{"id":892326,"date":"2017-06-12T18:26:45","date_gmt":"2017-06-13T00:26:45","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=892326"},"modified":"2017-06-12T18:26:45","modified_gmt":"2017-06-13T00:26:45","slug":"courts-misunderstand-meaning-particular-part","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/courts-misunderstand-meaning-particular-part\/","title":{"rendered":"Courts Misunderstand the Meaning of \u201cThat Particular Part\u201d"},"content":{"rendered":"

David Smith | Policyholder Perspective<\/a> | June 7, 2017<\/p>\n

This is part one of a two-part series looking at how court decisions in recent years have thwarted general contractors\u2019 reasonable expectation of coverage under their general liability policies.<\/p>\n

In early March, the Ninth Circuit Court of Appeals issued an unpublished opinion in\u00a0Archer Western Contractors v. National Union<\/em>, No. 15-55648 (filed Mar. 2 2017). The opinion held that the phrase \u201cthat particular part\u201d as used in the \u201cDamage to Property\u201d exclusions in a CGL policy must be interpreted broadly to encompass \u201cthe entire project on which a general contractor is performing operations.\u201d This is not the first time the Ninth Circuit has issued an unpublished opinion interpreting \u201cthat particular part\u201d to apply to the entirety of a project.<\/p>\n

The Ninth Circuit in these cases ignored the plain meaning of words that the insurance industry itself has explained should be construed in the\u00a0narrowest possible<\/em><\/strong>\u00a0sense. Policyholders, particularly general contractors, should beware this worrisome trend in the courts, as it is creating the potential for a gap in ongoing operations coverage that was not meant to exist.<\/span><\/p>\n

There are two exclusions in a standard CGL policy that use the phrase \u201cthat particular part\u201d \u2013 exclusions j(5) and j(6), both of which are subsections of the \u201cDamage to Property\u201d exclusions. Exclusion j(5) bars coverage for liability because of damage to \u201cthat particular part of any real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the \u2018property damage\u2019 arises out of those operations.\u201d Exclusion j(6) reads \u201cthat particular part of any property that must be restored, repaired or replaced because \u2018your work\u2019 was incorrectly performed on it.\u201d The standard CGL policy separately states that j(6) does not apply to property damage included in the products-completed operations hazard. In other words, like j(5), it only applies to property damage from ongoing operations.<\/p>\n

The\u00a0Archer Western\u00a0<\/em>court relied in part on\u00a0Clarendon Am. Ins. Co. v. Gen. Sec. Indem. Co. of Arizona<\/em>, 193 Cal. App.\u00a0<\/sup>4th 1311 (2011). Without discussing the meaning of \u201cthat particular part,\u201d the\u00a0Clarendon<\/em>\u00a0court stated that \u201cthese faulty workmanship exclusions preclude coverage for deficiencies in the insured\u2019s work.\u201d\u00a0Id<\/em>. at 1325. But the Ninth Circuit in\u00a0Archer Western\u00a0<\/em>actually went much further by saying that the phrase \u201cthat particular part\u201d encompasses the entire project on which a general contractor is performing operations.\u201d It makes this statement without regard to: (1) whether subcontractors performed some or all of the work involved, either the faulty work itself or other work subsequently damaged because of the faulty work; or (2) who owns the work damaged because of the faulty work.<\/p>\n

It is widely accepted that CGL policies are not performance bonds, and are not intended to provide coverage for a contractor\u2019s own bad workmanship. However, they\u00a0are<\/em><\/strong>\u00a0intended to provide coverage for consequential damage to other property caused by that bad workmanship.<\/p>\n

Industry materials dating from the time these exclusions were introduced and approved by state departments of insurance across the country flatly contradict both the\u00a0Archer Western\u00a0<\/em>and\u00a0Clarendon<\/em>\u00a0courts\u2019 interpretation of \u201cthat particular part.\u201d Materials distributed by the Insurance Services Office (the largest insurance rating and drafting organization in the country, which drafted the language in question) to insurance companies in 1979 made clear that the exclusions only apply to the particular part on which the insured is actually working when the damage occurs. \u201cWhere the damage caused by the insured in the performance of his operations goes beyond damage to the property on which he is working,\u00a0this section limits the exclusion to the particular part on which he is working<\/em><\/strong>.\u201d ISO Circular \u201cBroad Form Property Damage Explained<\/u>\u201d January 29, 1979 (emphasis added). Courts consider insurance industry materials when determining the scope of policy language (see, e.g.<\/em>,\u00a0Maryland Cas. Co. v. Reeder<\/em>, 221 Cal. App. 3d 961 (1990)). The\u00a0Archer<\/em>\u00a0Western\u00a0<\/em>court apparently did not do so.<\/p>\n

The ISO Circular attached a list of hypotheticals showing the application of coverage. Among them are \u201cPainter is burning paint off a house with a torch and sets fire to the house.\u201d ISO states that the claim would be \u201cCovered except for \u2018that particular part\u2019 to which the torch was applied.\u201d Another example given was \u201cServiceman working on television in owner\u2019s home blows out picture tube while tinkering with another tube, or tips set over damaging other parts.\u201d ISO concludes the loss would be \u201cCovered since picture tube or other parts are not \u2018that particular part\u2019 on which operation [sic] are being performed.\u201d<\/p>\n

Leaving aside quaint thoughts of burning paint off a house or mending a tube television set, these examples emphasize that the \u201cthat particular part\u201d language was intended by the insurance industry to limit the exclusion to the smallest division of a job possible. Coming back to the present day and the current CGL form, another ISO Circular from 1985 made clear that the new style form (then soon to be introduced and which contains the same standard language that\u00a0Clarendon<\/em>,\u00a0Archer Western<\/em>\u00a0and other courts have interpreted) \u201cwould result in substantially the same coverage as provided in the current basic contract when amended by the Broad From Endorsement.\u201d ISO Circular \u201cAmended Commercial General Liability Coverage Forms Submitted<\/u>\u201d February 22, 1985 at p.6.<\/p>\n

In our view,\u00a0Clarendon<\/em>\u00a0is a badly reasoned and badly decided case from the California Court of Appeal Fourth District for several reasons, of which this is only one. It is interesting that it is an insurer v. insurer case that gives insurers a significant windfall and relies on underlying issues that were stipulated to by the two insurers involved. The Ninth Circuit in\u00a0Archer Western<\/em>, other Ninth Circuit panels and other courts have badly misconstrued, and in some cases ignored altogether, the insurance industry\u2019s own interpretation that the phrase \u201cthat particular part\u201d should be construed narrowly, and numerous subsequent industry commentators\u2019 affirmation of the narrow interpretation.<\/p>\n

While some recent decisions adopting an overly broad interpretation of \u201cthat particular part\u201d have been \u201cunpublished,\u201d they are worrisome nonetheless. In pending and future lawsuits over this issue, policyholder counsel should educate the courts about the history of the phrase \u201cthat particular part\u201d and zealously advocate for what should be an indisputably reasonable interpretation \u2013 that the exclusionary language \u201cthat particular part\u201d be interpreted narrowly to apply to the smallest division of a job possible.<\/p>\n","protected":false},"excerpt":{"rendered":"

David Smith | Policyholder Perspective | June 7, 2017 This is part one of a two-part series looking at how court decisions in recent years have thwarted general contractors\u2019 reasonable expectation of coverage under their general liability policies. In early March, the Ninth Circuit Court of Appeals issued an unpublished opinion in\u00a0Archer Western Contractors v.… Continue reading Courts Misunderstand the Meaning of \u201cThat Particular Part\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":[30,9914],"tags":[9895,4739,201,23],"class_list":["post-892326","post","type-post","status-publish","format-standard","hentry","category-general-liability-policy","category-insurance-coverage","tag-advise-consult","tag-commercial-general-liability-policy","tag-general-contractors","tag-insurance-coverage","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nCourts Misunderstand the Meaning of \u201cThat Particular Part\u201d - Advise & Consult, Inc.<\/title>\n<meta name=\"description\" content=\"how court decisions in recent years have thwarted general contractors\u2019 reasonable expectation of coverage under their general liability policies\" \/>\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\/courts-misunderstand-meaning-particular-part\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Courts Misunderstand the Meaning of \u201cThat Particular Part\u201d - Advise & Consult, Inc.\" \/>\n<meta property=\"og:description\" content=\"how court decisions in recent years have thwarted general contractors\u2019 reasonable expectation of coverage under their general liability policies\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.myconstructionexpert.com\/blog\/courts-misunderstand-meaning-particular-part\/\" \/>\n<meta property=\"og:site_name\" content=\"Advise & Consult, Inc.\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Advise-Consult-Inc-126949043996790\/\" \/>\n<meta property=\"article:published_time\" content=\"2017-06-13T00:26:45+00:00\" \/>\n<meta name=\"author\" content=\"admin\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@adviseconsult\" \/>\n<meta name=\"twitter:site\" content=\"@adviseconsult\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/courts-misunderstand-meaning-particular-part\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/courts-misunderstand-meaning-particular-part\/\"},\"author\":{\"name\":\"admin\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/0a11abe008083d5fb19c2b0feefe7bd7\"},\"headline\":\"Courts Misunderstand the Meaning of \u201cThat Particular Part\u201d\",\"datePublished\":\"2017-06-13T00:26:45+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/courts-misunderstand-meaning-particular-part\/\"},\"wordCount\":1056,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#organization\"},\"keywords\":[\"Advise & Consult\",\"Commercial General Liability Policy\",\"General Contractors\",\"insurance coverage\"],\"articleSection\":[\"General Liability Policy\",\"Insurance Coverage\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.myconstructionexpert.com\/blog\/courts-misunderstand-meaning-particular-part\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/courts-misunderstand-meaning-particular-part\/\",\"url\":\"https:\/\/www.myconstructionexpert.com\/blog\/courts-misunderstand-meaning-particular-part\/\",\"name\":\"Courts Misunderstand the Meaning of \u201cThat Particular Part\u201d - Advise & Consult, Inc.\",\"isPartOf\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#website\"},\"datePublished\":\"2017-06-13T00:26:45+00:00\",\"description\":\"how court decisions in recent years have thwarted general contractors\u2019 reasonable expectation of coverage under their general liability policies\",\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.myconstructionexpert.com\/blog\/courts-misunderstand-meaning-particular-part\/\"]}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#website\",\"url\":\"https:\/\/www.myconstructionexpert.com\/blog\/\",\"name\":\"Advise & Consult, Inc.\",\"description\":\"Construction Expert Witnesses\",\"publisher\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.myconstructionexpert.com\/blog\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#organization\",\"name\":\"Advise & Consult\",\"url\":\"https:\/\/www.myconstructionexpert.com\/blog\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/www.myconstructionexpert.com\/blog\/wp-content\/uploads\/2015\/11\/AC-Red-Logo.png\",\"contentUrl\":\"https:\/\/www.myconstructionexpert.com\/blog\/wp-content\/uploads\/2015\/11\/AC-Red-Logo.png\",\"width\":162,\"height\":75,\"caption\":\"Advise & Consult\"},\"image\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/logo\/image\/\"},\"sameAs\":[\"https:\/\/www.facebook.com\/Advise-Consult-Inc-126949043996790\/\",\"https:\/\/x.com\/adviseconsult\",\"https:\/\/www.linkedin.com\/company-beta\/204526\/\",\"https:\/\/www.youtube.com\/user\/MrConstructionExpert\"]},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/0a11abe008083d5fb19c2b0feefe7bd7\",\"name\":\"admin\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/b01e71b7acadd7657af782b7ad1a30cc?s=96&d=mm&r=pg\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/b01e71b7acadd7657af782b7ad1a30cc?s=96&d=mm&r=pg\",\"caption\":\"admin\"},\"sameAs\":[\"http:\/\/www.expertwitnessinconstruction.com\"]}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Courts Misunderstand the Meaning of \u201cThat Particular Part\u201d - Advise & Consult, Inc.","description":"how court decisions in recent years have thwarted general contractors\u2019 reasonable expectation of coverage under their general liability policies","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.myconstructionexpert.com\/blog\/courts-misunderstand-meaning-particular-part\/","og_locale":"en_US","og_type":"article","og_title":"Courts Misunderstand the Meaning of \u201cThat Particular Part\u201d - Advise & Consult, Inc.","og_description":"how court decisions in recent years have thwarted general contractors\u2019 reasonable expectation of coverage under their general liability policies","og_url":"https:\/\/www.myconstructionexpert.com\/blog\/courts-misunderstand-meaning-particular-part\/","og_site_name":"Advise & Consult, Inc.","article_publisher":"https:\/\/www.facebook.com\/Advise-Consult-Inc-126949043996790\/","article_published_time":"2017-06-13T00:26:45+00:00","author":"admin","twitter_card":"summary_large_image","twitter_creator":"@adviseconsult","twitter_site":"@adviseconsult","twitter_misc":{"Written by":"admin","Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.myconstructionexpert.com\/blog\/courts-misunderstand-meaning-particular-part\/#article","isPartOf":{"@id":"https:\/\/www.myconstructionexpert.com\/blog\/courts-misunderstand-meaning-particular-part\/"},"author":{"name":"admin","@id":"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/0a11abe008083d5fb19c2b0feefe7bd7"},"headline":"Courts Misunderstand the Meaning of \u201cThat Particular Part\u201d","datePublished":"2017-06-13T00:26:45+00:00","mainEntityOfPage":{"@id":"https:\/\/www.myconstructionexpert.com\/blog\/courts-misunderstand-meaning-particular-part\/"},"wordCount":1056,"commentCount":0,"publisher":{"@id":"https:\/\/www.myconstructionexpert.com\/blog\/#organization"},"keywords":["Advise & Consult","Commercial General Liability Policy","General Contractors","insurance coverage"],"articleSection":["General Liability Policy","Insurance Coverage"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.myconstructionexpert.com\/blog\/courts-misunderstand-meaning-particular-part\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.myconstructionexpert.com\/blog\/courts-misunderstand-meaning-particular-part\/","url":"https:\/\/www.myconstructionexpert.com\/blog\/courts-misunderstand-meaning-particular-part\/","name":"Courts Misunderstand the Meaning of \u201cThat Particular Part\u201d - Advise & Consult, Inc.","isPartOf":{"@id":"https:\/\/www.myconstructionexpert.com\/blog\/#website"},"datePublished":"2017-06-13T00:26:45+00:00","description":"how court decisions in recent years have thwarted general contractors\u2019 reasonable expectation of coverage under their general liability policies","inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.myconstructionexpert.com\/blog\/courts-misunderstand-meaning-particular-part\/"]}]},{"@type":"WebSite","@id":"https:\/\/www.myconstructionexpert.com\/blog\/#website","url":"https:\/\/www.myconstructionexpert.com\/blog\/","name":"Advise & Consult, Inc.","description":"Construction Expert Witnesses","publisher":{"@id":"https:\/\/www.myconstructionexpert.com\/blog\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.myconstructionexpert.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.myconstructionexpert.com\/blog\/#organization","name":"Advise & Consult","url":"https:\/\/www.myconstructionexpert.com\/blog\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/logo\/image\/","url":"https:\/\/www.myconstructionexpert.com\/blog\/wp-content\/uploads\/2015\/11\/AC-Red-Logo.png","contentUrl":"https:\/\/www.myconstructionexpert.com\/blog\/wp-content\/uploads\/2015\/11\/AC-Red-Logo.png","width":162,"height":75,"caption":"Advise & Consult"},"image":{"@id":"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/Advise-Consult-Inc-126949043996790\/","https:\/\/x.com\/adviseconsult","https:\/\/www.linkedin.com\/company-beta\/204526\/","https:\/\/www.youtube.com\/user\/MrConstructionExpert"]},{"@type":"Person","@id":"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/0a11abe008083d5fb19c2b0feefe7bd7","name":"admin","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/b01e71b7acadd7657af782b7ad1a30cc?s=96&d=mm&r=pg","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/b01e71b7acadd7657af782b7ad1a30cc?s=96&d=mm&r=pg","caption":"admin"},"sameAs":["http:\/\/www.expertwitnessinconstruction.com"]}]}},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p2ztG6-3K8m","jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/posts\/892326","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/comments?post=892326"}],"version-history":[{"count":1,"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/posts\/892326\/revisions"}],"predecessor-version":[{"id":892327,"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/posts\/892326\/revisions\/892327"}],"wp:attachment":[{"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/media?parent=892326"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/categories?post=892326"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/tags?post=892326"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}