Massachusetts Federal Court Rejects Adria Towers, Finds Construction Defects Not an “Occurrence”

In an important ruling for insurers, U.S. District Court Judge Patti Saris found that Massachusetts does not follow the position taken in Cypress Point Condo Association v. Adria Towers, LLC, 226 N.J. 403, 418 (2016), i.e., it does not hold that “faulty workmanship claims [should be recognized] as … an ‘occurrence,’ thus triggering coverage, ‘so long as the allegedly defective work [was] performed by a subcontractor rather than the policyholder itself.”[1]

Instead, Judge Saris reaffirmed earlier Massachusetts authority holding faulty work is not an “occurrence” for coverage purposes,[2] and found this authority applied whether or not the work in question was subcontracted.

In the alternative, Judge Saris found, even if a contractor’s faulty work could be deemed an an “occurrence,” such work did not constitute covered “property damage,” because none of the alleged damage was “outside the scope of the work that Tocci was contractually required to fulfill as general contractor.”[3]