Justia Insurance Law Opinion Summaries

Colorado Center Development, LLC, the owner of certain property in Denver, Colorado, hired J.E. Dunn Construction Company to construct an office building (the Project). Colorado Center purchased from Defendant Liberty Mutual Fire Insurance Company a Builder’s Risk insurance policy (the Policy). The Policy provided protection against “direct physical loss or damage caused by a covered peril to ‘buildings or structures’ while in the course of construction, erection, or fabrication.” J.E. Dunn hired plaintiff Rocky Mountain Prestress, LLC (RMP) as a subcontractor to perform work including “engineer[ing], supply[ing,] and install[ing] all precast concrete components, connections, and erections aids” and “[s]upply[ing] and install[ing] grout and/or patching of all connections required by the engineering for the structural integrity of the precast.” Because of “potential concerns that arose at another project” relating to “sinking pillars/columns,” J.E. Dunn requested RMP to retain a third-party engineering firm to investigate “potential structural issues” with RMP’s work on the Project. The engineering firm concluded that the Project required “repairs to insufficiently grouted joints between precast concrete column and pilaster elements” at 264 locations throughout the structure. The engineering firm began its investigation in August 2016, and the final grouting repair work was completed in February 2017. In the meantime, in November 2016, RMP submitted a claim to Liberty seeking coverage under the Policy. The district court granted summary judgment in favor of the insurance company on three independent grounds: (1) RMP had not shown that the claimed loss was fortuitous; (2) the claimed loss did not constitute “direct physical loss or damage” as required for coverage under the policy; and (3) even if there might otherwise have been coverage, the claimed loss fell within the policy’s exclusion for defective workmanship. After review, the Tenth Circuit affirmed the district court’s decision based on the defective-workmanship exclusion. View "Rocky Mountain Presstress v. Liberty Mutual Fire Insurance" on Justia Law

Several insurance companies (the Insurers) appealed the denial of their motions to intervene in a construction defect action between a property owners' association (the Association) and a number of construction contractors and subcontractors (the Insureds). The underlying construction defect action proceeded to trial, resulting in a verdict for the Association. After review, the South Carolina Supreme Court determined the Insurers were not entitled to intervene as a matter of right, and the trial court did not abuse its discretion in denying them permissive intervention. However, the Court held the Insurers had a right to a determination of which portions of the Association's damages are covered under the commercial general liability (CGL) policies between the Insurers and the Insureds. The Court also recognized that the Insurers had the right and ability to contest coverage of the jury verdict in a subsequent declaratory judgment action. "In that action, the Insurers and the Insureds will be bound by the existence and extent of any jury verdict in favor of the Association in the construction defect action. However, they will not be bound as to any factual matters for which a conflict of interest existed, such as determining what portion of the total damages are covered by any applicable CGL policies." View "Builders Mutual Insurance Company" on Justia Law

North Edwards Water District (the District) selected Clark Bros., Inc. (Clark) as its general or direct contractor on a public works project to build an arsenic removal water treatment plant. Clark hired subcontractor Crosno Construction (Crosno) to build and coat two steel reservoir tanks. The subcontract contained a "pay-when-paid" provision that stated Clark would pay Crosno within a reasonable time of receiving payments from the District, but that this reasonable time "in no event shall be less than the time Contractor and Subcontractor require to pursue to conclusion their legal remedies against Owner or other responsible party to obtain payment . . . ." After Crosno completed most of its work, a dispute arose between the District and Clark halting the project. As Clark sued the District, Crosno sought to recover payments owed under the public works payment bond that Clark had obtained for the project. The issue this case presented for the Court of Appeal's review involved Crosno's claim against the bond surety, Travelers Casualty and Surety Company of America (Travelers). At issue was whether the pay-when-paid provision in Crosno's subcontract precluded Crosno from recovering under the payment bond while Clark's lawsuit against the District was pending. Relying on Wm. R. Clarke Corp. v. Safeco Ins. Co., 15 Cal.4th 882 (1997), the trial court found the pay-when-paid provision here unenforceable because it affected or impaired Crosno's payment bond rights in violation of Civil Code section 8122. With the facts largely undisputed, the court granted Crosno's motion for summary judgment and entered judgment in its favor for principal due plus prejudgment interest. Travelers argued the trial court misconstrued Wm. R. Clarke and erred in failing to enforce the pay-when-paid provision against the bond claim. After carefully considering the parties' arguments, the Court of Appeal agreed with the trial court's analysis and affirmed. View "Crosno Construction, Inc. v. Travelers Casualty etc." on Justia Law

A construction contractor’s employees were injured on the job and received workers’ compensation benefits from their employer. The workers later brought a negligence suit against three other corporations: the one that had entered into the construction contract with their employer, that corporation’s parent corporation, and an affiliated corporation that operated the facility under construction. The three corporations moved for summary judgment, arguing that all three were “project owners” potentially liable for the payment of workers’ compensation benefits and therefore were protected from liability under the exclusive liability provision of the Alaska Workers’ Compensation Act. The superior court granted the motion, rejecting the workers’ argument that status as a “project owner” was limited to a corporation that had a contractual relationship with their employer. After review, the Alaska Supreme Court concluded a project owner, for purposes of the Act, "must be someone who actually contracts with a person to perform specific work and enjoys the beneficial use of that work." Furthermore, the Court found the workers raised issues of material fact about which of the three corporate defendants satisfied this definition. Judgment was therefore reversed and the matter remanded for further proceedings. View "Lovely, et al. v Baker Hughes, Inc., et al." on Justia Law

Flameproof, a distributor of fire retardant and treated lumber (FRT lumber), maintained liability insurance through Lexington, covering liability for "property damage” that is “caused by an occurrence that takes place in the coverage territory.” “Occurrence” is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” “Property damage” is “physical injury to tangible property, including all resulting loss of that property,” or loss of use of property that is not physically injured. Three lawsuits arose from Flameproof’s sale of lumber to Minnesota-based contractors. The contracts called for FRT lumber meeting the requirements of the International Building Code (IBC). The complaints alleged that Flameproof “unilaterally” decided to deliver its in-house FlameTech brand lumber, which purportedly was not IBC-compliant. After the material was installed, the owners discovered that the lumber was not IBC-certified. Flameproof “admitted” that it had shipped FlameTech lumber rather than the FRT lumber advertised on its website and ordered. The FlameTech lumber was removed and replaced, damaging the surrounding materials. The lawsuits alleged negligent misrepresentation, fraudulent misrepresentation, deceptive business practices, false advertising, consumer fraud, breach of warranties, and breach of contract. Lexington sought a ruling that it owed no duty to defend Flameproof. The Seventh Circuit affirmed summary judgment for Lexington. The underlying complaints do not allege an “occurrence”—or accident—as required to trigger Lexington’s duty to defend under the policy. View "Lexington Insurance Co. v. Chicago Flameproof & Wood Specialties Corp." on Justia Law

In May 2015, the Chickasaw County School District entered into a contract with Sullivan Enterprises, Inc., for window restoration work on the Houlka Attendance Center. In July 2015, during construction, a fire began that completely consumed the attendance center. Liberty Mutual, the school district’s insurer, paid the school district $4.3 million for the damage to the building. Liberty Mutual then filed a subrogation suit against Sullivan Enterprises, Fowlkes Plumbing, LLC, and Quality Heat & Air, Inc. The United States District Court for the Northern District of Mississippi found that the waiver of subrogation did not apply to damages to the “non-Work” property, thus Liberty Mutual could proceed in litigation as to “non-Work” property damages. The United States Court of Appeals for the Fifth Circuit allowed an interlocutory appeal and certified a question to the Mississippi Supreme Court regarding whether the subrogation waiver applied to “non-Work” property. The Supreme Court determined that based on the plain meaning of the contract language, the waiver of subrogation applied to both work and non-work property. View "Liberty Mutual Fire Insurance Co. v. Fowlkes Plumbing, L.L.C." on Justia Law

In 1997, Suffolk Construction Company entered into a contract with the University of Connecticut (“UConn”) for the construction of several buildings on UConn’s campus. UConn secured insurance policies from Reliance Insurance Company for the Project, naming Suffolk (and other contractors) as an insured. Suffolk completed the work in January 2001. The Reliance insurance policy was extended until January 2004. However, in late 2001, however, Reliance went into liquidation. In 2013 and 2014, UConn complained of defects in the construction that resulted in damage to its buildings. UConn initiated legal proceedings against Suffolk and other contractors. In 2016, Suffolk submitted a proof of claim to the Insurance Commissioner of Pennsylvania, as the statutory liquidator of Reliance. At issue before the Pennsylvania Supreme Court in this case involved the Pennsylvania Commonwealth Court's interpretation of certain contract language using Connecticut law. The Commonwealth Court found that the language of the contract was clear and unambiguous, thus precluding consideration of extrinsic evidence of the parties’ intent. The Supreme Court determined, however, a Settlement Agreement between the parties could have been construed as nothing more than a mutual general release between UConn and Suffolk: "The ambiguity stems not from Suffolk’s 'subjective perception' of the terms of the Settlement Agreement, but from the terms of the agreement itself, as the language releasing claims for 'insurance coverage' and 'indemnification' does not have a single, clear meaning." As such, the Commonwealth Court erred by failing to consider extrinsic evidence, outside of the terms of the Settlement Agreement, to discern the parties’ intent. The Supreme Court therefore vacated the Commonwealth Court decision and remanded for further proceedings. View "Suffolk Constr. v. Reliance Ins." on Justia Law

On a winter night in 2014, strong winds blew through the town of Georgia, Vermont, causing a partially constructed livestock barn to collapse. Commercial Construction Endeavors, Inc. (CCE), the contractor building the barn, sought recompense for the resulting losses from its insurer, Ohio Security Insurance Company. However, insurer and insured disagreed as to policy coverage for costs incurred by CCE in removing the remains of the collapsed barn and rebuilding it to its pre-collapse state. Ultimately, CCE sued Ohio Security for breach of contract. In successive summary-judgment rulings, the trial court held that the contractor’s rebuilding expenses were covered under the policy, but the cost of debris removal was not. Ohio Security cross-appealed the first ruling and CCE appealed the second; the Vermont Supreme Court reversed the first ruling and affirmed the second. The Court determined the additional collapse coverage applied only to “Covered Property,” which was business personal property; CCE did not dispute that the barn was not business personal property and thus was not “Covered Property.” Therefore, the court’s first summary-judgment ruling was reversed. The debris removal was not a loss involving business personal property. As a result, it was not a loss to “Covered Property” at that term was defined by the policy at issue. View "Commercial Construction Endeavors, Inc. v. Ohio Security Insurance Company" on Justia Law

A general contractor was covered as an additional insured on a commercial general liability (CGL) policy issued to its roofing subcontractor. The insurer refused to defend the general contractor after it was sued by homeowners for construction defects concerning roofing, prompting this lawsuit. After a bench trial, the trial court concluded the insurer owed no duty to defend. It believed the exclusion in the additional insured endorsement for damage to "property in the care, custody or control of the additional insured" precluded any duty to defend the general contractor in construction defect litigation. The general contractor disputed the insurer's interpretation of the policy and contended there was a duty to defend. After review, the Court of Appeal agreed and reversed judgment: “the facts indicate only shared control between the general contractor and its roofing subcontractor. Because the insurer did not prove coverage for the underlying construction defect litigation was impossible, it owed the general contractor a duty to defend the homeowner claim.” View "McMillin Homes Construction v. Natl. Fire & Marine Ins. Co." on Justia Law

The Supreme Court affirmed the judgment of the superior court granting summary judgment in favor of Insurer and Plaintiff's claims alleging that Insurer was contractually obligated to provide insurance coverage to Plaintiff, which was listed as an additional issued on the relevant insurance policy, holding that Insurer had no duty to defend Plaintiff.Plaintiff, the general contractor for a construction project, subcontracted with Insured for structural work on the project. Insured purchased a commercial general liability insurance policy from Insurer, which named Plaintiff as an additional insured. The policy provided for defense and indemnification costs to Insured for its work on the project. Insured's employee (Employee), who sustained injuries while working on the construction project site, filed a complaint against Plaintiff, alleging that Plaintiff's negligent acts were the proximate cause of his injuries. Plaintiff sought a declaratory judgment that Insurer was contractually obligated to indemnify and defend Plaintiff as an additional insured relative to the Employee action. The superior court justice granted summary judgment for Insurer. The Supreme Court affirmed, holding that Employee's complaint was devoid of any allegations that brought the underlying case within the coverage of the policy, and therefore, Insurer had no duty to defend Plaintiff. View "Bacon Construction Co. v. Arbella Protection Insurance Co." on Justia Law