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

Mealey's Construction Defects Insurance

November 02, 2023
Subcontractor’s Insurer Dismissed From Insurer’s Duty To Defend, Contribution Suit

FAYETTEVILLE, Ark. — The Texas Anti-Indemnity Act (TAIA) applies to an insurance policy issued to a subcontractor and, therefore, policy provisions providing additional insured coverage or requiring the insurer to indemnify a contractor for the contractor’s own negligence or fault are unenforceable, a federal judge in Arkansas ruled Nov. 1 in granting the subcontractor’s insurer’s dismissal motion.
November 01, 2023
Texas Panel Affirms Insurer Must Indemnify Concrete Contractor For $2.2M Judgment

EL PASO, Texas — A Texas appellate panel on Oct. 31 affirmed that a commercial general liability insurer must indemnify its concrete contractor insured for an underlying $2.2 million judgment, rejecting the insurer’s arguments that the contractual liability, your product and your work exclusions in the policy bar coverage.
November 01, 2023
Stay Granted In Insurance Rescission Suit Due To Overlap With Underlying Case

SAN FRANCISCO — A California federal judge granted a stay in an insurer’s suit against its insured and a lessee contracting with the insured for a remodeling project, seeking rescission of policies and a declaratory judgment that there is no duty to defend and indemnify the insured in an underlying negligence suit regarding the remodeling project, finding that factors weigh in favor of a stay, including the overlapping facts in the underlying action and the declaratory judgment suit.
November 01, 2023
New Jersey Panel Affirms Judgment For Insurer In Condo Water Intrusion Suit

TRENTON, N.J. — Finding that a lower court did not err in determining that policy exclusions bar coverage for construction defects claims against a condominium developer or in applying the discovery rule to the condominium association’s claims, a New Jersey appellate panel on Oct. 31 affirmed the lower court’s rulings denying the association’s motion for summary judgment and granting summary judgment to the insurer.
October 27, 2023
Contractor Did Not Timely Report Claim; No Professional Liability Coverage Owed

LOS ANGELES — A California appeals panel affirmed a lower court’s summary judgment ruling in favor of a professional liability insurer in a contractor insured’s breach of contract and bad faith lawsuit, finding that the insured failed to timely report underlying counterclaims for negligence, delay, breach of contract, construction defects and failure to complete construction.
October 26, 2023
Subcontractor’s Insurer Appeals Judgment In Pavement Coverage Row To 7th Circuit

CHICAGO — A subcontractor’s insurer on Oct. 25 appealed to the Seventh Circuit U.S. Court of Appeals an Illinois federal judge’s decision in a coverage dispute over the failure of pavement at a Michigan outlet mall to deny its motion for summary judgment and grant the competing summary judgment motion of another subcontractor’s insurer because the underlying complaint does not allege an “occurrence” or “property damage” to trigger the second insurer’s duty to defend.
October 25, 2023
Insurers, Contractor Address Rain Exclusion In Briefing Before 9th Circuit

SAN FRANCISCO — A contractor “argues it can sidestep the Rain Exclusion by recharacterizing the rain and snow that fell on the incomplete roof as a different ‘peril’ than that contemplated by the” exclusion, but the exclusion “unambiguously contemplates and excludes damage from rain and snow that damages the Project’s interior before its roof is finished,” the contractor’s all-risk insurers say in urging the Ninth Circuit U.S. Court of Appeals to affirm a lower court’s grant of summary judgment in their favor.
October 25, 2023
Insurer, Subcontractor Agree To Dismiss 9th Circuit Appeal Over $2.5M Award

SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals has ordered the dismissal of an insurer’s appeal of a lower court’s 2021 ruling granting its subcontractor insured summary judgment on breach of contract and bad faith claims and awarding it $2.5 million, granting the parties’ stipulated motion for voluntary dismissal.
October 24, 2023
Leaky Roof Suit Transferred From Western District Of Texas To Southern District

AUSTIN, Texas — A federal judge in Texas has granted a commercial general liability insurer’s unopposed motion to transfer a breach of contract suit against it stemming from the replacement of a roof that later leaked to another federal court in Texas “where the relevant witnesses, the Property, key events, and documents are located.”
October 24, 2023
In Revised Ruling, Illinois Panel Reverses, Finds Insurer Entitled To Subrogation

CHICAGO — An Illinois appellate panel on Oct. 24 reversed a lower court’s grant of summary judgment to an engineering firm in a builders risk insurer’s suit seeking subrogation damages for the flooding of a building under construction, finding that the trial court erred in finding that the insurer does not meet the prerequisites for equitable subrogation because the insurer’s right to subrogate stemmed from the insurance contract.
October 23, 2023
Lawyer Insured: Panel’s Ruling Guts Professional Liability Insurer’s Duty To Defend

NEW YORK — A lawyer insured on Oct. 21 filed a petition for rehearing en banc seeking to reverse the Second Circuit U.S. Court of Appeals’ ruling that a professional liability insurer has no duty to defend its construction management company against a lawsuit arising from a home renovation project because the underlying complaint fails to allege professional services that the insured provided as a lawyer to trigger coverage, arguing that the panel’s decision “abrogates decades of black-letter New York insurance law that favors insureds, effectively gutting an insurer’s duty to defend.”
October 17, 2023
3rd Circuit Dismisses Contractor’s, Homeowners’ Appeal In Mold Coverage Case

PHILADELPHIA — The Third Circuit U.S. Court of Appeals has dismissed homeowners’ and their contractor’s appeal of a lower court ruling that the contractor’s insurer owes them no coverage for personal injuries one of the homeowners sustained as a result of a mold infestation caused by the contractor’s negligent workmanship after the parties stipulated to dismissal following mediation.
October 17, 2023
Builder’s Coverage Dispute Over Home Subject To Flooding Dismissed After Settlement

FORT WORTH, Texas — A federal judge in Texas has dismissed with prejudice a homebuilder’s suit against a commercial general liability insurer, which in 2022 he found had a duty to defend the builder in a coverage dispute over its alleged failure to disclose to homebuyers that a home it built was subject to flooding after the parties filed a joint motion for dismissal of the case.
October 16, 2023
Mississippi High Court Majority: Fire Not Latent Injury To Trigger Discovery Rule

JACKSON, Miss. — A majority of the Mississippi Supreme Court found that a fire that started in a metal storage bin containing wood shavings the night after a welding company had repaired the bin was not a latent injury to trigger the discovery rule, affirming that a subrogated insurer’s negligence suit against the welding company is time-barred.
October 16, 2023
Maryland Panel: Insurer’s Negligence Claims Against Subcontractors Are Not Barred

ANNAPOLIS, Md. — Reversing a lower court in part, a Maryland appeals panel held Oct. 13 that contractual waivers of subrogation do not bar an all-risk insurer’s claims alleging that tornado damage to an Amazon warehouse was caused by subcontractors’ negligence in designing and building the warehouse because the subcontractors were not intended third-party beneficiaries of the subrogation waiver.
October 16, 2023
Federal Judge Grants Motion To Voluntarily Dismiss Pipeline Explosion Suit

BIRMINGHAM, Ala. — An Alabama federal judge granted a motion to voluntarily dismiss with prejudice a lawsuit filed by two insurers seeking a declaration that no coverage is owed for a gas pipeline explosion after the insurers notified the court that they reached a settlement with their insureds.
October 16, 2023
Insurer Appeals Ruling That Negligence Claim Against Engineer Is Time-Barred

CHEYENNE, Wyo. — A subrogated homeowners insurer has appealed to the 10th Circuit U.S. Court of Appeals a federal judge in Wyoming’s ruling that its claim against the engineer that designed a home’s plumbing is time-barred by the two-year statute of limitations for professional negligence claims as the claim began to run when the engineer submitted the final design plans.
October 13, 2023
Magistrate Recommends Denying Judgment To Insurer In Sewer Pipe Break Coverage Row

SEATTLE — A federal magistrate judge in Washington recommended denying an insurer’s motion for summary judgment in a coverage dispute related to a contractor’s alleged faulty construction of a conveyance pipe for a sewer overflow control project, finding that the insurer failed to show that there is no coverage pursuant to the policy.
October 11, 2023
No Professional Services Alleged To Trigger Coverage For Lawyer, 2nd Circuit Says

NEW YORK — The Second Circuit U.S. Court of Appeals on Oct. 10 affirmed a lower court’s ruling in favor of a professional liability insurer in a declaratory judgment and breach of contract lawsuit brought by a lawyer insured, agreeing with the lower court that the insurer has no duty to defend the insured’s construction management company against a lawsuit arising from a home renovation project because the underlying complaint fails to allege professional services that the insured provided as a lawyer to trigger coverage.
October 10, 2023
California Federal Judge Finds Contractor Cannot Bring Bad Faith Claim

LOS ANGELES — Because there has been no excess judgment in underlying arbitration proceedings stemming from a general contractor’s alleged failure to properly secure a building under construction in advance of a hurricane, the contractor cannot state a claim against a commercial general liability insurer for bad faith, a federal judge in California ruled in granting the insurer’s motion for partial summary judgment on the claim.
October 10, 2023
Magistrate Finds Insurer Had Duty To Defend Mutual Insured In Defects Suit

EL PASO, Texas — A commercial general liability insurer had a duty to defend its electrical contractor insured in an underlying construction defects action, but genuine issues of material fact preclude a ruling on whether it had a duty to indemnify the contractor, a federal magistrate judge in Texas found, recommending that the insurer be required to pay its share of defense costs as sought by the insured’s other CGL insurers.
October 05, 2023
11th Circuit: District Court Had Jurisdiction, Appeal Against Insurer May Proceed

ATLANTA — The 11th Circuit U.S. Court of Appeals has determined that the dismissal of a contractor from an insurer’s declaratory judgment action related to an underlying construction defect action was valid and that the parties were diverse in the first instance, allowing the project owner’s appeal of the lower court’s ruling granting judgment on the pleadings to the insurer, which was noticed in December, to proceed.
October 05, 2023
Summary Judgment Granted For Insurer; Bad Faith Claim Dismissed With Prejudice

NEWARK, N.J. — A federal judge in New Jersey granted an insurer’s motion for summary judgment in part, dismissing with prejudice a condominium association’s bad faith claim against the insurer but otherwise denying the insurer’s motion, ruling that the question of whether the insurer is liable for $113 million for water damage to a property allegedly caused by an engineering firm the association hired “contains genuine issues of material fact best reserved for a jury.”
October 05, 2023
Judge Rules Subcontractor’s ‘Faulty Workmanship’ Not Covered By Insurer

ROME, Ga. — A federal judge in Georgia granted an insurer’s motion for summary judgment and denied a masonry company’s cross-motion, ruling that a subcontractor’s “faulty workmanship” was not covered because of a business risk exclusion in the insurer’s policy.
October 05, 2023
Oregon High Court Urged To ‘Quash Confusion,’ Clarify ‘Occurrence’ Requirement

SALEM, Ore. — Saying a commercial general liability insurer’s respondents’ brief “illustrates precisely why clarification of Oregon law on the interpretation of ‘occurrence’ is needed,” homeowners urge the state Supreme Court to “clarify that ‘occurrence’ is interpreted by the words used to define it and that ‘accident’ and ‘exposure’ turn on the facts of what happened, without regard to the legal theory of liability that might be later applied to those facts in a legal proceeding.”