by KPMLAW | Aug 15, 2016 | KPMBlog, News, Uncategorized
Written by Gary Reinhardt, Esq. Recently, the United States District Court for the Eastern District of Virginia revisited the workmanship and earth movement exclusions of a Commercial General Liability policy and how the ensuing loss provisions impact coverage. In Taja Investments, LLC v. Peerless Ins. Co., 2016 U.S. Dist. Lexis 95760 (July 21, 2016), a wall collapsed during renovation of a row house. The construction company performing the renovations sought coverage for emergency measures to prevent further damage and the cost to restore the property to pre-collapse condition. Investigation revealed that the insured intended to expand a crawl space to create a living area basement. However, the contractors doing the work ignored warnings about performing underpinning during the excavation process. Engineers determined that this failure to underpin the work coupled with unstable soil and clay below the surface caused the collapse. The insured did not dispute this finding. The carrier denied coverage for the loss asserting that the damage was excluded. The insured sued for breach of contract. The Court granted summary judgment for the insurer on both the workmanship and earth movement exclusions. First, the Court stated that the workmanship exclusion “is applicable when the insured’s loss is attributable to the quality of the constructed property and arises from defects in the materials or process used by the insured or its agents to construct the property.” Id. at 9. Because “the cause of the collapse is directly attributable to the acts and omissions of Plaintiff in excavating the entirety of the basement without performing any underpinning to secure the foundation of the walls” the workmanship exclusion precluded coverage. ...
