Insurance Law

WVSCA Clarifies Retroactive Application of Cherrington to Pending Cases

On May 20, 2015, the West Virginia Supreme Court of Appeals concluded in BPI, Inc. v. Nationwide Mutual Insurance Company, [subscribers can access an enhanced version of this opinion: lexis.com | Lexis Advance], that its prior decision in Cherrington v. Erie Insurance Property & Casualty Co. should be applied retroactively to any pending claim not rendered final prior to that decision, effectively confirming that defective workmanship causing bodily injury or property damage can properly be characterized as an “occurrence” under commercial general liability insurance policies in those pending claims.

In 2013, the West Virginia Supreme Court of Appeals addressed the issue of defective workmanship causing bodily injury or property damage and held in Cherrington, [subscribers can access an enhanced version of this opinion: lexis.com | Lexis Advance], that defective workmanship is properly characterized as an “occurrence” under a commercial general liability insurance policy subject to applicable policy exclusions. That decision altered the law in West Virginia with regard to that issue, and the new principle was applied to the 2004 insurance policy under review in Cherrington. In BPI, Inc., the Court addressed the factors set forth in Bradley v. Appalachian Power Co. to determine whether to extend full retroactivity. After applying the factors to the facts before it, the Court concluded that the general rule of retroactivity should be applied. Accordingly, any case that was not final at the time the Cherrington decision was rendered will have the benefit of the holding in Cherrington.

If you have any questions regarding the application of the Court’s decision in BPI, Inc. v. Nationwide Mutual Insurance Company, please contact a member of our First Party Insurance Team.

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