Duty to Defend Triggered by Damage to Other Non-Defective Property

    The court found the insurer must defend because there was a possibility of damage to property due to work not performed by the insured. B&W Paving & Landscape, LLC v. Employers Mut. Cas. Co., 2022 U.S. Dist. LEXIS 225783 (D. Conn. Dec. 15, 2022). 

    In 2010, Whiting Turner Contracting Company (WT) contracted with United Illuminating Company (UI) to act as general contractor for the construction of UI’s new central facility. WT subcontracted with Cherry Hill Construction, Inc. (Cherry Hill) for work underneath the parking lot and driveways, including installing base and sub base materials. WT also subcontracted with B&W Paving and Landscape, LLC (B&W) for the asphalt paving.

    In 2018, UI sued WT for defective and incomplete work. WT then filed a third-party compact against its subcontractors, including B&W. WT sued for contribution for any liability it may have to UI for the paving work.

    Experts were retained. WT retained GZA GeoEnvironmental, Inc. (GZA), who found that “thinner asphalt paving layers at the site have like contributed to the detrimental intrusion of water into the underlying granular base and sub base courses resulting in an associated reduction in structural strength,” opining “that the deficient paving thickness has thus contributed to the detrimental effects on the base and sub base materials and the pavement structure deficiencies noted in the driveway and parking lot claim asserted by UI.” 

    B&W was insured by a commercial general liability policiyissued by Employers. Employers declined to defend B&W, claiming there was no coverage for the claim made by WT’s third-party complaint. B&W filed this suit alleging Employers owed a duty to defend and to indemnify. Cross-motions for summary judgment were filed on the duty to defend. 

    The parties did not contest that for coverage purposes “property damage” from defective construction work by the insured only included damage caused to other, non-defective property, and did not extend to repairing or replacing the insured’s defective work. 

    Employers argued that it had no duty to defend because the underlying third-party complaint did not specify that B&W’s work damaged Cherry Hill’s non-defective work, instead broadly alleging property caused by B&W. The court determined, however, that the underlying complaint in conjunction with the GZA opinion triggered Employers’ duty to defend. The underlying complaint claimed paving-related losses sustained by UI due to B&W’s defective work, and stated that B&W must indemnify WT for any clams brought by UI. The GZA statement on UI’s losses at least arguably included losses caused by B&W’s work damaging the work of Cherry Hill. This sufficed to find that the allegations in the complaint fell possibly within the scope of B&W’s coverage, triggering the duty to defend. 

    Employers argued two exclusions were applicable to deny a defense. The “property damage” exclusion exceeded coverage for “property damage” that directly or consequentially occurs  from the faulty workmanship of the insured and its contractors/subcontractors while the work was ongoing. The property damage exclusion did not apply to damage caused after work was competed. B&W argued that the damage occurred after completion of the work. Employers did not meet its burden to show that it was possible the exclusion did not apply.

    The second exclusion raised by Employers was the “your work” exclusion. The exclusion excluded coverage for damage caused by the insured to the insured’s own work. Employers merely argued that the GZA report did not raise the possibility of coverage. The court disagreed that either exclusion applied. B&W’s motion was granted while Employers’ motion was denied.