In Carr v. Spinnaker Insurance Company, the United States Court of Appeals for the Ninth Circuit upheld the district court’s finding that property damage resulting from objectionable and imperfect work performed by an unlicensed contractor did not constitute covered vandalism or malicious mischief under a property insurance policy. Instead, the loss fit squarely within the policy’s faulty and defective workmanship exclusion.
Factual Overview and Legal Analysis
The insured filed a lawsuit against her insurer alleging, among other things, breach of contract. The dispute arose from the insured’s claim for property damage that she attributed to the work of a contractor she hired. The insured contended that the contractor’s unsatisfactory work constituted theft or vandalism and malicious mischief – which should have been covered under her policy – because the contractor misrepresented that he was properly licensed.
First, the Ninth Circuit agreed with the district court in finding that the record did not create a reasonable dispute of fact as to whether the contractor acted in conscious or intentional disregard of the insured’s property rights consistent with vandalism or malicious mischief. The Court relied on case law that defined “vandalism” as “willful or malicious destruction or defacement of things of beauty or of public or private property, and that defined “malicious mischief” as “willful, wanton, or reckless damage or destruction of another’s property.” Here, the insured failed to show that any of the contractor’s objectionable paint work occurred without her prior direction of contemporaneous approval.
Second, the Court determined that the faulty and defective workmanship exclusion precluded coverage. Specifically, the policy excluded “faulty or defective workmanship” inclusive of “[d]esign, specifications, workmanship, repair, construction, renovation, remodeling, grading, [and] compaction” and “[m]aterials used in repair, construction, renovation or remodeling.” Although the subject policy did not define “faulty” or defective,” the Court turned to their dictionary definitions: (i) “faulty” has been defined as “marked by fault or defect” or “imperfect”; and (ii) “defective” has been defined as “imperfect in form, structure, or function.” The Ninth Circuit explained that even to the extent the insured objected to the methods or appearance of the contractor’s work, it constituted imperfect workmanship that fit within the plain understanding of “faulty” and “defective.”
Conclusion
Carr illustrates that an insured’s dissatisfaction with work performed – even by an allegedly unlicensed contractor – does not qualify as vandalism or malicious mischief. The Court clarified that imperfect or substandard processes or outcomes may be more appropriately considered under a faulty or defective workmanship exclusion. The distinction may rest on whether there was a conscious or intentional disregard of the property.