Tred R. Eyerly | Insurance Law Hawaii | November 21, 2016
The Eleventh Circuit found there was no duty to defend the contractor additional insured for the costs of repairing and replacing roofing installed incorrectly by the subcontractor insured. Core Constr. Servs. Southeast v. Crum & Forster Spec. Ins. Co., 2016 U.S. App. LEXIS 17575 (11th Cir. Sept 28, 2016).
After the condominium project was completed, Hurricane Wilma damaged several roofs in the development. The association and its insurer, Empire Indemnity Insurance Company, discovered that the roof had been installed incorrectly by Patnode Roofing, Inc. Empire paid for the damages and the association assigned its claims against Core Construction and its subcontractors, including Patnode, to Empire. Empire then sued Core Construction, Patnode and other subcontractors.
Core Construction was a named insured under a CGL policy issued by Crum & Forster to Patnode. Core Construction requested a defense, but Crum & Forster rejected the request. In a coverage suit, the district court granted summary judgment to Crum & Forster because the underlying suit did not allege that Patnode’s work resulted in “property damage” as defined in the policy. The complaint only asserted that the roofs had been damaged, rather than asserting that the roofs had caused damage to other elements of the building.
The Eleventh Circuit acknowledged that the Florida Supreme Court had concluded that “property damage” involves “damage beyond the faulty workmanship or defective work.” But there was “no coverage for ‘property damage’ when a claim sought solely the costs of repairing and replacing the actual defects in . . . construction.” United States Fire Ins. Co. v. J.S.U.B., Inc., 979 So.2d 871, 889 (Fla. 2008).
Here, Crum & Forster owed no duty to defend because the complaint did not allege a claim for “property damage.” Empire did not allege that the defective installation of roofing caused “physical injury to tangible property” such that there was damage to the completed project caused by the subcontractor’s defective roofing work or that the defective work caused the roof to fail in such a way as to allow the elements to damage other components of the project. The complaint against Core Construction only alleged a claim for the cost of repairing and replacing a roof that had been installed improperly by its subcontractor.