Construction Defect Claim Survives Insurer’s Summary Judgment Motion Due to Lack of Evidence

    The court denied the insurer's motion for summary judgment on a construction defect claim due to lack of evidence. Statesboro Erectors, Inc. v. Owners Ins. Co., 2024 U.S. Dist. LEXIS 176555 (N.D. Ga. Sept. 30, 2024). 

    Griffco was the general contractor for a construction project. King Steel was hired as the "steel fabricator." King Steel subcontracted with Statesboro Erectors to complete certain construction work at the site. Statesboro agreed to the complete, proper and safe erection of the structural steel.

    A steel collapse occurred at the construction site. According to King Steel, the collapse "appeared to have occurred due to lack of temporary cables or bracing for steel columns." Because of the collapse, King Steel was required to supply additional materials to replace the structural damage caused by the collapse.

    King Steel sent Statesboro a demand seeking $426,291.89 in damages for repairing the collapse. A week later, King Steel sent a second letter demanding an additional $410,385.27 from Statesboro. This request was based on the deductive change order King Steel received from Griffco. 

    Statesboro's insurer, Owners Insurance Company, denied coverage for the $426,291.89 claim, but requested additional information on the deductive change order in the amount of $410,385.27. Owners and King Steel ultimately reached a settlement and Owners agreed to pay a portion of this amount. Months later, King Steel sent a demand letter to Statesboro seeking immediate payment of the $426,291.89 it had demanded. During mediation with Statesboro and King Steel, Stateboro agreed to pay King Steel $456,874.

    Statesboro then sought reimbursement from Owners for the $456,874. Owners denied the claim because it deemed the request to be for items not covered by the Statesboro policy. 

    Suit was filed. Owners moved for summary judgment arguing that the damages Statesboro sought were not covered by the policy. First, it contended that the $456,874 in damages did not qualify as "property damage" because it reflected the faulty workmanship of Statesboro. Second, even if some of the damages were "property damage," they were excluded under the policy.

    The court determined that the dearth of evidence was fatal to Owners' motion. There was no evidence in the record regarding the cause of, extent of, details surrounding, or the party responsible for the structural collapse. According to the evidence obtained by King Steel, the collapse appeared to have occurred due to lack of temporary cables or bracing for steel columns. This was the only evidence suggesting that the steel collapse was due to any faulty workmanship or inadequate construction by Statesboro. It was simply King Steel's assertion of the cause without any underlying evidence in support.

    The lack of evidence prevented the court from finding that, as a matter of law, certain policy provisions were applicable. For example, Owners contended there was no property damage because the damages Statesboro sought were based on its own faulty workmanship. On the record before it, however, the court could not determine whether the damages sought by Statesboro were the result of its faulty workmanship. This lack of evidence also prevented the court from finding that certain policy exclusions applied.

    Therefore, Owners' motion was denied.