Insurance Law Hawaii

Oregon Supreme Court Finds Recovery for an "Accident" Depends On Whether There is Tort Liability

    The Oregon Supreme Court wrestled with the meaning of "occurrence" in a liability policy, determining that recovery for an "accident" depended on whether there was a basis in fact for imposing tort liability. Twigg v. Admiral Ins. Co., 2025 Ore. LEXIS 242 (Ore. April 17, 2025). 

    Plaintiffs hired the insured, Rainier Pacific Development LLC, a general contractor, to build a home on a hillside lot. Once construction was substantially complete and plaintiffs had taken possession, they notified Rainier of various construction defects. This included the garage floor being sloped and cracked in the middle area and sloped inward, toward the house, raising the risk of water damage to the house. Rainier failed to timely fix the problem and plaintiffs initiated arbitration proceedings.

    Plaintifs and Rainier settled their dispute through a "Repair Agreement" in which they established specific performance standards for completing specified repairs. Rainier hired a subcontractor to install a lightweight concrete overlay, known as the "Ardex", which was to be laid over the previously installed garage floor. The subcontractor completed its installation of the Ardex, but, before Rainier had completed any other work under the Repair Agreement, plaintiffs reinitiated arbitration. 

    Plaintiffs contended that the installation of the Ardex was flawed. Due to Rainier's failure to property install the Ardex and to complete the other agreed upon work, plaintiffs had to hire another contractor to perform work to meet the standards of the Repair Agreement. 

    The arbitrator found that the installation of the Ardex was "defective and contrary to one or more of the manufacturer's directives." Therefore, the arbitrator found that Rainier had breached the Repair Agreement. 

    A trial court entered judgment against Rainier in the amount of the arbitrator's award. Plaintiffs were unable to collect on the judgment from Rainier, so they sued Rainier's insurer, Admiral Insurance Company. Admiral answered that because the arbitrator had awarded damages based solely on Rainier's breach of the Repair Agreement, the CGL policy did not provide coverage. The trial court granted Admiral's motion for summary judgment because the damage to plaintiffs garage had not been caused by an "occurrence." The Court of Appeals affirmed.

    On appeal to the Supreme Court, the dispute turned on what qualified as an "accident" under the policy. Plaintiffs could not recover for the damage to the garage floor unless Rainier's liability for the damage arose from an "accident.

    Looking to dictionary definitions, there was support for plaintiff's argument that "accident" encompassed unintended property damage caused by mistakes a contractor made while fulfilling its contractual obligations. But there was also support for Admiral's view that "accident" as used in the CGL policy contemplated actionable fault, and not merely inadvertence. Thus, both interpretations were plausible and the court could not, on that basis alone, chose one interpretation over the other.

    Case law supported Rainier's view that, if the underlying record could support a tort claim, then it did not matter whether the underlying claim was in fact prosecuted in tort, contract, or both. If the terms of a policy remained ambiguous after a review of the parties' proposed interpretations of the terms and conditions of the policy, the ambiguous terms were to be construed against the insurer, who drafted the policy. 

    Therefore, to establish the property damage alleged was caused by an "accident" within the meaning of the CGL policy, plaintiffs were not required to formally allege a tort claim or obtain an award in tort. Rather, plaintiffs were required to establish that there was a basis in fact for imposing tort liability on Rainier, even though the same facts may have established Rainier's liability in contract. 

    There was evidence in the record that the Ardex's manufacture provided specific instructions for its installation that Rainier's subcontractor failed to follow. Cracks and voids emerged in plaintiffs' garage floor that were consistent with those warned of in the manufacturer's instructions, and plaintiffs incurred damages as a result. Collectively, the evidence was sufficient to raise a genuine issue of fact as to whether Rainier's subcontractor, by failing to follow the manufacturer's installation instructions, unreasonably created a foreseeable risk of harm to plaintiffs and that they had incurred damages as a result. 

    A facfinder could find that the garage floor had been negligently installed and that plaintiffs incurred damages associated with a result. The evidence was sufficient to preclude summary judgment on the ground that plaintiffs had failed to demonstrate that their damages were the result of an accident, i.e., that there was a basis in tort to recover those damages. 

    The decisions of the Court of Appeals and of the trial court were reversed. 

Fifth Circuit Affirms District Court's Grant of Summary Judgment to Insurer on Property Loss Claim

    The Fifth Circuit affirmed the district court's grant of summary judgment to the insurer despite the insured's claim it was not adequately compensated for its loss. In the Matter of New York Inn, Inc., 2025 U.S. App. LEXIS 7887 (5th Cir. April 3, 2025). 

    Viva Inn Motel submitted a claim to its insurer, Associated Industries Insurance Company, for water damage from a burst pipe occurring on February 17, 2021. New York Inn, a corporate affiliate of Viva, was an additional insured on the policy. An adjuster investigated for Associated and recommended that Associated pay Viva  $153,961.57, representing the actual cash value (ACV) amount of the loss. An adjuster for Viva and New York Inn (Motel Owners) provided an estimate for replacement cost value (RCV) of repairs for $175,256.42. 

    Associated sent a payment to Viva for $153,961.57 and requested documentation to support the payment for RCV. Viva requested an advance payment for Viva's business interruption loss. Associated responded that it would consider the payment but requested Viva's profit and loss statements for the prior three months to calculate the payment. The Motel submitted a profit and loss statement for October 20, 2020, through December 20, 2024. Based on this document, Associated estimated the business interruption loss from February 17, 2021, to May 31, 2021, as $74,295. This estimate was used to calculate the payment owed to Viva and a check was issued for $26,349.82. An advance payment of $10,000 for content loss was also issued, but Associated noted that Viva had not submitted any inventory of damaged contents. 

    Viva hired Decagon Development Company, Inc. to renovate the Motel. Decagon sent three invoices to Viva, totaling $682,244. Associated hired a consultant to inspect the Motel and provide an estimate of repairs. The cost of repairs were estimated at $236,188.84. After deducting the prior payment of $153,961.57 for ACV, Associated paid Viva another $81,227.27. 

    In December 2022, the Motel reopened. 

    In May 2021, New York Inn filed for bankruptcy. It filed a complaint, joined by Viva, in the bankruptcy proceeding against Associated for underpaying New York Inn's claim. Associated filed a motion to dismiss, which the bankruptcy court granted. On appeal to the district court, summary judgment was granted to Associated.

    Motel Owners appealed. Motel Owners alleged Associated failed to pay the full amount owed for (1) repairs to the Motel; (2) contents in the Motel; and (3) interruption to the business caused by damage from the storm. 

    The court determined that Motel sought an additional $435,305.77 for building repair. Viva failed to differentiate between costs of building repairs attributable to risks covered by the policy (i.e., the water damage from the storm) and costs attributable to risks not covered by the policy (i.e., the mold damage due to the delay in remediating the water damage). The invoices submitted by Motel Owners did not differentiate between covered and non-covered repairs. The insured had the burden to separate the damage attributable to the risk covered by the policy versus damage caused by non-covered risks. Therefore, Motel Owners' evidence did not create a genuine dispute of material fact as to whether Associated breached the policy by underpaying for building repair. 

    Regarding contents loss, Associated paid $10,000, but Viva never submitted the required documentation for additional coverage. Motel Owners had the burden to prove they suffered a loss and that the loss was covered by the policy. Accordingly, Motel Owners' evidence did not create a genuine dispute of material fact as to whether Associated breached the policy by underpaying for contents. 

    Associated paid Viva $26,349.82 for business interruption between February 17, 2021, to May 31, 2021. Motel Owners argued that they were entitled to at least an additional $73,650.19 to compensate them for the entire duration of the Motel's restoration from February 2021 to December 2022, when the Motel reopened. Motel Owner's argument was based solely on what it felt was reasonable or feasible, rather than on the text of the policy, which did not define the duration of time for business interruption based on what was reasonable or feasible. Because Motel Owners failed to adequately brief their argument that the bankruptcy court and the district court erred in granting Associated's summary judgment as to coverage for business interruption, they abandoned that argument. 

    Therefore, the district court's grant of Associated's motion for summary judgment was affirmed. 

Boat Owner Survives Insurer's Motion to Dismiss

    The court rejected the insurer's motion to dismiss after the the insured's vessel sank during a hurricane. Knight v. Market Am. Ins. Co., 2025 U.S. Dist. LEXIS 71973 April 16, 2025). 

    Hurricane Ian sank a yacht owned by the Knight Living Trust. The Trust insured the yacht under a policy with Markel. The policy contained a haul out provision stating,

If a windstorm warning is issued for the location where the insured yacht is located, the insured yacht shall be on land. If a location is shown below, the insured yacht shall be inland at the specific location as described. 

ASHORE ON THE UNITED STATES MAINLAND, AND WITHIN THE LISTED NAVIGATIONAL LIMITS.

    Before Hurricane Ian struck, windstorm warnings were issued. The yacht was moored at the marina. Efforts to have the vessel hauled out of the marina were unsuccessful. The marina stated it was unable to haul out the vessel. Other marinas also refused the request the haul out the vessel. The Trust asserted that despite its best efforts, no method or means reasonably existed to haul out the vessel and place it on land. Hurricane Ian came ashore and the vessel sank.

    A claim we filed, but Markel denied the claim because of non-compliance with the haul out provision.

    The Trust sued for a declaration that the policy provided covert for the loss. The Trust relied upon a Florida statute providing that a breach by the insured of a provision of an insurance policy did not void the policy unless the breach or violation increased the hazard by any means within the control of the insured. The Trust argued that the failure to haul out the vessel did not increase the risk of loss by any means within the control of the insured, thereby precluding Markel from denying the claim. 

    The Trust's second theory was that the haul out provision violated the public policy of Florida which prohibited requiring vessel owners to contractually or otherwise be obligated to remove their vessels from their marina slips upon the issuance of la windstorm warning. 

    Market moved to dismiss for failure to state a claim.

    The court noted that an insured could prevail under the Florida statute if the insurer could not prove the cause of loss was within the control of the insured. The Trust stated a plausible cause of action pursuant to the Florida statute.

    Regarding the Trust's second argument, it had to prove the existence of a public policy. The Trust had shown that in some contexts Florida had stated through a statute a public policy similar to the one it asserted here. This was sufficient to establish a plausible claim which allowed the Trust to proceed with its obligation to establish such a public policy in the context of marine insurance policies.

    Therefore, the motion to dismiss was denied. 

Cross-Motions for Summary Judgment Denied in Collapse Claim

    The court denied cross-motions from the insured and the insurer after the insured's dwelling suffered a collapse of the ceiling. Simons v. Fed. Ins. Co., 2025 U.S. Dist. LEXIS 75839 (C.D. Cal. March 4, 2025). 

    Gary Simons bought a second home located in Park City, Utah (Utah Property) that was an architectural master piece sitting on 4.5 acres of land. He purchased a policy from Chubb. A renewal of the policy for the third year of coverage provided $18,595,000 in coverage for the dwelling and $4,978,500 in content coverage.

    On August 7, 2022, the ceiling suddenly and unexpectedly collapsed, causing substantial damage and rendering the Utah Property unhabitable. A claim was submitted to Chubb. Chubb's inspection reported collapse damage to the kitchen and great room ceiling and water damage throughout the home. The inspector concluded that the cause of the kitchen ceiling collapse was defective construction. The Chubb policy excluded any loss caused by faulty construction or maintenance. Chubb paid a total of $3,367,084.44 for the claim.

    Simons hired a public adjustor. The public adjuster estimated that the restoration of the property, which included debris removal and restoration costs, would be just over $4.7 million. A demand for dwelling coverage was made for $4.7 million. Chubb approved payment for restoration of $2.7 million. 

    For contents coverage, Simons sought $699,939.00 for damaged and destroyed contents. Chubb paid $25,000 for business property and $105,336.48 for personal property. Chubb refused to pay additional funds based on its determination that the contents were "business property," which it claimed limited Simons'coverage to $25,000. 

    Chubb also paid $308,700 for fair rental value based on the amount that Simons had earned from the rental income in the 12 months prior to the ceiling collapse. Finally, Chubb paid $176,519.75 for extra living expenses for the two months use of another dwelling.

    Simons sued for breach of contract and bad faith. Both parties filed for summary judgment.

    Regarding dwelling coverage, the court concluded that there was a genuine dispute of material fact as to whether the faulty construction was the proximate cause of the incident. Experts from the two sides disagreed on whether faulty construction was a cause of loss, creating an issue of fact. 

    The court agreed with Chubb that Simons' contents coverage claim was subject to the $25,000 business property sublimit. The determination of contents coverage, however, was reserved for the jury. 

    For fair rental value coverage, Simons contended that Chubb only paid for a 12-month period of loss, but the time of restoration exceeded 12 months and therefore he was entitled to more benefits. The court agreed that Simons was displaced for more than na a 12-month period and was arguably entitled more benefits for loss of rental income. But Simons had not proffered an exact number to which he should be entitled. Therefore, this claim was more appropriate for the jury to decide.

    For extra living expenses, the policy did not limit the incurred living expenses to be related to Park City, nor did it limit expenses to the time Simons spent in Park City. The court, however, could not make a determination as a matter of law as to whether Simons' expenses were reasonable and necessary to maintain his "standard of living," which was for the jury to decide.

    Therefore the court denied the cross-motions for summary judgment as to breach of contract The cross-motions were also denied on the bad faith claim. A jury could decide that Chubb acted inappropriately in handling Simons' extra living expense claims based on Chubb's interpretation of the policy.

Insured's COVID-19 Claim Survives Motion for Judgment on the Pleadings Based on Loss of Attraction Endorsement

    Faced with a motion for judgment on the pleadings filed by several of its insurers, the insured was successful in arguing that the Loss of Attraction endorsement in one insurer's policy allowed the insured to pursue losses suffered by its businesses due to COVID-19. BBX Capital Corp. v. Scottsdale Ins. Co., et al., 2025 Mo. App. LEXIS 212 (Mo. Ct. App. April 1, 2025).

    The insured, BBX Capital Corporation, had 284 business properties located throughout the United States, including in Missouri. BBX's business properties included vacation resorts and timeshare properties, and retail stores selling chocolate and other confectionery products

    BBX purchased "all-risk" property insurance polices from several insurance companies for primary or excess coverage. Each policy was constructed around a master form, consisting of fifty=two pages of common provisions and twelve endorsements (Master Policy). Each insurer then separately added declarations pages and endorsements modifying the provisions of the Master Policy to create their own individual policies. 

    BBX sought to receive coverage under the policies for COVID-19 pandemic-related losses. After timely notice, the insurers either denied BBX's claim or sent reservation of rights letters. BBX fiied suit alleging direct physical loss due to the presence of SARS-CoV-2 and shut-down orders.

    The insurers moved for judgment on the pleadings in a joint motion seeking dismissal of the complaint. The trial court granted the insurers' motion and BBX appealed.

    The appellate court affirmed with one exception: the Loss of Attraction Endorsement did not require physical loss or damage to property. The endorsement provided,

This policy is extended to cover the actual loss sustained and Extra Expense incurred by the insured resulting from cancellation of or inability to accept bookings for accommodation and/or cessation or diminution of trade due to a loss of potential customers, as a direct result of;

. . . 

2) Infectious, communicable or contagious disease.

. . . 

4) closing of whole or part of the premises of the insured by order of a Public Authority consequent upon the existence or threat of hazardous conditions . . .

    The court focused on the Loss of Attraction Endorsement found in Interstate Fire & Casualty Company's policy. The Interstate policy also included a Communicable Disease Exclusion. However, the Communicable Disease Exclusion was not properly referred to in its Declarations Page. Therefore, the exclusion was superseded by the terms and conditions of the Master Policy and did not apply to bar coverage for BBX's alleged losses under the Loss of Attraction Endorsement. Consequently, the trial court erred in holding BBX's claimed losses were unambiguously excused under Interstate's Communicable Disease Exclusion. 

    The judgment of the trial court was reversed and remanded for further proceedings as to BBX's claims for Loss of Attraction coverage under Interstate's Policy. 

Insurer's Motion to Dismiss Claims by Plaintiff not Named in Policy Fails

    The federal district court denied the insurer's motion to dismiss even though the plaintiff was not named in the policy. Viccellio v. Foremost Pro. & Cas. Ins. Co., 2025 U.S Dist. LEXIS 61590 (M.D. La. March 31, 2025).

    Plaintiff's residence sustained damage from Hurricane Ida. Plaintiff timely notified the insurer, Foremost, of a claim under the policy. Foremost failed to timely pay for the loss. 

    Plaintiff filed suit for breach of contract and bad faith. Foremost moved to dismiss for failure to state a claim. Foremost asserted that Patricia Viccellio was the name insured. Plaintiff, however, was Christy Viccellio. Foremost argued that the proper plaintiff, Patricia Viccelio, who was not named, was deceased. Foremost contended that Patricia Viccellio never transferred the policy to plaintiff, and Patricia Viccellio did not list plaintlff as an insured under the policy. 

    Foremost argued that courts examine the language of a policy itself to determine if a party is an insured, additional insured, or third-party beneficiary. Plaintiff countered that the policy in fact named plaintiff as an insured. She referred to a Claim Outcome Letter regarding the policy from Foremost addressed to plaintiff and Patricia Viccellio. Foremost responded that the C?laim Outcome Letter incorrectly listed both Patricia Viccellio and plaintiff as insureds. 

    The court decided not to consider the Claim Outcome Letter on a Motion to Dismiss because it was not attached to the complaint nor alleged in the complaint. But the court could also not accept as true Foremost's reference to Patricia Viccellio's death. No facts were alleged in the complaint or articulated in the policy regarding her death.

    The complaint alleged that plaintiff contracted with Foremost. The policy, however, listed only "Patricia Viccellio" and did not explicitly list plaintiff, Christy Viccellio, as an insured. This raised questions of whether plaintiff would be able to demonstrate sufficient evidence to prove her claims. Regardless, on a motion to dismiss the court accepted as true plaintiff's assertion that plaintiff was the "Viccellio" who contracted with Foremost. Viewing this fact in the light most favorable to plaintiff, the difference in the first name on the complaint as opposed to that of the insured noted in the policy did not create enough doubt to justify dismissing the entire action without first allowing the parties to addresss this evidentiary issue. Therefore, the court declined to dismiss the case for failure to sate a claim. 

Insured's Challenge to Use of Xactimate Software to Determine Repair Costs for Damage Fails

    The insurer's motion for summary judgment to dismiss the insured's complaint challenging the use of Xactimate to determine the repair costs for fire damage was granted. Belotti v. State Farm Fire & Cas. Co., 2025 U.S. Dist. LEXIS 54471 (M.D. Pa. March 25, 2025). 

    Plaintiffs' home was damaged by fire. After submitting a claim to State Farm, a claim specialist visited the site to inspect the loss. State Farm also hired a contractor, Edward Gieda, to assist with the plaintiffs' claims. Mr, Gieda sent his initial draft estimate to State Farm. Mr. Gieda's initial draft estimate and State Farm's estimate used an estimating software tool, Xactimate. State Farm selected Xactimate's "new construction" labor efficiency for the estimate. The "new construction" tool was selected because the plaintiffs' home would not be occupied during the repair work and because once demolition was completed and the wall finishes removed, the repair would would essentially be new construction.

    State Farm estimated the Replacement Cost Value (RCV) to be $172,015.39 and the Actual Cash Value (ACV) payment, after applying the policy's deductible, to be $130,852.61. State Farm sent a check of $130,852.61. The plaintiffs' public adjuster provided State Farm with a repair estimate he prepared with a RCV of $374,069.77. The public adjuster's estimate also used Xactimate, but with the application of the "Restoration/Service/Remodel" labor efficiency setting. 

    State Farm demanded an appraisal under the policy. The appraisal award agreed that the RCV and he ACV amounts for plaintiffs' loss were $267,382.04 and $240,643.84 respectively. The appraisal award was not prepared using Xactimate and did not use either Xactimate's "new construction" or "Restoration/Service/Remodel" labor efficiency settings. State Farm made an additional ACV payment in the amount of $66,690.45, the difference between State Farm's previously total ACV payments and the aACV amount of the award.

    Plaintiffs' sued, alleging breach of contract. State Farm's policy required it to "pay the cost of repair or replacement" of the plaintiffs' losses with "similar construction." Plaintiffs did not contest that State Farm failed to pay for the cost of repair and replacement of the losses with similar construction. Instead, plaintiffs challenged State Farm's alleged failure to use a specific method of computation concerning its assessment of the plaintiffs' losses. The plaintiffs further contended that when State Farm used a "new construction" setting, rather than its required "repair/reconstruction" model, State Farm breached its contract, 

    State Farm moved for summary judgment, arguing it had no contractual duty to use a particular setting when estimating losses. Plaintiffs argued that the language " . . . pay the cost to repair or replace with similar construction" did not include a provision that allowed State Farm to use the "new construction" model for damages under this provision. Plaintiffs submitted that allowing State Farm to use this methodology was not provided for in the policy.

    The court found that the plain language of the policy clearly and unambiguously only pertained to the required use of similar construction. The policy did not concern any method of computation or any language that required a singular method of computation. The policy provision simply bound State Farm to pay for the cost or replacement of damaged property with similar construction. The policy unambiguously imposed no contractual duty to use a particular estimate when estimating losses under the provision. Therefore, State Farm did not breach any contractual obligation in creating its estimate.

 

Alaska Supreme Court Finds Carbon Monoxide is Not a Pollutant Excluding Coverage

    In answering a certified question from the Ninth Circuit, the Alaska Supreme Court determined that an insured could reasonably expect coverage for injuries resulting form exposure to carbon monoxide from an improperly installed home applicance.

    Josiah Wheeler rented a cabin owned by Deborah Overly and Terry Summers. While living in the cabin, Wheeler was found dead in the cabin's bathtub. An autopsy revealed that he died of acute carbon monoxide poisoning. An investigation found that a propane water heater, installed in the same room as the bathtub, had an exhaust flue unconnected to any external venting, 

    The cabin was covered under a homeowners policy issued by Garrison Property and Casualty Insurance Company. The policy excluded coverage for bodily injury or property damage "[a]rising out of the actual, alleged, or threatened discharge, dispersal, release, escape, seepage or migration of 'pollutants' however caused and whenever occurring." The policy further excluded bodily injury "[a]rising out of exposure to lead paint or other lead-based products" and "[a]rising out of exposer to asbestos." 

    Wheeler's estate and his parents sought an out-of-court settlement with the homeowners, Overly and Summers. Overly and Summers notified Garrison, which denied coverage because carbon monoxide was a "pollutant" under the policy. When sued, Overly and Summers signed a confession of judgment admitting that they negligently caused Wheeler's death. Overly an Summers assigned their right to proceed against 'Garrison for losses arising from Wheeler's death.

    Wheeler's estate filed suit against Garrison. The district court entered judgment against the estate, determining that Overly and Summers could not have reasonably expected coverage. It reasoned that carbon monoxide fell within the policy's definition of "pollutant."  

    The estate appealed. The Ninth Circuit certified a question to the Alaska Supreme Court: Does the pollution exclusion in the homeowners policy bar coverage for injury arising out of exposure to carbon monoxide emitted by an improperly installed home appliance?

    The Alaska Supreme Court considered how a reasonable insured would read the policy. The two exclusions that followed the pollution exclusion for lead paint and asbestos had a significant effect on how a reasonable insured would interpret the pollution exclusion. The express exclusions for exposure to these common household "pollutants" led support to a narrower interpretation of the pollution exclusion. A reasonable insured could infer from these specific exclusions that exposure to toxic substances found within the home did not fall within the pollution exclusion. Further, the asbestos and lead exclusions' use of the broad terms "exposure" contrasted with the six "movement" words in the pollution exclusion: "discharge, dispersal, release, escape, seepage or migration." The absence of an exclusion specifically mentioning carbon monoxide supported an insured's reasonable expectation that harm from exposure to carbon monoxide, which was also often found within the home and caused no harm absent a defect or failure, was not an excluded harm. 

    The court answered the certified question by stating that the pollution exclusion did not exclude coverage for injury arising out of exposure to carbon monoxide emitted by an improperly installed home appliance. 

Absent Separate Covered Peril, Ensuing Loss is Not Applicable

    The Eighth Circuit affirmed the district's granting of summary judgment to the insurer, finding that the exclusion for faulty workmanship was applicable despite the ensuing loss provision. Bob Robinson Commercial Flooring Inc. v. RLI Ins. Co., 2025 U.S. App. LEXIS 6369 (8th Cir. March 19, 2025). 

    The general contractor hired Bob Robinson Commercial Flooring, Inc. (BRCF) to install a vinyl gym floor with painted volleyball and basketball Iines at a middle school. BRCF installed the gym floor and subcontracted the painting portion of the project to Robert Liles Parking Lot Services (Liles). Liles's painting work was faulty by including crooked lines, incorrect markings, and smudges. The general contractor rejected the gym floor. Because the defective painting could not removed from the vinyl flooring, BRCF had to remove and replace the floor and paint new lines at a cost of $181,415.39.

    BRCF submitted a claim for the loss to RLI Insurance Company seeking coverage for the total loss. RLI rejected the claim because of an exclusion providing it would not pay for defects, errors or omissions due to workmanship or construction. The exclusion included an ensuing loss provision, which read, "But if a defect, error or omissions as described above results in a covered peril, we do cover the loss or damage caused by that covered peril."

    BRCF filed suit alleging that while the policy did not directly cover the subcontractor's negligent paint job, the ensuing loss clause did cover the irreparable damage caused to the vinyl gym floor as a result of the subcontractor's negligence. The district court granted RLI summary judgment, concluding that the policy excluded coverage for damage and loss resulting from defective workmanship, and the subcontractor's negligent paint job was the sole reason the gym floor was damaged.

    BRCF appealed. BRCF conceded that its contract damage claim was limited to the cost of removing and replacing the vinyl floor, $134,188.95, and did not seek to recover the cost of painting the new floor.

    BRCF argued that the policy's ensuing loss provision unambiguously provided coverage for the replacement cost of the vinyl gym floor. BRCF, however, did not identify a "covered peril," as the ensuing loss clause required, to restore coverage excluded by the faulty workmanship exclusion. All BRCF argued was that the cost of repainting the gym floor and the cost of replacing the floor were separate "perils." But they were not separate "perils." They were different types of damage to the covered property. If both types of damage occurred at the same time and were solely caused by an excluded peril such as faulty workmanship, the ensuing loss cause did not "restore" all or any part of the excluded coverage.

    The policy defined a covered peril as a direct physical loss or damage not caused by an excluded event. The ensuing loss clause restored coverage if an excluded peril resulted in loss that was caused by a covered peril. By contrast, if all the loss was caused by the excluded peril, applying the ensuing loss clause to restore some but not all of the loss, as BRCF urged, would require RLI to pay for loss solely attributable to faulty construction, an excluded period. The court therefore read the ensuing loss provision as requiring that a separate non-excluded peril cause a restored loss. 

    Therefore, the district court did not err in finding the exclusion for faulty workmanship excluded coverage for the entire loss and damage to the gym floor resulting from Liles's defective painting. 

Insureds Prevail on Summary Judgment Addressing Responsibility for Water Leak

    The court granted summary judgment to the insureds, finding they were not responsible for a water leak from a drain valve on the tenth floor of the building. Charter Oak Fire Ins. Co. v. Bremermann Mech., Inc., et al., 2025 U.S. Dist. LEXIS 59871 (E.D. La. March 31, 2025). 

    The General Services Administration (GSA), the building owner, contracted with Wright Brothers, LLC (WB) to serve as the general contractor to create office space on the tenth floor of the building. Under the general contract, WB was responsible for providing all materials, services and labor to both design and construct the office space. WB subcontracted with Bremermann Mechanical, Inc. (BMI) to provide HVAC installation. BMI, in turn, subcontracted with Siemens to provide products and services to facilitate the installation. 

    A water leak from a drain valve on the tenth floor caused damage to the building. Charter Oak and Travelers were Plaintiffs as subrogees of WB and BMI. Siemens and its insurer, HDI Global Insurance Company, and BMI and its insurer, Kinsale Insurance Company, were defendants.

    At the beginning of the project, Siemens provided mechanical submittals to BMI. Five Valve Systems were to be installed in the tenth-floor ceiling. All systems used composite caps. Plaintiffs introduced evidence from the Valve System's manufacturer that the installed composite caps or any caps on the Valve System were not designed to contain water flow. BMI provided a submittal to WB for approval. WB obtained approval from GSA. WB then directed BMI to purchase all necessary equipment - including the Subject Valve that was incorporated into the system. 

    BMI began the installation of the Valve System, including the Subject Valve with a composite cap. WB's site superintendent, Donny Phillips, testified that he evaluated all valves and ensured the work was in conformity with the project's specifications. He did not identify any leaks. 

    From June 10, 2020 to August 7, 2020, multiple other entities performed work within inches to feet of the Subject Valve. On August 16, 2020, WB received a call from building security about water coming from the tenth floor. Phillips responded and found pressured water jetting from the Subject Valve. The building sustained water damage over nine floors. Investigation showed that the Subject Cap suffered no damage, including no thread damage. WB reported the incident to Plaintiffs, its insurers

    Plaintiffs paid $2,300,000 to GSA in damages, and then sought to recoup their expenses from Defendants. BMI and Siemens moved for summary judgment. They argued there was insufficient evidence for a jury to conclude that either BMI or Siemens were liable because there was no evidence their acts or omissions caused the incident. Plaintiffs conceded they did not know who opened the Subject Valve or removed the Subject Cap. 

    HDI, BMI's insurer, and Kinsale, Siemens's insurer, also moved for summary judgment, arguing they were not liable to Plaintiffs because the subcontractors were not liable. 

    The Plaintiffs' best argument was that because BMI had a responsibility to install a functioning valve system and did install the Valve System, that they could have been the party to open the valve and were thus responsible for the leak. Plaintiffs had to support their claim with affirmative evidence for a jury to conclude that BMI was responsible for the Subject Valve being open. BMI's presence in the general area was not enough. The same was true for Siemens. The Plaintiffs contended that a Siemens employee could have touched the Subject Valve when working on the HVAC. But the employee testified that he did not touch the Subject Valve or the Subject Cap because he had no reason to do so. There was no evidence beyond mere speculation that BMI or Siemens opened the Subject Valve. Consequently, the subcontractors were entitled to summary judgment. 

    Further, Kinsale and HDI were entitled to summary judgment because Plaintiffs cold not recover either as an additional insureds or under the indemnity provisions in the Siemens or BMI policies. Because Plaintiffs failed to prove that Defendant Subcontractors were negligent or liable to Plaintiffs, they could not recoup under the indemnity provisions in the Siemens or BMI policies. Plaintiffs also could not collect as additional insureds under the BMI or Siemens policy. Both policies limited coverage to the named insured's acts or omissions.