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

Mealey's Construction Defects Insurance

September 19, 2024
Interpretation Of ‘Direct Physical Loss’ Phrase Was Erroneous, Building Owner Says

CINCINNATI — A district court erred in relying on a definition of the term “direct physical loss” as used in a prior opinion issued by the Sixth Circuit U.S. Court of Appeals when it determined that the collapse of some bricks from a wall within a building did not cause any damage to the wall or building as a whole, the building owner maintains in a Sept. 18 appellant reply brief filed in the Sixth Circuit.
September 19, 2024
Judge: No Coverage Owed For Suit Alleging Faulty Work On Apartment Complex Roofs

NEW YORK — Adopting a magistrate’s report and recommendation, a federal New York judge concluded that insurers owe no coverage for an underlying lawsuit that accuses a contractor and a subcontractor of faulty work on roofs in a New York City apartment complex that failed during Hurricane Sandy.
September 17, 2024
Magistrate Rules On Discovery In Suit Alleging Surety Breached Performance Bond

FORT LAUDERDALE, Fla. — A federal magistrate judge in Florida granted in part and denied in part a plaintiff’s motions to compel discovery in its lawsuit alleging that a surety breached a performance bond by denying liability for damage to its construction project allegedly caused by a subcontractor’s “defective and deficient work.”
September 17, 2024
11th Circuit Rejects Insurer’s Challenge To Ruling In Favor Of Contractor’s Assignee

ATLANTA — The 11th Circuit U.S. Court of Appeals denied an insurer’s petition seeking reconsideration of its ruling that affirmed a lower federal court’s $557,500 summary judgment in favor of a contractor insured’s assignee in a lawsuit seeking coverage for damage incurred as a result of the insured’s misconduct.
September 16, 2024
Federal Judge Dismisses Complaint In Additional Insured Coverage Dispute

ORLANDO, Fla. — A federal judge in Florida partly granted an insurer’s motion to dismiss without prejudice a contractor and community owner’s amended complaint seeking declaratory relief as to additional insured coverage for a homeowner’s association’s underlying lawsuit allegedly arising from a subcontractor’s negligent and defect construction work.
September 09, 2024
After Reconsideration, Judge Says Court Erred When It Ruled In Insurer’s Favor

LOS ANGELES — Granting insureds’ motion for reconsideration, a federal judge in California said the court erred when it granted an insurer’s motion for summary judgment as to insureds’ breach of contract claim, finding that the court cannot conclude as a matter of law that the insureds’ water damage loss is not covered by their policy.
September 09, 2024
Court: No CGL Coverage Owed For Suit Alleging Insured Installed Defective Equipment

CHALESTON, W. Va. —The West Virginia Intermediate Court of Appeals held that a commercial general liability insurer had no duty to defend or indemnify for an underlying lawsuit challenging the insured’s design, building and installation of custom equipment for a whiskey barrel manufacturer, affirming a lower court’s grant of the insurer’s motion for summary judgment in the insured’s declaratory judgment lawsuit.
September 06, 2024
Judge: Negligent Work, Rust And Corrosion Exclusions Bar Coverage For Condo Damage

WHITE PLAINS, N.Y. —A New York federal judge entered judgment in favor of an insurer one day after finding that an insured’s damages to its condominium building were caused by “rust and corrosion” and “negligent work,” triggering a commercial property insurance policy’s exclusions, and that the insured failed to establish a triable issue of fact.
September 05, 2024
Judge Dismisses Coverage Dispute After Underlying Defective Concrete Suit Settles

PHOENIX — A federal judge in Arizona ordered an insurer’s declaratory judgment action dismissed after the insurer indicated that the underlying defective concrete lawsuit that prompted the coverage dispute has settled.
September 05, 2024
Parties Settle Insurer’s Subrogation Suit Arising From Parking Garage Collapse

LEXINGTON, Ky. — Noting that the parties indicated that they have reached a settlement as to all remaining claims, a federal judge in Kentucky denied as moot the pending motions for summary judgment and canceled a scheduled bench trial in an insurer’s subrogation lawsuit arising from a parking garage collapse.
September 04, 2024
Settlement Reached With 2nd Insurer In Faulty Construction Coverage Dispute

DENVER — One month after 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, the plaintiff insurer filed another notice indicating that it has reached a settlement with the last remaining insurer defendant.
September 04, 2024
Insurer Challenges Panel’s Affirmation Of Judgment In Favor Of Contractor’s Assignee

ATLANTA — An insurer asked the 11th Circuit U.S. Court of Appeals to reconsider its ruling that affirmed a lower federal court’s $557,500 summary judgment in favor of a contractor insured’s assignee in a lawsuit seeking coverage for damage incurred as a result of the insured’s misconduct.
September 03, 2024
Indiana Panel Partly Reverses Ruling In Insured’s Suit Against Insurer, Contractor

INDIANAPOLIS — The Indiana Court of Appeals affirmed a lower court’s grant of summary judgment in favor of a homeowners insurer in an insured’s breach of contract lawsuit but reversed the lower court’s finding that there is a genuine issue of material fact that a contractor’s work was negligently completed, finding that no privity of contract existed between the insured and the contractor and personal injury was not reasonably foreseeable to result from the contractor’s purported acts of negligence.
August 30, 2024
Impaired Property Exclusion Bars Coverage For Improperly Constructed Retaining Walls

TACOMA, Wash. — A federal judge in Washington held that an insurance policy’s impaired property exclusion bars coverage for underlying damage caused by retaining walls that were improperly constructed by the insured, further finding that the “sudden and accidental injury” exception to the exclusion does not apply.
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.