The Eleventh Circuit certified a question to the Georgia Supreme Court, asking whether property damage can constitute an "occurrence" under a CGL policy where its effects are not felt on "other property." HDI-Gerling Am. Ins. Co. v. Morrison Homes, Inc., 2012 U.S. App. Ct. LEXIS 23813 (11th Cir. Nov. 19, 2012).
The general contractor, Taylor Morrison Services, Inc., was covered by a CGL policy issued by Gerling. The policy excluded "expected or intended injury," contractual liability," and business risk exclusions. Morrison was sued by homeowners in a class action suit. Morrison had allegedly omitted four inches of gravel required beneath the base of the concrete foundations by the Uniform Building Code. Thereafter, the houses sustained water intrusion, cracks in the floors and driveways, and warped and buckling flooring.
Gerling defended, but sued Morrison for a declaratory judgment. The complaint focused on the "Business Risk Exclusions" as well as the Expected or Intended Injury Exclusion, the Contractual Liability Exclusion, and the definition of "occurrence," arguing the court should declare there was no coverage for the homeowners' claims.
The District Court granted summary judgment to Gerling, holding there was no "occurrence" because the claims involved only damage to the "insured's own work." One Georgia case had held there was no "occurrence" under a CGL policy where the claim was for faulty workmanship, and the only damage is to the insured's work itself. The plaintiffs here did not allege that any other property was damaged besides the houses that defendant constructed.
On appeal, the parties disagreed on the meaning of the "other property" language. Gerling argued it should be limited to mean damage to property other than to the completed work itself. Morrison argued the reference to "other" property meant property other than the faulty workmanship itself.
Therefore, the Eleventh Circuit asked the Georgia Supreme Court whether an "occurrence" required that there be damage to "other property," that is, property other than the insured's completed work itself.
This analysis went much further than that of the Hawaii Intermediate Court of Appeals in Admiral Ins. v. Group Builders, 123 Haw. 142, 231 P.3d 67 (Haw. Ct. App. 2010). In Group Builders, the court merely found the construction defect arose from a breach of contract, which was not covered by a CGL policy.
