Tred R. Eyerly | Insurance Law Hawaii | February 7, 2018
The Eleventh Circuit found that the insured caused property damage to areas beyond its own work, obligating the insurer to defend. Addison Ins. Co. v. 4000 Island Blvd. Condo. Ass’n, 2017 U.S. App. LEXIS 26870 (11th Cir. Dec. 28, 2017).
The condominium association contracted with Poma Construction Corp. to replace the building’s aging concrete balcony railings with new aluminum and glass railings. Poma subcontracted with Windsor Metal Specialties, Inc. to paint the new railings. Work was completed on February 24, 2012. Poma issued a 10-year warranty covering its installation of the railings. Windsor issued a 20-year limited warranty covering the paint job.
In October 2014, the association sued Poma and Windsor, alleging that the new railings were defective and would need to be removed and replaced. Claims for breach of contract, breach of implied warranty, and breach of express warranty were asserted. The amended complaint alleged that the defective railing system, including Windsor’s defective paint finishes on the railings, caused damage to other property such as the railing post pockets, the balcony concrete slabs, and finishes on the balcony concrete slabs.
Addison, Windsor’s insurer, sued for a declaratory judgment that it had no duty to defend. The policy provided that Windsor’s coverage did not apply to property damage to Windsor’s own work product or to that particular property that must be repaired because Windsor’s work “was incorrectly performed on it.”
Addison moved for summary judgment, arguing that the association had sued Windsor for breach of warranty, rather than for property damage. Windsor argued that a genuine issue of material fact existed as to whether the damage alleged in the association’s complaint constituted “property damage” to which no policy exclusion applied. An affidavit submitted with Windsor’s opposition stated there was railing failure and damage to the areas where the railings were installed.
The district court denied Addison’s motion for summary judgment. Addison appealed.
The Eleventh Circuit affirmed. Windsor’s work product was the paint finishes on the railings, and the railings were the particular part of the property on which Windsor’s work was allegedly performed incorrectly. The underlying complaint alleged that “the defective railing system, including the defective paint finish has caused and will continue to cause damage to other property . . . including but not limited to the railing post pockets, the balcony concrete slabs and finishes on the balcony concrete slabs.”
These allegations alleged facts that brought the action within the policy. Therefore, Addison had a duty to defend.