The insurer unsuccessfully sought summary judgment based upon the underlying complaint's allegations of damage caused by faulty workmanship. Barton v. Nationwide Mut. Fire Ins. Co., 2020 U.S. District. LEXIS 25943 (D. Ala. Feb. 14, 2020). 

    The Bartons contracted with Stacy Alliston Design and Building, Inc. (Stacy) to build their home, Stacy acted as the general contractor and hired subcontractors to perform work in building the home. After plaintiffs moved into the house, they noticed water issues, particularly a window in the foyer and dormer windows in the attic. Stacy repaired the dormer windows, suggesting that the water leakage from the foyer window was actually due to the dormer windows. After the repairs, water remained in the attic, however.

    The Bartons eventually had to replace their roof which was rotting due to unfixed toe board nail holes, and had to cut into sheetrock to evaluate water damage from the issues with the dormer windows. 

    Thereafter, the Bartons had a home inspection done. It revealed several construction defects and failures to adhere to code requirements by Stacy as well as resulting damages. Stacy failed to correct the deficiencies and the Bartons claimed they incurred significant expense to remedy the problems.

    The Bartons filed suit. Nationwide defended Stacy, but later withdrew its defense. Thereafter, Stacy failed to participate in the case. Summary judgment was issued to the Bartons. Judgment was entered for $900,000.

    The Bartons sued Nationwide to satisfy the $900,000 judgment. Nationwide moved for summary judgment, arguing defective work was not an "occurrence" under Alabama law. The Bartons contended that Stacy performed faulty work that caused additional damage to their newly-built home, including water damage that was so severe as to require them to add a new roof.

    Under Alabama law, faulty workmanship itself was not generally an "occurrence," but faulty workmanship could cause an occurrence. Here, it was undisputed that at least some of the resulting property damage caused by the faulty work could be considered an occurrence under the policy. Therefore, Nationwide was not entitled to summary judgment on lack of an "occurrence."

    Nor was the "your work" exclusion applicable. Under the exclusion, property damage to your work arising out of it or any part of it and not included in the "products-completed operations hazard" was excluded. Property damage under the "products-completed operations hazard" was covered if such damages occurred away from premises the insured owned and arose out of the insured's work, except when the work had not been completed or abandoned. But an endorsement provided that damage to your work caused by subcontractors was not excluded. Therefore, the subcontractor exception could provide coverage for damages which would otherwise be excluded by the "your work" exclusion. Factual issues regarding damages had to be determined by a jury. 

    Finally, the policy included $2,000,000 in "products-completed operations" coverage. The "your work" exclusion applied only if the policy's declarations failed to show any coverage for "products-completed operations." This was not the case here, as Stacy bargained and paid for $2,000,000 in coverage for its "products-completed operations," which nullified the "your work" exclusion.