Tred Eyerly – April 28, 2014
The court found coverage for damage resulting from faulty workmanship. Drury Co. v. Mo. United Sch. Ins. Counsel, 2014 Mo. App. LEXIS 319 (Mo. Ct. App. March 25, 2014).
The School District entered a contract with general contractor, Penzel Construction Company, Inc., to build an addition to a high school. Under the prime contract, the School District was to purchase property insurance, including builder’s risk “all-risk” coverage. The policy was to cover the interests of the owner, the contractor, subcontractors and sub-subcontractors in the project.
The School District obtained a policy from Missouri United School Insurance Counsel (MUSIC). Exclusions in the all-risk policy included loss due to faulty workmanship or materials, “unless loss by a peril not otherwise excluded ensues and then MUSIC shall be liable only for such ensuing loss.”
Penzel entered a subcontract with Drury to install a roof deck made of Tectum. Drury began installing the Tectum on the project’s roof. Rain and ice storms occurred over the next several months and the Tectum suffered moisture damage. Drury submitted the claim to MUSIC, which the claim denied based upon the faulty workmanship exclusion.
Drury sued MUSIC for breach of contract, among other claims. The trial court granted summary judgment to Drury, finding that regardless of MUSIC’s assertion that the faulty workmanship exclusion applied, the trial court determined the loss was covered because the covered peril of rain ensued.
The court of appeals affirmed. The policy covered damage to the Tectum resulting from “rain snow, or sleet.” Although loss caused by faulty workmanship was excluded, MUSIC did not allege that Drury undertook deliberate damage-inducing actions. Because Drury sustained an ensuing loss from the precipitation, MUSIC was liable for the ensuing loss regardless of whether Drury’s workmanship was faulty.