Defense Owed to Insured Subcontractor, but not to Additional Insured

    Affirming the district court, the Eleventh Circuit agreed that the insured subcontractor was entitled to a defense against claims of faulty workmanship, but no defense was owed to the additional insured subcontractor. Cincinnati Spec. Underwriters Ins. Co. v. KNS Group, LLC, 2022 U.S. App. LEXIS 27949 (11th Cir. Oct. 6. 2022). 

    The general contractor on a project to build a casino and hotel hired GM&P Consulting and Glazing Contractors, Inc. (GM&P) to provide exterior glazing for the building. GM&P enlisted subcontractor KNS to assist it by glazing glass and installing window walls. KNS agreed to provide commercial general liability and other types of insurance, and to indemnify GM&P for liability for damages caused by any of its acts or omissions. KNS acquired a policy from Cincinnati. 

    The casino filed suit against the general contractor and subcontractors, alleging that GM&P installed defective “Glass Facade” and improperly installed windows. GM&P filed a Hird-party complaint against KNS due to KNS’s alleged defective construction of the casino.

    Cincinnati filed this coverage lawsuit seeking a declaratory judgment that it had no duty to defend and no duty to indemnify KNS or GM&P in the underlying suit. Cross-motions for summary judgment were filed and the district court ruled that Cincinnati had a duty to defend KNS, but no duty to defend or indemnify GM&P. GM&P appealed and Cincinnati filed a cross-appeal on the district court’s determination that it had a duty to defend KNS.

    The Eleventh Circuit first determined there was no duty to defend the additional insured, GM&P. The policy limited GM&P’s coverage to “property damage” caused, in whole or in part, by KNS or KNS’s agents. The underlying complaint alleged that GM&P was negligent in its furnishing of materials and installation of the Glass Facade. It alleged no negligence by KNS nor any of its agents. Without more, Cincinnati had no duty to defend or indemnify GM&P. 

    The district court’s declaration that Cincinnati must defend KNS was all affirmed. The underlying complaint alleged that the Glass Faced supplied and installed by GM&P was “fraught with systemic defects, including loose gaskets between window panels, damaged sealants and panel frame, and misaligned window wall panels creating the risk of property damage.” Further, it was alleged that another defendant supplied the glass panels installed by GM&P, which suggested that GM&P’s faulty installation could have damaged a separate component of the property – the panels. Thus, when the pleadings were read favourably to the insured, they reasonably could lead to coverage.

    The Eleventh Circuit was not persuaded by Cincinnati’s arguments that certain exclusions applied. The court also agreed with the district court that determining a duty to indemnify was premature.