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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 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.).



Idaho High Court: Faulty Work Exclusion Does Not Apply To Insured's Loss
BOISE, Idaho - The faulty, inadequate or defective work exclusion does not apply to an insured's loss of her house caused when a renter, who had an option to purchase the house, demolished it, the Idaho Supreme Court ruled April 28, because the renter's intention to build a home was not the dwelling listed under the policy (Shammie L. Fisher v. Garrison Property and Casualty Insurance Co., No. 44117-2016, Idaho Sup., 2017 Ida. LEXIS 111).



Wisconsin Majority: Appeal Of Misrepresentation Dispute 'Improvidently Granted'
MADISON, Wis. - A majority of the Wisconsin Supreme Court on April 27 dismissed as "improvidently granted" a review of an appeals court's finding that a business owner's liability insurer had no duty to defend an allegation of misrepresentation against its contractor insured (Maya Elaine Smith v. Jeff Anderson, d/b/a Anderson Real Estate Services v. 4th Dimension Design, Inc., No. 2015AP79, Wis. Sup., 2017 Wisc. LEXIS 234).



Washington High Court Majority Says Coverage Owed For Negligent Installation
SEATTLE - The majority of the Washington Supreme Court on April 27 determined that an insurer has a duty to defend underlying claims arising out of carbon monoxide poisoning because the efficient proximate cause of the loss was the negligent installation of a hot water heater, which is a covered occurrence under the policy (Zhaoyun Xia, et al. v. ProBuilders Specialty Insurance Co., et al., No. 92436-8, Wash. Sup., 2017 Wash. LEXIS 443).



11th Circuit: Insurer Owes No Defense, Indemnity For Negligent Home Inspection
ATLANTA - A commercial general liability insurer had no duty to defend or indemnify a home inspector against allegations that an insufficient inspection failed to discover defective conditions prior to a home sale, the 11th Circuit U.S. Court of Appeals affirmed April 17, finding that the inspector's negligence did not cause any covered "property damage" (Auto-Owners Insurance Co. v. Ralph Gage Contracting Inc., et al., No. 16-15442, 11th Cir., 2017 U.S. App. LEXIS 6528).



3rd Circuit: Insurers Have No Duty To Defend, Indemnify Faulty Workmanship Claims
PHILADELPHIA - Commercial general liability insurers have no duty to defend or indemnify an insured in a shoddy workmanship lawsuit filed by the former owner of an apartment complex, the Third Circuit U.S. Court of Appeals ruled April 11, affirming summary judgment for the insurers (Mega Construction Corp. v. XL America Group, et al. v. Travelers Casualty Insurance Company of America v. Ohio Casualty, No. 16-2639, 3rd Cir., 2017 U.S. App. LEXIS 6210).



9th Circuit Says Damage Is Not Continuation Of Assignee's Original Damage
SAN FRANCISCO - The Ninth Circuit U.S. Court of Appeals on April 20 determined that a district court erred in granting summary judgment in favor of two insurers because it was reasonable for the assignees of the insured to assume that the damage sustained as the result of an insured's negligent repair is not a continuation of the assignee's original damage (Adrianus Alkemade and Rachelle Alkemade v. Quanta Indemnity Co. and General Fidelity Insurance Co., No. 14-35605, 9th Cir., 2017 U.S. App. LEXIS 6896).



4th Circuit: Insured's Faulty Design Of Student Housing Foundation Is Covered
RICHMOND, Va. - A professional liability insurance policy provided coverage for a general contractor's liability for defective design of a building's foundation, which resulted in the contractor becoming responsible to pay $1.77 million as part of the costs to repair, the Fourth Circuit U.S. Court of Appeals held April 4, affirming summary judgment on an insured's breach of contract counterclaim (Westchester Surplus Lines Insurance Co. v. Clancy & Theys Construction Co., Nos. 15-2299 & 15-2373, 4th Cir., 2017 U.S. App. LEXIS 5796).



Insurer Estopped From Use Of Subcontractors Exception Based On Improper Info
PHOENIX - An insurer is estopped from asserting a coverage defense to a homeowner's breach of contract and bad faith lawsuit based on the subcontractors exclusion because the information relevant to that defense was improperly disclosed by an insured contractor's counsel, a visiting Alaska federal judge to the Arizona federal court ruled April 10 (Karen Cosgrove v. National Fire & Marine Insurance Co., No. 14-2229, D. Ariz., 2017 U.S. Dist. LEXIS 54479).



N.J. Appellate Panel: 2 Cases Over Condo Defects Must Be Dismissed
TRENTON, N.J. - A New Jersey Superior Court Appellate Division panel on April 28 ruled that two cases against an insurance company over alleged defects in a condominium complex - one by the insured, the construction company, and one by the condominium association - are barred by preclusion doctrines (AJD Construction Company, Inc. v. Crum and Forster Specialty Insurance Company, Port Liberte II Condominium Association, Inc. v. Crum and Forster Specialty Insurance Company, No. A-5269-15T3, N.J. Super., App. Div., 2017 N.J. Super. Unpub. LEXIS 1034).



Pennsylvania Panel Reverses Judgment Against Insurer In Raw Sewage Coverage Suit
HARRISBURG, Pa.- A Pennsylvania appeals panel on May 1 found that a trial judge erred by reading into the denial of an insurer's motion for summary judgment a legal conclusion that was neither articulated by the ruling judge nor necessary to the denial, reversing and remanding a judgment against the insurer to determine whether a water-damage exclusion barred coverage for insureds' raw sewage claim (Howard Windows Jr. and Eleanor Windows v. Erie Insurance Exchange, No. 362 WDA 2016, Pa. Super., 2017 Pa. Super. LEXIS 309).



Insurer Did Not Impermissibly Depreciate Labor Costs, 10th Circuit Affirms
DENVER - The 10th Circuit U.S. Court of Appeals on April 21 affirmed a lower federal court's finding that a homeowners insurer did not violate its policy when it depreciated labor costs in determining the actual cash value of an insured's loss following hail and water damage (Margaret Graves v. American Family Mutual Insurance Co., No. 15-3187, 10th Cir., 2017 U.S. App. LEXIS 6980).



Judge: Fact Issues Remain On If Covered Peril Caused Insured's Continuous Damage
TACOMA, Wash. - Questions of fact exist on whether a covered peril caused continuous damage to a condominium association's common areas and buildings under several "all-risk" insurance policies, a Washington federal judge ruled April 10, denying summary judgment to the association and insurers (Eagle Harbour Condominium Association v. Allstate Insurance Co., et al., No. 15-5312, W.D. Wash., 2017 U.S. Dist. LEXIS 54761).



Insurer Met Burden Of Proving That No Coverage Is Owed For Negligent Roofing Work
NASHVILLE, Tenn. - A Tennessee federal judge on April 26 granted an insurer's motion for summary judgment after determining that an insurer met its burden of proving that no coverage is afforded for underlying claims arising out of an insured's alleged negligent roofing work (Mount Vernon Fire Insurance Co. v. Liem Construction Inc., et al., No. 16-689, M.D. Tenn., 2017 U.S. Dist. LEXIS 63224).



Federal Judge Stays Defects Coverage Suit Until Underlying Suits Are Resolved
SAN FRANCISCO - A California federal judge on April 26 denied an insurer's motion for summary judgment and stayed the insurer's suit until two underlying suits alleging claims related to the insured's alleged negligent workmanship are resolved because there are multiple issues of material dispute that need to be resolved before a coverage decision can be made (Tokio Marine Specialty Insurance Co. v. Thompson Brooks Inc., et al., No. 17-514, N.D. Calif., 2017 U.S. Dist. LEXIS 63542).



Judge Remands Caulking Company's Request For Coverage Suit Sua Sponte
MIAMI - A federal judge in Florida on April 20 remanded sua sponte a lawsuit brought by a caulking company seeking declaratory judgment from two of its insurers for indemnification and duty to defend, finding that the amount in controversy does not exceed the $75,000 jurisdictional threshold (General Caulking & Coatings Co. v. American Home Assurance Company, et al., No. 16-cv-23662-UU, S.D. Fla., 2017 U.S. Dist. 61163).



Removal Of Construction Defects Suit Not Proper, California Federal Judge Says
LOS ANGELES - A California federal judge on April 21 granted an insurer's motion to remand after determining that removal was improper because complete diversity of citizenship may not exist as there is a possibility that several defendants in the construction defects suit, originally filed in California state court, are citizens of California (Ironshore Specialty Insurance Co. v. Maison Reeves Homeowners Association, et al., No. 17-1704, C.D. Calif., 2017 U.S. Dist. LEXIS 61241).



Fact Issues Exist On When Damage Manifested Under Insurance Policies, Judge Says
TRENTON, N.J. - Factual issues remain on whether damage caused by a window subcontractor manifested before or after an insurer's policy periods, a New Jersey federal judge ruled April 12, denying summary judgment to two insurers in a contribution lawsuit over defense costs incurred by the one insurer in a construction defects case (American Fire and Casualty Co. v. Crum & Forster Specialty Insurance Co., No. 14-04696, D. N.J., 2017 U.S. Dist. LEXIS 56450).



Judge: Fact Issues Exist On If Independent Counsel Is Required For Insured's Defense
CHICAGO - In an insured's breach of contract and bad faith lawsuit against its commercial general liability insurer, an Illinois federal judge ruled April 11 that the parties failed to provide evidence to clear up genuine issues of material fact regarding whether independent counsel should be appointed for an insured in an underlying construction defects case (DePasquale Steel Erectors Inc. v. Gemini Insurance Co., No. 16-10892, N.D. Ill., 2017 U.S. Dist. LEXIS 54917).



Judge Rules On Insurers' Late Notice, Suits Limitations Defense In Coverage Dispute
TACOMA, Wash. - In a coverage dispute between a condominium association and several "all-risk" insurers, a Washington federal judge on April 12 granted in part and denied in part summary judgment on two insurers' late notice defense but granted summary judgment entirely on their suit limitations defense (Eagle Harbour Condominium Association v. Allstate Insurance Co., et al., No. 15-5312, W.D. Wash., 2017 U.S. Dist. LEXIS 56292).



8th Circuit Finds Settlement Agreement For Defect Claims Violated Cooperation Clause
ST. LOUIS - 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, the Eighth Circuit U.S. Court of Appeals affirmed April 17 (James River Insurance Co. v. The Interlachen Propertyowners Association and Kuepers Construction Inc., No. 16-2994, 8th Cir.).



Judge Allows Testimony On Cause Of Damages In Bad Faith Suit Against Insurer
CHARLESTON, S.C. - An additional insured may offer layman testimony about the cause of damages or cost of repairs at a condominium association for purposes of its bad faith lawsuit against an insurer, a South Carolina federal judge ruled April 6 (UFP Eastern Division Inc. f/k/a Universal Forest Products Eastern Division Inc. v. Selective Insurance Company of South Carolina, No. 15-2801, D. S.C., 2017 U.S. Dist. LEXIS 53190).



Ohio Federal Judge: Insurer Failed To Show Good Cause Exists For Protective Order
CINCINNATI - An Ohio federal judge on April 11 denied an insurer's motion for a protective order regarding a number of documents and communications sought by an insured seeking coverage for underlying asbestos claims after determining that the insurer failed to meet its burden of establishing that there is good cause for a protective order (The William Powell Co. v. National Indemnity Co., et al., No. 14-807, S.D. Ohio, 2017 U.S. Dist. LEXIS 55148).



What's Loss Got To Do With It? Courts And Commentators' Differing Applications Of CG 20 10 Additional Insured Endorsements
By Howard K. Glick and Daniel S. Weber Along with indemnity agreements, contractors and owners use additional insured endorsements as a primary means of protection from third-party liability that arises out of work performed under the contract. One of the most commonly used form additional insured endorsements, the Insurance Services Office, Inc. ("ISO")1 CG 20 10 Automatic Additional Insured Endorsement, underwent significant revisions in 2004. Despite the CG 20 10 endorsement being revised over a decade ago, the exact scope of coverage afforded under this form endorsement remains unclear as courts and commentators appear to differ on the proper interpretation of the pertinent language. Prior to 2004, ISO CG 20 10 endorsements provided additional insured coverage for losses "arising out of" the named insured's work performed for the ostensive additional insured. Because of the broad interpretation by courts nationwide of "arising out of" language, there was no requirement that the acts or omissions of the named insured play any role in the loss.2 In 2004, ISO sought to narrow the scope of coverage afforded to additional insureds by placing significance on the named insured's acts or omissions. Indeed, it is generally understood that "[t]he 2004 ISO revisions sought to narrow the coverage afforded an additional insured by injecting fault into the analysis []" whereas under the pre-2004 ISO revisions, "the mere fact that an employee is working on the job site at the time of the injury would likely be enough to trigger the additional insured coverage." 3



15 Lawsuits Over Defects In Insureds' Windows Constitute Separate 'Occurrences'
DES MOINES, Iowa - Fifteen lawsuits against insureds for alleged negligently designed or installed windows constitute separate "occurrences" under comprehensive general liability policies, an Iowa federal judge ruled March 31, granting partial summary judgment to the insureds (Pella Corp., et al. v. Liberty Mutual Insurance Co., No. 11-00273, S.D. Iowa).



Judge: Insured's Poor Work Does Not Trigger Insurer's Duty To Defend, Indemnify
DALLAS - Claims arising out of an insured's poor workmanship do not state allegations of property damage caused by an "occurrence," a Texas federal judge ruled March 10, finding that a commercial general liability insurer has no duty to defend or indemnify (Atlantic Casualty Insurance Co. v. PrimeLending and First Choice Construction LLC v. Connect Insurance Agency Inc., No. 15-1475, N.D. Texas; 2017 U.S. Dist. LEXIS 34425).



Insurer Has No Duty To Indemnify Faulty Work Settlement, 7th Circuit Says
CHICAGO - An insurer has no duty to indemnify a settlement of a faulty workmanship claim against a subcontractor, the Seventh Circuit U.S. Court of Appeals affirmed March 8, because claims of an insured's defective work resulting in damage to its own work do not constitute an "occurrence" caused by "property damage" (Allied Property & Casualty Insurance Co., et al. v. Metro North Condominium Association, No. 16-1868, 7th Cir.; 2017 U.S. App. LEXIS 4107).



Judge Stays Insurer's Duty To Indemnify Suit Pending Outcome In Defects Case
JACKSONVILLE, Fla. - An insurer's declaratory judgment action against an insured contractor and a condominium association regarding the duty to indemnify an underlying construction defects suit is premature, a Florida federal judge ruled March 31, staying rather than dismissing the action pending the outcome of the underlying suit (Mid-Continent Casualty Co. v. Nassau Builders Inc., et al., No. 16-921, M.D. Fla., 2017 U.S. Dist. LEXIS 48526).



Judge: Insurer Breached Duty To Defend, Indemnify Construction Suit Settlement
ANCHORAGE, Alaska - An insurer breached its duty to defend and indemnify an insured for a settlement of underlying claims arising out of a breach of contract dispute on a construction project, an Alaska federal judge ruled March 16; however, the judge held that the insurer did not breach its duty of good faith (KICC-Alcan General, joint venture v. Crum & Forster Specialty Insurance Company Inc., No. 15-00255, D. Ala., 2017 U.S. Dist. LEXIS 37560).



Federal Judge Stays Duty- To-Indemnify Issue In Insurers, Insured Dispute
RALEIGH, N.C. - Although allowing a coverage dispute between four insurers and an insured to proceed as to the duty to defend a construction defect lawsuit, a North Carolina on March 1 stayed the duty-to-indemnify issue pending resolution of the underlying case (Westfield Insurance Co. v. Weaver Cooke Construction LLC, et al., No. 15-169, E.D. N.C.; 2017 U.S. Dist. LEXIS 28662).



Texas Federal Judge Says Carrier Has A Duty To Indemnify Insured
HOUSTON - A Texas federal judge on Feb. 27 determined that an insurer has a duty to indemnify its insured for an underlying product liability suit but found no support for the insured's extracontractual claims and, accordingly, dismissed those claims against the insurer (U.S. Metals Inc. v. Liberty Mutual Group Inc., et al., No. 12-379, S.D. Texas, 2017 U.S. Dist. LEXIS 32507).



Judge Rules On Insurer's Duty To Defend, Indemnify Construction Defects Case
BIRMINGHAM, Ala. - A commercial liability insurer had a partial duty to defend one of two insureds in an underlying construction defects case, an Alabama federal judge ruled March 16, granting in part and denying in part summary judgment to the insurer; however, the judge denied summary judgment on the duty-to-indemnify issue without prejudice to the insurer's right to refile (Auto-Owners Insurance Co. v. Wier-Wright Enterprises Inc. d/b/a Doug Wiersig Homes, et al., No. 15-1118, N.D. Ala.; 2017 U.S. Dist. LEXIS 37477).



Federal Judge Decides Motions In Construction Defects Insurance Dispute
SAN JOSE, Calif. - In a coverage dispute between various insurers over their responsibility toward an underlying construction defects settlement, a California federal judge on March 7 addressed four summary judgment motions on multiple key issues from the duty to defend to the number of occurrences (St. Paul Fire and Marine Insurance Co. v. Insurance Company of the State of Pennsylvania, et al., No. 15-02744, N.D. Calif.; 2017 U.S. Dist. LEXIS 32551).



Insureds Failed To Prove Bad Faith Claim, Delaware Supreme Court Concludes
WILMINGTON, Del. - Insureds failed to establish evidence that their insurer did not have a reasonable justification for denying their claim for water damage from a broken toilet to their condominium unit, the Delaware Supreme Court ruled March 13, affirming a directed verdict to the insurer on a bad faith claim (Debra Bennett and William Bennett v. USAA Casualty Insurance Co., No. S10C-02-010, Del. Sup.; 2017 Del. LEXIS 105).



Judge Finds Excess Insurer Waived Communications Privilege In Defects Claim File
CHARLESTON, S.C. - An excess insurer waived the attorney-client privilege on communications contained in its claim files with regard to the denial of a claim arising out of construction defects, a South Carolina federal judge held March 31 (ContraVest Inc., et al. v. Mt. Hawley Insurance Co., No. 15-00304, D. S.C., 2017 U.S. Dist. LEXIS 48638).



Homeowner's Insurer Paid Full Amount Of Claims, Magistrate Judge Concludes
PHILADELPHIA - A homeowner's insurer paid the entire amount it owed to insureds for damage to their home because the insureds failed to offer expert reports to rebut the insurer's evidence that the unpaid portions were not covered, a Pennsylvania federal judge ruled March 22, granting summary judgment to the insurer on a breach of contract claim (Scot Fazio and Dawn Fazio v. State Farm Fire and Casualty Co., No. 16-1987, E.D. Pa., 2017 U.S. Dist. LEXIS 41604).



Panel Upholds Breach Of Contract Award, Reverses Bad Faith Awards Against Insurer
BEAUMONT, Texas - A Texas appeals panel on March 9 affirmed a jury's $15,000 award for breach of contract damages but reversed 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 that resulted from the finding that the insurer knowingly engaged in unfair settlement practices, rendering judgment that an insured take nothing as to the claims (State Farm Lloyds v. Dennis Webb, No. 09-15-00408-CV, Texas App., 9th Dist.; 2017 Tex. App. LEXIS 1997).



Judge: Subcontractors Owe Defense To Subrogated Insurer's Negligence Claim
BOSTON - Three subcontractors owe a defense to a general contractor against negligence and breach of the implied warranties of habitability and good workmanship claims brought by a subrogated insurer for water damage in a condominium building, a Massachusetts federal judge ruled March 22 (Philadelphia Indemnity Insurance Co. v. Consigli Construction Company Inc., et al. v. Central Ceilings Inc., No. 14-14687, D. Mass., 2017 U.S. Dist. LEXIS 41444).



'Continuous, Progressive Injury' Exclusion Relieves Insurer Of Duty To Defend, Indemnify
SACRAMENTO, Calif. - In recommending that default judgment be granted for an insurer, a federal magistrate judge in California on March 9 found that the insurer has no duty to defend or indemnify an underlying construction defects case against an insured because the "continuous or progressive injury and damage" exclusion precludes coverage (Mt. Hawley Insurance Co. v. Crane Development Corp., et al., No. 16-0892, E.D. Calif.; 2017 U.S. Dist. LEXIS 34175).



Judge: Insurer Properly Relied On 'Maintenance' Exclusion To Bar Coverage
PHILADELPHIA - Evidence supported an insurer's reliance on a "maintenance" exclusion to deny coverage for water damage caused by an insured's failure to maintain his furnace, the Third Circuit U.S. Court of Appeals ruled March 6, affirming summary judgment in favor of the insurer on breach of contract and bad faith claims handling (David Dougherty v. Allstate Property and Casualty Insurance Co., No. 16-2680, 3rd Cir.; 2017 U.S. App. LEXIS 3930).



9th Circuit: Business Risk Exclusions Bar Coverage For Construction Defects Suit
SAN FRANCISCO - Two business risk exclusions found in a commercial general liability (CGL) insurance policy bar coverage for a construction defects lawsuit, the Ninth Circuit U.S. Court of Appeals held March 2, affirming summary judgment to an insurer on breach of contract and bad faith claims (Archer Western Contractors Ltd. v. National Union Fire Insurance Company of Pittsburgh, PA, No. 15-55648, 9th Cir.; 2017 U.S. App. LEXIS 3796).



Judge: Water Exclusion Bars Coverage To Insureds For Damage From Collapsed Pipe
MIAMI - An insurance policy's water exclusion precludes payment to insureds for water damage and other repairs stemming from their collapsed and backed-up pipe, a Florida federal judge ruled March 28, granting summary judgment to the insurer (Ken Cameron and Michelle Cameron v. Scottsdale Insurance Co., No. 16-21704, S.D. Fla., 2017 U.S. Dist. LEXIS 45474).



Judge Awards $187,604.17 For Costs Associated With Insured's Work On Fuel Tank
HOUSTON - Granting a motion for final entry of judgment, a Texas federal judge ruled March 29 that a commercial general liability insurer owes a contractor $187,604.17 for costs associated with an insured subcontractor's work on a fuel tank (Mid-Continent Casualty Co. v. Petroleum Solutions, Inc., et al., No. 09-0422, S.D. Texas, 2017 U.S. Dist. LEXIS 46285).



Excess Insurer Had No Duty To Indemnify Construction Defect Suit, Judge Finds
DENVER - An excess insurer had no duty to indemnify two insureds for a construction defect case because the primary policy was not yet exhausted, a Colorado federal judge ruled March 20, dismissing a reimbursement lawsuit filed by two other insurers seeking monies for the defect case's settlement (Zurich American Insurance Co. and American Guarantee and Liability Insurance Co. v. Acadia Insurance Co., No. 14-01273, D. Colo., 2017 U.S. Dist. LEXIS 39579).



Federal Judge Dismisses Excess Insurer's Coverage Case Based Upon Article 3
ORLANDO, Fla. - An excess insurer's claims regarding its duty to defend and indemnify an insured against claims of negligent construction in a condominium project do not satisfy the case and controversy requirement of Article III, Section 2, of the U.S. Constitution, a Florida federal judge ruled March 2, dismissing the case (Interstate Fire & Casualty Co. v. McMurry Construction Company Inc., et al., No. 16-841, M.D. Fla.; 2017 U.S. Dist. LEXIS 29501).



Judge Defines 'Collapse,' Finds Insurer Has No Duty To Indemnify Damage
CHICAGO - A homeowners insurance policy was intended to cover only a peril in which a building loses its character as a building, an Illinois federal judge ruled March 14, in defining "collapse" under the policy and finding that the insurer has no duty to indemnify damage caused by a contractor to the insureds' home (The Travelers Home and Marine Insurance Co. v. Patrick Walsh and Colleen Walsh, No. 15-3063, N.D. Ill.; 2017 U.S. Dist. LEXIS 35841).



Federal Judge Bars Expert Testimony On Some Repair Costs For Insureds' Damages
TULSA, Okla. - An Oklahoma federal judge on March 14 excluded testimony from an expert on estimates to repair a master control center (MCC) and electrical costs as a result of insureds' damages caused by a contractor and subcontractor's inadequate design and installation of the concrete columns but allowed other estimates to be admitted (Lexington Insurance Co., et al. v. Newbern Fabricating Inc. and Baucom Concrete Construction Inc. & Newbern Fabricating Inc. v. Doveland Engineering Co., No. 14-0610, N.D. Okla.; 2017 U.S. Dist. LEXIS 36133).



Issues Of Fact Exist On Cause Of Collapse And Insured's Knowledge, Federal Judge Says
PEORIA, Ill. - Because questions of fact exist regarding the cause of the collapse of a building's second floor and the insured's knowledge of the condition of the building, an Illinois federal judge on March 21 denied an insurer's motion for summary judgment (WAMFAM5 Inc. v. Nova Casualty Insurance Co., No. 15-1195, C.D. Ill., 2017 U.S. Dist. LEXIS 40159).



Insurer's Case On 'Collapse' Issue On Retrial Fails Without Expert Testimony, Judge Says
SEATTLE - Having excluded an insurer's expert testimony in a retrial as inadmissible, a Washington federal judge on March 1 ruled that the insurer cannot establish whether alleged "collapse" conditions observed in 2008 at an insured's condominium complex were present during another insurer's policy periods (Houston General Insurance Co. v. St. Paul Fire & Marine Insurance Co., et al., No. 11-2093, W.D. Wash.; 2017 U.S. Dist. LEXIS 29177).



Judge Dismisses Insured's Declaratory Relief Claim In Water Damage Dispute
MIAMI - Dismissing an insured's request for declaratory relief on coverage for water damage to its property, a Florida federal judge held March 1 that the insured "failed to plead facts necessary to establish any dispute or doubt under the insurance policy" and "failed to allege ambiguity" with regard to a loss settlement provision (Espadon Group Inc. v. Lexington Insurance Co., No. 16-24413, S.D. Fla.; 2017 U.S. Dist. LEXIS 29918).



Judge Authorizes Liquidator To Pay Portion Of Homeowner Class Claim
CHICAGO - An Illinois judge on March 14 approved a liquidator's recommendation of a payment to a class of homeowners that won a construction defect lawsuit against a group of developers insured by an insolvent insurer (In the matter of the liquidation of Legion Indemnity Co., No. 02 CH 06695, Ill. Cir., Cook Co., Chanc. Div.).