Insurance Law Hawaii

Business Risk Exclusions Bar Coverage Whether or Not Operations Completed

    The federal district court found that exclusions j (5), (6) and l barred coverage for damage caused to the city's water main collector system. Sunwestern Contractors, Inc. v. Cincinnati Indem. Co., 2019 U.S. Dist. LEXIS 82642 (D. Ariz. May 15, 2019).

    Sunwestern contracted with the city of Tucson for the construction of a water main collector system. During the project, Sunwestern conducted a pressure-test of the pipeline when several flanges, which connected the pipe sections, came apart. The flange failure caused water to tear out gaskets, seriously damage the pipeline, components of the pipeline, and surrounding areas. Four million dollars in damage was caused. 

    Sunwestern had a CGL policy with Cincinnati. Coverage was denied by Cincinnati when it determined there was no "occurrence."

    There was no dispute that the work was faulty. The relevant inquiry was whether Sunwestern's faulty workmanship resulted in property damage. It was uncontroverted that it did. Improper installation of pipe components led to damage to the pipeline and surrounding areas. The flanges were improperly installed. Sunwestern showed that serious property damage resulted from its defective work and consequential property damage resulting from the faulty work was an occurrence under the policy. 

    The court then turned to the business risk exclusions. Exclusion j (6) precluded coverage for incorrectly performed work. But the exclusion included an exception for completed operations. Further the exclusion did not exclude coverage for property damage for non-defective property that resulted from faulty workmanship. Thus, while exclusion j (6) unambiguously excluded coverage for damage to the flanges and other incorrectly constructed portions of the pipeline, if they were not "completed," it did not exclude coverage for consequential damage to non-defective property caused by that incorrectly performed work. 

    Exclusion j (5) barred coverage for property damage to "that particular part of real property on which you or any contractors or subcontractors working . . . on your behalf are performing operations, if the 'property damage' arises out of those operations." Like exclusion j (6), exclusion j (5) only precluded coverage for work that was still in progress. The court found that exclusions j (5) and j (6) unambiguously precluded coverage for the incident and all residual property damage stemming from the incident. However, exclusions j (5) and j (6) only precluded damage to work that was not yet completed, or still in progress. 

    Exclusion (l), however, applied, excluding property damage to "work or operations performed by" Sunwestern that was included in the products-completed operations hazard. Consequently, exclusion (l) precluded coverage for Sunwestern's completed work.

    In all, if the work was completed, it was excluded by exclusion (l). If it was not completed, it was excluded by exclusions j (5) and j (6). The products-completed operations hazard provision was still subject to any relevant exclusions and any faulty work that was encompassed in the products-completed operations hazard provision was unambiguously excluded from coverage by exclusion (l). 

    There was no ambiguity in the exclusions. Exclusions j (5) and j (6) unambiguously precluded coverage for incorrectly performed work. While exclusions j (5) and j (6) did not preclude coverage for incorrectly performed work that was completed, exclusion (l) unambiguously did. Therefore, Sunwestern was not entitled to coverage and Cincinnati's motion for partial summary judgment was granted. 

    

One Occurrence Means One Deductible

    The court held that claims regarding the negligent supervision of an independent contractor who engaged in the sexual abuse of three victimes amounted to one occurrence, requiring a single deductible. Scott Fetzer Co. v. Zurich Am. Ins. Co., 2019 U.S. App. LEXIS 13023 (6th Cir. April 30,2019). 

    In 2013, three women filed suit against Scott Fetzer Company (dosing business as Kirby Company), Crantz Development LLC, and John Fields. The women alleged that John Fields had sexually assaulted them on numerous occasions between May 2012 and January 2013. Fields was an independent dealer of vacuum cleaners who worked for Crantz, a factory distributor of Kirby vacuums, which were manufactured by Fetzer. The women alleged multiple instances of verbal abuse and harassment, inappropriate touching, force sexual acts, and rape. The women asserted that Fetzer and Crantz Development were negligent in hiring Fields as an independent dealer, allowing Fields to go on sales trips with the women, and failing to have policies and procedures in place to prevent sexual harassment.

    Fetzer settled with the three women and then sought reimbursement from Zurich under two general liability policies. Under the policies, Zurich agreed to pay $2 million per "occurrence" of bodily injury, but Fetzer was responsible for paying the first $1 million for each "occurrence." Of the three settlements, only one exceeded the per-occurrence deductible amount. Zurich paid the amount that exceeded the deductible, but it refused to pay anything for the other two settlements. Fetzer contended that the "occurrence" was its negligent hiring and supervision of Fields, which limited the number of occurrences to one, and therefore, Fetzer would have to pay only one deductible. Zurich argued that Fields's actions against each individual woman were all separate occurrences, meaning that there were three occurrences and Fetzer was responsible for paying three separate deductibles.

    The district court found that there were three separate occurrences. The Sixth Circuit reversed.

    Under Fetzer's interpretation of "occurrence," the "accident" was not that the women were exposed to Fields, but that they were exposed to Fetzer's negligent supervision of Fields. Ohio courts had determined that the relevant "occurrence" could fairly be interpreted as negligent supervision, not the acts perpetrated by the bad actor. The court agreed that the relevant occurrence was Fetzer's negligent supervision of Fields.

    If the relevant "occurrence' was negligent supervision, there was only one occurrence. Ohio followed the cause test. The number of occurrences was determined by reference to the cause or causes of the damage or injury, rather than the number of individual claims. Because the occurrence was the negligent supervision of Fields, it was reasonable to read the policy to mean there was only one occurrence.

Subcontractor Entitled to Defense for Defective Work Causing Property Damage Beyond Its Scope of Work

    The Illinois Court of Appeals found the subcontractor was owed a defense for alleged property damage caused by its faulty workmanship, but outside its scope of work. Acuity Ins. Co. v. 950 W. Huron Condo. Ass'n, 2019 Ill. App. LEXIS 208 (Ill. Ct. App. March 29, 2019).

    The condominium association sued its general contractor, Belgravia, for alleged defects allowing water to infiltrate and cause damage. Belgravia filed a third-party complaint against its subcontractors, including the carpentry subcontractor Denk & Roche. Denk & Roche held a CGL policy with two insurers during the relevant period, one with Cincinnati Insurance Company for the period January 1, 2000 through June 1, 2007, and another with Acuity Insurance Company, effective June 1, 2007, through December 31, 2013.

    Denk & Roche tendered its defense to both insurers. Cincinnati agreed to defend and contributed to a settlement of the AOAO's claims. Acuity denied a defense, contending that the underlying claims did not trigger a duty to defend. Acuity's declaratory judgment suit sought a determination that it had no duty to defend. Cincinnati intervened and argued it was entitled to equitable contribution from Acuity.

    On cross-motions for summary judgment, the trial court found that Acuity had no duty to defend.

    On appeal, the court noted that while a CGL policy would not insure a contractor for the cost of correcting construction defects, damage to something other than the project itself did constitute an occurrence under a CGL policy. Here, the duty to defend Denk & Roche turned n what qualified as damaged beyond "the project itself" where the insured was a subcontractor performing discrete work on a project and the subcontractor had no control over other aspects of the project. 

    From the eyes of the subcontractor, the "project" was limited to the scope of its own work. The precise nature of any damage that might occur for something outside of that scope was as unknown or unforeseeable as damage to something entirely outside of the construction project. Therefore, when the underlying complaint alleged that a subcontractor's negligence caused something to occur to a party of the project outside of the subcontractor's scope of work, there was an occurrence under a CGL policy, even though it would not be an occurrence from a general contractor or developer's perspective. Consequently, the court drew a major distinction between coverage for faulty workmanship performed by a subcontractor versus a general contractor or developer. Summary judgment for Acuity was reversed.

    The court also found that Cincinnati was entitled to equitable contribution from Acuity for undertaking the subcontractor's defense. The case was remanded for a determination on the exact amount of contribution to be made. 

 

 

 

No Coverage for Defects in Subcontrator's Own Work

    Damage to the concrete floor installed by the insured subcontractor was not property damage and thus not covered under the insured's CGL policy. Kalman Floor Co. v. Old Republic Gen. Ins. Corp., 2019 U.S. Dist. LEXIS 3319 (D. Colo Jan. 8, 2019). 

    In 2007, Kalman Floor Co. was subcontracted to construct over 158,000 square feet of concrete flooring for a cold storage facility. The concrete floor was completed in late 2008. In late 2009, the contractor notified Kalman that pockmarks, or "pop-outs," were visible on the concrete flooring. The only damage to tangible property in the facility caused by the pop-outs was the concrete flooring itself.

    On January 31, 2009, Old Republic issued a general liability policy to Kalman for one year. The policy excluded for damage to "your work," defined as "work or operations performed by you or on your behalf." Old Republic denied coverage for damage to the concrete floor. Kalman sued, seeking a declaration that the exclusions did not bar coverage. 

    Under Tenth Circuit law, as established in Greystone Const, Inc. v. Nat'l Fire & Marine Ins. Co., 661 F.3d 1272 (10th Cir. 2011), the term "occurrence" in a CGL policy encompassed unforeseeable damage to non-defective property arising from faulty workmanship. The policy was intended to protect the insured business from claims by third parties concerning personal injury or property damage resulting from accidents. In discovery, Kalman admitted the pop-outs in the concrete floor "did not physically injure or damage any tangible property other than the floor system it installed." Thus, under the terms of the policy, property damage did not occur. 

    Consequently, Old Republic's motion for summary judgment was granted and the case dismissed with prejudice.

Insurer Must Defend Subcontractor For Claims Alleging Faulty Workmanship

    Interpreting Florida law, the federal district court found that the insurer must defend the subcontractor for claims based upon faulty workmanship. S. Owners Ins. Co. v. Gallo Bldg. Servs., 2018 U.S. Dist. LEXIS 212961 (M.D. Fla. Dec. 18, 2018).

    Gallo Building Services entered a subcontract with KB Homes, developer, related to the construction of a condominium project. All of the work was subcontracted by KB Homes to subcontractors, suppliers and material men. After completion of the project, the Condominium Association found a number of alleged construction defects at the project. KB Homes notified the subcontractors and tendered its defense. The subcontractors rejected the tender. 

    KB Homes filed suit against Gallo and other subcontractors. Claims against Gallo included breach of contract, breach of express and implied warranty, negligence and indemnity. Specific allegations against Gallo included failing to install all necessary control joints, installing incorrect mid-wall flashing, installing stucco in direct contact with dissimilar materials, etc. 

    Southern Owners Insurance Company filed suit for declaratory judgment that it had no duty to defend or indemnify its insured, Gallo. Gallo was subsequently dissolved. A default judgment was entered against Gallo, but KB Homes moved to set the default judgment aside, which was granted. KB Homes then moved for summary judgment in favor of Gallo. 

    The court noted that under Florida law, there was no property damage if there was no damage beyond the faulty workmanship, unless the faulty workmanship damaged some otherwise nondefective component of the project. Here, the court found that the underlying complaint alleged physical injury to tangible property by claiming that, in addition to faulty workmanship, defects in Gallo's work caused damage to other building components, damage to other property, and property damage to the work of KB Homes and other subcontractors. 

    Nevertheless, Southern argued two exclusions barred coverage. The Your Work Exclusion excluded coverage for "property damage" to "[Gallo's] work arising out of it or any part of it and included in the 'products-completed operations hazard.'" The policy defined "your work" to included "work or operations performed by [Gallo] or on [Gallo's] behalf. The "products-completed operations hazard" meant Gallo's completed work. Southern argued that the alleged construction defects arouse out of Gallo's own work and the policy contained no subcontractor exception. Typically, a CGL policy included an exception to the Your Work Exclusion for work performed by the insured's subcontractor.

    Here, Gallo was a subcontractor responsible for a limited scope of work within the much larger general condominium project. The underlying complaint did not allege that Gallo's scope of work encompassed construction of the overall project. Rather, the underlying complaint alleged Gallo's limited scope of work. Further, the underlying complaint alleged that alleged defects "caused damage to other building components, damage to other property, loss of use, and required relocation of residents." Thus, damage beyond the scope of Gallo's work was alleged in the underlying complaint and the exclusion did not bar coverage.

    Southern also argued there was not duty to defend because the allegations in the underlying complaint fell within the Stucco Exclusion. This exclusion barred coverage for any suit for property damage which "is in any way related to or arising out of an exterior finishing system or exterior stucco application." KB Homes argued that Gallo performed multiple scopes of work unrelated to stucco or an exterior finishing system and the underlying complaint contained allegations entirely unrelated to the application of either exterior. Consequently, this exclusion did not apply, either.

    Finally, although Southern had a duty to defend, it was premature to determine whether there was a duty to indemnify because there had been no factual determination as to liability in the underlying case.

"Occurrence" Viewed From Eyes of Insured

    The court determined that a young girl's suicide prompted by the insured's text messages constituted an occurrence under the homeowner's policy. State Farm Fire and Cas. Co. v. Motta, 2018 U.S. Dist. LEXIS 208472 (E.D. Pa. Dec. 11, 2018).

    High school student Zach Trimbur harassed and cyberbullied classmate Julia Morath. When the boy's parents, Walter Trimbur and Stephanie Moota, were informed, they assured school administrators they would supervise, discipline and control their son. Yet, the boy continued his conduct. The boy was suspended by the school, but still continued his cyberbullying after his suspension. Julia subsequently committed suicide.

    The Moraths sued Zach and his parents, alleging negligence, wrongful death, and survival. Stephanie Motta sought coverage under her homeowners policy with State Farm. State Farm defended under a reservation of rights.

    State Farm filed suit for a declaratory judgment that it had no duty to defend or indemnify the Trimbur boy in the underlying case. State Farm argued the suicide did not arise from an "occurrence" because the cyberbullying was non-accidental. The court determined there was an "occurrence" and State Farm had to provide a defense for Zach. 

    The underlying complaint alleged that Zach's actions were wanton and willful. State Farm argued that Zach intentionally cyberbullied and harassed Julia Morath, meaning there was no "accident" to trigger the policy. Zach countered by arguing that intentional acts can have unintended consequences, and Pennsylvania courts considered whether an insured could have reasonably foreseen the resulting injury. Julia Morath's death by suicide was an extraordinary intervening event unforeseeable to him. 

    The court noted that when properly focused on the entire occurrence, the fact that Julia Morath, not Zach Trimbur, inflicted the only alleged bodily injury was material. Further, the Moraths alleged a negligence theory against Zach. Though the underlying complaint used the words "harassment," "bulling," and "intentional," the Moraths alleged not a single intentional tort against Zach.

    Viewing these events from Zach's perspective, the court could not conclusively find death by suicide was foreseeable from his cyberbullying. From the boy's perspective, his classmate's death by suicide was an accident. Therefore, State Farm had a duty to defend.

Insured's Striking Multiple Vehicles Constitutes One Occurrence under Texas Law

    Reversing the district court, the Fifth Circuit found one occurrence after the insured's truck struck multiple vehicles. Evanston Ins. Co. v. Mid-Contenint Cas. Co., 2018 U.S. App. LEXIS 32722 (5th Cir. Nov. 19, 2018).

    An employee of Global Waste Services, LLC, Marlon Diggs, lost control of his Mack truck. At 11:04 a.m., the Mack truck hit a Dodge Ram. Three minutes later, the Mack truck struck a Ford F150. Two minutes after that, the Mack truck approached a toll plaza and caused the series of collisions which were at issue. 

    At 11:09 a.m., the Mack Truck struck a Honda Accord that was waiting in line at the toll plaza. The Mack truck pushed the Accord forward for more than 100 feet into the crash barrels separating two toll lanes, where the Accord came to rest. One passenger in the Accord was seriously injured. The Mack truck continued to travel through the automatic toll lane for 66 feet before striking a Dodge Charger. The Mack truck then struck a tollbooth, causing significant damage. The Mack truck continued pushing the Charger until it crashed into a retaining wall, pinning the Charger between the Mack truck and the wall. The driver of the Charger and Diggs both died. 

    Wrongful death cases were filed in state court against Global. The County made demands for the cleanup and repair of the toll plaza. All claims ultimately settled with contributions from Global's insurers. Mid-Continent insured Global under a commercial auto insurance policy with limits of $1 million per accident. Global had an excess liability policy from Evanston with a $5 million per-accident liability limit. Evanston paid over $5.6 million on various claims. Mid-Continent paid $1 million on one claim. 

    Evanston filed suit seeking reimbursement from Mid-Continent for a portion of the payments Evanston made on behalf of Global. Evanston also sought to recover the entirety of its defense costs. Evanston argued that Mid-Continent incorrectly construed all the collisions occurring after the Mack truck's impact with the Accord to be a single accident. Evanston argued that each separate impact between the Mack truck and another vehicle or object constituted a separate accident subject to separate liability limits. 

    The district court found that two accidents occurred. The collisions between the Mack truck and the Accord and between the Mack truck and the Dodge Charger were separate accidents because they occurred independently, and the former did not lead to the occurrence of the latter. The district court ordered that Mid-Continent, who only paid one million, should have paid $2,045,000 under the various settlements.  Therefore, Mid-Continent was ordered to pay Evanston $1,045,000 plus the costs of defense. 

    On appeal, the issue was whether the Mack truck's collisions near the toll plaza constituted one accident or multiple accidents under the language of Mid-Continent's policy. The policy defined "accident" to include "continuous or repeated exposure to the same conditions resulting in 'bodily injury' or 'property damage.'" Under the "Limit of Insurance" provision, the policy stated that "regardless of the number of covered autos, insureds, premiums paid, claims made or vehicles involved in the accident, the most Mid-Continent would pay for the total of all damages resulting from any one accident was the policy limit of one million dollars. 

    Under Texas law, the court applied the "cause" approach in interpreting the policy. In interpreting the meaning of an "occurrence, Texas courts focused on the events that caused the injuries and gave rise to the insured's liability, rather than on the number of injurious effects. Other jurisdictions adopted an "effects" approach in which each separate claim arising from the insured' negligence was considered a separate occurrence. 

    Under the cause test, the appropriate inquiry was whether there was one proximate, uninterrupted, and continuing cause which resulted in all of the injuries and damage. If so, then there was a single occurrence. If the chain of the proximate causation was broken by a pause in the negligent conduct or by some intervening cause, then there were multiple occurrences, even if the insured's negligent conduct which caused each of the injuries was the same kind of negligent conduct. 

    Here, the chain of causation remained unbroken. the ongoing negligence of the runaway Mack truck was the single "proximate, uninterrupted, and continuing cause" of all the collisions. The language of the policy provided that all injuries - no matter the number of vehicles involved or the number of claims made - arising from continuous or repeated exposure to substantially the same conditions were considered a single accident. The broad language of the policy had to be given effect. There was one accident under the policy.

    Therefore, the district court was reversed and judgment was rendered in favor of Mid-Continent. 

Forest Fire Constitutes One Occurrence

    The Wisconsin Supreme Court determined that a fire damaging several properties arose from one occurrence. Secura Ins. v. Lyme St. Croix Forest Company, LLC., 2018 Wis. LEXIS 579 Oct. 30, 2018). 

    A fire broke out on forest land owned by Lyme St. Croix Forest Company. Known as the "Germann Road Fire," it burned 7, 442 acres over three days. Real and personal property belonging to many individuals and businesses were damaged. The fire allegedly began while equipment owned by Ray Duerr Logging, LLC was being repaired. Flames quickly spread from dry grass to a pile of recently felled trees and spread to the surrounding forest. 

    Secura insured Duerr under a CGL policy. The policy had a $2 million general aggregate policy limit and a $1 million per-occurrence limit. The policy also had a "Logging and Lumbering Operations Endorsement" with a $500,000 per-occurrence limit for property damage due to fire. 

    Secura filed suit for a declaratory judgment to determine its coverage obligations. Secura argued in its motion for partial summary judgment that the Germann Road Fire was a single occurrence. Therefore, the $500,000 policy limit from the endorsement applied rather than the $2 million aggregate limit. The circuit court rejected Secura's argument, finding that "each 'seepage' of fire onto another's property constituted a separate occurrence for purposes of the policy." The court of appeals affirmed, finding there was an occurrence each time the fire spead to a new piece of property and caused damage.

    On appeal, the Supreme Court noted that Wisconsin followed the "cause theory" in determining whether there was a single occurrence or multiple occurrences. Under the cause theory, where a single, uninterrupted cause resulted in all of the injuries and damage, there was one occurrence. Some jurisdictions followed the effect theory where each accident must be construed from the point of the view of the person whose property was damaged. Pursuant to the effect theory, there would be an occurrence when the separate property of each claimant was damaged. 

    The Supreme Court disagreed with the analysis of the court of appeals. If there was an occurrence each time a fire refueled and expanded, then a fire, which is constantly refueling and expanding, would result in an unfathomably large number of occurrences regardless of how many property lines it crossed. Therefore, the court concluded the Germann Road Fire constituted a single occurrence and the $500,000 per-occurrence limit applied to the property damage. 

Ohio Supreme Court Holds No Occurence Arises from Subcontractor's Faulty Workmanship

    The Ohio Supreme Court bucked the modern trend by finding that there was no coverage under CGL policy's the subcontractor's exception for faulty workmanship claimed against the insured. Ohio N. Univ. v. Charles Constr. Servs. 2018 Ohio LEXIS 2375 (Ohio Oct. 9, 2018).

    The University contracted with Charles Construction Services, Inc. to build a new luxury hotel and conference center on campus. After work was completed, the University discovered extensive water damage from hidden leaks that it believed were caused by the defective work of Charles Construction and its subcontractors. Repairs were made at the cost of $6 million. 

    The University sued Charles Construction for breach of contract and other claims related to the damage. Charles Construction answered and filed third-party complaints against its subcontractors. Charles Construction tendered to its insurer, Cincinnati Insurance Company (CIC), seeking a defense. CIC agreed to defend under a reservation of rights. CIC intervened in the lawsuit and sought a declaratory judgment that it did not have a duty to defend or indemnify. CIC then filed a motion for summary judgment.

    CIC relied upon a prior decision from the Ohio Supreme Court, Westfield Ins. Co. v Custom Agri. Sys., Inc., 979 N.E. 2d 269 (Ohio 2012), which held that property damage caused by a contractor's own faulty work was not accidental and therefore not covered. The issue currently before the court was whether the general contractor's policy covered claims for property damage caused by a subcontractor's faulty work. 

    The trial court found in favor of CIC. The court of appeals reversed, noting that Custom Argi. had not addressed issues raised by the policy's products-completed operations hazard coverage or subcontractor specific policy terms. 

    Those provisions can be summarized as follows. The policy excluded property damage to:

(6) That particular part of any property that must be restored, repaired or replaced because "your work" was incorrectly performed on it.

Paragraph (6) of this exclusion does not apply to "property damage" included in the "products-completed operations hazard."

The policy defined "products-completed operations hazard" as including,

"property damage" occurring away from premises you own or rent and arising out of . . . "your work" except:

. . .

(2) Work that has not yet been completed or abandoned.

    Despite these provisions, a subcontractor's faulty work did not meet the definition of an "occurrence" because it was not based upon fortuity. The insuring agreement agreed to pay for property damage under certain circumstances. But the damage must be due to an "occurrence." There was no question that the water-related damage was "property damage" and was discovered after the work had been completed. But unless there was an "occurrence," the products-operations completed hazard provision and subcontractor exception had no effect, despite the fact that Charles Construction had paid additional money for it. 

    The court was aware that is reasoning was at odds with recent decisions of other courts. But the language requiring that "property damage" be caused by an "occurrence" remained a constant in the policies. Under the court's precedence, faulty workmanship was not an occurrence as defined in CGL policies. 

    The court therefore reverted to reasoning used before changes to the standard CGL policy in 1986, finding that inadvertent faulty workmanship could never be fortuitous or an accident. The CGL policy was altered in 1986 to provide coverage for certain kinds of property damage caused by inadvertent faulty work. The exclusions were modified to narrow the scope of coverage that was provided when property damage was caused by faulty workmanship. The subcontractor exception was intended to provide coverage for a general contractor when property damage was caused by the faulty work of a subcontractor. This was particularly the case when the property damage occurred after the general contractor had completed the project and the damage was to something other where the allegedly defective work was done. This history was neither addressed nor reconciled by the Ohio Supreme Court's decision. 

 

Coverage Denied Where Occurrence Takes Place Outside Coverage Territory

    The court held there was no coverage for construction defect claims that occurred outside the coverage territory. Foremost Signature Ins. Co. v. Silverboys, 2018 U.S. Dist. LEXIS 154524 (S.D. Fla. Sept. 11, 2018).

    Solo Design, LLC, a Miami-based design company, entered into a contract with Silverboys, LLC (Owner) to provide interior design services in conjunction with the renovation of the Owner's vacation home in the Bahamas. Solo retained Whittingham, a Bahamian architect, as a subcontractor to serve as project manager. 

    Owner sued Solo, Whittingham and others in Florida for breach of contract, fraud, conversion and negligence when the project did not go as planned. The underlying complaint alleged intentional misconduct, lying about qualifications and the progress of the project, submitting false invoices, requesting money for services that were not performed, etc. Owner alleged that the damages included: (a) the cost to repair substandard work; (b) loss of use of the home due to delay; and (c) overcharges for furnishings, contract fees, and expenses. The underlying complaint set forth only a few instances of physical injury to the home, including mold on the ceiling in the master shower, faulty millwork on the children's playroom bookshelf, and a defective front door and resysta facade. 

    Solo had three CGL policies with Foremost that covered "property damage" caused by an "occurrence" that took place in the "coverage territory" during the policy period. 

    Foremost brought suit for a declaratory judgment that the policies did not cover the Owner's claims and there was no duty to defend or to indemnify. Both parties moved for summary judgment. 

    The court first found that allegations regarding mold in the shower and the damaged resysta façade - injuries to otherwise nondefective property caused by defendants' failure to properly perform their job - could be read to fall within the definition of covered property damage so long defendants' failures were not intentional. Therefore, in the context of a duty to defend, the underlying complaint sufficiently alleged property damage caused by an occurrence. 

    The policies' coverage territory included " the United States . . . or all parts of the world if the damages arises out of . . . good or products made or sold by [Solo] in the United States; or activities of a person whose home is in the United States, but is away for a short time on your business." Foremost argued there was no duty to defend because all alleged property damage was caused by an occurrence in the Bahamas, outside the coverage territory. Defendants argued that the alleged negligent conduct that caused the damage occurred in the coverage territory since Solo failed to supervise Whittingham, made billing mistakes, and drafted the designs in Miami. The court determined that the location of the injuries, not of some precipitating cause, determined the location of the event for purposes of coverage. Here, the alleged property damage was in the Bahamas, outside of the coverage territory. There was no indication that Solo employees traveled to the Bahamas for a short or long period of time. 

    Accordingly, there was no property damage caused by an occurrence in the coverage area, and not duty to defend.