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Preview: LexisNexis® Mealey's™ Construction Defects Insurance Legal News

LexisNexis® Mealey's™ Construction Defects Insurance Legal News



Headline Construction Defects Insurance Legal News from LexisNexis®



 



Panel Says Synthetic Stucco Exclusion Bars Insurance Coverage For Water Damage
MILWAUKEE - A commercial general liability insurance policy's synthetic stucco exclusion precludes coverage in a dispute between a condominium association and the insurer of a general contractor over water damage caused by subcontractors' defective work, a Wisconsin appeals panel affirmed July 31 (Kaitlin Woods Condominium Association Inc. v. Kaitlin Woods LLC, et al., No. 2015AP423, Wis. App., Dist. 1, 2017 Wisc. App. LEXIS 565).



Insured's Negligent Work Constitutes An 'Occurrence' Under Policy, 1st Circuit Says
CHICAGO - A condominium association's claim that a painting subcontractor acted negligently is sufficient under Illinois law to constitute an "occurrence" under a commercial general liability policy, the Seventh Circuit U.S. Court of Appeals affirmed July 13 (Westfield Insurance Co. v. National Decorating Service, Inc., et al., No. 16-1439, 7th Cir., 2017 U.S. App. LEXIS 12516).



10th Circuit: Insurers Not Required To Pay Judgments Against Contractors
DENVER - A federal judge in Utah did not err when awarding summary judgment to two insurance companies that were sued by a couple seeking to recover $2.2 million in judgments they are owed by two contractors over faulty framing, a 10th Circuit U.S. Court of Appeals panel ruled July 13, holding that the insurers are not required to provide coverage under policies issued to the contractors (Auto-Owners Insurance Company v. George Fleming, et al, No. 16-4118, 10th Cir., 2017 U.S. App. LEXIS 12533).



Judge Finds Damage To Welds Is Covered, Reserves Indemnity Ruling
TACOMA, Wash. - A Washington federal judge on July 20 partially granted a motion for summary judgment filed by insurers to the extent that it sought declaratory judgment that only property damage to welds was covered under an insurance policy, but found that an underlying complaint could impose liability on a pipe company that may be also covered under the policy (Travelers Property Casualty Company of America, et al. v. Northwest Pipe Company, et al., No. 17-5098, W.D. Wash., 2017 U.S. Dist. LEXIS 113325).



Insurer Gets Summary Judgment In Declaratory Action Stemming From Deck Collapse
ABERDEEN, Miss. - A Mississippi federal judge on July 21 granted an insurer summary judgment in a declaratory action against two victims of a deck collapse, saying there is no injury or damage caused by an occurrence under the policy and therefore no duty to defend a subcontractor who built the deck (Employers Mutual Casualty Company v. Brytni West, et al., No. 16-4, N.D. Miss., Aberdeen Div., 2017 U.S. Dist. LEXIS 113951).



Negligence Claim Is Barred Under Florida Law, Florida Federal Judge Determines
ORLANDO, Fla. - A Florida federal judge on July 18 determined that an insurer's negligence claim is barred under Florida law because the negligence stems from a contractual relationship between its insured and the company responsible for maintaining a building damaged when a sprinkler system malfunctioned (Certain Underwriters at Lloyd's of London, UK, v. Ocean Walk Resort Condominium Association Inc., No. 16-258, M.D. Fla., 2017 U.S. Dist. LEXIS 111233).



Split Georgia Appeals Court: No Bad Faith By Insurer In Failing Stucco Suits
ATLANTA - A divided Georgia Court of Appeals on June 30 upheld a trial court's summary judgment ruling for an insured on its breach of contract and declaratory claims and on the insurer's counterclaims; however, the majority reversed denial of summary judgment for the insurer on a claim for bad faith, finding that "[t]he question of whether the previous reservations of rights were still effective had not been squarely answered in Georgia" (American Safety Indemnity Co. v. Sto Corp., No. A17A0453, Ga. App., 2017 Ga. App. LEXIS 339).



Judge Allows First-Party Insured's Bad Faith Claim To Proceed To Trial
SIOUX CITY, Iowa - While dismissing an insured's third-party bad faith claim against an insurer for denied coverage of water damage, an Iowa federal judge on June 30 allowed the insured's first-party bad faith and punitive damages claims to proceed to trial (Tim Van Der Weide v. Cincinnati Insurance Co., No. 14-4100, N.D. Iowa; 2017 U.S. Dist. LEXIS 101735).



Massachusetts Federal Judge Grants Surety Insurer's Motion For Summary Judgment
BOSTON - A Massachusetts federal judge on July 14 accepted a magistrate judge's recommendation that a surety insurer's motion for summary judgment be granted because the contractor failed to file suit within the applicable one-year statute of limitations (Endicott Constructors Corp. v. E. Amanti & Sons Inc., et al., No. 14-12807, D. Mass., 2017 U.S. Dist. LEXIS 110215).



Michigan Panel Affirms Exclusion Does Not Apply To Insured's Water Damage
GRAND RAPIDS, Mich. - A Michigan appeals panel on July 20 affirmed a lower court's ruling in favor of an insured in a coverage dispute arising from water damage to the insured's Ann Arbor, Mich., property (Cincinnati Insurance Co. v Thomas Kaeding II, No. 332559, Mich. App., 2017 Mich. App. LEXIS 1185).



Florida Federal Judge Allows Insurer's Declaratory Judgment Claim To Proceed
ORLANDO, Fla. - A Florida federal judge on July 13 denied a contractor's motion to dismiss an insurer's suit seeking a declaration that the contractor is not an additional insured after determining that allowing the insurer's declaratory judgment claim to proceed is the best way to resolve the coverage issue (Mid-Continent Casualty Co. v. New South Industries Inc., et al., No. 17-175, M.D. Fla., 2017 U.S. Dist. LEXIS 108590).



Maryland Federal Judge Denies Motion To Dismiss In Pier Collapse Suit
BALTIMORE - A Maryland federal judge on July 5 denied a third-party defendant's motion to dismiss an insured's third-party complaint alleging claims arising out of a collapsed pier after determining that the insured stated a plausible negligence claim against the third-party defendant (The Hartford Fire Insurance Co. v. The Harborview Marina & Yacht Club Community Association Inc., No. 16-769, D. Md.; 2017 U.S. Dist. LEXIS 103260).



Federal Judge Stays Surety's Declaratory Judgment Action Over Construction Dispute
HOUSTON - A Texas federal judge on June 30 stayed a surety's declaratory judgment action pending resolution of an underlying state court action between the principal and the obligee as to a dispute over a construction project (Travelers Casualty and Surety Company of America v. Rosenberger Construction LLC, No. 17-45, S.D. Texas, 2017 U.S. Dist. LEXIS 102231).



Texas High Court Grants Insurer New Trial In Defect Coverage Dispute
AUSTIN, Texas - A judgment in an underlying construction defect lawsuit is not binding on an insurer because its insured builder did not have a sufficient financial stake in the outcome due to a pretrial agreement, the Texas Supreme Court ruled June 16, granting a new trial over whether the insurer must cover the construction defect claims (Great American Insurance Co., et al. v. Glen Hamel, et al., No. 14-1007, Texas Sup., 2017 Tex. LEXIS 553).



Texas Federal Judge Says Counterclaim Not Redundant, Denies Motion To Dismiss
AUSTIN, Texas - A Texas federal judge on June 2 denied a contractor's motion to dismiss an insurer's counterclaim for declaratory relief after determining that the counterclaim is not redundant of the insurer's affirmative defense asserted in its answer to the complaint (Hunt Construction Group Inc. v. Cobb Mechanical Contractors Inc. et al., No. 17-215, W.D. Texas).



9th Circuit Finds Jury Instructions Were Adequate For Dispute Over Coverage
SAN FRANCISCO - A Ninth Circuit U.S. Court of Appeals panel on June 16 overruled arguments from a general contractor that a jury was not properly instructed about certain exclusions included in a policy obtained from ProBuilders Specialty Insurance Co., finding that the contactor was reading the exclusions too narrowly (ProBuilders Specialty Insurance Company, RRG v. Valley Corp. B., et al., No. 14-17544, 9th Cir., 2017 U.S. App. LEXIS 10716).



Judge: Insurer Has Duty To Defend Contractor In Airport Floor Damage Suit
DENVER - A commercial general liability insurer has a duty to defend a contractor against claims of defective work on an airport hangar floor, a Colorado federal judge ruled June 12, also staying the case pending resolution of the underlying action (Auto-Owners Insurance Co. v. High Country Coatings Inc. and Zurich American Insurance Co., No. 16-03196, D. Colo.).



Judge Reserves Ruling On Whether Pipeline Damage Was Covered Under Policy
TACOMA, Wash. - A Washington federal judge on June 22 refused to stay a declaratory relief action and reserved a ruling on summary judgment in a case filed by two insurers against a water district and a company in relation to coverage for damage at a water pipeline project, finding that an analysis on whether the allegations in the underlying coverage case implicated covered property damage would not prejudice the defendants (Travelers Property Casualty Company of America, et al. v. Northwest Pipe Company, et al., No. 17-5098, W.D. Wash., 2017 U.S. Dist. LEXIS 96643).



Judge Enters Judgment For Nautilus Insurance, Finds No Duty To Defend
CHICAGO - An Illinois federal judge on June 1 granted summary judgment and entered a default ruling in favor of an insurer, finding that it had no obligation to indemnify a construction company in an underlying lawsuit because it never received reasonable notice of the case or any claim under the terms of a general liability policy (Nautilus Insurance Co. v. JLL Construction Services, Inc., No. 15-cv-09297, N.D. Ill., 2017 U.S. Dist. LEXIS 83736).



Panel: Prevailing Insurer In Defects Dispute Cannot Recover Attorney Fees
ATLANTA - An insurer who prevailed in a construction defects dispute cannot recover attorney fees because its joint settlement offer with homeowners was invalid and unenforceable, the 11th Circuit U.S. Court of Appeals affirmed June 7 (Joseph Bradfield and Patricia Bradfield v. Mid-Continent Casualty Co., No. 16-17385, 11th Cir., 2017 U.S. App. LEXIS 10094).



Judge Finds Policy Covered Water Vapor Damage, Rejects Insurer's Arguments
BILLINGS, Mont. - A Montana federal judge on June 6 granted summary judgment in favor of a property owner, finding that issues of fact exist as to whether a contractor caused a furnace vent pipe to disconnect, resulting in water damage, but found that the damage was covered under a homeowners insurance policy (Landy C. Leep v. Trinity Universal Insurance Co., No. 16-57, D. Mont., 2017 U.S. Dist. LEXIS 86759).



Judge Grants Insured's Motion To Transfer Venue Of Declaratory Judgment Suit
ATLANTA - A Georgia federal judge on June 29 granted an insured's motion to transfer the venue of an insurer's declaratory judgment lawsuit challenging coverage for an underlying action brought against its insured (Owners Insurance Co. v. Comfort Air Corp., No. 17-1092, N.D. Ga., 2017 U.S. Dist. LEXIS 100874).



Texas Federal Judge Says Insured Failed To Prove Excess Carrier Owes Coverage
HOUSTON - A Texas federal judge on June 1 determined that an excess insurer is not liable to an insured for an underlying construction defects suit because the insured failed to prove that the excess insurer owed coverage under its policy (American Guarantee and Liability Insurance Co., et al. v. United States Fire Insurance Co., No. 15-1926, S.D. Texas, 2017 U.S. Dist. LEXIS 90150).



Insurer Seeks Equitable Contribution For Insured's Defense In 3 Defects Suits
MORRISTOWN, N.J. - An insurer claims in a June 2 complaint filed in New Jersey state court that it is entitled to equitable contribution from another insurer because the other insurer improperly denied coverage to its insured for three construction defects lawsuits filed against the insured (Zurich American Insurance Co., as successor by merger to Assurance Company of America, et al. v. Crum & Forster Specialty Insurance Co., et al., No. L-1233-17, N.J. Super., Morris Co.).



Florida Federal Judge Orders Parties To Submit Stipulation Of Dismissal
MIAMI - A Florida federal judge on June 7 ordered a contractor and an insurer to file a joint stipulation of dismissal pursuant to a mediator's report that the parties settled their claims related to an insured's negligent performance of roofing work (Thornton Construction Co. Inc. v. Scottsdale Insurance Co., No. 16-22001, S.D. Fla., 2017 U.S. Dist. LEXIS 88192).



Judge: Negligence Claim In Defective Workmanship Suit Did Not Trigger Coverage
CONCORD, N.H. - A New Hampshire federal judge on June 6 granted a commercial general liability insurer's motion for summary judgment in a subcontractor insured's lawsuit seeking coverage for underlying claims that it performed surface preparation work negligently, in an unworkmanlike manner and not in accordance with job specifications (Fletch's Sandblasting and Painting, Inc. v. Colony Insurance Co., No. 15-490, D. N.H., 2017 U.S. Dist. LEXIS 86488).



No Coverage Afforded For Home's Foundation Damage, Federal Judge Says
HARTFORD, Conn. - No coverage is afforded for foundation damage to an insured home because no coverage is afforded for collapse or for latent defects under the policy at issue, a Connecticut federal judge said June 26 in granting an insurer's motion for summary judgment (Gueng-Ho Kim, et al. v. State Farm Fire and Casualty Co., No. 15-879, D. Conn., 2017 U.S. Dist. LEXIS 97871).



Judge Refuses To Substitute Insurer As Defendant In UCL, Coverage Case
SAN DIEGO - A California federal judge on June 16 denied a request filed by a group of development companies to substitute an insurer as a defendant in an action seeking coverage in an underlying construction defects case, finding that the substitution would not advance the litigation and refusing to remand the case (Toll CA, L.P., et al. v. American Safety Indemnity Company, et al., No. 16-cv-1523, S.D. Calif., 2017 U.S. Dist. LEXIS 94107).



Panel Says Insurer's Declaratory Judgment Claim Was Moot After Settlement
SEATTLE - A district court erred in allowing an insurer's declaratory judgment claim to proceed after an underlying construction defects suit was settled because the insurer's declaratory judgment claim became moot after the settlement, the Ninth Circuit U.S. Court of Appeals said May 24 in partially reversing the district court's judgment (Century Surety Co., v. Belmont Seattle LLC, No. 14-36002, 9th Cir., 2017 U.S. App. LEXIS 9052).



Florida Federal Judge Denies Motion To Dismiss In Defects Coverage Suit
MIAMI - A Florida federal judge on May 26 denied a motion to dismiss after determining that an insurer's suit seeking a coverage declaration for an underlying suit arising out of its insured's alleged defective roofing work presents an appropriate controversy to be decided by the federal court (Atain Specialty Insurance Co., v. Kenneth Russell Roof Contracting LLC, No. 16-23627, S.D. Fla., 2017 U.S. Dist. LEXIS 81960).



Federal Judge Partially Lifts Stay In Insurers' Declaratory Judgment Suit
GULFPORT, Miss. - A Mississippi federal judge on May 11 agreed to partially lift a stay in a suit filed by insurers seeking a declaration as to whether they have a duty to defend their insureds for an underlying suit filed against the insureds by a subcontractor seeking damages for unjust enrichment (Greenwich Insurance Co., et al. v. Capsco Industries Inc., et al., No. 14-297, S.D. Miss., 2017 U.S. Dist. LEXIS 71928).



Judge Finds Professional Liability Exclusion Applies To Construction Inspector
GREENVILLE, S.C. - A federal judge in South Carolina on May 24 awarded summary judgment to State Farm Fire and Casualty Insurance Co., ruling that the professional liability exclusion does not require the insurer to provide coverage to a construction inspection company accused of negligence (State Farm Fire and Casualty Insurance Co. v. Morningstar Consultants, Inc., No. 16-01685-MGL, D. S.C., 2017 U.S. Dist. LEXIS 79371).



Contractual Liability Exclusion Does Not Bar Coverage For Suit Filed Against Insured
PHOENIX - The Division One Arizona Court of Appeals on May 9 reversed a trial court's ruling that a contractual liability exclusion bars coverage for an underlying suit filed against an insured after determining that the underlying dispute did not arise out of a contractual dispute as required for the exclusion to apply (Dennis Teufel v. American Family Mutual Insurance Co., et al., No. 15-0736, Ariz. App., Div. 1, 2017 Ariz. App. Unpub. LEXIS 558).



Oregon Appeals Court: Multi-Unit Exclusion Doesn't Clear Insurer In Defect Suit
SALEM, Ore. - An Oregon Court of Appeals panel on May 10 reversed a trial court's ruling for an insurer in a condominium association's defects suit, finding that a trial court erred in determining that a multi-unit residential exclusion in the policy applied to combined-use buildings that include residential and business space (Hunters Ridge Condominium Association v. Sherwood Crossing, LLC, et al., No. A157014, Hunters Ridge Condominium Association as Assignee of E.A. White Construction Co., LLC v. Walter George Construction, Inc., et al., No. A157016, Ore. App., 2017 Ore. App. LEXIS 600).



Federal Judge Dismisses Insurer's Counterclaims In Construction Defects Dispute
LAS VEGAS - A Nevada federal judge on May 19 dismissed an insurer's breach of contract and declaratory relief counterclaims after determining that the insurer failed to allege facts in support of its assertion that an additional insured's failure to cooperate with the insurer prejudiced the insurer's ability to defend the additional insured in an underlying construction defects suit (Centex Homes v. Zurich Specialties London Limited, et al., No. 16-1278, D. Nev., 2017 U.S. Dist. LEXIS 77212).



Texas Panel Denies Motions For Rehearing, Upholds Jury's Award For Breach Of Contract
BEAUMONT, Texas - A Texas appeals panel on May 4 denied an insured's and an insurer's motions for rehearing in a coverage dispute arising from a plumbing leak, affirming that a jury correctly entered a $15,000 award for breach of contract damages and reversing the jury's $20,000 award of actual damages that resulted from an insurer's alleged unfair settlement practices and the jury's award of additional damages of $60,000 (State Farm Llloyds v. Dennis Webb, No. 09-15-00408, Texas App., 9th Dist., 2017 Tex. App. LEXIS 4025).



No Support For Breach Of Contract Tied To Payment Of Reinsurance Deductible
NEW YORK - In support of a breach of contract claim in an insurance coverage dispute over flood damage at a construction site, construction companies failed to show that their insurer's settlement caused them to pay a $50,000 deductible under a captive reinsurance agreement, a New York federal judge ruled May 4, dismissing the complaint (Keller Foundations LLC, et al. v. Zurich American Insurance Co., No. 16-6751, S.D. N.Y., 2017 U.S. Dist. LEXIS 68902).



Federal Judge Refuses To Compel Insurer To Produce Discovery In Coverage Dispute
WILLIAMSPORT, Pa. - A Pennsylvania federal judge on May 12 denied a modular home builder insured's motions to compel discovery and for sanctions in a commercial general liability insurer's declaratory judgment action disputing coverage for underlying faulty workmanship claims against the insured (Westfield Insurance Co. v. Icon Legacy Custom Modular Homes and Icon Legacy, No. 15-00539, M.D. Pa., 2017 U.S. Dist. LEXIS 72624).



Coverage Barred For Construction Defects Claims, Insurer Says In Complaint
TAMPA, Fla. - No coverage is owed for an underlying suit seeking damages as a result of water intrusion and other construction defects because coverage is barred for the underlying claims by exclusions for mold, pollution and impaired property, an insurer claims in a May 24 complaint filed against its insured in Florida federal court (Mid-Continent Casualty Co. v. Mobley Homes Florida LLC, No. 17-1232, M.D. Fla.).



Connecticut Federal Judge Says Questions Of Fact Exist In Water, Ice Damage Suit
BRIDGEPORT, Conn. - A Connecticut federal judge on May 17 partially denied an insurer's motion for summary judgment after determining that questions of fact remain regarding whether damage to a freezer floor is barred by the policy's earth movement exclusion (Thurston Foods Inc. v. Wausau Business Insurance Co., No. 15-14, D. Conn., 2017 U.S. Dist. LEXIS 74935).



Federal Judge Denies Motions To Reconsider In Construction Defects Suit
TACOMA, Wash. - A Washington federal judge on May 9 denied motions for reconsideration filed by insurers involved in a construction defects coverage suit after determining that the insurers failed to raise any issues that warrant reconsideration (Eagle Harbour Condominium Association v. Allstate Insurance Co., et al., No. 15-5312, W.D. Wash., 2017 U.S. Dist. LEXIS 70793).



Federal Magistrate Judge Recommends Default Judgment Be Entered Against Insured
SAN JOSE, Calif. - A California federal magistrate judge on May 3 recommended that a default judgment be entered against an insured because the insured failed to response to its insurers' complaint seeking a declaration that no coverage is owed for an underlying construction defects suit and because no coverage exists for the underlying suit based on the insured's misrepresentation in a policy application (Associated Industries Insurance Co. Inc., et al. v. Detail Construction & Waterproofing, Inc., No. 16-6042, N.D. Calif., 2017 U.S. Dist. LEXIS 67722).



Pennsylvania Federal Judge: Issue Of Fact Remains As To Cause Of Fire In Townhome
PHILADELPHIA - A Pennsylvania federal judge on May 18 denied a contractor's motion for summary judgment after determining that an insurer's proposed expert testimony on the causation of a fire presents a genuine dispute of material fact as to whether one of the contractors who worked in the home's basement contributed to the cause of the fire (State Farm Fire & Casualty Co., as subrogee of the Estate of Alkis J. Marland v. Hartman Contractors, et al., No. 14-6535, E.D. Pa., 2017 U.S. Dist. LEXIS 75967).



Florida Appeals Panel Finds Insurer's Subrogation Suit Is Not Time-Barred
MIAMI - The Third District Florida Court of Appeal on May 10 reversed a trial court's dismissal of an insurer's complaint after determining that the trial court erred in finding that the complaint was time-barred because the insurer filed the suit within four years of the actual date of loss (Companion Property and Casualty Group v. Built Tops Building Services Inc., No. 3D16-2044, Fla. App., 3rd Dist., 2017 Fla. App. LEXIS 6584).



No Jurisdiction Under CAFA's 'Mass Action' Provision, Judge Rules In Remanding
RIVERSIDE, Calif. - A California federal judge on May 3 granted insurers' motion to remand a lawsuit arising from claims over defective water supply lines, finding that the 26 insurers, acting as subrogees of 145 insureds, are the only plaintiffs and therefore fail to satisfy the "mass action" provision under the Class Action Fairness Act (CAFA) to retain jurisdiction (Liberty Mutual Fire Insurance Co. v. EZ-Flo International Inc., No. 17-228, C.D. Calif., 2017 U.S. Dist. LEXIS 67761).



Excess Insurer Appeals Ruling In Suit Over $6.7M Construction Defects Settlement
DENVER - An excess insurer has asked the 10th Circuit U.S. Court of Appeals to reverse a lower federal court's ruling in favor of a primary commercial general liability insurer in a dispute over coverage for an underlying $6.7 million settlement over construction defects claims against a ski area developer insured (Federal Insurance Co. v. National Union, No. 16-1438, 10th Cir.).



Insured: Insurer Is Liable Under 'Collapse' Provisions For Hidden Decay Damages
SEATTLE - An insured has asked the Ninth Circuit U.S. Court of Appeals to reverse a lower federal court's ruling that an insurer is not liable for damage to apartments from hidden decay under its policies' "collapse" provisions (American Economy Insurance Co. v. CHL, LLC, No. 16-35606, 9th Cir.).