A U.S. federal district court recently granted Peerless Insurance’s summary judgment motion, concluding that, as a matter of law, under Virginia law, a property policy insuring a building under renovation would not provide coverage for a collapsed basement wall due to a subcontractor’s lack of shoring,. Taja Investments LLC v. Peerless Ins. Co. a/k/a Liberty Mutual Ins. Co., Civ. No. 1:15-cv-01647, 2016 U.S. Dist. LEXIS 95760 (E. D. VA, July 21, 2016). The plaintiff insured, Taja Investments, was a construction company, which was excavating a 4-5 foot crawlspace under a building to create a space with a 9 foot depth in order to allow for additional living areas. The insured’s claim arose out of the collapse of one of the basement…
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Vermont Supreme Court Collapse Case Underscores Danger of Insuring Against the “Risk” of a Peril
Three months ago in Equinox on the Battenkill Mgmt. Ass’n. v. Philadelphia Indem. Ins. Co., 2015 VT 98 (Vt., Aug. 7, 2015), Vermont’s highest court held that a policy insuring against the “risks of . . . collapse” affords considerably broader coverage than one insuring against “direct loss [by] collapse.” While the latter covers only a falling in, the former encompasses situations in which collapse is imminent and perhaps even situations in which “the insured building’s structural integrity has degraded to the point where it cannot be safely and reliably used.” The case is a cautionary tale for underwriters everywhere, and it also contains a useful survey of “risk of collapse” jurisprudence from around the country. The policyholder was a…
Tagged with: Risk of Collapse, Vermont
Posted in Collapse, Direct Physical Loss or Damage, Faulty Workmanship or Design, Hidden Decay
Posted in Collapse, Direct Physical Loss or Damage, Faulty Workmanship or Design, Hidden Decay
Massachusetts Court: Loss of Drink Product Caused By Faulty Workmanship And Design of Bottle Caps Not a Covered Ensuing Loss
Monday saw a unanimous panel of Massachusetts’ intermediate level appellate court reject a policyholder’s ensuing loss arguments. In H.P. Hood LLC v. Allianz Global Risks U.S. Ins. Co., 2015 Mass. App. LEXIS 175, 2015 WL 6629484 (Mass., Nov. 2, 2015), the justices held that the loss of over two million bottles of an energy drink was not separate or different in kind but rather “directly caused by, and completely bound up in” the excluded peril — faulty workmanship and design of the bottle caps. The insured produced a high-performance protein supplement known as Myoplex for Abbott Laboratories, and it had contracted to manufacture some forty million bottles in 2009. The drink was a “shelf stable” beverage that did not require…
Tagged with: Massachusetts
Posted in Direct Physical Loss or Damage, Ensuing Loss, Faulty Workmanship or Design
Posted in Direct Physical Loss or Damage, Ensuing Loss, Faulty Workmanship or Design
Florida to Decide What Test Applies When Concurrent Multiple Perils Cause a Loss
For years, Florida courts have been seesawing between two different doctrines to determine whether there is coverage under a property policy when two perils – one excluded and one included — combine to cause a loss. Two districts of the state’s intermediate level appellate court have applied one test and a third has applied another, with the most recent decision being American Home Assur. Co. v. Sebo, 141 So.3d 195 (Fla.Ct.App., Sep. 18, 2013). On October 7th of last year, the state’s highest court accepted review in the Sebo matter, and oral argument was conducted on September 2, 2015. Some clarity will finally emerge in the Sunshine State with respect to this issue. When multiple perils combine to cause a…
Sixth Circuit: A Michigan Collapse Extension Overrides Exclusions for Cracking and Defective Design
In Joy Tabernacle — The New Testament Church v. State Farm Fire & Cas. Co., 2015 WL 3824733, 2015 U.S. App. LEXIS 10707 (6th Cir., Jun. 22, 2015), a unanimous panel of the federal Court of Appeals recently held that a collapse extension of coverage negates a policy’s exclusions for cracking and faulty workmanship and design because more specific provisions of a contract of insurance are controlling over general ones. The court noted that any collapse necessarily entails “the cracking of beams and walls” and that giving effect to the exclusion under those circumstances would render the extension nugatory. In addition, the defective design exclusion was ineffective because the collapse extension specifically recited that collapse caused at least in part…
Tagged with: Michigan, Sixth Circuit
Posted in Collapse, Exclusions, Faulty Workmanship or Design, Hidden Decay, Settling or Cracking
Posted in Collapse, Exclusions, Faulty Workmanship or Design, Hidden Decay, Settling or Cracking
Missouri Court Clarifies What Constitutes An Ensuing Loss
Last week in Performance Arts Cmty. Improvement Dist. v. ACE Amer. Ins. Co., 2015 WL 3491292, 2015 U.S. Dist. LEXIS 71592 (W.D. Mo., June 3, 2015), a federal court in Missouri shot down an insured’s arguments that a wall collapse caused by the excluded peril of defective design was a covered ensuing loss under a builder’s risk policy. The developer admittedly erred in calling an for excess amount of concrete slurry to be pumped behind the structure, but the policyholder contended that the collapse that that mistake caused was a separate loss by “excessive lateral pressure.” The court analogized to that to arguing that the collapse of a defectively-designed building was a separate loss caused by the covered peril of…
Tagged with: Missouri
Posted in Builders' Risk, Collapse, Ensuing Loss, Faulty Workmanship or Design
Posted in Builders' Risk, Collapse, Ensuing Loss, Faulty Workmanship or Design
Silica Dust Damage Held Barred by Pollution and Faulty Workmanship Exclusions in New York
Building construction frequently generates silica dust, a substance that can cause lung disease and other respiratory problems. Abrasive sand-blasting or jack hammering as well as concrete drilling and block cutting can lead to its release. In Broome Cty. v. Travelers Indem. Co., – N.Y.S.2d –, 125 A.D.3d 1241, 2015 WL 790256, 2015 N.Y.App.Div. LEXIS 1706 (N.Y.App.Div., Feb. 26, 2015), a unanimous panel from New York’s intermediate level appellate court held that the pollution and faulty workmanship exclusions in a first-party policy barred coverage for the property damage when silica dust spread throughout an office building due to construction activities nearby. The insured was Broome County, the owner of a building in a government complex. During the construction of a parking…
Tagged with: New York, Silica Dust
Posted in Ambiguity, Contamination, Faulty Workmanship or Design, Particulates, Pollution
Posted in Ambiguity, Contamination, Faulty Workmanship or Design, Particulates, Pollution
