{"id":891139,"date":"2016-10-19T14:43:18","date_gmt":"2016-10-19T20:43:18","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=891139"},"modified":"2016-10-19T14:43:18","modified_gmt":"2016-10-19T20:43:18","slug":"defective-workmanship-may-covered-occurrence-winds-change-sweep-iowa","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/defective-workmanship-may-covered-occurrence-winds-change-sweep-iowa\/","title":{"rendered":"Defective Workmanship May Be a Covered Occurrence as Winds of Change Sweep through Iowa"},"content":{"rendered":"<p>David L. Beck | <a href=\"http:\/\/www.lexology.com\/library\/detail.aspx?g=939a8950-0d7c-4325-8210-c2beaf1eb55d\" target=\"_blank\">Pillsbury Winthrop Shaw Pittman LLP<\/a> | September 19, 2016<\/p>\n<p>Over the past four months, a trio of cases has introduced a policyholder-friendly breath of fresh air to Iowa insurance coverage law as Iowa state and federal courts have found that defective workmanship may constitute a covered occurrence under the plain language of CGL policies.<\/p>\n<p><strong>Before the Storm<\/strong><\/p>\n<p>In 1999, the Iowa Supreme Court held in <em>Pursell Const., Inc. v. Hawkeye-Security Ins. Co.<\/em> that defective workmanship of an insured, standing alone, is not an occurrence under a CGL policy. In <em>Pursell<\/em>, the insured defectively constructed two houses below the floodplain in violation of local ordinance. The insured sought coverage for the costs to raise the level of the houses. The court held that because the insured\u2019s defective workmanship did not cause damage to property other than the insured\u2019s work product itself (the houses), there was no occurrence and so there was no coverage.<\/p>\n<p><strong>An Initial Gust<\/strong><\/p>\n<p>This June, the Iowa Supreme Court considered a closely related question: can defective workmanship by an insured\u2019s <em>subcontractor<\/em> be a covered occurrence? In <em>National Surety Corp. v. West Lake Investments, LLC <\/em>, the insured was liable for interior water damage to a 300-unit apartment complex because of the defective work of its subcontractor. The CGL policy excluded coverage for damages to the insured\u2019s work, but the exclusion excepted damages arising from work performed by a subcontractor on the insured\u2019s behalf. The court held that the policy expressly contemplates coverage for third-party property damage caused by defective workmanship by an insured\u2019s subcontractor.<\/p>\n<p><strong>A Second Wind<\/strong><\/p>\n<p>In August, the Eighth Circuit held that damages resulting from the insured\u2019s <em>own <\/em>defective work also can constitute an occurrence under Iowa law where there is damage to third-party property. In <em>Decker Plastics v. West Bend Mut. Ins. Co.<\/em>, the Eighth Circuit found that the insured\u2019s defective manufacture of plastic bags, which disintegrated and contaminated landscaping materials placed in the bags, constituted an occurrence. In overturning the district court\u2019s decision, the Eighth Circuit explained that although the bags were defective, their deterioration was unexpected and resulted in damage to other property. The Eighth Circuit wrote: \u201cWe predict that the Supreme Court of Iowa would \u2026 limit its holding in Pursell to cases where the alleged \u2018occurrence\u2019 is \u2018defective workmanship\u2019 standing alone, that is, resulting in damages only to the work product itself.\u201d<\/p>\n<p><strong>A Steady Gale<\/strong><\/p>\n<p>In September, an Iowa district court declined a request to certify to the Iowa Supreme Court the question whether a CGL policy provides coverage for product liability claims where the faulty work stems from the insured\u2019s own product and\/or installation. The case, <em>Pella Corp. v. Liberty Mut. Ins. Co.<\/em>, involves alleged defects in the insured\u2019s windows resulting in water damage to buildings. The court did not address the ultimate impact of the <em>Decker Plastics<\/em> case discussed above, but noted that \u201cit does provide a statement of the law on the issue in this circuit.\u201d The district court found that the question to be certified\u2014\u201cwhether third party property damage caused by an insured\u2019s defective work or product can be an \u2018occurrence\u2019 under a CGL policy\u201d\u2014may be determinative of the case, but also that Iowa law is settled on the issue, and the district court has \u201csufficient resources to decide the question.\u201d Accordingly, certification was refused. A decision in this case will provide further guidance and clarification as to the extent of coverage in Iowa for damages arising from defective workmanship, whether performed by the insured or its subcontractor.<\/p>\n<p>It takes more than the occasional crosswind to permanently shift the interpretation of CGL policy, but these three cases suggest that observers of Iowa CGL law would do well to keep an eye on the weather vane.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>David L. Beck | Pillsbury Winthrop Shaw Pittman LLP | September 19, 2016 Over the past four months, a trio of cases has introduced a policyholder-friendly breath of fresh air to Iowa insurance coverage law as Iowa state and federal courts have found that defective workmanship may constitute a covered occurrence under the plain language&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/defective-workmanship-may-covered-occurrence-winds-change-sweep-iowa\/\">Continue reading <span class=\"screen-reader-text\">Defective Workmanship May Be a Covered Occurrence as Winds of Change Sweep through Iowa<\/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":[309,392,238,9830],"class_list":["post-891139","post","type-post","status-publish","format-standard","hentry","category-construction-defects","category-general-liability-policy","category-insurance-claims","tag-occurrence","tag-cgl-policy","tag-defective-workmanship","tag-iowa","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>Defective Workmanship May Be a Covered Occurrence as Winds of Change Sweep through Iowa - Advise &amp; 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