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Birmingham Bar Association Spring 2014

Insurance workmanship is an accidental ‘occurrence’ potentially covered under the CGL policy have decided that it can be an ‘occurrence.’” The Court also noted that the history of the post-1986 CGL policy supports that a construction defect may be an “occurrence.” The Court explained that its prior decision defining “occurrence” by the nature of the property damaged by a construction defect was “incorrectly decided.” “This focus on the nature of the property damaged to define whether there has been an ‘occurrence’ has been criticized by courts and commentators.” The Court reasoned, “There is nothing in the definition of ‘occurrence’ that supports that faulty workmanship that damages the property of a third party is a covered ‘occurrence,’ but faulty workmanship that damages the work or property of the insured contractor is not an ‘occurrence.’” Thus, whether or not there is an “occurrence” cannot be determined by that nature of the property damaged. The Court finally concluded, “Faulty workmanship may constitute an ‘occurrence’ if the faulty work was ‘unexpected’ and not intended by the insured, and the property damage was not anticipated or intentional, so that neither the cause nor the harm was anticipated, intended, or expected.” This rule, the Court explained, “is consistent with our definition of ‘accident’ for purposes of a CGL policy.” Connecticut: Capstone Building Corp. v. American Motorists Insurance Co., 67 A.3d 961 (Conn. June 11, 2013). The Connecticut Supreme Court was asked to answer several certified questions by an Alabama federal district court. Among those certified questions was, “Whether damage to a project contracted to be built, which was caused by defective construction or faulty workmanship associated with the construction project, may constitute ‘property damage’ resulting from an ‘occurrence,’ triggering coverage under a commercial general liability insurance policy?” This was an issue of first impression in Connecticut. The case involved the construction of a student-housing project on the University of Connecticut (“UCONN”) campus. Capstone Building Corporation served as the project’s general contractor, but it did not self-perform any of the project work. All work was performed by subcontractors. The contractor was covered by a CGL policy. In construing the policy, the Connecticut Supreme Court explained that it would give “accident” its natural and ordinary meaning—an “unexpected happening; unexpected or unintended.” “A deliberate act, performed negligently, is an accident if the effect is not the intended or expected result; that is, the result would have been different had the deliberate act been performed correctly.” The Court concluded that a contractor’s defective workmanship can give rise to an “occurrence.” It reasoned that “occurrence” means “accident,” and “accident” means “unexpected or unintended.” Thus, because “negligent work is unintentional from the point of view of the insured,” the Court found “that it may constitute the basis for an ‘accident’ or ‘occurrence’ under the plain terms of the commercial general liability policy.” West Virginia: Cherrington v. Erie Insurance Property and Casualty Co., 745 S.E.2d 508 (W.V. June 18, 2013). An individual contracted with a homebuilder to construct a new home in Greenbrier County, West Virginia. After the completion of the home, the homeowner discovered various defects in the house, including an uneven concrete floor on the ground level; water infiltration through the roof and chimney joint; a sagging support beam; and numerous cracks in the drywall throughout the house. All Birmingham Bar Bulletin/ Spring 2014 13


Birmingham Bar Association Spring 2014
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