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

Mealey's Construction Defects Insurance

January 07, 2025
Building Owner, Contractor Say Rehearing En Banc Is Warranted In Collapse Suit

CINCINNATI — A building owner and a contractor filed petitions for rehearing en banc in the Sixth Circuit U.S. Court of Appeals, contending that rehearing en banc is warranted because the panel’s finding that coverage is owed only for a portion of a wall that collapsed in a building that was undergoing renovation is inconsistent with a prior Sixth Circuit opinion and other prevailing case law within the Sixth Circuit.
January 06, 2025
10th Circuit Reverses Verdict In Condo Developer’s Favor, Remands For New Trial

DENVER — The 10th Circuit U.S. Court of Appeals reversed a jury $2.54 million award in favor of a condominium developer and remanded for a new trial after finding that it cannot recover under a builders risk insurance policy for repair costs of a cracked concrete slab that it has not paid and has no obligation to pay.
January 06, 2025
Wisconsin Majority: Exception To Construction Defect Exclusion Reinstates Coverage

WAUKESHA, Wis. — A majority of a Wisconsin appeals court reversed a lower court’s grant of summary judgment in favor of a homeowners insurer in its lawsuit challenging coverage for its insureds’ rain damage, finding that the ensuing cause of loss exception to the insurance policy’s Construction Defect Exclusion reinstates coverage and an additional coverage endorsement renders the policy’s Fungi Exclusion inapplicable.
January 02, 2025
7th Circuit Won’t Reconsider Ruling That Insurer Has Duty To Defend Architect

CHICAGO — The Seventh Circuit U.S. Court of Appeals will not reconsider its ruling that a commercial general liability insurer has a duty to defend its architectural company insured against an underlying lawsuit asserting that it inadequately designed and oversaw the construction of an Iowa building, rejecting the insurer’s challenge to its finding that the intervening decision by the Illinois Supreme Court in Acuity v. M/I Homes of Chicago, LLC indicates that the insurer owes an underlying defense.
December 23, 2024
Subcontractor’s Insurer’s Declaratory Claims Against Contractor Are Dismissed

MIAMI — Finding that the underlying complaint a contractor filed against a subcontractor alleges property damage under the subcontractor’s commercial general liability policy but that the “your work” exclusion may apply, a federal judge in Florida on Dec. 20 denied dismissal of the insurer’s claims for a declaration that it has no duty to defend the subcontractor; however, the judge found that a declaration regarding the insurer’s duty to indemnify is premature and dismissed the contractor from the insurer’s action.
December 19, 2024
Va. Judge Dismisses Contractor’s Counterclaim, Awards Judgment To Excess Insurer

FAIRFAX, Va. — Finding that a second-layer excess insurer did not breach its contract with its construction manager insured when it failed to indemnify the insured for its $24 million contribution to settle construction defects alleged by its client, a Virginia judge dismissed the insured’s counterclaim and entered judgment in favor of the insurer.
December 18, 2024
Breach Of Contract, Insurance Code Claims Dismissed In Leaky Roof Coverage Suit

McALLEN, Texas — After reviewing a magistrate’s judge’s memorandum and recommendation to which both parties in a suit over coverage for a leaky replacement roof objected, a federal judge in Texas found no error and adopted the recommendation, dismissing without prejudice the property owner’s breach of contract action against a subcontractor’s insurer and dismissing with prejudice Insurance Code claims against the insurer brought on behalf of the deceased subcontractor.
December 17, 2024
Massachusetts Magistrate Judge Compels Roof Material Maker To Disclose Documents

SPRINGFIELD, Mass. — A Massachusetts federal magistrate judge has granted an order compelling a roof coating maker to produce relevant documents in a construction defect suit and related insurance coverage litigation.
December 16, 2024
Coverage Dispute Over Conveyance Pipe Construction Closed After Dismissals

SEATTLE — Following several orders granting stipulated motions to dismiss, a federal court in Washington has issued a judgment ordering a coverage dispute over faulty construction allegations related to a conveyance pipe for a sewer overflow control project to be closed.
December 16, 2024
Federal Judge Refuses To Dismiss Bad Faith Suit Arising From Roof Damage

SIOUX FALLS, S.D. — A federal judge in South Dakota denied a property insurer’s motion to dismiss insureds’ breach of contract, bad faith and declaratory judgment lawsuit prompted by the insurer’s denial of coverage for damage to the insureds’ roof under the policy exclusion due to faulty construction or design, finding that the court is not convinced the insureds’ alleged loss arose out of the weight of water or ice.
December 16, 2024
5th Circuit: No Coverage For Insured’s Loss Due To Surface Water, Faulty Workmanship

NEW ORLEANS — The Fifth Circuit U.S. Court of Appeals affirmed a lower federal court’s summary judgment ruling in favor of a homeowners insurer in an insured’s breach of contract and bad faith lawsuit arising from a pool deck renovation that caused water damage to the insured’s rental property, finding that the undisputed evidence attributes the insured’s loss to surface water and faulty workmanship, which are excluded from coverage.
December 12, 2024
Lower Court Properly Found Coverage Is Not Owed For Entire Building, Panel Says

CINCINNATI — The Sixth Circuit U.S. Court of Appeals on Dec. 11 affirmed a district court’s ruling that coverage is only owed for a portion of a wall that collapsed in a building that was undergoing renovation, agreeing with the lower court’s finding that a partial collapse is not the same as a collapse as defined in the policy issued to a building owner and contractor.
December 12, 2024
Washington Federal Judge Refuses To Enter Summary Judgment On Bad Faith Claim

SEATTLE — An insured condominium association is not entitled to summary judgment on a bad faith claim in a dispute over coverage for hidden water damage, a Washington federal judge said after determining that questions of fact exist on the issue of when the insured discovered the damage.
December 11, 2024
Insurer Ask 7th Circuit To Reconsider Ruling That It Has Duty To Defend Architect

CHICAGO — A commercial general liability insurer filed a petition asking the Seventh Circuit U.S. Court of Appeals to reconsider an earlier ruling that it has a duty to defend its architectural company insured against an underlying lawsuit asserting that it inadequately designed and oversaw the construction of an Iowa building, challenging the Seventh Circuit’s finding that the intervening decision by the Illinois Supreme Court in Acuity v. M/I Homes of Chicago, LLC indicates that the insurer owes an underlying defense.
December 06, 2024
Justice Severs Coverage Issues In Suit Over Damage Caused By Construction Project

NEW YORK — A New York justice consolidated two subrogation lawsuits that involve indemnification and negligence claims arising from alleged property damage that was caused by the same construction project and granted an insurer’s motion to sever the coverage claims from the consolidated subrogation claims.
December 06, 2024
Contractor, Subcontractors Explore Possible Settlement Before Further Discovery

BOSTON — A contractor and subcontractors filed a joint status report in a dispute stemming from allegedly faulty installation of flooring at a construction project in New Jersey, telling a Massachusetts federal court that “they are interested in exploring the possibility of settlement before engaging in further discovery.”
December 05, 2024
N.Y. Justice: Earth Movement Exclusion Unmistakably Excludes Coverage For Damage

BROOKLYN, N.Y. — A New York justice held that the language in a general liability insurance policy’s earth movement exclusion “specifically, clearly, and unmistakably excludes coverage for the damage” at issue and that a concrete company lacks standing to bring an application for reargument of the court’s earlier ruling that granted insurers’ motion to dismiss a third-party complaint brought by a property owner and a construction manager.
December 03, 2024
Appellate Briefing Complete In Construction Insurance Dispute Over Sprinkler Leak

BATON ROUGE, La. — An excess insurer filed its reply brief in the Fifth Circuit U.S. Court of Appeals defending its appeal of a Louisiana federal court’s rulings that first granted a manufacturer’s motion for summary judgment in a construction insurance dispute stemming from damages caused by a sprinkler leak and then dismissed all of the excess insurer’s claims against the manufacturer with prejudice.
December 02, 2024
CGL Insurer Has Duty To Defend Architect Against Defect Suit, 7th Circuit Rules

CHICAGO — The Seventh Circuit U.S. Court of Appeals held that a commercial general liability insurer has a duty to defend its architectural company insured against an underlying lawsuit asserting that it inadequately designed and oversaw the construction of an Iowa building, finding that the intervening decision by the Illinois Supreme Court in Acuity v. M/I Homes of Chicago, LLC indicates that the insurer owes an underlying defense.
December 02, 2024
Construction Company Alleges Bad Faith Cross-Claim Against CGL Insurer

SACRAMENTO, Calif. —A construction company insured answered a commercial general liability insurer’s first amended complaint and filed cross-claims for breach of contract and breach of the implied covenant of good faith and fair dealing and seeks equitable contribution as assignee of an excess insurer that funded its $2,250,000 settlement of an underlying construction defects lawsuit.
November 27, 2024
Federal Judge Rules For CGL Insurer In General Contractor’s Breach Of Contract Suit

BROOKLYN, N.Y. — A federal judge in Wisconsin granted a commercial general liability insurer’s motion for summary judgment in a general contractor insured’s breach of contract and declaratory judgment lawsuit seeking reimbursement for its cost of replacing defective covers for digesters that were owned by two agricultural companies, concluding that the insured has failed to submit admissible evidence to support its claim that coverage exists under the policy for “property damage” that was caused by an “occurrence” or that coverage exists under the policy’s “products-completed operations hazards” provision.
November 25, 2024
Insurer’s Subrogation Suit Over Water Damage Dismissed After Parties Settle

AKRON, Ohio — Noting that the parties indicated that they reached a settlement, a federal magistrate judge in Ohio dismissed a property insurer’s subrogation lawsuit alleging that a subcontractor’s negligence in installing a fire suppression system caused millions in water damage.
November 21, 2024
Insurer Prejudiced By Developer’s Late Notice Of Claim, New York Justice Rules

NEW YORK — A New York justice granted an insurer’s motion to dismiss claims and cross-claims against it in a coverage dispute over damages from excavation work, finding that the insurer was prejudiced by the developer’s late notice of the claim.
November 18, 2024
Judge: CGL Insurer Has No Duty To Indemnify Contractor For Negligent Work Claims

SAN FRANCISCO — A federal judge in California granted a commercial general liability insurer’s motion for partial summary judgment seeking a declaration that it has no duty to indemnify its contractor insured against an underlying lawsuit alleging the insured performed negligent contractor work, finding there are no triable questions of material fact and coverage is excluded for the damages alleged in the underlying lawsuit.
November 18, 2024
Judge Dismisses 1 Insurer From Bad Faith Suit Arising From Construction Defects

DENVER — Following the parties’ joint stipulation of dismissal, a federal judge in Colorado dismissed with prejudice one insurer from a plaintiff insurers breach of contract and bad faith lawsuit seeking recovery of the defense and settlement costs that it paid on behalf of its general contractor insured in an underlying construction defects lawsuit.