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

Mealey's Construction Defects Insurance

January 27, 2023
Policy Language Required Subcontractor’s Work To Be Done During Policy Period

LOS ANGELES — An insurer had no duty to defend a subcontractor in a construction defects action because the products-completed operations hazard language in a wrap policy the insurer provided to a developer required work to be completed during the policy period, which the subcontractor did not do, a federal judge in California ruled in denying a motion for summary judgment filed by an assignee of the subcontractor and granting a summary judgment motion filed by the insurer.
January 26, 2023
Contractor’s Claims In ‘Complicated’ Water Intrusion Coverage Suit Timely

DENVER — A federal magistrate judge in Colorado recommended that a contractor’s third-party claims in a coverage suit brought by an insurer over the contractor’s alleged construction defects in the building of a commercial and residential development not be dismissed because “the complicated history of how the Project’s alleged construction defects were pursued” allows the derivative claims to remain timely.
January 25, 2023
Claims Against Several More Insurers In Defective Work Coverage Suit Dismissed

ALBUQUERQUE, N.M. — Without providing detail, a federal judge in New Mexico on Jan. 24 issued a pair of orders dismissing with prejudice claims brought by a contractor against commercial general liability insurers in a coverage dispute stemming from allegedly defective work performed by insured subcontractors on a residential subdivision.
January 25, 2023
Indemnification Claim Survives Dismissal Bid In Suit Over Garage Collapse

LEXINGTON, Ky. — A federal judge in Kentucky ruled that partial dismissal of a third-party complaint filed in a lawsuit brought by an insurer alleging that a contractor and inspector were negligent in their repair of a parking garage, which led to the garage’s collapse, is warranted because although the third-party plaintiffs have sufficiently pleaded their indemnification claim, they have failed to do so regarding their claim for contribution.
January 25, 2023
Insurer Has Duty To Defend Contractor In Underlying Faulty Workmanship Suit

BOSTON — An insurer had a duty to defend its insured contractor in an underlying lawsuit alleging that faulty workmanship on the part of the contractor and others in the renovation of a building led to the building’s collapse, causing over $1 million in damage, because the claims made against the contractor allege “‘property damage,’ caused by an ‘occurrence,” a federal judge in Massachusetts ruled Jan. 24 in granting the contractor’s motion for partial summary judgment in part and denying the insurer’s motion.
January 24, 2023
Policy Language Bars Coverage To Engineering Firm In Highway Construction Suit

AUSTIN, Texas — A federal magistrate judge in Texas recommended that an excess insurer’s motion for summary judgment in its coverage dispute with its insured engineering firm stemming from claims made against the insurer an others over a faulty highway construction project because the insurer has sufficiently shown that the plain language of the policies at issue precludes coverage.
January 24, 2023
Subcontractor Fails To Show That Cross-Claim Is Barred By Statute Of Limitations

LAS VEGAS — A federal judge in Nevada denied a subcontractor’s motion to dismiss a cross-claim for equitable subrogation filed by an insurer in a coverage dispute stemming from mold and moisture-related damages on three construction projects, ruling that the cross-claim is not barred by the statute of limitations and is sufficiently related to the original claim.
January 23, 2023
Contractor’s Amended Reformation Counterclaim Survives Dismissal Bid

WEST PALM BEACH, Fla. — A federal judge in Florida declined to dismiss a contractor’s counterclaim for reformation against a commercial general liability (CGL) insurer in the insurer’s declaratory relief lawsuit stemming from a subcontractor’s alleged faulty installation of cladding and glazing systems in a construction project, ruling that the contractor’s counterclaim provides “more than sufficient notice” to the insurer and has been properly pleaded.
January 23, 2023
Insurer’s Denial Of Defense To Developer In Defects Suit Was Not In Bad Faith

SAN DIEGO — A California appellate court panel ruled that a trial court did not err in granting summary adjudication in favor of an insurer on a bad faith claim in a coverage dispute stemming from the insurer’s failure to defend a developer and contractor in a construction defects lawsuit because a genuine dispute existed between the parties at the time the developer and contractor made their request to the insurer to contribute to their defense costs.
January 23, 2023
Insurer Gets Claim Against It Severed From Defects Coverage Suit

TACOMA, Wash. — A federal judge in Washington granted an insurer’s motion to bifurcate brought by homeowners in a coverage dispute stemming from a construction defects lawsuit over the construction of homes in a housing development, ruling that both convenience and prejudice concerns and judicial economy favor bifurcation.
January 19, 2023
Exclusion Removed Insurers’ Duty To Indemnify Developer In Water Damage Suit

PASADENA, Calif. — A federal district court did nor err in ruling that insurers had no duty to indemnify a home remodeler in a lawsuit brought by a homeowner in a water damage lawsuit stemming from the installation of a faulty fire suppression system because damage caused after the system unexpectedly activated was excluded under a policy provision, a Ninth Circuit U.S. Court of Appeals panel affirmed Jan. 18.
January 18, 2023
Subrogee Insurer Realigned As Plaintiff In Window Damage Coverage Suit

BIRMINGHAM, Ala. — A federal judge in Alabama realigned parties in a declaratory judgment action against a general contractor, subcontractor and the general contractor’s insurer stemming from allegedly defective window painting work performed on a home, naming the insurer as plaintiff in the action and requiring the insurer to file an amended complaint in which it states that jurisdiction in the district court exists.
January 11, 2023
Subcontractor’s Appeal In Coverage Suit Over Faulty Welding Work Dismissed

ATLANTA — The 11th Circuit U.S. Court of Appeals dismissed an appeal brought by an insured subcontractor in a coverage dispute stemming from a lawsuit filed against the subcontractor related to faulty welding performed at a construction project after the parties in the litigation agreed to settle their claims.
January 10, 2023
Failure To Plead Estoppel Doomed Couple’s Claims In Faulty Work Coverage Suit

ATLANTA — A federal district court did not err in ruling that a general contractor’s insurer was not required to pay $900,000 to a couple for claims of negligence and wantonness brought against the contractor for defective construction of their home because the couple failed to meet their burden of proving estoppel and failed to meet their burden to establish that coverage applied, an 11th Circuit U.S. Court of Appeals panel affirmed Jan. 9 in a per curiam opinion.
January 09, 2023
Faulty Workmanship Exclusion Barred Coverage For Ceiling Collapse Damages

BATON ROUGE, La. — In a divided opinion, a Louisiana appellate panel affirmed a state trial court’s grant of summary judgment in a lawsuit brought by homeowners stemming from their insurer’s denial of a claim for damages resulting from a ceiling collapse in their home, ruling that the trial court properly determined that a policy exclusion for faulty workmanship barred coverage for the homeowners’ claim.
January 09, 2023
Church Appeals Water Damage No-Coverage Ruling To 6th Circuit

DETROIT — A church will appeal a grant of summary judgment in favor of an insurer in a water damage coverage dispute stemming from a leaky roof in which a judge ruled that the insurer did not breach its contract with the church by failing to provide coverage because the policy’s negligent work exclusion bars coverage for the claim, according to a notice of appeal filed in Michigan federal court.
January 09, 2023
Insurer Has No Duty To Defend Contractor Against Faulty Pool Design Claims

SOUTH BEND, Ind. — A commercial general liability insurer has no obligation to defend a contractor against claims made in an underlying lawsuit by a woman alleging that the contractor was negligent in the design and construction of a lap pool at a fitness center because the contractor was not covered under the policy as a corporation and because the woman’s injuries were not the result of an “occurrence” as defined under the policy, a federal judge in Indiana ruled in granting the insurer’s motion for summary judgment.
December 21, 2022
COMMENTARY: Construction Defect Claims: A 2022 Update, Part I

By Thomas F. Segalla, Michael T. Glascott, Ashlyn M. Capote, Adam R. Durst, Sean P. Hvisdas and Samantha M. McDermott
January 05, 2023
Contractor Ordered To Pay More Than $188,000 In Damages Over Roof Collapse

ABERDEEN, Miss. — A federal judge in Mississippi issued a final judgment in a lawsuit brought by a commercial property insurer seeking to recover money from a contractor that the insurer paid to its insured after a roof the contractor built collapsed, ordering the contractor to pay $188,700.65 in damages after default judgment was entered against the contractor.
January 05, 2023
Insurer Permitted To File Late Appeal In Duty To- Defend Suit Against Contractor

LOS ANGELES — A federal judge in California allowed an insurer to file a late notice of appeal in a coverage dispute stemming from construction defects discovered after completion of a mixed-use project, ruling that the insurer has sufficiently shown that the filing delay was the result of excusable neglect pursuant to U.S. Supreme Court precedent.
December 28, 2022
Appeal Of Subrogation Waiver Ruling Dismissed After Parties Reach Settlement

PHILADELPHIA — In a one-paragraph order, the Third Circuit U.S. Court of Appeals dismissed an appeal of a Pennsylvania federal court’s ruling that insurers cannot bring claims against a contractor and subcontractor in a negligence lawsuit stemming from a property fire because the insurers are subrogees of the owners of the unit that was damaged and a homeowners association, who are subject to a valid subrogation waiver after the parties reached the terms of an undisclosed settlement agreement.
December 22, 2022
Judge: Insurer Has Duty To Defend Paver In Faulty Asphalt Installation Suit

NEW HAVEN, Conn. — An insurer owed its insured subcontractor a duty to defend in an underlying construction defects lawsuit stemming from the subcontractor’s allegedly faulty paving work in a parking lot because both the allegations made in the underlying lawsuit and information included in a construction management services provider’s report showed that losses sustained were the result of the subcontractor’s allegedly faulty work, a federal judge in Connecticut ruled in granting the subcontractor’s motion for summary judgment and denying the insurer’s competing motion.
December 22, 2022
Court Misapplied Policy Provision In Condensation Damage Coverage Suit

SEATTLE — A Washington trial court erred in granting summary judgment in favor of an insurer in a coverage dispute with a condominium owner stemming from condensation damage to its roof because the trial court misinterpreted the policy’s resulting loss provision in issuing its ruling, a Division I Washington Court of Appeals panel ruled in reversing and remanding.
December 21, 2022
Insurer Owes No Duty To Indemnify Defendants In Window Damage Suit

BIRMINGHAM, Ala. — A federal judge in Alabama granted a commercial general liability insurer’s summary judgment motions against defendants in its declaratory judgment lawsuit against a general contractor, subcontractor and the general contractor’s insurer stemming from allegedly window cleaning work performed on a home, ruling that the CGL insurer owes no coverage or indemnification to any party in the action.
December 20, 2022
Court Lacks Jurisdiction Over Contractor’s Coverage Claims Against Insurers

BOSTON — A federal judge in Massachusetts granted motions to dismiss filed by insurers in a coverage dispute stemming from allegedly faulty installation of flooring at a construction project in New Jersey, ruling that the contractor failed to sufficiently plead that the district court had general or specific jurisdiction to hear the lawsuit.