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

Mealey's Construction Defects Insurance

July 27, 2023
Louisiana Federal Judge Denies Contractor’s Insurer New Trial In Water Intrusion Suit

NEW ORLEANS — A subcontractor’s insurer’s answer to a contractor’s insurer’s amended complaint filed after it moved for dismissal of the original complaint “did not moot its pending motion to dismiss,” a federal judge in Louisiana ruled July 26 in denying a motion for a new trial or reconsideration of the ruling dismissing its suit to recover damages it paid stemming from water damage caused by the subcontractor’s negligence in performing work on a home’s roof.
July 26, 2023
Damage Caused By Insured’s Fracking Work Is Not Occurrence, Panel Reiterates

PHILADELPHIA — Following a panel rehearing, a Third Circuit U.S. Court of Appeals panel on July 25 reiterated that an insurer owes no coverage to its insured for damages to natural gas wells caused by the insured’s fracking work because neither faulty workmanship nor failure to perform a contract in a workmanlike manner can be construed as an occurrence as required by the policy.
July 25, 2023
Farmers Cooperative Appeals Rulings In Defective Silo Construction Coverage Case

LAREDO, Texas — A farmers cooperative has appealed to the Fifth Circuit U.S. Court of Appeals a Texas federal judge’s June ruling that the insurer of a contractor it hired to build two grain silos has no duty to indemnify the contractor in the cooperative’s underlying lawsuit alleging that the construction was defective because the cooperative 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.
July 25, 2023
Glass Installer Appeals Ruling For CGL, Umbrella Insurers To 3rd Circuit

CAMDEN, N.J. — A glass installer has appealed to the Third Circuit U.S. Court of Appeals a New Jersey federal judge’s June ruling that its commercial general liability and umbrella insurers are not liable to cover defense and indemnity costs it incurred 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.
July 25, 2023
Oregon Supreme Court Accepts Homeowners’ Appeal In Defects Coverage Suit

SALEM, Ore. — The Oregon Supreme Court has agreed to review homeowners’ appeal of an appellate court ruling that a commercial general liability insurer has no duty to indemnify them or its contractor insured for a coverage dispute over faulty work performed in building their home.
July 25, 2023
Judge: Roofer Cannot Apply Payments From Other Insurers Toward SIR Endorsement

MIAMI — Because a provision in a commercial general liability policy requires the $150,000 retained limit of the self-insured retention (SIR) endorsement to be paid by the insured, a roofing company cannot apply third-party payments from other insurers toward the limit, a federal judge in Florida ruled in denying the insured’s motion for partial summary judgment in its breach of contract suit against its CGL insurer.
July 25, 2023
Judge Denies Roofing Insurer’s Motion To Reconsider Dismissal Of Declaratory Action

PHILADELPHIA — A federal judge in Pennsylvania has denied an insurer’s request for reconsideration of the dismissal of its declaratory relief action stemming from two negligence and faulty work lawsuits against its roofing contractor insured, saying he “properly interpreted and applied the law, and did not rely upon erroneous factual conclusions” when he dismissed the case sua sponte for lack of jurisdiction.
July 24, 2023
No Additional Abrupt Collapse Coverage Owed, Insurer Argues To 10th Circuit

DENVER — An insurer and its claims service manager argue to the 10th Circuit U.S. Court of Appeals that a building owner insured is owed no coverage under an insurance policy’s additional abrupt collapse coverage, contending that the insured’s building “did not collapse because its structural capacity was not ‘substantially’ or ‘significantly’ impaired.”
July 22, 2023
Judge Rules In Favor Of Engineering Firm, Property Manager In Collapse Dispute

LEXINGTON, Ky. — A federal judge in Kentucky held that an engineering firm is entitled to summary judgment in an insurer’s subrogation lawsuit arising from a parking garage collapse because the insurer’s negligence and misrepresentation claims are barred by the statute of limitations, further granting a property manager’s motion to dismiss the insurer’s fraudulent concealment claim against it.
July 20, 2023
Sufficient Facts Alleged In Support Of Statutory Bad Faith Claim In Defects Suit

GREENBELT, Md. — A Maryland federal judge denied an insurer’s motion to dismiss a claim for statutory bad faith after determining that the insured general contractor alleged sufficient facts in support of its claim that the insurer acted in bad faith by failing to process its claim for coverage of a faulty wall system installed as part of a construction project within 45 days as required under Maryland law.
July 20, 2023
Earth Movement Caused By Faulty Workmanship Or Settling Is Covered, Judge Finds

MINNEAPOLIS — Finding that whether three insurers “intended to create an anti-concurrent causation clause” in their policies’ earth movement definition is “ambiguous,” a federal judge in Minnesota determined that earth movement caused by faulty workmanship or settling is covered by the earth movement coverage extension in the policies, “regardless of if the faulty workmanship and/or settling is the proximate cause of the loss,” granting partial summary judgment to their mutual insured.
July 19, 2023
11th Circuit Dismisses Developer’s Appeal Of Judgment For Insurer

ATLANTA — The 11th Circuit U.S. Court of Appeals has dismissed with prejudice a development company and its owner’s appeal of a lower court ruling granting summary judgment in favor of its commercial general liability insurer in a declaratory relief action over damage caused to a neighboring pond during a construction project after the parties jointly stipulated to the dismissal.
July 18, 2023
California Panel Affirms Dismissal Of Homeowners Insurer, Bank From Construction Row

LOS ANGELES — A California appeals panel has affirmed the dismissal of a homeowners insurer and a mortgage lender from a construction company’s suit seeking to $128,187.34 for work it performed on the homeowners’ house that an arbitrator found was offset by the homeowners’ damages for construction defects, among other things, finding that the company’s claims against the insurer and bank are derivative of its claims against the homeowners and, therefore, barred by the doctrine of claim preclusion.
July 17, 2023
Insurers Refute Argument That Wind-Driven Rain Must Be Treated As ‘Separate’ Peril

SEATTLE — Responding to a condominium owners association insured’s appeal in a water damage repairs coverage suit, insurers argued to the Ninth Circuit U.S. Court of Appeals that the Washington Supreme Court’s recent unanimous ruling Hill & Stout, PLLC v. Mut. of Enumclaw Ins. Co. precludes the insured’s argument that wind-driven rain must be treated as a “separate” peril under the policy.
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.