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CGL Insurer Had No Duty To Defend Defective Contract Work

Monday, September 03, 2012 05:50 am


Insurance -- CGL

Ewing Constr. Co., Inc. v. Amerisure Ins. Co., 2012 U.S. App. Lexis 12154 (5th Cir. June 15, 2012)

In Texas, a commercial general liability (CGL) policy's contractual liability exclusion is given its plain meaning: It excludes coverage for liabilities that the contractor (the insured) has assumed under its construction contract. In other words: no coverage for a contract breach.

Ewing Construction Company, Inc. (Ewing) contracted to construct tennis courts at a school in Corpus Christi, Texas for a price of $2 million. Soon after project completion, the courts cracked and flaked and became unfit for use. The school district sued Ewing for contract breach and negligence for failing to exercise ordinary care, perform in a workmanlike manner, and complete construction in accordance with the plans/specifications. Ewing called on its insurer, Amerisure Insurance Company (Amerisure), to defend it under a CGL policy. Amerisure denied coverage.

A district court held that Amerisure owed no duty to defend or indemnify Ewing because the policy's contractual liability exclusion excluded coverage. That ruling held on appeal, in part.

It was undisputed that the tennis court defects constituted "property damage" caused by an "occurrence" that took place in the "coverage territory," as those terms were defined in the CGL policy. What was dis [...]

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