{"id":2011,"date":"2013-08-15T06:10:30","date_gmt":"2013-08-15T12:10:30","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=2011"},"modified":"2013-08-13T14:10:44","modified_gmt":"2013-08-13T20:10:44","slug":"south-carolina-supreme-court-holds-that-exclusions-preclude-coverage-for-damage-caused-by-defective-work","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/south-carolina-supreme-court-holds-that-exclusions-preclude-coverage-for-damage-caused-by-defective-work\/","title":{"rendered":"South Carolina Supreme Court holds that Exclusions Preclude Coverage for Damage Caused by Defective Work"},"content":{"rendered":"

John R. Casciano and Saad Gul – August 2, 2013<\/p>\n

In Bennett & Bennett Construction, Inc. v. Auto Owners Insurance Company, No. 27284 _ S.E.2d. _ 2013 S.C. LEXIS 170 (S.C. July 17, 2013) the Supreme Court of South Carolina, applying South Carolina law, held that that two exclusions barred coverage for a construction company\u2019s defective work suit against its subcontractor.<\/p>\n

The plaintiff, Bennett & Bennett Construction (B&B) was the general contractor on a construction site. It hired M & M Construction (M&M) as a subcontractor to install the brickwork. When Bennett & Bennett inspected M&M\u2019s work, it discovered mortar and slurry dried onto the face of the brick. Thereafter, M&M hired a subcontractor to clean the brick. The subcontractor\u2019s efforts exacerbated the problem by discoloring some bricks and degrading their finish. M&M failed to respond to demands for further remedial action. B&B then replaced the brick face at its own expense.<\/p>\n

B&B sued M&M for breach of contract, breach of warranty and negligence. Neither M&M nor its insurer, Auto Owners Insurance Company, defended the suit. Accordingly, B&B ultimately obtained a default judgment against M&M. B&B then sued Auto Owners for a declaratory judgment that its CGL policy issued to M&M provided coverage for the damages to M&M\u2019s brickwork that was caused by M&M\u2019s subcontractor. After a bench trial, the trial court ruled that there was an occurrence under the subject policy and that coverage was not otherwise excluded. The South Carolina Supreme Court reversed. It held that coverage was excluded under two policy exclusions.<\/p>\n

Exclusion j(5) of the policy bars coverage for property damage to \u201cThat particular part of real property on which [the insured] or any contractors or subcontractors working directly or indirectly on the [insured\u2019s] behalf are performing operations, if the \u2018property damage\u2019 arises out of those operations . . . .\u201d The South Carolina Supreme Court explained that Exclusion j(5) \u201cunambiguously excludes coverage wherever the insured or an person acting on the insured\u2019s behalf causes damages in the course of working on the property, regardless of whether the insured\u2019s work has been completed.\u201d 2013 S.C. LEXIS 170 at * 4. Accordingly, the Court explained, the exclusion \u201cremoves coverage when a subcontractor working on the insured\u2019s behalf [is] performing operations, if the \u2018property damage\u2019 arises out of those operations.\u201d Id. at *4 – *5. It was undisputed that the claimed property damage was caused by M&M\u2019s subcontractor. Additionally, the Court found that the subcontractor was \u201cperforming operations\u201d out of which the property damage arose. On that basis, the Supreme Court held that Exclusion j.(5) barred coverage for B&B\u2019s claim for the damage caused to the brickwork by M&M\u2019s subcontractor, regardless of whether M&M\u2019s work was completed or not. Id. at *9 – *10.<\/p>\n

Second, the Court held that the policy\u2019s Exclusion n also precluded coverage. That exclusion bars coverage for \u201cDamages claimed for any loss, cost or expense . . . incurred . . . for the . . . repair, replacement, adjustment, removal or disposal of . . . \u2018Your Work\u2019\u201d if such work is withdrawn from use \u201cbecause of a known or suspected defect, deficiency [or] inadequacy.\u201d The Court noted that M&M had contracted to install a decorative brick face and M&M\u2019s work \u2013 the brick face \u2013 had to be replaced because of a deficiency or inadequacy in M&M\u2019s work. Id. at * 10. Consequently, the Court held that Exclusion n also barred coverage for the claim against M&M.<\/p>\n

This case is consistent with rulings in other jurisdictions based on plain and unambiguous policy language and shows the court\u2019s willingness to apply exclusionary language to bar coverage.<\/p>\n

via South Carolina Supreme Court holds that exclusions preclude coverage for damage caused by defective work – Lexology<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

John R. Casciano and Saad Gul – August 2, 2013 In Bennett & Bennett Construction, Inc. v. Auto Owners Insurance Company, No. 27284 _ S.E.2d. _ 2013 S.C. LEXIS 170 (S.C. July 17, 2013) the Supreme Court of South Carolina, applying South Carolina law, held that that two exclusions barred coverage for a construction company\u2019s… Continue reading South Carolina Supreme Court holds that Exclusions Preclude Coverage for Damage Caused by Defective Work<\/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":[4,3],"tags":[12,19,56],"class_list":["post-2011","post","type-post","status-publish","format-standard","hentry","category-construction-defects","category-insurance-claims","tag-construction","tag-construction-defects-2","tag-property-damage","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nSouth Carolina Supreme Court holds that Exclusions Preclude Coverage for Damage Caused by Defective Work - Advise & 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\/south-carolina-supreme-court-holds-that-exclusions-preclude-coverage-for-damage-caused-by-defective-work\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"South Carolina Supreme Court holds that Exclusions Preclude Coverage for Damage Caused by Defective Work - Advise & Consult, Inc.\" \/>\n<meta property=\"og:description\" content=\"John R. 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