{"id":1337,"date":"2013-02-21T08:18:51","date_gmt":"2013-02-21T15:18:51","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=1337"},"modified":"2013-02-14T15:19:13","modified_gmt":"2013-02-14T22:19:13","slug":"analysis-of-occurrence-in-defect-coverage-actions","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/analysis-of-occurrence-in-defect-coverage-actions\/","title":{"rendered":"Analysis of \u201cOccurrence\u201d in Defect Coverage Actions"},"content":{"rendered":"<p>Aaron Mandel and Stevi Raab &#8211; February 8, 2013<\/p>\n<p>Through its recent opinion in Westfield Ins. Co. v. Custom Agri Systems, Inc., 2012 WL 4944305 (Ohio Oct. 16, 2012) (\u201cWestfield\u201d), the Ohio Supreme Court joined the majority of states in holding that faulty construction work does not qualify as an \u201coccurrence\u201d within the meaning of a general liability policy.<\/p>\n<p>In Westfield, Younglove Construction (\u201cYounglove\u201d) contracted with PSD Development (\u201cPSD\u201d) to construct a feed manufacturing plant. \u00a0After PSD withheld payment, Younglove sued PSD for breach of contract in Ohio federal court. \u00a0In its answer, PSD alleged that one of Younglove\u2019s subcontractors, Custom Agri Systems, Inc. (\u201cCustom\u201d), defectively constructed a steel grain bin, but did not allege that Custom\u2019s defective construction work damaged PSD\u2019s other property. \u00a0Younglove then sued Custom for contribution and indemnity, and Custom sought a defense and indemnity from its general liability insurer, Westfield Insurance Company (\u201cWestfield\u201d). \u00a0Westfield intervened in the action, seeking a declaration it was not obligated to provide coverage to Custom because Younglove\u2019s claim against Custom did not seek damages arising out of \u201cproperty damage\u201d caused by an \u201coccurrence.\u201d \u00a0Westfield and Custom cross-moved for summary judgment on the issue.<\/p>\n<p>In deciding the motions, the court acknowledged that Ohio law did not address whether defective construction work qualifies as an \u201coccurrence\u201d within the meaning of a liability policy. \u00a0Rather than decide the issue, however, the court found that a contractual liability exclusion in Westfield\u2019s policy precluded coverage and granted summary judgment to Westfield. \u00a0Custom appealed to the Sixth Circuit, and Westfield filed an unopposed motion to certify two questions of state law to the Ohio Supreme Court:\u00a0 whether a property owner\u2019s claims of defective construction allege \u201cproperty damage\u201d caused by an \u201coccurrence\u201d under a commercial general liability policy, and, if so, whether contractual liability exclusions nevertheless preclude coverage for such claims. \u00a0The Sixth Circuit granted Westfield\u2019s motion, and the Ohio Supreme Court accepted certification.<\/p>\n<p>Addressing only the first question because the court believed it was dispositive, the Ohio Supreme Court held that defective construction does not constitute an occurrence. \u00a0The court reasoned that general liability policies are \u201cnot intended to protect business owners against every risk of operating a business,\u201d nor are they \u201cintended to insure the risks of an insured causing damage to the insured\u2019s own work.\u201d \u00a0The court also looked at court decisions in other jurisdiction, and found the majority view is that claims of defective construction are not claims for \u201cproperty damage\u201d caused by an \u201coccurrence\u201d within the meaning of general liability policies. \u00a0The court then analyzed whether Custom\u2019s defective construction of the grain bin was an \u201coccurrence,\u201d noting the policy defined \u201coccurrence\u201d as an \u201caccident including continuous or repeated exposure to substantially the same general harmful conditions.\u201d \u00a0Although the policy did not define \u201caccident,\u201d the court noted that the term has an inherent \u201cfortuity principle\u201d under which losses must be \u201cunexpected, as well as unintended,\u201d and concluded that Custom\u2019s defective work on the steel grain bin was not an \u201coccurrence.\u201d<\/p>\n<p>via <a href=\"http:\/\/www.jdsupra.com\/legalnews\/introducing-construction-defect-coverage-53305\/\">Introducing Construction Defect Coverage Quarterly, and an Analysis of \u201cOccurrence\u201d in Defect Coverage Actions | Sedgwick LLP &#8211; JDSupra<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Aaron Mandel and Stevi Raab &#8211; February 8, 2013 Through its recent opinion in Westfield Ins. Co. v. Custom Agri Systems, Inc., 2012 WL 4944305 (Ohio Oct. 16, 2012) (\u201cWestfield\u201d), the Ohio Supreme Court joined the majority of states in holding that faulty construction work does not qualify as an \u201coccurrence\u201d within the meaning of&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/analysis-of-occurrence-in-defect-coverage-actions\/\">Continue reading <span class=\"screen-reader-text\">Analysis of \u201cOccurrence\u201d in Defect Coverage Actions<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[172,3],"tags":[299,11,298],"class_list":["post-1337","post","type-post","status-publish","format-standard","hentry","category-construction-law-2","category-insurance-claims","tag-defect-coverage","tag-insurance-claim","tag-occurence","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Analysis of \u201cOccurrence\u201d in Defect Coverage Actions - Advise &amp; Consult, Inc.<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/analysis-of-occurrence-in-defect-coverage-actions\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Analysis of \u201cOccurrence\u201d in Defect Coverage Actions - Advise &amp; Consult, Inc.\" \/>\n<meta property=\"og:description\" content=\"Aaron Mandel and Stevi Raab &#8211; February 8, 2013 Through its recent opinion in Westfield Ins. 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