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

Mealey's Construction Defects Insurance

August 29, 2024
Subcontractor Must Supplement Responses; Insurer’s Motion To Bifurcate Granted

LOUISVILLE, Ky. — A Kentucky federal judge ordered a subcontractor to supplement a number of its responses to an insurer’s requests for admissions and bifurcated the insureds’ bad faith claims from the insurer’s coverage claim in a suit filed by an insurer against its insured contractor and subcontractor because bifurcation would avoid any potential prejudice to the insurer by a jury.
August 26, 2024
Federal Judge Enters Take-Nothing Judgment In Insurer’s Suit Against Contractor

CHARLESTON, S.C. —A federal judge in South Carolina entered a take-nothing judgment in an insurer’s lawsuit seeking a declaration that it had no duty to indemnify a contractor against an underlying construction defects lawsuit brought by a homeowner’s estate after finding that the court lacked subject matter jurisdiction to rule on the declaratory judgment action.
August 26, 2024
Policy Excludes Coverage For New Construction, 9th Circuit Affirms

SEATTLE — The Ninth Circuit U.S. Court of Appeals on Aug. 23 affirmed a lower federal court’s ruling that an insurer did not breach its duty to defend its subcontractor insured against homeowners’ underlying construction defects claims, finding that the underlying claims are barred from coverage because they involve new construction.
August 26, 2024
Judge: Fact Issues As To When Water Damage Occurred Preclude Summary Judgment

SAN DIEGO — A federal judge in California denied an insurer’s motion for partial summary judgment in another insurer’s lawsuit seeking equitable contribution after it was left to defend a subcontractor against underlying claims that it installed faulty concrete in a parking garage, finding that fact issues preclude summary judgment.
August 21, 2024
Claims In Amended Construction Defects Coverage Complaint Stricken For Expansion

DENVER — Finding that an amended complaint an insurer filed after settling a dispute with its homebuilder insured over coverage for underlying faulty construction claims to assert cross-claims the homebuilder had filed against its subcontractors’ insurers impermissibly expanded the scope of the claims and damages sought by the builder, a federal judge in Colorado granted the subcontractors’ insurers’ motion to strike portions of the amended complaint.
August 20, 2024
Fact Questions Exist As To Whether Insurer Had Duty To Pay Water Loss Claims

AKRON, Ohio — A federal magistrate judge in Ohio concluded that there is a question of fact regarding whether a property insurer was obligated to pay millions in water loss claims, denying a subcontractor’s motion for summary judgment in the insurer’s subrogation lawsuit alleging that the subcontractor’s negligence in installing a fire suppression system caused the water damage.
August 19, 2024
Massachusetts Panel: Insurer Has No Duty To Indemnify $272,533 Jury Verdict

BOSTON — The Massachusetts Appeals Court concluded that a commercial general liability insurer has no duty to indemnify its general contractor insured for $272,533 in damages that a jury awarded to homeowners after finding that the insured was liable for construction defects to their home, finding that “construction defects, without more, do not constitute property damage” pursuant to the policy.
August 19, 2024
District Court’s Collapse Ruling Was Not Clearly Erroneous, Insurer Says

CINCINNATI — A district court’s finding that no coverage is owed for a structurally unsound wall that remained standing after a portion of the wall collapsed during a building renovation was not clearly erroneous because the wall remained standing and did not collapse as required for coverage to be afforded under the policy, the insurer says in its Aug. 16 appellee brief filed in the Sixth Circuit U.S. Court of Appeals.
August 15, 2024
Insureds Appeal Ruling That Their Damage Was Caused By Defect, Deterioration

LOS ANGELES — Insureds are asking the Ninth Circuit U.S. Court of Appeals to review a California federal judge’s holding that damages to their property “were caused by a defect, weakness, inadequacy, fault, or unsoundness in design, repair, construction, or materials — which in turn caused wear, tear, . . . deterioration, and wet or dry rot” and that, as a result, their loss is excluded from coverage under their homeowners insurance policy.
August 15, 2024
Building Owner Appeals No Coverage Ruling In Suit Over Structural Damage

PHOENIX — A building owner insured filed a notice in an Arizona federal court indicating that it is appealing the court’s July 26 ruling that granted a commercial property insurer’s motion for summary judgment in its breach of contract and bad faith lawsuit seeking coverage for structural damage to its building, challenging the court’s conclusion that its loss was reasonably foreseeable and almost certain to occur and, as a result, the risk was not covered.
August 09, 2024
11th Circuit Affirms $557,500 Judgment In Favor Of Contractor’s Assignee

ATLANTA — The 11th Circuit U.S. Court of Appeals affirmed a lower federal court’s $557,500 summary judgment in favor of a contractor insured’s assignee in his lawsuit seeking coverage for damage that he incurred as a result of the insured’s misconduct.
August 06, 2024
No Coverage Owed For Defective Work Claims, Pennsylvania Panel Affirms

PHILADELPHIA — A Pennsylvania Superior Court panel on Aug. 5 found that faulty workmanship claims against an insured are not an occurrence to trigger coverage under its contractors general insurance policy, affirming a lower court’s grant of summary judgment in favor of the insurer on its counterclaim that it has no duty to defend or indemnify.
August 06, 2024
Parties Reach Impasse During Mediation Of Construction Defects Coverage Suit

ORLANDO, Fla. — A mediator filed a report in a Florida federal court indicating that parties in an insurer’s lawsuit seeking a declaration on coverage for construction-related damages at a condominium development have failed to settle their dispute.
August 05, 2024
Bond Claim Against Insurers Is Not Properly Venued, Magistrate Says, Transfers Suit

MILWAUKEE — A federal magistrate judge in Wisconsin found that a Wisconsin-based subcontractor has made a prima facie showing of the existence of personal jurisdiction over a Guam-based contractor in Wisconsin but that Wisconsin is not the proper venue for a bond claim against surety insurers, transferring the entire lawsuit arising from defective hangar doors to Guam.
August 05, 2024
Insurers Announce Settlement In Coverage Dispute Over Faulty Construction Claims

DENVER — A plaintiff insurer and one of the defendant insurers filed a joint notice of settlement in a Colorado federal court in a dispute over coverage for a construction company accused of causing damages to homes through faulty construction.
August 05, 2024
Magistrate Rules On Attorney Fee Motions In Subcontractor’s Suit Under Miller Act

JACKSONVILLE, Fla. — A federal magistrate judge in Florida held that a contractor’s surety is entitled to attorney fees and expenses under a performance bond that was issued by a subcontractor’s surety and under Florida Statutes Section 627.756(1), recommending that the court partly grant the insurer’s motion for attorney fees and costs in the subcontractor’s lawsuit brought under the Miller Act seeking $295,871.34 under a payment bond for its pretermination work at a U.S. naval station.
July 31, 2024
Wyoming High Court Accepts Certified Question In Negligence Suit Against Engineer

CHEYENNE, Wyo. —The Wyoming Supreme Court has agreed to answer a certified question from the 10th Circuit U.S. Court of Appeals in a subrogated homeowners insurer’s appeal of a Wyoming federal court’s ruling that its claim against an engineering firm that designed a home’s plumbing is time-barred by the two-year statute of limitations for professional negligence claims.
July 29, 2024
Judge: Insured’s Structural Building Damage Was Not ‘Fortuitous’; No Coverage Owed

PHOENIX — A federal judge in Arizona on July 26 granted a commercial property insurer’s motion for summary judgment in a building owner insured’s breach of contract and bad faith lawsuit seeking coverage for structural damage to its building, finding that the insured’s loss was reasonably foreseeable and almost certain to occur and, as a result, the risk was not covered.
July 29, 2024
Magistrate Refuses To Bifurcate Bad Faith Claim From Breach Of Contract Claim

DENVER — A federal magistrate judge in Colorado denied a defendant insurer’s motion to bifurcate the plaintiff insurer’s bad faith claim from a breach of contract claim in its lawsuit seeking recovery of the defense and settlement costs that it paid on behalf of its general contractor insured in an underlying construction defects lawsuit, finding that the issues of bad faith and the defendant insurer’s duty to defend “are inseparable.”
July 24, 2024
Panel Affirms Ruling In Insurer’s Favor In Suit Arising From Public Works Projects

SAN DIEGO — A California appeals panel affirmed a lower court’s grant of summary judgment in favor of a commercial general liability insurer in a contractor’s breach of contract and bad faith lawsuit seeking coverage for two underlying actions brought by the San Diego Housing Commission, finding that the insured failed to demonstrate that it suffered damages.
July 22, 2024
Justice Denies Summary Judgment Motions In Suit Arising From Inadequate Pinning

NEW YORK — A New York justice denied an excess insurer and its insured’s motions for summary judgment in a coverage dispute arising from property damaged allegedly caused by contractors’ “inadequate pinning” of a parking garage during an expansion project, finding that questions of fact preclude summary judgment in favor of the insured and it would be premature to grant the insurer’s motion for summary judgment without first allowing the insured the opportunity to reply to the insurer’s amended answer.
July 22, 2024
Judge Stays Suit Pending Arbitration Between New Orleans Aviation Board, Insureds

NEW ORLEANS —A federal judge in Louisiana granted the New Orleans Aviation Board’s (NOAB)’s motion to stay litigation pending arbitration with insureds in a coverage dispute stemming from construction damages at a city airport, finding that a discretionary stay is warranted “to maintain control” of the court docket and “efficiently resolve” the lawsuit.
July 22, 2024
Federal Judge Dismisses Coverage Dispute Over Alleged Defective Commercial Building

BUTTE, Mont. — A federal judge in Montana dismissed with prejudice an insurer’s declaratory judgment lawsuit the same day the insurer, a contractor and a subcontractor agreed to dismiss the coverage dispute arising from a commercial building that allegedly suffers from damages and defects.
July 17, 2024
Subcontractors Are Not Parties To Subrogation Waiver, Maryland High Court Affirms

ANNAPOLIS, Md. — The Supreme Court of Maryland affirmed an appeals court’s finding 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, further affirming the appeal court’s ruling that the language of the subcontract waiver clause is ambiguous.
July 17, 2024
11th Circuit Affirms Insured Did Not Establish Covered Loss Caused Property Damage

ATLANTA — The 11th Circuit U.S. Court of Appeals affirmed a Florida federal judge’s grant of an insurance company’s motion for summary judgment in a man’s breach of contract dispute over the insurer’s denial of a claim stemming from damages his property sustained during Tropical Storm Eta, finding that there is no genuine dispute that the policy’s gradual or sudden loss exclusion applied to the insured’s claim.