The Alabama Supreme Court followed prior precedent and found that the contractor's faulty workmanship causing damage to his own product did not arise from an occurrence. Owners Ins. Co. v. Jim Carr Homebuilder, LLC, 2013 Ala. LEXIS 122 (Ala. Sept. 20, 2013).
The plaintiffs contracted with Carr to construct a new home. After completion of the home and taking occupancy, the plaintiffs noted several problems with the house related to water leaking through the roof, walls and floors, resulting in water damage to various areas of the house. The plaintiffs sued Carr and the case eventually went to arbitration. The arbitrator entered an award in favor of plaintiffs for $600,000.
Owners filed an action against Carr for a declaratory judgment seeking to establish there was no coverage because the property damage did not arise from an occurrence. The trial court granted summary judgment to Carr.
The Alabama Supreme Court reversed. Under prior case law, faulty workmanship preformed as part of a construction project could lead to an occurrence if the faulty workmanship subjected personal property or other parts of the structure outside the scope of that construction project to continuous or repeated exposure to some other general harmful condition.
Here the damage that resulted from poor workmanship was limited to damage to Carr's own product. Accordingly, there was no occurrence.
The Alabama Court did not rely upon any policy language in distinguishing between damage to the insured's project which it held did not constitute an occurrence, and damage to other property or other parts of the structure, which it agreed would constitute an occurrence.
