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Birmingham Bar Association Spring 2014

Insurance of the defective work was performed by subcontractors. The homebuilder was insured by a CGL policy. The insurer argued (and the trial court agreed) that “CGL insurance does not provide coverage for defective workmanship,” relying on then-existing West Virginia case law. On appeal, the West Virginia Supreme Court revisited its previous decisions and appears to have been persuaded by the “majority of other states” that had reached the opposite conclusion. The Court stated, “While we appreciate this Court’s duty to follow our prior precedents, we also are cognizant that stare decisis does not require this Court’s continued allegiance to cases whose decisions were based upon reasoning which has become outdated or fallen into disfavor…. Wisdom too often never comes, and so one ought not to reject it merely because it comes late.” Thus, the Court reversed its previous decisions to hold that “defective workmanship causing bodily injury or property damage is an ‘occurrence’ under a policy of commercial general liability insurance.” The Court reasoned that “occurrence” means “accident,” and “accident” means that the damages must not have been “deliberate, intentional, expected, desired, or foreseen by the insured.” The Court found it to be nonsensical that a contractor would deliberately intend “the deleterious consequences that were occasioned by its subcontractors’ substandard craftsmanship,” as such would amount to “deliberate sabotage.” Thus, the Court found that the damages were “accidental” and not “deliberate, intentional, expected, desired, or foreseen” by the homebuilder. As such, because “occurrence” means “accident,” there was an “occurrence.” Georgia: Taylor Morrison Services, Inc. v. HDI-Gerling America Insurance Co., 746 S.E.2d 587 (Ga. July 12, 2013). The Georgia Supreme Court was asked to answer certified questions by the U.S. Court of Appeals for the Eleventh Circuit. Among the certified questions was, “Whether, for an ‘occurrence’ to exist under a standard CGL policy, Georgia law requires there to be damage to ‘other property,’ that is, property other than the insured’s completed work itself?” The case involved a homebuilder and a class of 400 homeowners who bought homes from the homebuilder. The class alleged that the concrete foundations of their homes were improperly constructed, causing the foundations to fail. In turn, the failing foundations caused damage to the houses, including water intrusion, cracks in the floors and driveways, and warped and buckling flooring. The homebuilder was insured by a CGL policy. The homebuilder’s insurer sought a declaratory judgment of “no coverage” for the homeowners’ claims. In the declaratory judgment action, the trial court granted summary judgment for the insurer, finding that the homeowners’ claims did not involve an ‘occurrence’ because the only ‘property damage’ alleged was damage to the work of the homebuilder (i.e., the homes). In answering the certified question, the Georgia Supreme Court began its analysis with the meaning of “accident,” which it would give its usual and common meaning. According to the Court, an “accident” refers to “an unexpected happening without intention or design,” an “event or change occurring without intent or volition through carelessness, unawareness, ignorance, or a combination of causes and producing an unfortunate result,” or “something that occurs unexpectedly or unintentionally.” The Court explained that “accident” is not normally defined by the nature or extent of injuries. Therefore, the Court held that “occurrence” means “accident,” which “does not require damage to the property or work of someone other than the insured.” The Court reasoned that 14 Birmingham Bar Association


Birmingham Bar Association Spring 2014
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