No Coverage for Faulty Installation of Windows

    The federal district t court granted summary judgment to the insurer, agreeing there was no "occurrence" nor "property damage" resulting from the faulty installation of windows. Employers Mut. Casualty Co. v. Knipp Equipment Inc., 2025 U.S. Dis. 24400 (D. Kan. Feb. 11, 2025).

    Edwards County and Knipp entered into a contract for the removal and replacement of the Courthouse's 113 windows. Three weeks after the job was completed, a rainstorm struck and several of the windows leaked. 

    Edwards County filed a Statement of Claim with the American Arbitration Association, claiming Knipp breached its duty to perform the work and render the services owed to Edwards County in a good and workmanlike manner. Edwards County alleged that the windows had to be removed, re-sized, and re-installed, at the estimated cost of $420,000. 

    Employers issued a commercial general liability policy to Knipp. Employers provided a defense to Knipp under a reservation of rights. An Arbitration Award was issued in Edwards County's favor. The Arbitrator found that Edwards County was entitled to recover damages for the cost to correct all 113 window openings in the building. King never paid.

    Employers filed suit against Knipp and Edwards County. Employers and Knipp entered into a settlement agreement stipulating that the policy provided no coverage with respect to the Award and Employer's had to duty no indemnify Knipp with respect to the Award. Edwards County filed a counterclaim against Employers, asserting its rights as a third-party beneficiary to the policy and claiming that Employers breached its duty to indemnify Knipp. 

    Employers moved for summary judgment seeking a declaratory judgment that there was no coverage under the policy. Employers asserted there was no occurrence. Edwards County argued that even if Knipp's performance was inept, it was not intentional or intended within the meaning of established tort law. The court noted that Kansas followed the natural and probable consequence test. Under this test, an insured's intent to injure could be inferred if the resulting injury from the standpoint of the insured, was the natural and probable consequence of the act ultimately causing the injury. 

    Here, the Arbitrator made several determinations. First, he found that Knipp and the subcontractor did not consulted with the architecture firm, but decided to remove the historic steel window frame sand mortar at each location. Second, Knipp and its subcontractor failed to perform "an invasive examination around an existing window to ascertain" the windows' "pre-existing water-resistant" qualities. Third, he found that Knipp committed "a material breach of contract and a breach of its implied warranty of workmanlike performance" due to its "failure to install either the wall flashing at the window heads or a window system incorporating a head receptor in place of head flashing." These decisions ultimately led to Edward County's damages.

    Edwards County claimed that Knipp's poor judgment did not constitute an intentional act because Knipp did not intend to cause Edwards County injury. The court was unpersuaded. Knipp's decisive acts and omissions led to their natural consequence – i.e., window damage – which inevitably required their removal and replacement. Although Knipp may have not intended to cause this specific harm, its subversion of the architecture firm was certainly not accidental. Because the window damage was not accidental, it was neither the result of an occurrence. Therefore, Employers was entitled to summary judgment on this issue.    

    Nor was there property damage. The Arbitration Award entitled Edwards County to the "cost to correct the water-resistant barrier at the Courthouse windows." Accordingly, this Award was designed to compensate for the defective installation of the windows – not for any physical damage to the windows. Employers was entitled to summary judgment on this issue as well.