the appeal.
July 14, 2023
Judge Dismisses Insurers’ Coverage Suit Over $5.6M Construction Defects Judgment

FORT PIERCE, Fla. — A federal judge in Florida has dismissed without prejudice insurers’ declaratory judgment lawsuit disputing coverage for a $5.6 million judgment entered against its insured in an underlying construction defects action, finding a magistrate judge’s conclusion that the factors in Ameritas Variable Life Ins. Co. v. Roach “weigh heavily against entertaining the Federal Declaratory Action” to be “well reasoned and correct.”
July 13, 2023
Judge: Insurers Do Not Have To Indemnify Subcontractor For Faulty Stucco Work

PHILADELPHIA — A federal judge in Pennsylvania granted judgment on the pleadings to two insurers seeking a declaration that they do not have to defend their insured, a stucco subcontractor, against underlying litigation over water damage to homes in a residential community, finding that the damages are alleged to have been caused by faulty workmanship and not an “occurrence.”
July 06, 2023
No Indemnification Owed For Defective Silo Construction, Federal Judge Rules

LAREDO, Texas — A federal judge in Texas concluded that an insurer has no duty to indemnify its insured for a lawsuit alleging a defective silo construction, finding that the underlying plaintiff did not incur any “property” damage to trigger coverage and the policy exclusions bar coverage even if the underlying damages were deemed “loss of use” property damage.
June 30, 2023
Water Damage Coverage Suit Administratively Closed After Parties Settle

KANSAS CITY, Kan. — A federal judge in Kansas administratively closed a coverage suit stemming from water damage claims at a residential construction project the day after the parties notified the court that they had reached an agreement to settle.
June 30, 2023
Magistrate Recommends Granting Insurer’s Motion For Default Declaratory Judgment

TAMPA, Fla. — A Florida federal magistrate judge issued a report that recommended granting an insurer’s motion for entry of a default judgment against its stucco installer insured, finding that a policy’s “Condominium, Townhome, Tract or Track Exclusion” excluded coverage for claims that the insured inadequately and improperly installed components of the stucco system and exterior envelope of a single-family home built as a track development.
June 30, 2023
District Court Decision In Mold Coverage Suit Must Be Reversed, Insureds Say

ATLANTA — A district court’s ruling that no coverage is owed for mold damage discovered in an insured hotel should be reversed because the policy at issue provides coverage for losses caused by a construction defect even if the cost to fix the defect is not covered, the insureds say in an appellant reply brief filed in the 11th Circuit U.S. Court of Appeals.
June 29, 2023
Contractor Denied Summary Judgment On Subrogee Insurer’s Water Damage Claim

NEW YORK — A New York justice denied without prejudice a plumbing contractor’s motion for summary judgment on claims brought against it by an insurer, as subrogee of an insured restaurant that was damaged by flooding following a construction project, finding that there are issues of fact regarding when the insurer obtained subrogation rights and whether a settlement between the contractor and the property owner estops subrogation.
June 27, 2023
Judge: Insurers Not Liable For Glass Installer’s Costs In Underlying Defects Action

CAMDEN, N.J. — Commercial general liability and umbrella insurers are not liable to cover defense and indemnity costs incurred by a glass installer in settling an underlying action alleging that a glass curtain wall it installed became visibly obstructed by a dark “dripping” material because there was no property damage caused by an occurrence during the policy periods, a federal judge in New Jersey found.
June 26, 2023
Panel Upholds Finding That Water Damage Suit Is Barred By Suit Limitations Provision

DENVER — The 10th Circuit U.S. Court of Appeals upheld a district court’s grant of summary judgment in favor of an insurer in a water damage suit after determining that the insured’s suit is barred by the policy’s four-year limitations provision and that insurer’s denial of coverage based on the policy’s exclusions for long-term water leakage and faulty workmanship does not constitute bad faith.
June 26, 2023
Contractor Challenges Ruling That Exclusion Bars Coverage For Faulty Installation

WEST PALM BEACH, Fla. — A contractor moved for a Florida federal court to reconsider its Feb. 27 ruling that a commercial general liability insurer is entitled to summary judgment on its declaratory judgment claims in a lawsuit stemming from a subcontractor’s alleged faulty installation of cladding and glazing systems in a construction project, challenging the court’s ruling that the policy’s “course-of-construction” exclusion bars coverage.
June 23, 2023
CGL Insurer Responds To Homeowners’ Petition Seeking Oregon High Court Review

SALEM, Ore. — A commercial general liability insurer responded to homeowners’ petition asking the Oregon Supreme Court to review an appeals court’s ruling that the insurer has no duty to indemnify either the homeowners or its contractor insured for a coverage dispute over faulty work performed in building a home, challenging the homeowners’ contention that the appeals court “erroneously read” Oak Crest Construction Co. v. Austin Mutual Insurance Co. “to require tort liability to find an ‘occurrence’ or ‘accident’” under the policy.
June 23, 2023
9th Circuit Appeal Of Duty-To-Defend Ruling In Favor Of Contractor Dismissed

SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals on June 22 ordered the dismissal of an insurer’s appeal of a district court’s grant of summary judgment in favor of a general contractor in a dispute over the insurer’s duty to defend the contractor in a construction defects suit pursuant to a stipulated motion for voluntary dismissal filed by the parties.
June 23, 2023
Bad Faith Claim Against Builders Risk Insurer Cannot Proceed, Federal Judge Says

BEAUMONT, Texas — A Texas federal judge adopted a magistrate judge’s recommendation to grant a builders risk insurer’s motion for summary judgment on breach of contract and bad faith claims after rejecting the insured’s argument that the bad faith claim should proceed because the insurer was vicariously liable for its agent’s negligent procurement of the policy and estopped from denying coverage for interior water damage sustained at the insured’s warehouse while the roof was being replaced.
June 22, 2023
Wisconsin Majority Affirms Coverage Ruling In Dispute Over Pool Construction

MADISON, Wis. —A majority of the Wisconsin Supreme Court affirmed an appellate panel’s reversal of a trial court’s ruling that there was no insurance coverage as a matter of law for a pool contractor or the company that supplied the shotcrete for a project that was allegedly riddled with leaks, finding that a trier of fact could determine that the water leakage and consequent cracks in the inground pool, as well as the damage to the surrounding soil, constituted property damage that was caused by an occurrence.
June 22, 2023
Subcontractor, OCIP Broker- Administrator Agree To Dismiss 9th Circuit Appeal

SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals has ordered the dismissal of a subcontractor’s appeal of the dismissal of its claims against the administrator/broker of an owner controlled insurance plan (OCIP) in a dispute over coverage for property damage at a construction project after the parties stipulated to voluntary dismissal with prejudice.
June 20, 2023
California Judge Rules In Insurer’s Favor In Suit Arising From Roof Damage

LOS ANGELES — A California judge granted an insurer’s motion for summary judgment in a condominium homeowners association insured’s breach of contract and bad faith lawsuit arising from alleged storm damage to the roof of a Studio City building that housed 31 luxury condominiums, finding that the insurer has met its burden of establishing that the policy’s water damage and faulty workmanship exclusions applied to bar coverage.
June 20, 2023
Judge Dismisses Excess Insurer’s Cross-Claim In Faulty Windows Coverage Suit

DALLAS — Three weeks after granting a motion to dismiss filed by a contractor and its commercial general liability insurer in the insurer’s suit regarding coverage for claims made in an arbitration proceeding over the installation of defective windows in an apartment building, a federal judge in Texas declined to entertain an excess insurer’s cross-claim seeking a declaration regarding whether it is required to indemnify the contractor for the award and issued a final judgment dismissing the case.
June 16, 2023
Judge Awards Compensatory Damages To Subcontractor Insured In Coverage Dispute

ALBUQUERQUE, N.M. — A federal judge in New Mexico awarded a subcontractor insured $27,102.18 in compensatory damages for its “reasonable and necessary expenses” in defending a lawsuit over alleged construction defects in a courthouse building but declined to award punitive and treble damages to the insured at this time.
June 16, 2023
Magistrate Recommends Dismissing Insurers’ Coverage Dispute Over $5.6M Judgment

FORT PIERCE, Fla. —A federal magistrate in Florida recommended dismissal without prejudice of insurers’ declaratory judgment lawsuit disputing coverage for an underlying $5.6 million judgment entered against its insured in an underlying construction defects action, concluding that the factors in Ameritas Variable Life Ins. Co. v. Roach “weigh heavily against entertaining the Federal Declaratory Action.”
June 14, 2023
New York Panel Reverses Dismissal Of Claims Against Insurer In Defects Suit

NEW YORK — A New York appellate panel on June 13 affirmed dismissal of an engineering and construction management firm’s complaint against a subcontractor to recover defense costs it incurred in an underlying arbitration over alleged construction defects, agreeing with the lower court that the firm was not entitled to indemnification from the subcontractor pursuant to the terms of a joint defense and cooperation agreement (JDCA) the two had entered into, but the panel reversed the dismissal of the subcontractor’s insurer from the complaint because the insurer never moved for dismissal.
June 14, 2023
Parties Debate Exclusions In D.C. Circuit Appeal Over Condensation Damage Coverage

WASHINGTON, D.C. — A real estate developer and contractor seeking reversal of summary judgment granted to their builders risk insurers in a dispute over coverage for remediation of condensation damage tell the District of Columbia Circuit U.S. Court of Appeals that the insurers’ arguments in opposition were rejected in Blaine Construction Corp. v. Insurance Company of North America and that the evidence of causation provided should have been dispositive under the language of the policies.
June 09, 2023
11th Circuit Rejects Subrogee Insurer’s Reliance On Concurrent Cause Doctrine

ATLANTA — The 11th Circuit U.S. Court of Appeals affirmed a federal district court’s grant of summary judgment in favor of an insurer in a subrogee insurer’s lawsuit seeking indemnification for their mutual insured’s nearly $3.5 million in losses and remediation expenses arising from a joint venture that oversaw a construction project at a water reclamation facility, rejecting the subrogee insurer’s reliance on the concurrent cause doctrine.
June 08, 2023
Architect Fails To Assert Property Damage Caused By Occurrence, Insurer Counters

CHICAGO — Responding to an architectural company insured’s appeal in a coverage dispute over claims of “defective, incomplete and architectural problems” with an Iowa building for which it was hired to provide architectural services, a commercial general liability insurer asserts that the insured “seeks to avoid the weight of decades of state and federal case law applying Illinois law to construction defect coverage disputes.”