{"id":897188,"date":"2020-03-12T11:35:36","date_gmt":"2020-03-12T17:35:36","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=897188"},"modified":"2020-03-12T11:35:38","modified_gmt":"2020-03-12T17:35:38","slug":"wrong-construction-materials-resulting-in-damage-not-occurrence","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/wrong-construction-materials-resulting-in-damage-not-occurrence\/","title":{"rendered":"Supplying Wrong Construction Materials Resulting in Rip-and-Tear Damage Not an \u201cOccurrence,\u201d 7th Circuit Holds"},"content":{"rendered":"\n<p>Timothy Carroll and Anthony Miscioscia | <a href=\"https:\/\/coveragereporter.com\/supplying-wrong-construction-materials-resulting-in-rip-and-tear-damage-not-an-occurrence-7th-circuit-holds\/\">White and Williams<\/a><\/p>\n\n\n\n<p>The construction contract calls for International Building Code-compliant lumber. The insured doesn\u2019t supply that. What the insured does supply gets installed but then ripped out and replaced, causing damage to the surrounding property into which the lumber was integrated. Such circumstances \u2014 not uncommon in the construction industry \u2014 do not constitute an \u201coccurrence\u201d under Illinois law, according to the U.S. Court of Appeals for the Seventh Circuit in an opinion published yesterday.&nbsp;<em>Lexington Insurance Company v. Chicago Flameproof &amp; Wood Specialties Corporation<\/em>, No. 19-1062, 2020 U.S. App. LEXIS 6006 (7th Cir. Feb. 27, 2020).<\/p>\n\n\n\n<p>The insured in&nbsp;<em>Chicago Flameproof<\/em>&nbsp;was an Illinois-based \u201cdistributor of commercial building materials, including fire retardant and treated lumber (\u2018FRT lumber\u2019).\u201d A residential and commercial contractor contracted with the insured for \u201ca particular brand of FRT lumber, D-Blaze lumber, for use in the four projects.\u201d Despite the insured\u2019s alleged knowledge that the lumber was being purchased to comply with International Building Code (IBC) standards adopted in Minnesota, the site of the construction projects, the insured allegedly \u201cmade a \u2018unilateral decision\u2019 to instead deliver its in-house FlameTech brand lumber, which purportedly was not IBC-compliant FRT lumber, and \u201cthereby \u2018did not meet the IBC definition of FRT lumber\u2019 and therefore \u2018was not actually FRT lumber.\u2019\u201d Not aware of using the wrong lumber, the contractor installed it but, after later discovering it, was instructed to remove it and replace it with IBC-certified FRT lumber. Doing so resulted in damage to the \u201csurrounding materials into which the lumber had been integrated.\u201d The insured was sued for breach of contract, breach of warranties, negligent misrepresentation, and on other related causes of action.<\/p>\n\n\n\n<p>The insurer in&nbsp;<em>Chicago Flameproof<\/em>&nbsp;filed suit, seeking a declaration that it did not owe a duty to defend the insured in the underlying suit. Entering judgment for the insurer, the Illinois federal district court held that if, as alleged, the insured \u201cknowingly supplied non-IBC-compliant lumber and concealed that it did so, . . . then the property damage that allegedly resulted from tearing out that non-compliant lumber cannot be said to have been caused by an accident.\u201d On appeal, the Seventh Circuit Court of Appeals affirmed that holding, concluding the underlying suit did not allege an \u201coccurrence,\u201d defined in the policy as \u201can accident.\u201d<\/p>\n\n\n\n<p>Under Illinois law, the Court observed, an accident is \u201can unforeseen occurrence, usually of an untoward or disastrous character or an undesigned sudden or unexpected event of an inflictive or unfortunate character,\u201d and that if damage \u201c \u2018is the rational and probable consequence of the act or, stated differently, the natural and ordinary consequence of the act,\u2019 then the act \u2018is not an accident.\u2019 \u201d The Court of Appeals also observed that \u201c[f]aulty workmanship may constitute an occurrence if it results in damages that exceed the scope of the insured\u2019s work product,\u201d or \u201cwhere the insured \u2018was unaware of the defective nature\u2019 of its component until after it was incorporated into a finished product.\u201d<\/p>\n\n\n\n<p>Concluding that the underlying suit did not allege an \u201coccurrence,\u201d as so defined, the Court reasoned that \u201c[t]here was nothing regarding the natural and ordinary consequences of supplying uncertified lumber for projects that require certified lumber that was unknown or hidden to [the insured] at the time it shipped the uncertified lumber.\u201d The rip-and-tear damage alleged, therefore, \u201cwas the natural and ordinary result of [the insured\u2019s] deliberate decision to supply, and conceal that it had supplied, uncertified lumber,\u201d and thus not an \u201coccurrence.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Timothy Carroll and Anthony Miscioscia | White and Williams The construction contract calls for International Building Code-compliant lumber. The insured doesn\u2019t supply that. What the insured does supply gets installed but then ripped out and replaced, causing damage to the surrounding property into which the lumber was integrated. Such circumstances \u2014 not uncommon in the&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/wrong-construction-materials-resulting-in-damage-not-occurrence\/\">Continue reading <span class=\"screen-reader-text\">Supplying Wrong Construction Materials Resulting in Rip-and-Tear Damage Not an \u201cOccurrence,\u201d 7th Circuit Holds<\/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":[9914],"tags":[9895,6647,23,346,11106],"class_list":["post-897188","post","type-post","status-publish","format-standard","hentry","category-insurance-coverage","tag-advise-consult","tag-illinois","tag-insurance-coverage","tag-occurrences","tag-rip-and-tear-damage","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>Supplying Wrong Construction Materials Resulting in Rip-and-Tear Damage Not an \u201cOccurrence,\u201d 7th Circuit Holds - Advise &amp; 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