{"id":885766,"date":"2015-11-25T06:33:27","date_gmt":"2015-11-25T13:33:27","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=885766"},"modified":"2015-11-24T15:42:11","modified_gmt":"2015-11-24T22:42:11","slug":"new-jersey-appellate-court-holds-that-coverage-exists-for-consequential-damages-caused-by-subcontractors-defective-work","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/new-jersey-appellate-court-holds-that-coverage-exists-for-consequential-damages-caused-by-subcontractors-defective-work\/","title":{"rendered":"New Jersey Appellate Court Holds That Coverage Exists for Consequential Damages Caused By Subcontractors\u2019 Defective Work"},"content":{"rendered":"<p>Denise N. Yasinow, Loly G. Tor and Christopher A. Barbarisi | K &amp; L Gates | November 23, 2015<\/p>\n<p>This past summer, the Superior Court of New Jersey, Appellate Division issued a favorable decision for owners, real estate developers, and general contractors regarding insurance coverage for damages caused by the faulty work of their subcontractors.\u00a0 In <em><u>C<\/u><\/em><u>ypress Point Condominium Association, Inc.<\/u><u> v. Adria Towers, LLC<\/u>,\u00a0the Court held that unexpected and unintended consequential damages caused by a subcontractor\u2019s <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/alabama-joins-recent-trend-states-finding-defective-work-may-covered-commercial-general-liability-policy\/\" target=\"_blank\">defective work<\/a> constitutes \u201cproperty damage\u201d caused by an \u201coccurrence\u201d under a commercial general liability (\u201cCGL\u201d) insurance policy.\u00a0 Thus, these types of consequential damages are recoverable.<\/p>\n<p>The <u>Cypress Point<\/u> decision roundly rejected the Third Circuit\u2019s opinion in <u>P<\/u><u>ennsylvania National Mutual Casualty Insurance Co. v. Parkshore Development Corp.<\/u>,\u00a0which concluded that <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/sixth-circuit-finds-no-coverage-for-property-damage-caused-by-faulty-workmanship\/\" target=\"_blank\">faulty workmanship<\/a> performed by a contractor or a subcontractor that causes damage to the general contractor\u2019s work is not an \u201coccurrence.\u201d<\/p>\n<p>In <u>Cypress Point<\/u>, the plaintiff, a condominium association, brought an action against the association\u2019s developer, the developer\u2019s two insurers, and various subcontractors.\u00a0 The developer served as the general contractor on the condominium project and hired the subcontractors to perform all construction work.\u00a0 The plaintiff sought coverage from the insurers under the developer\u2019s CGL policies for consequential damages caused by the subcontractors\u2019 defective work.\u00a0 According to the plaintiff, the subcontractors improperly installed the roof, flashing, gutters and leaders, brick and EIFS facade, windows, doors, and sealants.\u00a0 The <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/pennsylvania-court-holds-faulty-workmanship-not-an-occurrence\/\" target=\"_blank\">faulty workmanship<\/a> caused consequential damages to the common areas of the condominium complex and to the unit owners\u2019 property.<\/p>\n<p>The trial court granted summary judgment to one insurer and dismissed the complaint against the other insurer as moot, determining that there was no \u201cproperty damage\u201d or \u201coccurrence\u201d as required by the policy to trigger coverage.<\/p>\n<p>On appeal, the plaintiff raised two main arguments.\u00a0 First, the plaintiff argued that under a plain reading of the policy language, consequential damages constitute \u201cproperty damage\u201d and an \u201coccurrence.\u201d\u00a0 Second, the plaintiff argued that the trial judge erroneously placed substantial reliance on the holdings in <u>Weedo v. Stone\u2013E\u2013Brick, Inc.<\/u>, 81 N.J. 233 (1979) and <u>Firemen\u2019s Insurance Co. of Newark v. National Union Fire Insurance Co.<\/u>, 387 N.J. Super. 434 (App. Div. 2006) to determine whether there existed \u201cproperty damage\u201d and an \u201coccurrence.\u201d<\/p>\n<p>On the first argument, the <u><a href=\"https:\/\/www.myconstructionexpert.com\/blog\/defective-construction-can-be-a-covered-occurrence-in-new-jersey-the-end-of-weedo\/\" target=\"_blank\">Cypress Point<\/a><\/u> Court found that consequential damages constitute \u201cproperty damage\u201d and an \u201coccurrence\u201d as defined in the policy.\u00a0 On the second argument, the Court concluded that the trial judge erroneously applied the holdings in <u>Weedo<\/u> and <u>Firemen\u2019s<\/u> and readily distinguished the cases on two grounds.\u00a0 First, the Court concluded that <u>Weedo<\/u> and <u>Firemen\u2019s<\/u>involved only replacement costs of correcting the defective work itself (cost of replacing stucco in<u>Weedo<\/u> and replacing firewalls in <u>Firemen\u2019s)<\/u> rather than the costs of curing consequential damages caused by defective work. \u00a0Second,&#8230;<\/p>\n<p><a href=\"http:\/\/www.klconstructionlawblog.com\/2015\/11\/articles\/uncategorized\/new-jersey-appellate-court-holds-that-coverage-exists-for-consequential-damages-caused-by-subcontractors-defective-work\/?utm_source=K%26L+Gates+-+Construction+Law+Blog&amp;utm_campaign=ab5648d1bc-RSS_EMAIL_CAMPAIGN&amp;utm_medium=email&amp;utm_term=0_3e9d26ab6d-ab5648d1bc-70724877\" target=\"_blank\">To finish reading this article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Denise N. Yasinow, Loly G. Tor and Christopher A. Barbarisi | K &amp; L Gates | November 23, 2015 This past summer, the Superior Court of New Jersey, Appellate Division issued a favorable decision for owners, real estate developers, and general contractors regarding insurance coverage for damages caused by the faulty work of their subcontractors.\u00a0&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/new-jersey-appellate-court-holds-that-coverage-exists-for-consequential-damages-caused-by-subcontractors-defective-work\/\">Continue reading <span class=\"screen-reader-text\">New Jersey Appellate Court Holds That Coverage Exists for Consequential Damages Caused By Subcontractors\u2019 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":[918,68],"class_list":["post-885766","post","type-post","status-publish","format-standard","hentry","category-construction-defects","category-insurance-claims","tag-defective-work","tag-faulty-workmanship","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>New Jersey Appellate Court Holds That Coverage Exists for Consequential Damages Caused By Subcontractors\u2019 Defective Work - Advise &amp; 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