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®
Faulty Work's Consequential Damages Are Insured, New Jersey High Court Finds
TRENTON, N.J. - Consequential damages caused by the subcontractors' faulty workmanship constitute "property damage," and water damage from rain flowing into the interior of the property due to that faulty work is an "occurrence" under a commercial general liability insurance policy, the New Jersey Supreme Court ruled Aug. 4 (Cypress Point Condominium Association Inc. v. Adria Towers LLC, et al., No. A-13/14, N.J. Sup.; 2016 N.J. LEXIS 847).
Contamination Caused By Defective Plastic Bag Is An Occurrence, 8th Circuit Says
ST. LOUIS - The contamination of landscaping materials with plastic from defective storage bags is an occurrence under the terms of an insurance policy, the Eighth Circuit U.S. Court of Appeals said Aug. 19 in reversing a district court's judgment in favor of the insurer (Decker Plastics Inc. v. West Bend Mutual Insurance Co., No. 15-2861, 8th Cir.; 2016 U.S. App. LEXIS 15235).
Insured's Defective Work Is Not An 'Occurrence' Under Pennsylvania Law, Judge Says
JOHNSTOWN, Pa. - An insured's faulty workmanship does not constitute an "occurrence" under a commercial general liability insurance policy, a Pennsylvania federal judge ruled Aug. 9, relying on Kvaerner Metals Division of Kvaerner U.S., Inc. v. Commercial Union Ins. Co. (589 Pa. 317, 908 A.2d 888, 896 [Pa. 2006]) to find an insurer has no duty to defend or indemnify (Acuity, a mutual insurance company v. Knisely & Sons, Inc., et al., No. 15-76, W.D. Pa.; 2016 U.S. Dist. LEXIS 104431).
Insured's Defective Work Is Not An 'Occurrence,' Ohio Federal Judge Finds
TOLEDO, Ohio - An insured's alleged faulty workmanship does not constitute an "occurrence," an Ohio federal judge ruled Aug. 16, also finding that a "total pollution" exclusion relieves a commercial general liability insurer of its duty to defend and indemnify allegations that the insured's negligence caused roofing tar to escape from a roof and flow into a lake (Mesa Underwriters Specialty Insurance Co. v. Ronald L. Myers, et al., No. 14-2201, N.D. Ohio; 2016 U.S. Dist. LEXIS 108444).
Panel: Insurers Are Not Jointly, Severally Liable For $2.4M Defects Arbitration Award
DALLAS - Although two commercial general liability insurers have a duty to indemnify insureds for an underlying construction defects arbitration award, a Texas appeals panel ruled Aug. 25 that a trial court erred in finding that the insurers are jointly and severally liable for the $2.4 million award (Great American Lloyds Insurance Co. and Mid-Continent Casualty Co. v. Vines-Herrin Custom LLC, et al., No. 05-15-00230, Texas App., 5th Dist.; 2016 Tex. App. LEXIS 9407).
Judge: Insurer Has No Duty To Defend Window Maker In Defects Suit
MADISON, Wis. - A federal judge in Wisconsin on Aug. 25 ruled that an insurance company has no duty to defend a manufacturer accused of making allegedly defective windows, finding that the Wisconsin Supreme Court's ruling in Wisconsin Pharmacal Co. LLC v. Nebraska Cultures of California Inc. (2016 WI. 14, 367 Wis. 2d 221 ) made it clear that the integrated systems rule is applicable and does not require the insurer to provide coverage for damage caused to the homes of purchasers of the windows (Mary Haley, et al. v. Kolbe & Kolbe Millwork Co. Inc., No. 14-cv-99, W.D. Wis.; 2016 U.S. Dist. LEXIS 113752).
Judge: Fact Issues Exist On If Insured's Faulty Window Wall Systems Caused Damages
NEW YORK - Uncertain as to whether the claims for which an insured is liable are related to damages to window wall systems themselves or to other property owned by the condominium unit owners, a New York federal judge on Aug. 2 denied summary judgment to an insurer on the duty to defend and indemnify an underlying action (American Home Assurance Co. v. Allan Window Technologies, Ltd., No. 15-5138, S.D. N.Y.; 2016 U.S. Dist. LEXIS 101118).
Federal Judge Finds Personal Jurisdiction Over Insurance Defects Coverage Dispute
MOBILE, Ala. - An insured failed to demonstrate that an Alabama federal court does not have personal jurisdiction to hear a dispute regarding insurance coverage between the insured and its two insurers over construction defect claims, an Alabama federal judge ruled Aug. 12 (Crum & Forster Specialty Insurance Co., et al. v. ARD Contracting Inc., No. 16-0185, S.D. Ala.; 2016 U.S. Dist. LEXIS 106891).
'Your Work' Exclusion Bars Water Damage Caused By Insured's Work, Judge Says
HAMMOND, Ind. - A "your work" exclusion in a commercial general liability insurance policy precludes coverage for claims for real property structural damage and diminished value arising out of an insured's alleged faulty work that led to water intrusion in homes, an Indiana federal judge ruled Aug. 16, finding the insurer had no duty to defend or indemnify (West Bend Mutual Insurance Co. v. Cleland Homes Inc., et al., No. 12-580, N.D. Ind.; 2016 U.S. Dist. LEXIS 108030).
'Tract Housing' Exclusion Bars Coverage For Insureds' Defects, 5th Circuit Affirms
NEW ORLEANS - A commercial general liability insurance policy's "tract housing" precludes coverage to a group of homeowners who settled a construction defect lawsuit with its insured and then sought payment, the Fifth Circuit U.S. Court of Appeals ruled Aug. 10 (Jay Broughton, et al. v. Castlepoint National Insurance Co., formerly known as SUA Insurance Co. & Jennifer Trevino, et al. v. Castlepoint National Insurance Co., formerly known as SUA Insurance Co., No. 15-20708, 5th Cir.; 2016 U.S. App. LEXIS 14746).
Judge: Insurer Owes Defense For Covered Water Claims, Noncovered Mold Claims
SAN FRANCISCO - A commercial general liability insurer owed a defense in an underlying action for both covered water damage claims and noncovered mold damage claims, a California federal judge ruled Aug. 19, finding that neither a mold exclusion or a "continuous or progressive injury or damage" exclusion applies to bar coverage (Saarman Construction Ltd. v. Ironshore Specialty Insurance Co., No. 15-03548, N.D. Calif.; 2016 U.S. Dist. LEXIS 110921).
Judge: Misrepresentation Claims Are Not 'Occurrences' Under CGL Insurance Policy
CLEVELAND - Mobile homeowners' misrepresentation claims do not arise out of events that sought damages for an "occurrence" under a commercial general liability insurance policy and umbrella policy, an Ohio federal judge ruled Aug. 26, finding that the insurer had no duty to defend and indemnify claims filed in a class action lawsuit (Lakeside Terrace Homes Sales Ltd., et al. v. Arrowood Indemnity Co., No. 15-1794, N.D. Ohio; 2016 U.S. Dist. LEXIS 114828).
Insured Says Texas Federal Judge Erred In Finding Cooperation Clause Applies
HOUSTON - An insured argues in an Aug. 9 motion to amend that a Texas federal judge erred in ruling that a cooperation clause applies to the insured's conduct in declining a settlement in an underlying lawsuit over a faulty flex connector (Mid-Continent Casualty Co. v. Petroleum Solutions, Inc., et al., No. 09-0422, S.D. Texas).
Subrogation Waiver Does Not Bar Insurer's Gross Negligence Claim, Panel Says
DETROIT - While a subrogated insurer's gross negligence claim was not barred by a waiver-of-a subrogation clause, a Michigan appeals panel held Aug. 9 that the insurer failed to assert more than an ordinary negligence claim against a contractor and subcontractor for the faulty installation of a sprinkler system (Lexington Insurance Co. v. The Alan Group and Condor Piping Inc., No. 326921, Mich. App.; 2016 Mich. App. LEXIS 1486).
Judge Trims Third-Party Claims In Insurance Bad Faith Lawsuit
RENO, Nev. - A federal judge in Nevada on Aug. 22 substantially denied an insurer's motion to dismiss third-party claims in an insurance bad faith lawsuit but held that dismissal of the third parties' statutory bad faith claim is proper because such claims may not be brought by third parties under Nevada law (Troy and Paula Burley and Paul Ackerman and Judy Ackerman, as trustees of the Ackerman Family Trust, et al. v. National Union Fire Insurance Company of Pittsburgh, Pa., No.15-0272, D. Nev.; 2016 U.S. Dist. LEXIS 111477).
Florida Panel Conditionally Grants Appellate Attorney Fees In Sinkhole Dispute
LAKELAND, Fla. - The Second District Florida Court of Appeal on Aug. 17 vacated a June 10 order that denied insureds' amended motion for appellate attorney fees in a sinkhole coverage dispute and entered an order that grants their motion for appellate attorney fees conditioned upon their prevailing in the lower court (Wayne Allen v. State Farm Florida Insurance Co., No. 2D15-3114, Fla. App., 2nd Dist.; 2016 Fla. App. LEXIS 12381).
Panel Certifies Question On Meaning Of 'Suit' For Insurance Policy Under Florida Statute
ATLANTA - The 11th Circuit U.S. Court of Appeals on Aug. 2 certified a question to the Florida Supreme Court regarding whether the notice and repair process set forth in Florida Statutes Chapter 558 constitutes a "suit" within the meaning of commercial general liability insurance policies (Altman Contractors, Inc. v. Crum & Forster Specialty Insurance Co., No. 15-12816, 11th Cir.; 2016 U.S. App. LEXIS 14005).
Wisconsin High Court: 'Your Product' Exclusion Bars Coverage For Insured's Faulty Work
MADISON, Wis. - Applying the four-corners rule to compare a complaint's language to the terms of an insurance policy, a majority of the Wisconsin Supreme Court ruled June 30 that an insurer did not breach its duty to defend an insured because a "your product" exclusion applies and no exceptions to this exclusion restore coverage (Water Well Solutions Service Group Inc. v. Consolidated Insurance Co., No. 2014AP2484, Wis. Sup.; 2016 Wisc. LEXIS 163).
Judge: 'Your Work' Exclusion Bars Arbitration Award From Insured's Faulty Work
HOUSTON - An insurance policy's "your work" exclusion precludes damages awarded in arbitration to homeowners because the insured contractor's work caused the damages, which did not include damages to the pool or work performed by other subcontractors, a Texas federal judge ruled July 19 (Grier Patton and Camille Patton and David A. Fettner v. Mid-Continent Casualty Co., No. 15-1371, S.D. Texas; 2016 U.S. Dist. LEXIS 93568).
Fact Issues Remain On If Insured Breached Cooperation Clause, Federal Judge Holds
HOUSTON - A cooperation clause applies to an insured's conduct in declining a settlement in an underlying lawsuit over a faulty flex connector, a Texas federal judge ruled July 29, also finding that genuine issues of material fact exist regarding whether the insured breached that duty (Mid-Continent Casualty Co. v. Petroleum Solutions, Inc., et al., No. 09-0422, S.D. Texas; 2016 U.S. Dist. LEXIS 99896).
Judge: No Overlap Issues Between Insured's Coverage Suit, Underlying Contract Case
SALT LAKE CITY - An insured failed to show that an underlying breach of contract action involved the same parties and issues as its insurer's coverage action regarding the duty to defend and indemnify the insured, a Utah federal judge ruled July 8 (Acuity, a mutual insurance company v. McGinnis Homes, LLC, No. 16-58, D. Utah; 2016 U.S. Dist. LEXIS 88974).
Judge Allows Insured's Breach Of Contract, Bad Faith Claims To Proceed
JACKSON, Miss. - A Mississippi federal judge on July 1 dismissed an insured's claims for waiver and estoppel and for vicarious liability but allowed breach of contract and bad faith claims to proceed in a homeowners insurance coverage action (Brooke T. Martin v. Shelter Mutual Insurance Co., No. 15-675, S.D. Miss.; 2016 U.S. Dist. LEXIS 86112).
Insurer Had No Right To Remove Breach Of Contract, Bad Faith Suit, Judge Says
COLUMBIA, S.C. - An insurer that interpleaded itself into a construction defects lawsuit involving its insureds had no right to remove the case to federal court, a South Carolina federal judge ruled July 28, remanding the case to state court to resolve remaining counterclaims against the insurer for breach of contract and bad faith (The Gates at Williams-Brice Condominium Association and Katherine Swinson v. Lexington Insurance Co., No. 16-01001, D. S.C.; 2016 U.S. Dist. LEXIS 98599).
Judge Allows Bad Faith Claims In Suit Against Insurer Over Faulty Windows Settlements
TAMPA, Fla. - Window and sliding-glass-door manufacturers may proceed on their "bad-faith failure to settle" and "negligent failure to settle" claims against their insurer for failing to indemnify them for underlying settlements arising out of allegedly defective windows, a Florida federal judge ruled July 18 (MI Windows & Doors, LLC, et al. v. Liberty Mutual Fire Insurance Co., No. 14-3139, M.D. Fla.; 2016 U.S. Dist. LEXIS 92973).
Insured Won't Present Evidence, Testimony In Making Bad Faith Claim, Judge Rules
HATTIESBURG, Miss. - A federal judge in Mississippi on July 18 granted three motions in limine filed by an insurer in an insurance breach of contract and bad faith lawsuit, precluding an insured from presenting evidence, damages testimony and other testimony to show that the insurer acted in bad faith in conducting an investigation into a claim for coverage under a commercial property insurance policy (JCKP LLC v. Berkley Regional Specialty Insurance Co, et al., No. 14-0117, S.D. Miss.; 2016 U.S. Dist. LEXIS 93049).
Insured's Faulty Epoxy Is An 'Occurrence,' Federal Judge Concludes
BOSTON - Allegations of an insured's faulty epoxy potentially causing damage to components in night vision goggles constitutes an "occurrence," a Massachusetts federal judge ruled July 12, finding that a faulty workmanship exclusion does not preclude coverage (Innovative Mold Solutions, Inc. v. All America Insurance Company, Inc., et al., No. 15-40010, D. Mass.; 2016 U.S. Dist. LEXIS 91671).
Insured's Faulty Work Is Not Covered 'Property Damage,' Panel Upholds
TRENTON, N.J. - Allegations of an insured's negligent work that caused a collapse do not constitute covered "property damage" under commercial general liability insurance policies, a New Jersey appeals panel affirmed July 15 (New Jersey-American Water Co., Inc. v. Watchung Square Associates, LLC and Fidelity Corp. v. Vollers Excavating & Construction, Inc. and Frank Ferraro v. Salvatore Davino, et al. and Travelers Insurance Co., et al., Nos. A3436-13T1 & A-3445-13T1, N.J. Super., App. Div.; 2016 N.J. Super. Unpub. LEXIS 1639).
Faulty Work Exclusion Bars Coverage For Insured's Stone Flooring Error, Panel Finds
LOS ANGELES - Damage to an insured's mixed-use complex caused by subcontractors' faulty stone flooring work is precluded under a defective workmanship exclusion, a California appeals panel held July 28, affirming summary judgment to seven insurers on breach of contract, bad faith and fraud claims (Olympic and Georgia Partners LLC v. Arch Specialty Insurance Co., et al., No. B264647, Calif. App., 2nd Dist., Div. 2; 2016 Cal. App. Unpub. LEXIS 5559).
Judge: Faulty Workmanship Bars Insurance Claim For Damages From Collapse
ALEXANDRIA, Va. - A faulty workmanship exclusion precludes coverage for collapse damages caused by an insured's actions related to the excavation of a basement coupled with the failure to install underpinning to secure the building's foundation, a Virginia federal judge ruled July 21, finding that the ensuing loss exception fails to restore coverage because no independent and covered peril contributed to the collapse other than the insured's excluded conduct (Taja Investments LLC, et al. v. Peerless Insurance Co. a/k/a Liberty Mutual Insurance Co., No. 15-01647, E.D. Va.; 2016 U.S. Dist. LEXIS 95760).
Insurers Have No Duty To Defend, Indemnify Faulty Work, Magistrate Judge Says
PITTSBURGH - Under Pennsylvania law, commercial general liability insurers have no duty to defend or indemnify insureds for a negligent performance of contract claim arising out of alleged faulty workmanship, a Pennsylvania federal magistrate judge ruled June 30 (Peerless Insurance Co. and Ohio Security Insurance Co. v. Manown Builders, et al., No. 15-281, W.D. Pa.; 2016 U.S. Dist. LEXIS 85261).
Panel: No Defense Owed For Additional Insured's Alleged Intentional Bad Acts
CHICAGO - An insurer had no duty to defend an additional insured for construction defects in condominium units because nothing accidental was alleged, an Illinois appeals panel affirmed July 20, finding that the allegations include the additional insured's intentional bad acts or awareness of faulty workmanship (Westfield Insurance Co. v. West Van Buren, LLC and 933 Van Buren Condominium Association, No. 1-14-0862, Ill. App., 1st Dist.; 2016 Ill. App. LEXIS 473).
Judge: Additional Insured Dismissed Delay Claim Against 3 Insurers
NEW ORLEANS - Because an additional insured amended its complaint, there is no longer a "Delay Claim" under three insurance policies, a Louisiana federal judge ruled July 13, denying the insurers' motion for judgment on the pleadings (Landis Construction, LLC v. Torus Specialty Insurance Co., et al., No. 16-1619, E.D. La.; 2016 U.S. Dist. LEXIS 91024).
Insureds' Water Damage Is Subject To A 'Concurrent Cause' Exclusion, Panel Says
FRANKFORT, Ky. - The "Back-Up of Sewers and Drains" coverage provided under an insurance policy is subject to a "concurrent cause" exclusion, a Kentucky appeals panel ruled July 22, affirming summary judgment to an insurer that insureds did not suffer a covered loss from water damage due to flooding (Dr. Caroline I. Hendy, et al. v. Maryland Casualty Co., No. 2015-CA-001030, Ky. App.; 2016 Ky. App. Unpub. LEXIS 502).
Fact Issues Remain On Cause Of Insureds' Water Damage, Federal Judge Says
HARRISBURG, Pa. - Finding that genuine issues of fact remain as to the cause of homeowners' water damage, a Pennsylvania federal judge on July 7 declined to grant summary judgment to an insurer based on exclusions for defective construction, seepage, neglect or known loss doctrine (The Cincinnati Insurance Co. v. Jonathan Drenocky and Deborah Drenocky, No. 15-762, M.D. Pa.; 2016 U.S. Dist. LEXIS 87711).
Judge Finds Subrogated Insurers' Breach Of Contract Claim Is Time-Barred
TULSA, Okla. - Subrogated insurers failed to assert their breach of contract claim before the expiration of a five-year statute of limitations, which began running upon completion of construction, an Oklahoma federal judge ruled July 28, granting in part summary judgment to a general contractor (Lexington Insurance Co., et al. v. Newbern Fabricating, Inc. and Baucom Concrete Construction, Inc., No. 14-0610, N.D. Okla.; 2016 U.S. Dist. LEXIS 98595).
Panel: Subrogated Insurer's Rights To Recovery Were Not Waived Under Bylaws
BOSTON - A subrogated insurer's rights to recover insurance proceeds paid for a condominium unit's water damage were not waived based on a clause in the bylaws of the insured's condominium trust that unit owners "shall carry insurance" and that "all such policies shall contain waivers of subrogation," the First Circuit U.S. Court of Appeals held July 5 (Pacific Indemnity Co. v. John Deming, No. 15-2386, 1st Cir.; 2016 U.S. App. LEXIS 12374).
Judge Says Expert Did Not Offer Testimony On Defect In Insurer's Subrogation Suit
SOUTH BEND, Ind. - An expert did not provide any testimony as to a manufacturing defect to support an insured's motion for interlocutory review, an Indiana federal judge ruled July 19 in an insurer's subrogation lawsuit on claims for design defect and failure to adequately warn (The Cincinnati Insurance Co. a/s/o Jason and Michelle Howard v. Lennox Industries, Inc., No. 14-1731, N.D. Ind.; 2016 U.S. Dist. LEXIS 93417).
Florida Panel Reverses Ruling In Part In Sinkhole Coverage Dispute
LAKELAND, Fla. - A Florida appeals panel held July 6 that a lower court erred in awarding $233,610.02 in damages payable directly to insureds without regard for an insurance policy's loss settlement provision as to subsurface repair, reversing the lower court's ruling in part (Citizens Property Insurance Corp. v. James Stieben, et al., No. 2D14-4412, Fla. App., 2nd Dist.; 2016 Fla. App. LEXIS 10296).
Florida Panel Affirms Court's Denial Of Insured's Motion For Attorney Fees
LAKELAND, Fla. - A Florida appeals panel on July 15 held that although a lower court denial of insured's motion for attorney fees in a sinkhole coverage dispute was based on two statutory misinterpretations, there is ample basis in the record to affirm (Christopher Shane Miller v. Florida Insurance Guaranty Association Inc., et al., No. 2D15-1350, Fla. App., 2nd Dist.; 2016 Fla. App. LEXIS 10868).
Judge: Insurer Is Not Liable Under 'Collapse' Provisions For Hidden Decay Damages
SEATTLE - Under Washington law, an insurer is not liable for damage to apartments from hidden decay under its policies' "collapse" provisions, a Washington federal judge ruled July 7, finding that the insurer's coverage decision and claims handling were reasonable (American Economy Insurance Co. v. CHL, LLC, No. 15-899, W.D. Wash.; 2016 U.S. Dist. LEXIS 88286).
Judge Finds Requirement Met For Insurance Coverage Dispute Over Defects Suit
LOS ANGELES - Because homeowners seek more than $7.5 million in an underlying construction defects lawsuit, a California federal judge ruled Aug. 1 that the amount-in-controversy requirement has been met for an insurance coverage dispute involving three insurers (Maryland Casualty Co. and Northern Insurance Company of New York v. Ironshore Specialty Insurance Co., No. 16-00186, E.D. Calif.; 2016 U.S. Dist. LEXIS 100462).
Insured's Defective Work Is An 'Occurrence' Under CGL Policy, Iowa High Court Says
DES MOINES, Iowa - An insured's faulty work may constitute an "occurrence" under an excess commercial general liability insurance policy, a majority of the Iowa Supreme Court affirmed June 10, also finding that a trial court did not err in instructing a jury to determine whether damages arose due to an "accident" constituting an "occurrence" by considering the insured's viewpoint and what it intended or should reasonably have expected (National Surety Corp. v. Westlake Investments, LLC, No. 14-1274, Iowa Sup.; 2016 Iowa Sup. LEXIS 71).
Ohio Appeals Panel Says Alleged Damages Fall Outside Insurance Policy
CHILLICOTHE, Ohio - Homeowners' damages from the construction of a mobile home began before a policy period and, thus, are not covered under an insurance policy, an Ohio appeals panel affirmed June 16, finding that an insurer had no duty to defend or indemnify an insured (Lightning Rod Mutual Insurance Co. v. Robert Southworth d/b/a Bob's Home Service, et al., No. 15CA3704, Ohio App., 4th Dist.; 2016 Ohio App. LEXIS 2313).
Judge: Insurers Have No Duty To Indemnify As No Covered Property Damage Exists
SALT LAKE CITY - Homeowners failed to establish evidence that they suffered any property damage as a result of a contractor or subcontractor's work on their home that is covered under two commercial general liability insurance policies, a Utah federal judge ruled June 15, finding that the insurers have no duty to indemnify for underlying judgments (Auto-Owners Insurance Co. v. Timbersmith, Inc., et al. & George Fleming and Janis Fleming v. The Charter Oak Fire Insurance Co., No. 12-00786, D. Utah; 2016 U.S. Dist. LEXIS 78748).
Federal Judge Says Insurer Must Indemnify Damages To Homeowner's Panels
PITTSBURGH - An insurer must indemnify a homeowner's total recovery of $174,553.04 for the portion of damages to structural insulated panels (SIPs) that could not be recovered under the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL), including the homeowner's failure to mitigate damages, a Pennsylvania federal judge held June 9 (Cincinnati Insurance Co. v. Jerry Ellis Construction, et al., No. 14-155, W.D. Pa.; 2016 U.S. Dist. LEXIS 75405).
Insurer Has Duty To Defend Water Damage Claims, Judge Finds
CHICAGO - An insurer has a duty to defend claims for mold growth and water damage due to an insured's defective construction, an Illinois federal judge ruled June 8, also finding that "contractual liability" and "damage to property" exclusions do not apply (Frankenmuth Mutual Insurance Co. v. Hodsco Construction, Inc., et al., No. 15-11029, N.D. Ill.; 2016 U.S. Dist. LEXIS 76204).
Texas High Court Refuses To Rehear Coverage Suit Over Defective Flanges
AUSTIN, Texas - The Texas Supreme Court denied two motions to rehear a commercial general liability coverage dispute arising from faulty flanges that resulted in an underlying $6,345,824 settlement against the insured, according to its June 17 orders pronounced list (U.S. Metals Inc. v. Liberty Mutual Group Inc., et al., No. 14-0753, Texas Sup.).
Judge Says Insurer Has No Duty To Defend, Indemnify Breach Of Contract Claims
HONOLULU - A commercial general liability insurer has no duty to defend or indemnify underlying breach of contract claims, a Hawaii federal judge ruled June 7, also finding that the insurer did not breach the covenant of good faith and fair dealing by initially denying insureds' tender (State Farm Fire and Casualty Co. v. GP West, Inc. and Air Conditioning of Maui, Inc., No. 15-00101, D. Hawaii; 2016 U.S. Dist. LEXIS 74240).
Ohio Federal Judge Allows Insurer's Coverage Case Against Insured To Proceed
CLEVELAND - An insurer's declaratory judgment lawsuit against its insured regarding coverage for underlying breach of contract claims may proceed, an Ohio federal judge ruled June 22, declining to dismiss or stay the action pending resolution of the underlying lawsuit (Acuity v. Midwest Curtainwalls, Inc., No. 16-55, N.D. Ohio; 2016 U.S. Dist. LEXIS 81370).
Panel Quashes Abatement Order In Insureds' Breach Of Contract Lawsuit
WEST PALM BEACH, Fla. - A trial judge erred in granting an abatement order in a breach of contract lawsuit between insureds and their homeowners insurer, a Florida appeals panel ruled June 1, quashing the order and remanding for further proceedings (Raymond Diaz and Surey Diaz v. Florida Peninsula Insurance Co., No. 4D15-3283, Fla. App., 4th Dist.; 2016 Fla. App. LEXIS 8341).
Federal Magistrate Judge Dismisses Insurer's Fraud Indemnity Counterclaims
PITTSBURGH - A Pennsylvania federal magistrate judge on June 3 dismissed fraud and indemnification counterclaims filed by an insurer in a lawsuit over a contract payment dispute between a town's wastewater authority and the insurer (Liberty Mutual Insurance Co. v. The Municipal Authority of the City of McKeesport, No. 15-1319, W.D. Pa.).
Panel Finds Ambiguity In Excess Insurance Policy's Faulty Work Exclusion
PHOENIX - An excess insurance policy's faulty workmanship exclusion is ambiguous as to whether an insured's work was "put to its intended use," an Arizona appeals panel ruled June 2, vacating a trial judge's grant of summary judgment to the insurer regarding coverage for construction defect claims (Cantex, Inc. v. Princeton Excess and Surplus Lines Insurance Co., No. 1 CA-CV 15-0280, Ariz. App., Div. 1; 2016 Ariz. App. Unpub. LEXIS 716).
Federal Judge Says Stay, Not Dismissal, Of Insurer's Suit Is Appropriate
PROVIDENCE, R.I. - A Rhode Island federal judge on June 10 stayed an insurer's suit seeking a declaration that its policy's pollution exclusion bars coverage for an oil spill because the insurer's suit was filed before the insured's state court suit, which also seeks a coverage declaration for the oil spill (Arbella Protection Insurance Co. Inc. v. Regan Heating and Air Conditioning Inc., No. 15-441, D. R.I.; 2016 U.S. Dist. LEXIS 75841).
Washington High Court: Insurance Policy Bars Water Damage Immediately Upon Vacancy
OLYMPIA, Wash. - An insurance policy unambiguously excluded coverage for insureds' water damage immediately upon vacancy, the Washington Supreme Court ruled June 9, affirming an appellate court's reversal of a trial judge's contrary holding that the exclusion would commence only after a 60-day vacancy (Kut Suen Lui and May Far Lui v. Essex Insurance Co., No. 91777-9, Wash. Sup.; 2016 Wash. LEXIS 692).
'All-Risk' Policy Insures Loss Of Hidden Damage From Water Intrusion, Judge Finds
SEATTLE - Construing an "all-risk" insurance policy as covering risks of loss due to hidden damage or decay, a Washington federal judge ruled June 16 that two insurers failed to prove that their policy did not cover losses of hidden damage from water intrusion allegedly exposed in 2014 (Holden Manor Homeowners Association v. Safeco Insurance Company of America, et al., No. 15-1676, W.D. Wash.; 2016 U.S. Dist. LEXIS 78821).
Florida Panel Reverses Ruling In Part In Coverage Dispute Over Sinkhole Damage
LAKELAND, Fla. - A Florida appeals panel on June 24 reversed part of a lower court's final judgment that requires an insurer to pay $100,000 for subsurface repairs of sinkhole damage before its insureds execute a contract with a third party for those repairs, also reversing the lower court's award of prejudgment interest on the subsurface damages award (Citizens Property Insurance Corp. v. Edgardo Nunez, et al., No. 2D14-3712, Fla. App., 2nd Dist.; 2016 Fla. App. LEXIS 9693).
Panel Quashes Order Requiring Insureds To Disclose Financial Terms Of Settlement
LAKELAND, Fla. - A Florida appeals panel on June 10 quashed a lower court's order that required insureds to disclose their financial information regarding their settlement agreement with their homeowners insurer in a sinkhole coverage dispute (Wayne Allen and Susan Allen v. State Farm Florida Insurance Co., No. 2D15-3114, Fla. App., 2nd Dist.; 2016 Fla. App. LEXIS 8941).
Florida Panel Again Reverses Ruling As To Subsurface Repairs In Sinkhole Dispute
LAKELAND, Fla. - For the second time in a week, the Second District Florida Court of Appeal on June 17 held that a lower court erred in awarding monetary damages to insureds for subsurface repairs in a sinkhole coverage dispute without requiring them to enter into a contract for the repairs, reversing in part (Citizens Property Insurance Corp. v. Bambi Retz, No. 2D14-5856, Fla. App., 2nd Dist.; 2016 Fla. App. LEXIS 9345).
Settlement Agreement For Defect Claims Violated Cooperation Clause, Judge Says
MINNEAPOLIS - A settlement agreement between an association and an insured general contractor over allegations of defective construction violated an insurance policy's cooperation clause and, thus, is unenforceable, a Minnesota federal judge ruled June 1 (James River Insurance Co. v. The Interlachen Propertyowners Association and Kuepers Construction, Inc., No. 14-3434, D. Minn.; 2016 U.S. Dist. LEXIS 71825).