Mealey's Construction Defects Insurance : Mealey's : Legal News & Analysis

Mealey's Construction Defects Insurance

August 08, 2025
Judge Reconsiders Use Of Diamond Heights In Finding Insurer Didn’t Waive Consent

SAN FRANCISCO — A federal judge in California granted an excess insurer’s motion for reconsideration as to the application of Diamond Heights Homeowners Association v. National American Insurance Co. in the judge’s previous decision to deny a housing developer’s motion for partial summary judgment in its case against the excess insurer for breach of contract after the homeowner reported construction defects, agreeing with the insurer that Diamond Heights doesn’t apply.
August 08, 2025
Homeowner Asks Court To Reconsider Dismissal Of Suit Against Contractor’s Insurer

PHILADELPHIA — A homeowner is asking a federal court in Pennsylvania to reconsider its ruling dismissing his complaint against his contractor’s commercial general liability insurer for damages he was awarded in an underlying suit against the contractor, arguing that the court misapplied the state’s postloss assignment doctrine in determining that he lacked standing to assert a breach of contract claim against the insurer.
August 08, 2025
Judge Finds Company Failed To Show How Subcontractor’s Drawings Caused Its Breach

SANTA ANA, Calif. — A federal judge dismissed a self-storage design and construction limited liability company’s complaint against a subcontractor’s insurer after the insurer denied coverage for claims brought against the limited liability company by a builder for damages the company alleges were caused by using the subcontractor’s drawings for the project that specified wrong materials and did not properly identify connections between the company’s structural steel and other project components, holding that the company didn’t explain how the subcontractor’s drawings caused the company’s breach of its contract with the builder.
August 07, 2025
4th Circuit Stands By Its Revival Of Breach, Bad Faith Claims In Stucco Coverage Suit

RICHMOND, Va. — The Fourth Circuit U.S. Court of Appeals has denied a commercial general liability insurer’s motion for rehearing of its ruling reversing the dismissal of a general contractor’s breach of contract and bad faith counterclaims as moot and remanding for the lower court to determine whether some costs incurred by the contractor in addressing damage caused by faulty stucco may be covered under the policy.
August 07, 2025
Paint Damage Was Caused By Faulty Work, No Coverage Owed, 9th Circuit Affirms

SEATTLE — The Ninth Circuit U.S. Court of Appeals affirmed a Washington federal court’s grant of a homeowners insurer’s motion for summary judgment in an insured’s breach of contract and bad faith lawsuit, agreeing with the lower court that paint damage in a vacation home was caused by uncovered faulty workmanship and not covered vandalism.
August 05, 2025
Builder Seeks Reconsideration Of Ruling For Insurer On Defects Arbitration Award

HOUSTON — A homebuilder seeks reconsideration of a Texas federal judge’s ruling granting summary judgment in favor of its commercial general liability insurer in the builder’s suit seeking indemnification for a $213,000 arbitration award for damages caused by construction defects in a home it built, arguing that the judge erred in finding that the appraisal process discharged the insurer’s obligations as there was no appraisal or appraisal award in the case.
August 05, 2025
Insured’s Counterclaim In Dispute Over Defective Pool Shells Dismissed

AUSTIN, Texas — A Texas federal judge adopted a magistrate judge’s recommendation to dismiss an insured’s counterclaim for promissory estoppel in a dispute over coverage for defective pool shells damaged by a chemical reaction between alkalis in the cement and silica, overruling the insured’s objection that the magistrate judge misapplied the legal standard governing promissory estoppel claims.
August 04, 2025
Professional Liability Insurer Announces Judgment Satisfied In Mold Coverage Dispute

LAS VEGAS — A contractor’s professional and indemnity liability insurer filed a notice in a federal court in Nevada indicating that a broker’s professional liability insurer has satisfied a judgment in its favor in a coverage dispute arising from mold and moisture-related damage.
August 01, 2025
General Contractor’s Insurer Appeals Amended Judgment In Row Over Damages Coverage

SANTA ANA, Calif. — A commercial general liability insurer for a construction company filed a notice of appeal of a federal court in California’s judgment finding that another of the company’s insurers had no duty to defend the company as an additional insured in a dispute over damages to a Hard Rock Hotel location because the terms of the original contract included no requirements to maintain insurance beyond the final payment date for the project.
August 01, 2025
Condominium Association Appeals Ruling Finding Coblentz Agreement Unreasonable

JACKSONVILLE, Fla. — A condominium association has appealed to the 11th Circuit U.S. Court of Appeals a Florida federal judge’s order granting summary judgment to an insurer sued by a condominium association, as assignee for an insured general contractor, to collect funds agreed to under a Coblentz settlement in an underlying suit stemming from defects in the construction of a condominium building, as well as the judge’s order denying the condominium association’s motion for reconsideration.
August 01, 2025
9th Circuit Issues Mandate After Denying Reconsideration Of Defects Coverage Suit

SEATTLE — A Ninth Circuit U.S. Court of Appeals panel issued a mandate in a case where it held a lower federal court did not abuse its discretion by dismissing homeowners’ coverage dispute stemming from a defects lawsuit over the construction of homes, finding that four out of the five factors in Hernandez v. City of El Monte favor dismissal for failure to prosecute or comply with a court order; it issued the mandate after denying the homeowners’ petition for rehearing.
August 01, 2025
Parties To Roof Damage Coverage Dispute Given 60 Days To File Settlement Documents

NEWARK, N.J. — A federal judge issued a 60-day order administratively terminating a case brought by homeowners against their homeowners insurer and a shingle manufacturer regarding claims that damage to the homeowners’ roof was caused by defective shingles after the homeowners notified the court that the parties had reached a settlement.
July 30, 2025
Judge Dismisses Professional Negligence Suit Over Water Damage Following Settlement

CHEYENNE, Wyo. — A federal judge in Wyoming on July 29 granted a homeowners insurer, mechanical engineering firm and plumbing company’s stipulated motion to dismiss with prejudice the subrogated insurer’s negligence suit arising from water damage that was allegedly caused by improperly installed plumbing.
July 30, 2025
Contractor’s Insurers’ Motion To Dismiss Appeal In Suit Over Water Leak Granted

NEW ORLEANS — The clerk of the Fifth Circuit U.S. Court of Appeals filed an order granting a general contractor’s insurers’ motion to dismiss their appeal of a Louisiana federal judge’s ruling granting summary judgment to two subcontractors, who were responsible for installing a heating, ventilation and air conditioning (HVAC) system, and the subcontractors’ insurers after finding that the general contractor’s insurers failed to show that the subcontractors’ acts or omissions contributed to a water leak in the HVAC system.
July 24, 2025
9th Circuit Finds Insurer Owed No Coverage For Substandard Work Claims

PASADENA, Calif. — A Ninth Circuit U.S. Court of Appeals panel affirmed a lower court’s finding that a commercial general liability insurer owed no coverage for an underlying action alleging that an electrical contractor’s substandard work led to flooding damage to switchgear, holding that the claim was excluded under the policy.
July 23, 2025
Insurer Seeks Rehearing After 4th Circuit Finds Some Coverage Of Stucco Claims

RICHMOND, Va. — A commercial general liability insurer sought rehearing in the Fourth Circuit U.S. Court of Appeals after a panel of the Fourth Circuit found that the insurer owed no coverage to a general contractor for costs incurred repairing faulty stucco but that the trial court erred in dismissing as moot the contractor’s breach of contract and bad faith claims, arguing that the evidence does not support vacating the lower court’s denial of the contractor’s motion for partial summary judgment.
July 23, 2025
Insurer, Engineer File Verbal Notice Of Settlement Of Professional Negligence Suit

CHEYENNE, Wyo. — A homeowners insurer and a mechanical engineering firm indicated to a federal court in Wyoming that they have reached a settlement of the insurer’s negligence lawsuit arising from water damage that was allegedly caused by improperly installed plumbing.
July 21, 2025
Judge Finds Insurer Had No Duty To Defend, Indemnify Manufactured Home Installer

RICHLAND, Wash. — A federal judge found that a commercial general liability insurer had no duty to defend a manufactured home installer in an underlying action regarding defects in the installation of a couple’s manufactured home, granting summary judgment in favor of the insurer in a declaratory judgment action the insurer brought against the manufactured home installer and the couple who had the manufactured home installed on their property.
July 17, 2025
Judge Finds Indemnity Claim For Coverage Of Underlying Flood Claim Must Continue

OAKLAND, Calif. — A federal judge in California denied a railway company’s motion to dismiss or stay an insurer’s claim for declaratory relief that it did not have a duty to indemnify the railway company in an underlying complaint against it for negligence after the construction of the railway caused property to flood, finding that the railway company provided no reason that the claim regarding the duty to indemnify should be dismissed or stayed, while the insurer’s claim for declaratory relief that it did not have a duty to defend continues.
July 15, 2025
Homebuilder Proved Insurer Breached Contract, But Insurer Had No Duty To Defend

AUSTIN, Texas — A federal judge in Texas granted in part and denied in part cross-motions for summary judgment in a case in which a homebuilder alleges that its general liability insurer breached their contract by denying coverage for underlying construction defects claims and refusing to participate in settlement negotiations related to the underlying claims, finding that the claims constituted property damage under the policy and that the builder had shown that the insurer had breached the contract by not participating in the settlement negotiations, but agreeing with the insurer that it had the right, but not the duty, to defend the homebuilder in the suits.
July 14, 2025
Judge: Roof Work Excluded From Insurance Policy, Leaving No Duty Defend

SANTA ANA, Calif. — A California state court judge granted summary judgment to an insurer in a roof construction defect case, agreeing that the work at issue is excluded under terms of the insurance agreement and that the insurer has no duty to defend or indemnify the general contractor.
July 14, 2025
Homeowners Ask Panel To Reconsider Affirming Dismissal Of Defects Coverage Suit

SEATTLE — Homeowners filed a petition asking the Ninth Circuit U.S. Court of Appeals to reconsider its holding that a lower federal court did not abuse its discretion by dismissing their coverage dispute stemming from a defects lawsuit over the construction of homes, challenging the panel’s finding that four out of the five factors in Hernandez v. City of El Monte favor dismissal for failure to prosecute or comply with a court order.
July 11, 2025
Condo Developer, Insurer Settle Coverage Dispute In Advance Of Scheduled Retrial

DENVER — A condominium developer and its builders risk insurer on July 10 notified a federal court in Colorado that they “have reached a full and final resolution of all claims” and are drafting settlement documents; the claims relating to repair costs of a cracked concrete slab had been scheduled to go to trial in January 2026 after the 10th Circuit U.S. Court of Appeals in December reversed a $2.54 million jury award in favor of the developer and remanded for a new trial.
July 11, 2025
Contractor’s Insurer Must Defend Developers For Water, Other Damages

LOS ANGELES — A contractor’s commercial general liability insurer agreed to defend the developers of a residential development as additional insureds, and the homeowners’ subsequent filing of an action alleging that the contractor’s improper installation of concrete flatwork and foundation systems caused water intrusion and other damage to their homes triggered the insurer’s duty to defend, a federal judge in California ruled.
July 09, 2025
4th Circuit Finds Some Coverage Possible in Suit Over Faulty Stucco Claims

RICHMOND, Va. — A panel of the Fourth Circuit U.S. Court of Appeals found that a commercial general liability insurer owned no coverage to a general contractor for the costs incurred in repairing faulty stucco, but said the trial court erred in dismissing as moot the contractor’s breach of contract and bad faith claims because the court didn’t assess whether the costs associated with the property damage were covered under the policy.