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

Mealey's Construction Defects Insurance

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.”
June 08, 2023
Condo Developer Urges Court To Deny JMOL Or New Trial In Slab Coverage Suit

DENVER — The developer of a condominium project “presented sufficient evidence” to support a jury’s $2.54 million damages after its builders risk insurer denied coverage for a cracked concrete slab, and although the verdict “may not have been perfect, there was no irreconcilable inconsistency that justifies a new trial,” the developer tells a federal court in Colorado in responses to the insurer’s motions for judgment as a matter of law (JMOL) and a new trial.
June 06, 2023
CGL Insurer, Contractor Resolve Coverage Dispute, Agree To Dismiss Claims

AUSTIN, Texas — A commercial general liability insurer and its contractor insured have agreed to dismiss all claims and counterclaims in suit in Texas federal court over coverage for an underlying construction defects lawsuit after resolving their disputes through settlement.
June 06, 2023
Insurer Owes No Coverage For Suit Alleging Insured Negligently Installed Windows

HAMMOND, Ind. — A federal judge in Indiana entered judgment in favor of a general liability insurer one day after finding it has no duty to defend or indemnify an underlying action alleging its construction company insured installed windows in a negligent manner because there were no safety locks to prevent a child from opening the windows, finding that the policy was not in effect at the time of an underlying injury that was incurred by a two-year old who fell through an open window that was allegedly opened by another minor.
June 06, 2023
Homeowners’ Appeal Of Defects Coverage Suit Dismissed For Failure To Prosecute

SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals on June 5 dismissed homeowners’ appeal of the dismissal of their claims against an insurer in a coverage dispute stemming from a construction defects lawsuit over the construction of homes in a housing development for failure to prosecute.
June 05, 2023
Insurer Responds To Condo Owner’s Washington High Court Appeal In Collapse Dispute

OLYMPIA, Wash. — A commercial property insurer asked the Washington Supreme Court to affirm an appeals court’s finding that a condominium owners association insured failed to provide evidence of an “abrupt or sudden falling down of any part of a building such that it could not be occupied for its intended purpose” to trigger policy coverage, arguing that the insured does not explain how previous state and federal court decisions create a conflict with the appeals court’s ruling.
June 02, 2023
Roofer’s Insurer Seeks Reconsideration Of Declaratory Judgment Suit Dismissal

PHILADELPHIA — An insurer that is seeking reconsideration of the dismissal of its declaratory relief action stemming from two negligence and faulty work lawsuits against its roofing contractor insured has informed a federal court in Pennsylvania that the underlying actions have settled, further supporting its position for reconsideration.
June 02, 2023
N.J. Panel Partly Reverses Ruling, Vacates $935,063 Awarded To Insured’s Assignee

TRENTON, N.J. — A New Jersey appeals panel affirmed a lower court’s ruling that a commercial automobile insurance policy’s care, custody and control exclusion does not apply to bar coverage because an insured “lacked possessory dominion over the damaged concrete batch and warehouse floor” but reversed the lower court’s finding that the policy’s handling of property and completed operations exclusions are not applicable, finding that the insured completed its delivery of the aggregate before the damages occurred.
June 02, 2023
Montana High Court: Complaint Fails To Allege Construction Defect, No Coverage Owed

HELENA, Mont. — The Montana Supreme Court affirmed a lower court’s summary judgment ruling in favor of an insurer in a lawsuit seeking defense and indemnification for an underlying action, finding that the insurance policy's definitions of “property damage” caused by an “occurrence” cannot be read to encompass a landscaper’s underlying allegations that he was never paid for landscaping work at a townhome.
June 01, 2023
3rd Circuit Says Faulty Workmanship Is Not Occurrence, No Coverage Owed To Insured

PHILADELPHIA — The Third Circuit U.S. Court of Appeal on May 31 reversed a district court’s ruling that an insurer must indemnify 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 under the policy at issue.
June 01, 2023
Insurer Seeks Washington High Court Review Of Condensation Damage Coverage Dispute

OLYMPIA, Wash. — An all-risk insurer seeks Washington Supreme Court review of an appeals court ruling that reversed a lower court’s grant of summary judgment in its favor in a coverage dispute stemming from condensation damage to a condominium owner’s roof, arguing that the appeals court interpreted the resulting loss exception to the policy’s faulty workmanship exclusion “in a manner that renders the exclusion meaningless and is in conflict with” Washington high court and appeals court rulings.
May 31, 2023
Contractor’s Insurer Seeks New Trial Or Reconsideration In Water Intrusion Suit

NEW ORLEANS — An insurer proceeding as subrogee of its contractor insured seeks a new trial or, in the alternative, reconsideration of a Louisiana federal judge’s ruling dismissing its suit against a subcontractor’s insurer to recover damages it paid stemming from water damage caused by the subcontractor’s negligence in performing work on a home’s roof, arguing that because it filed an amended complaint after the subcontractor’s insurer filed its motion to dismiss, which the subcontractor’s insurer answered, the motion to dismiss was moot when it was granted.
May 31, 2023
CGL Insurer, Contractor Granted Dismissal In Faulty Window Coverage Suit

DALLAS — A federal judge in Texas has granted 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, dismissing the insurer’s claims against the contractor with prejudice and the insurer’s claims against other parties without prejudice.
May 30, 2023
Hawaii High Court Sets Oral Arguments For Questions On Equitable Reimbursement

HONOLULU — The Hawaii Supreme Court issued an order indicating that oral arguments are scheduled for July 6 to address questions regarding equitable reimbursement certified from a federal court in a coverage dispute over whether insurers owe a contractor and developer a duty to defend in a lawsuit over construction defects discovered at a condominium project.
May 25, 2023
Insureds Seek Partial Reconsideration In Suit Over Fire Suppression Leak Coverage

TAMPA, Fla. — While a federal judge in Florida correctly ruled that several leaks discovered in a fire suppression system over a period of time are considered one “occurrence” under a plain reading of builders risk policies issued by two insurers, the judge erred in finding that two deductibles applied — one for the original policy period and one for an extension of the policy period, a property owner and its general contractor argue in a May 24 motion for partial reconsideration.