Tuesday, December 24, 2013
Great article on ALI's Principles of Liability Insurance
Randy Maniloff's Coverage Opinions newsletter continues to be the most entertaining read on insurance coverage issues each month, as well as highly informative. This month's newsletter has a particularly interesting article on the American Law Institute's work on Principles of Liability Insurance, which is likely to have a large impact on insurance coverage law in the coming years.
Saturday, December 21, 2013
US District Court holds that failure of temporary patches does not prove faulty workmanship
I have been writing about General Casualty Co. of Wisconsin v. Five Star Building Corp., 2013 WL 5297095 (D. Mass.), in which rainwater penetrated temporary roof patches placed there by Five Star during HVAC work it was doing for UMass.
Five Star's insurer argued that coverage was excluded by an exclusion for property damage "to that particular part of any property that must be restored, repaired or replaced because 'your work' was incorrectly performed on it." The insurer argued that the fact that the temporary patches failed to keep out rainwater shows that Five Star's work was incorrectly performed. The court rejected that argument because it assumes either a strict liability or breach of contract theory of faulty workmanship.
Five Star's insurer argued that coverage was excluded by an exclusion for property damage "to that particular part of any property that must be restored, repaired or replaced because 'your work' was incorrectly performed on it." The insurer argued that the fact that the temporary patches failed to keep out rainwater shows that Five Star's work was incorrectly performed. The court rejected that argument because it assumes either a strict liability or breach of contract theory of faulty workmanship.
Thursday, December 19, 2013
US District Court construes construction exclusion narrowly
In my last post I wrote about General Casualty Co. of Wisconsin v. Five Star Building Corp., 2013 WL 5297095 (D. Mass.), in which rain infiltrated a building when temporary patches put up by Five Star during HVAC work for UMass failed.
Five Star's insurer argued that coverage was excluded by an exclusion for property damage "to that particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the 'property damage' arises out of those operations."
The insurer argued that the entire roof was the "particular part" on which Five Star was working and that therefore all damage to the roof was excluded.
The court held that the exclusion does not extend beyond "the essence" of the insured's work. It held that Five Star's work extended only to the replacement of the ventilation system, not to repair or replacement of the roof. Although as part of its work Five Star was required to punch holes in the roof, that roof work was merely incidental to the replacement of the HVAC system. Therefore the exclusion does not apply.
Five Star's insurer argued that coverage was excluded by an exclusion for property damage "to that particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the 'property damage' arises out of those operations."
The insurer argued that the entire roof was the "particular part" on which Five Star was working and that therefore all damage to the roof was excluded.
The court held that the exclusion does not extend beyond "the essence" of the insured's work. It held that Five Star's work extended only to the replacement of the ventilation system, not to repair or replacement of the roof. Although as part of its work Five Star was required to punch holes in the roof, that roof work was merely incidental to the replacement of the HVAC system. Therefore the exclusion does not apply.
Tuesday, December 17, 2013
US District Court holds that damages from faulty workmanship are not an occurrence
UMass hired Five Star to upgrade the HVAC system in the Morill Science Center. As part of its work Five Star sometimes penetrated the building roof and installed temporary patches to protect the building until permanent patches and flashing could be installed.
During a severe rainstorm several temporary patches failed and rainwater penetrated the roof, causing damage to insulation and to the interior of the building and its contents.
Five Star sought coverage from its general liability insurer, General Casualty. General Casualty agreed to cover most of the loss, but denied coverage for damage to the roofing system.
The first issue before the court was whether faulty workmanship is an "occurrence," an issue over which there is much disagreement around the country. In General Casualty Co. of Wisconsin v. Five Star Building Corp., 2013 WL 5297095 (D. Mass.), the United States District Court for the District of Massachusetts held, not in so many words, that the question was irrelevant, because the rain damage itself was an occurrence whether or not faulty workmanship was an occurrence.
During a severe rainstorm several temporary patches failed and rainwater penetrated the roof, causing damage to insulation and to the interior of the building and its contents.
Five Star sought coverage from its general liability insurer, General Casualty. General Casualty agreed to cover most of the loss, but denied coverage for damage to the roofing system.
The first issue before the court was whether faulty workmanship is an "occurrence," an issue over which there is much disagreement around the country. In General Casualty Co. of Wisconsin v. Five Star Building Corp., 2013 WL 5297095 (D. Mass.), the United States District Court for the District of Massachusetts held, not in so many words, that the question was irrelevant, because the rain damage itself was an occurrence whether or not faulty workmanship was an occurrence.
Assuming that Five Star engaged in faulty workmanship, its workmanship extended only as far as the installation of temporary patches and not to the roof itself. Thus, Five Star does not seek coverage for faulty workmanship itself, but rather coverage of the damage resulting from the rainstorm even if such allegedly faulty workmanship contributed to the leaking. The rain damage to the roofing system, therefore, is an "occurrence" under the policy.
Saturday, December 14, 2013
SJC seeks amicus briefs on attorney's fees for PIP cases
The Supreme Judicial Court of Massachusetts is seeking amicus briefs in the following case:
SJC-11561
Barron Chiropractic & Rehabilitation vs. Norfolk & Dedham Group
Whether an insurer can be liable for costs and attorney's fees in an action pursuant to G. L. c. 90, � 34M, on a claim that it failed to pay PIP benefits in accordance with the statute, if the insurer, allegedly for business reasons unrelated to the merits of the litigation, tenders payment of the full amount of the disputed benefits after the commencement of the action but before a judgment has entered against it.
Scheduled for March argument.
SJC-11561
Barron Chiropractic & Rehabilitation vs. Norfolk & Dedham Group
Whether an insurer can be liable for costs and attorney's fees in an action pursuant to G. L. c. 90, � 34M, on a claim that it failed to pay PIP benefits in accordance with the statute, if the insurer, allegedly for business reasons unrelated to the merits of the litigation, tenders payment of the full amount of the disputed benefits after the commencement of the action but before a judgment has entered against it.
Scheduled for March argument.
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