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Tag Archives: Duty to Defend

Insurance Company Must Defend Contractor Regardless of CGL Policy’s Breach-of-Contract Exclusion.

29 Wednesday Aug 2018

Posted by Celia C. Elwell, RP in Construction General Liability, Contract Law, Duty to Defend, Insurance Law

≈ Comments Off on Insurance Company Must Defend Contractor Regardless of CGL Policy’s Breach-of-Contract Exclusion.

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Construction General Liability, Contract Law, Duty to Defend, Insurance Law, Justia US Law

Normally, an insurance company has no duty to defend a contractor under a construction general liability (“CGL”) policy against breach-of-contract and negligence allegations. Not this time. This time, in the Western District of Texas, the insureds won against the insurance company. The court held the breach of contract exclusion did not apply because the contractor’s subcontractor, not the contractor, could be responsible for a construction defect.

A municipality hired the general contractor to construct a sports complex that included a swimming pool, baseball and softball fields, and parking lots. The contractor hired two subcontractors – one to design and build the swimming pool, and another to do all the dirt work, grading, and storm drainage for the entire complex.

At the beginning of 2017, a contractor employee saw cracks beginning the pool and parking lot after completion of the pool and most of the sports complex. The contractor put the pool subcontractor on notice to fix the cracks. About three months later, a contractor employee noticed the cracks were worse. The contractor and the pool subcontractor were unable to agree on how to fix the pool. By the end of the year, more cracks and other defects had appeared. The city, contractor, and subcontractors could not agree on how to solve these problems.

The city sued the contractor for breach of contract and negligence. The contractor notified its insurance company and, relying on its CGL policy, asked its insurance company to defend it against the city’s lawsuit. The insurance company refused. It sued the contractor requesting a judgment declaring that it had no duty to defend the contractor in the lawsuit filed by the city based on the CGL exclusion clause.

The insurance company relied on language in its policy that specifically denied coverage to the contractor for property damage caused by the contractor. In it its lawsuit against the contractor, the city had specifically alleged that work performed by the contractor and its subcontractors was defective. The insurance policy’s exclusion did not apply to work performed by a subcontractor. The court held that, because the city’s allegations included the possibility that subcontractor alone had created the defects at issue in the city’s lawsuit, the insurance company had a duty to defend the contractor.

Mt. Hawley Insurance Company v. Slay Engineering, Texas Multi-Chem and Huser Construction, LLC, No. 5:2018cv00252 – Document 19 (W.D. Tex. 2018). You can read the entire Memorandum and Order at Justia US Law here: https://bit.ly/2wul7ka. -CCE

 

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Duty to Defend In Insurance Case.

05 Thursday Feb 2015

Posted by Celia C. Elwell, RP in Duty to Defend, Insurance Law, Litigation, Motion in Limine, Summary judgment

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Barry Zalma, Duty to Defend, Insurance, Motion for Summary Jugdment, Motion in Linine, Zalma on Insurance Blog

Duty to Defend Not Effected by Denial of Motion for Summary Judgment, by Barry Zalma, Zalma on Insurance

http://zalma.com/blog/duty-to-defend-not-effected-by-denial-of-motion-for-summary-judgment/

Defense Can’t Be Avoided by Use Of Limine Motions

The duty to defend owed by an insurer is very broad and requires an insurer to defend even if there is only a potential for coverage on the facts of the case and the policy wording. Usually, an order denying a motion for summary judgment seeking an order that there is no duty to defend will usually be sufficient to reveal the potential for coverage and a requirement for defense – at least under a reservation of rights – to those insured. In McMillin Companies, LLC v. American Safety Indemnity Company, — Cal.Rptr.3d —-, 2015 WL 270034 (Cal.App. 4 Dist., 1/22/15) the right to claim no duty to defend will still exist even after a motion for summary judgment is denied if the motion order is not dispositive of the claims made by the motion for summary judgment. It also criticized the use of a motion in limine (to limit testimony allowed at trial) when it had the effect of a motion for summary judgment without the protections of a motion for summary judgment. . . .

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