{"id":903671,"date":"2024-12-04T14:26:54","date_gmt":"2024-12-04T21:26:54","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=903671"},"modified":"2024-12-04T14:26:56","modified_gmt":"2024-12-04T21:26:56","slug":"subcontractors-defective-work-cgl-coverage","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/subcontractors-defective-work-cgl-coverage\/","title":{"rendered":"US Appeals Court Upholds No CGL Coverage for General Contractor for Subcontractor&#8217;s Defective Work"},"content":{"rendered":"\n<p>John Hugo, Kelly Martin Malone and Michael Robertson | <a href=\"https:\/\/www.mgmlaw.com\/news-insights\/us-appeals-court-upholds-no-cgl-coverage-for-general-contractor-for-subcontractors-defective-work\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">MG+M The Law Firm<\/a><\/p>\n\n\n\n<p>On November 8, 2024, the US Court of Appeals for the First Circuit (the Court) issued a decision in the matter of\u00a0<em>Admiral Insurance Company, et al. v. Tocci Building Corporation, et al.<\/em>, No. 22-1462 (1st Cir. 2024). The appeal concerned a dispute between a general contractor (GC) and its insurers over coverage under a commercial general liability insurance policy (CGL). The question before the Court was whether the CGL covered damage to a non-defective part of the project (Project) resulting from a <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/subcontractors-defective-work-occurrence-weedo-wobbles-falls\/\">subcontractor\u2019s defective work<\/a> on a different part of the Project. The answer to that question would determine whether the insurer had an obligation to defend and\/or indemnify the GC in an underlying suit by the Project owner alleging issues with the GC\u2019s work.\u00a0<\/p>\n\n\n\n<p>In the underlying action, the insurer denied coverage on grounds that the action \u201cdoes not include any allegations that [the GC] is liable for property damage caused by an occurrence, as those terms are defined in the policy.\u201d In granting the insurers\u2019 motion for summary judgment, the district court reasoned that the allegation did not meet either requirement. The damage alleged was neither \u201cproperty damage\u201d because it was damage to the GC\u2019s project nor was the damage \u201ccaused by an occurrence\u201d because faulty workmanship does not constitute an occurrence.<\/p>\n\n\n\n<p>On appeal, the Court affirmed the insurers\u2019 denial of coverage, but for a different reason. The Court relied upon the \u201cYour Work\u201d property damage exclusion found in most CGL policies for GCs. Under this exclusion, there is no coverage for \u201cproperty damage\u201d to &#8220;[t]hat particular part of any property that must be restored, repaired or replaced because &#8216;Your work&#8217; was incorrectly performed on it.&#8221; The CGL policy defines &#8220;Your work&#8221; as work performed by or on behalf of the GC.&nbsp;<\/p>\n\n\n\n<p>The GC argued the exclusion did not apply because it was not seeking coverage to repair and replace damage to Property directly caused by its subcontractor\u2019s defective work, but rather property damage to another part of the Project indirectly caused by the subcontractor\u2019s defective work. The Court did not agree. Applying Massachusetts state law, the Court found that the &#8220;particular part of any property&#8221; referenced in the \u201cYour Work\u201d exclusion refers to the entire Project because the GC was charged with managing the Project as a whole. The \u201cYour Work\u201d exclusion therefore applies, and the claim is not covered.<\/p>\n\n\n\n<p>The Court opted to find there is no coverage under the \u201cYour Work\u201d exclusion rather than the \u201cproperty damage\u201d\/ \u201coccurrence\u201d analysis as the Court recognized that there is a sharp split in authority as to whether damage to non-defective work resulting from a subcontractor\u2019s defective work constitutes \u201cproperty damage\u201d or is caused by an \u201coccurrence.\u201d The recent trend has courts interpreting \u201coccurrence\u201d to include unanticipated damage to non-defective property resulting from poor workmanship. The Court noted that the SJC has yet to rule on this issue and was reluctant to predict how they might. Therefore, the Court decided to \u201csidestep th[e] issue by focusing on the exclusions\u2026\u201d rather than speculating as to how the SJC may rule on this issue in the future.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>John Hugo, Kelly Martin Malone and Michael Robertson | MG+M The Law Firm On November 8, 2024, the US Court of Appeals for the First Circuit (the Court) issued a decision in the matter of\u00a0Admiral Insurance Company, et al. v. Tocci Building Corporation, et al., No. 22-1462 (1st Cir. 2024). The appeal concerned a dispute&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/subcontractors-defective-work-cgl-coverage\/\">Continue reading <span class=\"screen-reader-text\">US Appeals Court Upholds No CGL Coverage for General Contractor for Subcontractor&#8217;s Defective Work<\/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":[10791,4,30],"tags":[9895,5496,918,157],"class_list":["post-903671","post","type-post","status-publish","format-standard","hentry","category-commercial-general-liability-policy","category-construction-defects","category-general-liability-policy","tag-advise-consult","tag-cgl-coverage","tag-defective-work","tag-subcontractor","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>US Appeals Court Upholds No CGL Coverage for General Contractor for Subcontractor&#039;s Defective Work - Advise &amp; 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