Article Date: 03/07/2014


U.S. Court of Appeals: CGL Insurer Had No Duty to Defend Additional Insured General Contractor against Owner’s Post-Completion Breach-of-Contract Claim for Defective Work


By Scott Turner

 

One of the circuits of the U.S. Court of Appeals has ruled that the commercial general liability (CGL) insurer of a named insured subcontractor had no duty to defend an additional insured general contractor in a project owner’s post-completion breach-of-contract suit for construction defects arising from the subcontractor’s work on a condominium project.

 

The ConstructionPro Week summary of this case is available to ConstructionPro Network members and includes:

  • The citation for the case
  • The details of the case
  • Author’s commentary
  • A link to the complete PDF copy of the original opinion

Here is a portion of the author's commentary:

 

"CGL coverage in this situation must be based on property damage experienced at the project, and timing issues under the CGL policy are very clearly determined by when such property damage occurs, not when the liability for that property damage arises. As a result, the additional insured endorsement’s reference to 'liability arising out of [DCM’s] ongoing operations' can only mean liability for property damage caused by and experienced during DCM’s ongoing operations. That, of course, may well involve liability for latent property damage that is not discovered until much later, even long after the project is completed. The court’s analysis of 'liability arising out of [DCM’s] ongoing operations' completely fails to address this possibility."

 



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