The Federal District Court, District of Hawaii, continued it long line of cases finding no coverage for claims of faulty workmanship. Nautilus Ins. Co. v. Summary Judgment RMB Enters., 2020 U.S. Dist. LEXIS 200468 (D. Haw. Oct. 28, 2020).

    Property owners entered a construction contract with RMB Enterprises to develop and construct residential structures and a pond. The pond walls enclosed residential spaces, providing structural foundations for the walls of the building. After completion of the project, the pond leaked into its pump room. RMB performed remedial work by injecting epoxy into cracks. Later, water from the pondleaked into the interior of a residence near a staircase. Water also leaked into the master bedroom area causing musty odor, mood growth, and increased humidity. 

    The owners sued RMB asserting breach of contract, breach of warranty, misrepresentation, and negligence claims. Nautilus denied coverage. The policy provided that faulty workmanship did not constitute an "occurrence." But when faulty workmanship caused property damage to property other than "your work," then such property damage would be considered caused by an occurrence. 

    Nautilus sued RMB for a declaratory judgment on coverage. RMB defaulted and the owners intervened. Nautilus moved for summary judgment.

    The court first determined that it could retain jurisdiction of the case. The court then found that there was no occurrence. It was well established under Hawaii law that contract and contract-based tort claims were not occurrences. Under governing law, breach of contract and breach of warranty claims were not covered. The same was true of misrepresentation and negligence claims. The negligence claims asserted that RMB owed a duty of care in the performance of its work and it breached that duty. These claims were predicated on the contractual relationship between the owners and RMB; they were not independent tort claims. Therefore, RMB's alleged acts were not "accidents" and were not covered. 

    Nor did RMB's work fall within the policy's exception to the definition of occurrence. The owners suggested that damage to the residence was an "occurrence," as it was property other than the pond. The court determined this description misrepresented the nature of the property, a residential compound integrating and connected to the pond. And even if the pond and residence were independent of one another, the dispositive inquiry was whether RMB caused property damage to property other than its work. The underlying complaint alleged that RMB caused property damage to its own work. 

    Therefore, summary judgment was granted to Nautilus.