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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®



 



South Dakota High Court: Insurer Owed Defense For Negligent Construction
PIERRE, S.D. - A commercial general liability insurer had a duty to defend an insured because the underlying allegations arguably state a covered claim, the South Dakota Supreme Court ruled Aug. 30, finding that the policy bars only the faulty work itself, not damage to other nondefective work (Lowery Construction & Concrete LLC v. Owners Insurance Co., No. 27946, S.D. Sup.).



7th Circuit Reverses Ruling, Finds Insurers Owe Defense For Insured's Leaky Windows
CHICAGO - Insurers have a duty to defend an insured against class action claims of leaks in windows because neither the economic loss doctrine nor the "your work" exclusion precludes coverage, the Seventh Circuit U.S. Court of Appeals held Aug. 8, reversing an underlying judgment and remanding with instructions to vacate that judgment (Mary Haley, et al. v. Kolbe & Kolbe Millwork Co., et al., Nos. 16-3563 & 16-3648, 7th Cir., 2017 U.S. App. LEXIS 14572).



No Duty To Defend Owed Based On Possible Accidents, Federal Judge Rules
LAS VEGAS - Three insurers cannot force another insurer to defend construction companies in underlying construction defects lawsuits based on the notion that the possibility of an accident caused by the defects triggered a duty to defend because such a duty is not broad enough to cover theoretical possibilities, a federal judge in Nevada held Aug. 24 (Assurance Co. of America, et al. v. Ironshore Specialty Ins. Co., No. 2:15-cv-00460, D. Nev., 2017 U.S. Dist. LEXIS 135895).



Washington Supreme Court Denies Rehearing In Carbon Monoxide Coverage Suit
OLYMPIA, Wash. - The Washington Supreme Court on Aug. 17 refused to reconsider its ruling 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 839).



Judge Says Insured's Faulty Work Is Not An 'Occurrence' Triggering Duty To Defend
PHILADELPHIA - An insured subcontractor's faulty workmanship is not an "occurrence" under a special business owner's policy, a Pennsylvania federal judge ruled Aug. 8, finding that the insurer had no duty to defend and indemnify an underlying lawsuit (MMG Insurance Co. v. Floor Associates Inc., No. 15-4814, E.D. Pa., 2017 U.S. Dist. LEXIS 124883).



Texas Panel Reverses Take-Nothing Judgment For Insurer In Water Damage Case
DALLAS - A trial judge erred in issuing a take-nothing judgment in favor of an insurer in a homeowners' action seeking coverage for damages to their home's foundation and in directing a verdict on their breach of contract claim because there was "more than a scintilla of evidence" that the damage was caused, at least in part, by two plumbing leaks and because the insurer, not the insured, was required to bear the burden of proof on damages, a Texas appellate panel ruled Aug. 1 in largely reversing and remanding the judgment (Charles R. Allen, et al. v. State Farm Lloyds, No. 05-16-00108-CV, Texas App., 5th Dist., 2017 Tex. App. LEXIS 7211).



8th Circuit: Faulty Fire System Is Not An 'Accident' Under Insurance Policy
ST. LOUIS - Replacing drywall and insulation as a result of a subcontractor's faulty fire suppression system did not constitute an "accident" under a general liability insurance policy, the Eighth Circuit U.S. Court of Appeals held Aug. 11, affirming the dismissal of breach of contract and bad faith claims against an insurer (McShane Construction Company LLC v. Gotham Insurance Co., No. 16-2632, 8th Cir., 2017 U.S. App. LEXIS 14875).



Bad Faith Claim Dismissed, Breach Of Contract Claim Stands In Coverage Dispute
NEW HAVEN, Conn. - A Connecticut federal judge on Aug. 28 held that despite the court's rejection of a homeowners insurer's coverage position regarding concrete wall cracks in the insureds' basement, the evidence on record is insufficient for a reasonable jury to find that the insurer denied the insureds' claim in bad faith (Michael Roberts v. Liberty Mutual Fire Insurance Co., No. 13-0435, D. Conn., 2017 U.S. Dist. LEXIS 137412).



Judge Finds Contractor Did Not Consent To Trying Vinyl Siding Negligence Theory
SAN FRANCISCO - A California federal judge on Aug. 24 denied an insurer's motion to add a new negligence theory of liability related to coverage for an apartment complex fire, finding that a contractor did not give its implied consent to trying the theory and that amendment to the pleadings would prejudice the contractor (Philadelphia Indemnity Insurance Co. v. Danco Builders, et al., No. 15-cv-03945, N.D. Calif., 2017 U.S. Dist. LEXIS 136338).



Florida Panel Reverses Ruling In Insurer's Favor In Sinkhole Coverage Dispute
LAKELAND, Fla. - A Florida appeals panel held Aug. 23 that because an insurer denied coverage for the insureds' claim for sinkhole damage, a lower court erred in finding that the insureds' failure to comply with the policy's conditions precluded them from filing suit (Juan Castro, et al. v. Homeowners Choice Property & Casualty Insurance Co., No. 2D15-5456, Fla. App., 2nd Dist., 2017 Fla. App. LEXIS 11979).



Florida Majority Reverses Ruling In Bad Faith Suit Over Sinkhole Damage
DAYTONA BEACH, Fla. - A majority of a Florida appeals panel on Aug. 11 held that no Florida statute or case law precludes an insured from filing a civil remedy notice (CRN) while a demand for appraisal is outstanding, reversing and remanding a lower court's ruling in favor of the insurer in a bad faith lawsuit arising from the insured's claim for sinkhole damage (Phillip Landers v. State Farm Florida Insurance Co., No. 5D15-4032, Fla. App., 5th Dist., 2017 Fla. App. LEXIS 11543).



Judge Orders Insurer To Pay $78,652.52 For Costs Of Defective Concrete Damage
HOUSTON - A Texas federal judge on Aug. 2 ordered a builder to take $78,652.52 from a commercial general liability insurer for damages arising out of an insured's defective concrete that damaged nonconcrete elements of a foundation (Lauger Companies Inc. v. Mid-Continent Casualty Co., No. 16-11, S.D. Texas, 2017 U.S. Dist. LEXIS 121709).



Couple's Upgrades To Construction Project Are Not An Accident, Judge Says
HUNTSVILLE, Ala. - A general contractor's insurance company was awarded summary judgment by a federal judge in Alabama on Aug. 10 after the judge found that the insurer was not obligated to defend the contractor against counterclaims brought by a couple who refused to pay for upgrades that increased the price of a home improvement project (Canal Indemnity Company v. Frankie Carbin, et al., No. 16-cv-00630-ABK, N.D. Ala., 2017 U.S. Dist. LEXIS 126662).



Judge: Company Must Provide Discovery In Dispute Related To Water Leak Damage
SEATTLE - A federal judge in Washington on Aug. 2 granted an insurer's motion to compel discovery and granted a company's motion to continue the opening date of the trial related to a coverage dispute seeking the recovery of costs paid out in an underlying suit brought by a condominium association over damage that stemmed from a water leak (Eagle West Insurance Co. v. Watts Regulator Co., et al., No. 16-781, W.D. Wash.; 2017 U.S. Dist. LEXIS 121673).



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).