have consistently and testing. Id. The defective work related The - PDF document

General Contractors, General Contractors-- There is Coverage Under the CGL Policy for Defective Work' Pe ormed by a Subcontractor Presented by Wm. Cary Wright 7, Carlton Fields, P.A. have consistently and testing. Id. The defective work related The focal point of the J.S.U.B. court's Iorida courts taken the position that Compre- to the soil was performed exclusively by the "Damage holding involved to Your hensive General Liability (hereaf- subcontractors, id. Coverage was sought Work" exclusion. However, the J.S.U.B. ter "CGL")insurance policies do by the builder under its CGL policy •. Id. The policy also contained an exception to not cover defective work performed by a insurer denied coverage and "maintained the "Damage to Your Work" exclusion, which stated "[t]his exclusion does not general contractor. In the past, this rule that the policies did not cover damage to also included defective work performed the Builder's own work or product that apply if the damaged work or the work by a subcontractor on a general contrac- resulted from the Builder's a subcon- of which the damage arises out or was tor's behalf. LaMarche v. Shelby Mutual tractor's faulty workmanship." Id. This is performed on your behalf by a subcon- Insurance Co., 390 So. 2d 325 (Fla. 1980); commonly referred to as the "Damage to tractor." Id. at •4. The insurer argued that Auto-Owners Co. Marvin Dev. Your Work" exclusion to CGL policies. Ins. the court need look at exclusions not v. exceptions policy because if the or doesn't allow for then coverage, an exclusion cannot create such coverage. court agreed Id. However, the at 16. appellant's with the contention that Florida courts have consistently taken the position "the policies must be read a whole as that Comprehensive General Liability' insurance of the policies should and be no part viewed as having no effect at all Id. at policies do not cover defective work performed •17. "This argument is consistent with the by a goneral contractor. dictates of CTC Development that reading a policy's coverage provisions together with its exceptions may provide support for a conclusion that the policy provides coverage for a given occurrence." J.S.U.B., Corp., 805 So. 2d 888 (Fla. 2d DCA 2001) In J.S.U.B., the trial court relied 30 Fla. L. Weekly D at •17. If the court on Lassiter Constr. Co. v. Am. States Ins. Co., La Marche v. Shelby Mutual Insurance to adopt the insurer's argument, were 699 So. 2d 768 (Fla. 4 th DCA 1997) Home (Fla. 1980) Company, So. 2d then the subcontractor exception would 390 325 Owners Warrant)/Corp. v. Hanover Ins. and held that the CGL policies did be completely ignored and have not no Co., 683 So. 2d 527 (Fla. 3d DCA 1996). cover the damages caused by a subcon- effect at all. The J.S.U.B. court declined Recently, there dramatic depar- tractor. On appeal, the builder challenged to go this route. After finding that the was a ture from this position in J.S.U.B., Inc. by pointing policy provided this contention that whole out v. as a coverage United States Fire Ins. Co., 30 Fla. L. Weekly portions of the standard language in CGL for the defective work, the court then D 774-(Fla. 2d DCA 2005). policies have changed since La Morche, that the "Damage determined to Your J.S.U.B. involved builder of Work" exclusion did not apply because of well the fact that the Florida a new as as homes. Id. at •1. After completion of the Supreme Court essentially broadened CGL the exception for work performed by a project, some of the homes suffered dam- its holding in 1998 with in subcontractor. coverage ages when the exterior walls moved E• Casualty Company In order to reach its conclusion regard- State Farm Fire or sank. Id. at •2. This damage was deter- CTC Development Corporation, ing thesu bcontractor exception, theJ.S.U.B. 720 v. So. 2d 1072 (Fla. 19981. J.S.U.B., 30 Fla. L. mined to be the result of defective work court first examined whether the policy related soil acquisition, compaction, Weekly D at •11. as a whole covered the instant situation. to

General Contractors, General Contractors• There is Coverage Under the CGL Policy for Defective Work Performed by a Subcontractor 2. EXCLUSIONS This insurance does not apply to: Damage To Property it will be interesting to see the future "Property damage" to: implication of the J.S.U.B. decision in both [*4] (5) That particular part of real Florida and the rest of the nation. property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the "property "[t]he policies According the an appellate to court, time in Florida has damage" arises out of those court here contain broad insuring language allowed from operations; or contractor to a recover covering property damage that is caused a CGL policy for the defective work of (6) That particular part of any by 'occurrence' in the subcontractor. Since subcontractors property that must be restored, an coverage a territory that place during often perform takes the a large amount of work repaired or replaced because policy period" Id. "11. "Occurrence" for general this decision "your work" was incorrectly at contractors, is defined in the policy as "an accident, should have substantial impact performed on it. a on including continuous repeated the industry. Despite the fact that CGL Paragraph (6) of this exclusion or ex- to substantially the policies have included the subcontractor does not apply to "property posure same gen- eral harmful conditions." Id. However, the exception for years, courts continued to damage" included in the policy did not define "accident," which overlook it and have repeatedly held that "products-completed left for the consider. Id. the contractor could court to not receive operations hazard." was cover- The CTC Development relied age from the policy. With Damage To Your Work court the J.S.U.B. on for its analysis of the term "accident," as decision, Florida "Property damage" to "your court followed the a "the pertinent insuring provisions" in CTC apparent intent of the policy. This decision work" arising out of it or any Development were similar to the J.S.U.B. follows the path of a few other states 2, part of it and included in the provisions. CTC Development held that and it will be interesting to see the future "products-completed operations "accident" includes not only "accidental implication of the J.S.U.B. decision in hazard." events", but also "injuries or damages both Florida and the rest of the nation. This exclusion does not apply if that are neither expected nor intended the damaged work or the work Policy Provisions • from the standpoint of the insured." out of which the damage arises CTC Development, 720 So. SECTION 2d 1074. COVERAGES was performed on your behalf at In reaching this conclusion, the CTC court COVERAGE A BODILY INJURY AND by a subcontractor. strayed from "an earlier, restric- PROPERTY DAMAGE LIABILITY m. Damage To Impaired Property Or more tive definition of 'accident•" Hardware Property Not Physically Injured Casualty Mutual Co. Gerrits, 1. INSURING AGREEMENT 65 "Property damage" to "impaired v. So. 2d 69 (Fla. 1953). The J.S.U.B. court We will pay those sums that property" or property that has a. determined that the broad language the insured becomes legally not been physically injured, of the policy combined with the broad obligated to pay as damages arising out of: definition of accident adopted by (1) the because of "bodily injury" or A defect, deficiency, inadequacy Supreme Florida Court "lead "property damage" to which the or dangerous condition in to conclusion that the here this insurance applies "your product" or "your work"; or occurrences fall within the coverage provisions (2) A delay or failure by you or of b. This insurance applies to the policies." J.S.U.B., 30 Fla. L. Weekly D "bodily injury" and "property anyone acting on at "14. In other words, the J.S.U.B. court damage" only if: [*5] your behalf to perform a contract held that the policy did cover this "occur- (1) The "bodily injury" or "property or agreement in accordance with rence," and that the subcontractor excep- damage" is caused by an its terms. tion trumped the "Damage to Your Work" "occurrence" that takes place This exclusion does not apply to exclusion. Therefore, the builder in the "coverage territory"; and could the loss of use of other property receive coverage from his CGL policy for (2) The "bodily injury" or "property arising out of sudden and ac- the defective work of his subcontractors. damage" occurs during the cidental physical injury to "your The implications of this policy period. will product" or "your work" after it case likely be far-reaching, as this is the first has been put to its intended use. .......... ,.3£• • •i.•i GREATER FLORIDA CONSTRUCTOR Q3 2005 • ," .i,