No Subrogation, Contribution Rights for Carrier Defending Construction Defect Claim

    The Court held that the insurer defending the additional insured general contractor had no right to equitable subrogation or equitable contribution from a separate carrier who also insured the general contractor as an additional insured. Old Republic Gen. Ins. Co. v. Amerisure Ins. Co., 2023 U.S. Dist. LEXIS 170293 (N.D. Ill. Sept. 25, 2023).

    Tanger Grand Rapids, LLC hired Rockford Construction Company to build the Tanger Outlet Center. Rockford subcontracted with Kamminga & Roodvoeis, Inc. (K&R) to work on the pavement for the outlet mall. Under the subcontract, K&R agreed to maintain primary commercial general liability insurance for itself, with Rockford as an additionial insured. K&R obtained a policy from Amerisure. For additional paving work, Rockford subcontracted with Michigan Paving & Materials, CP. The subcontract also required Michigan Paving to maintain primary coverage, with Rockford as an additional insured. Michigan Paving obtained a policy from Liberty Mutual. 

    Tanger sued Rockford and others after the pavement in the parking lot of the Outlet Center failed. Liberty Mutual agreed to defend, but Amerisure refused to defend Rockford.

    In the coverage action, Liberty Mutual sought a declaratory judgment that Amerisure had a duty to defned and indemnify Rockford. Tanger's underlying complaint did not allege that Rockford's defective work (or that of its subcontractors) caused any damage to property beyond the scope of the Tanger contract. Instead, Tanger alleged only that the pavement failed. The pavement was within the csope of Rockford's work as the general contractor for the outlet mall. Nor did Tanger seek any damages from Rockford apart from the costs of repairing the pavement. The costs of repairing Rockford's faulty pavement construction were economic losses, however, not "property damage." 

    The underlying ocmplaint sought only the costs of repairing Rockford's defective work, so it alleged neither an "occurrence" nor "property damage." Therefore, Amerisure had no duty to defend Rockford in the underlying action. Liberty Mutual's claims for equitable subrogation and equitable contribution both failed.