{"id":891853,"date":"2017-03-24T10:46:37","date_gmt":"2017-03-24T16:46:37","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=891853"},"modified":"2017-03-24T10:46:37","modified_gmt":"2017-03-24T16:46:37","slug":"faulty-work-not-covered-occurrence","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/faulty-work-not-covered-occurrence\/","title":{"rendered":"Seventh Circuit Finds Faulty Work Not a Covered \u201cOccurrence\u201d"},"content":{"rendered":"

Traub Lieberman Straus & Shrewsberry LLP<\/a> | March 21, 2017<\/p>\n

In Allied Prop. & Cas. Ins. Co. v. Metro North Condo. Ass\u2019n<\/em>, No. 16-1868, 2017 U.S. App. LEXIS 4107 (7th Cir. Mar. 8, 2017), the Seventh Circuit had occasion to consider whether claims of faulty workmanship could constitute \u201cproperty damage\u201d caused by an \u201coccurrence\u201d as required by the insuring agreement of a CGL policy.<\/p>\n

Metro North Condominium Association (\u201cMetro North\u201d) hired a developer to build a condominium in Chicago. The developer hired a subcontractor, CSC, to install the building\u2019s windows, and CSC allegedly installed the windows defectively. As a result, common elements of the building purportedly suffered significant water damage and individual condominium owners allegedly suffered damage to their personal property.<\/p>\n

Metro North sued the developer, which was insolvent. Metro North then amended its complaint and added a claim against CSC for the breach of the implied warranty of habitability. Metro North also brought a negligence claim, which was untimely and subsequently dismissed with prejudice.\u00a0 The suit proceeded with only the implied warranty claim pending against CSC.\u00a0 CSC tendered the suit to its CGL carrier, Allied Property & Casualty Insurance Company (\u201cAllied\u201d), but Allied denied coverage.<\/p>\n

In 2015, CSC and Metro North reached a settlement agreement. The agreement required Metro North to dismiss its pending lawsuit against CSC. In return, CSC assigned to Metro North all of its rights to payment of insurance coverage from Allied. The language of the agreement specified that the right to payment had to \u201carise out of the claims asserted against CSC\u201d in the underlying suit. At the time of the settlement, the only count pending against CSC was a claim for breach of implied warranty of habitability.<\/p>\n

Upon learning of the settlement agreement, Allied brought a declaratory judgment action against Metro North seeking a judgment that it was not liable for the damages claimed in the settlement agreement.\u00a0 The U.S District Court for the Northern District of Illinois granted judgment in favor of Allied, and Metro North appealed to the U.S. Circuit Court of Appeals for the Seventh Circuit.<\/p>\n

In its opinion, the Seventh Circuit stated that Allied would only be liable if the legally recoverable damages stemming from Metro North\u2019s claim were covered by the policy. The court, in affirming the District Court\u2019s decision, found that the measure of damages for a breach of implied warranty of habitability claim is the cost of repairing the \u201cdefective conditions.\u201d Under Illinois law, CGL policies do not cover the cost of repairing the insured\u2019s defectively completed work. \u00a0As such, the insuring agreement of the policies was not satisfied.<\/p>\n

Additionally, the Seventh Circuit held that Metro North did not have standing to assert a right on behalf of unit owners for the loss of their personal property. The court held that the Illinois Condominium Property Act only allows a condominium association to act on behalf of its unit owners when the claim involves common elements or more than one unit \u2013 not personal property. Thus, the court held, Metro North did not have standing to seek recovery for its unit owners\u2019 loss of personal property.<\/p>\n","protected":false},"excerpt":{"rendered":"

Traub Lieberman Straus & Shrewsberry LLP | March 21, 2017 In Allied Prop. & Cas. Ins. Co. v. Metro North Condo. Ass\u2019n, No. 16-1868, 2017 U.S. App. LEXIS 4107 (7th Cir. Mar. 8, 2017), the Seventh Circuit had occasion to consider whether claims of faulty workmanship could constitute \u201cproperty damage\u201d caused by an \u201coccurrence\u201d as… Continue reading Seventh Circuit Finds Faulty Work Not a Covered \u201cOccurrence\u201d<\/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":[309,9895,347,68,56],"class_list":["post-891853","post","type-post","status-publish","format-standard","hentry","category-construction-defects","category-general-liability-policy","category-insurance-claims","tag-occurrence","tag-advise-consult","tag-cgl-policy-occurrence","tag-faulty-workmanship","tag-property-damage","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nSeventh Circuit Finds Faulty Work Not a Covered \u201cOccurrence\u201d - 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