{"id":888795,"date":"2016-05-18T11:08:28","date_gmt":"2016-05-18T17:08:28","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=888795"},"modified":"2016-05-18T11:08:28","modified_gmt":"2016-05-18T17:08:28","slug":"recent-illinois-decision-fortifies-precedent-that-construction-defects-fail-to-trigger-occurrence-under-cgl-policies","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/recent-illinois-decision-fortifies-precedent-that-construction-defects-fail-to-trigger-occurrence-under-cgl-policies\/","title":{"rendered":"Recent Illinois Decision Fortifies Precedent that Construction Defects Fail to Trigger Occurrence under CGL Policies"},"content":{"rendered":"

Thomas G. Cronin | Gordon & Rees LLP | May 10, 2016<\/p>\n

A recent decision in the United States District Court for the Northern District of Illinois slammed home standing precedent concerning whether a construction defect triggers an \u201coccurrence\u201d<\/a> that would be covered under a commercial general liability (\u201cCGL\u201d) policy. In Allied Property & Casualty Insurance Co. v. Metro North Condominium Association<\/em>, Judge Jorge Alonso granted the plaintiff\u2019s motion for summary judgment and denied the defendant\u2019s motion for summary judgment, essentially rejecting the argument that an underlying construction defect claim was covered under a CGL policy.<\/p>\n

Allied Property<\/em> arose from an underlying lawsuit in Cook County, Illinois, where Metro North Condominium Association (\u201cMetro North\u201d) sued the developer and various contractors and subcontractors of its condominium due to several defects in the construction, including, most notably, water infiltration. As part of its complaint, Metro North alleged that a window installation subcontractor breached its implied warranty of habitability when it defectively and improperly installed windows in the building, which led to severe water infiltration following a large rainstorm in October 2006. Allied Property & Casualty Insurance Co. (\u201cAllied\u201d) had issued a CGL policy<\/a> to the window installer during the effective policy period, and Allied provided the contractor with an independent defense under a reservation of rights.<\/p>\n

During the course of litigation, Metro North entered into a settlement with the window installation contractor for $700,000, the amount of which was to be satisfied \u201csolely through the assignment\u2026of all [its] rights to payment, if any, from Allied\u201d under the applicable CGL policy. The policy required Allied to pay any amount its insured becomes legally obligated to pay \u201cas damages because of\u2026\u2019property damage<\/a>\u2019\u2026caused by an occurrence.\u201d Allied then filed its motion for summary judgment in the Northern District of Illinois, seeking declaration that there was no coverage available with respect to Metro North\u2019s settlement.<\/p>\n

In arriving at its opinion, the Northern District had to delve into Illinois precedent. Specifically, the Illinois Appellate Court in 2011 held that \u201cthere is no occurrence when a subcontractor\u2019s defective workmanship necessitates removing and repairing work,\u201d but when the defective workmanship results in damage to something other than the construction project itself, there may be an occurrence (see Milwaukee Mutual Insurance Co. v. J.P. Larsen, Inc., <\/em>956 N.E.2d 524, 531 (Ill. App. Ct. 2011)).<\/p>\n

Metro North\u2019s claimed damages constituted approximately $2.1 million in damages caused by water infiltration to the common elements of the building, and just under $200,000 in damages to personal or other property. The court, in issuing its opinion, maintained Illinois\u2019 longstanding precedent that a construction defect is not an \u201coccurrence\u201d<\/a> that would trigger liability under a CGL policy because, here, the damages were the ordinary consequence of the contractor\u2019s defective window installation. Specifically, the Northern District ruled that the severe bulk of the damages sought were not caused by an \u201coccurrence,\u201d but were rather the natural and ordinary consequence of faulty workmanship. In putting the nail in the coffin, the court held: \u201cWhen a subcontractor who installs windows performs defective work, the natural and ordinary consequence is water infiltration that will damage the rest of the building. There is no accident, so there is no occurrence, so there is no coverage.\u201d<\/p>\n

The Allied Property<\/em> holding is only the most recent cautionary tale for owners and contractors alike who are parties to a construction project in Illinois and who may not be able to realize coverage under a CGL policy for any resulting defect in the construction.<\/p>\n

Source<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Thomas G. Cronin | Gordon & Rees LLP | May 10, 2016 A recent decision in the United States District Court for the Northern District of Illinois slammed home standing precedent concerning whether a construction defect triggers an \u201coccurrence\u201d that would be covered under a commercial general liability (\u201cCGL\u201d) policy. In Allied Property & Casualty… Continue reading Recent Illinois Decision Fortifies Precedent that Construction Defects Fail to Trigger Occurrence under CGL Policies<\/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":[4,30,3],"tags":[392,19],"class_list":["post-888795","post","type-post","status-publish","format-standard","hentry","category-construction-defects","category-general-liability-policy","category-insurance-claims","tag-cgl-policy","tag-construction-defects-2","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nRecent Illinois Decision Fortifies Precedent that Construction Defects Fail to Trigger Occurrence under CGL Policies - 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