Ewing’s Undoing’s Ungluing: Appeals Court Follows Ewing And Holds That Contractual Liability Exclusion Precludes Coverage For Construction Defect Claim

Ewing’s Undoing’s Ungluing: Appeals Court Follows Ewing And Holds That Contractual Liability Exclusion Precludes Coverage For Construction Defect Claim

In January, the Supreme Court of Texas, in easily one of the most important coverage cases of 2014, held in Ewing Construction Co. v. Amerisure Insurance Co., [enhanced version available to lexis.com subscribers], that the “contractual liability” exclusion, contained in a CGL policy, did not preclude coverage for a construction defect claim involving not out of the ordinary facts. The Texas Supreme Court’s decision came following the case’s earlier time spent in the 5th Circuit.

The day Ewing was decided it seemed like case closed on the issue. Not so fast. As I mentioned in the last issue of Coverage Opinions, Mid-Continent Casualty Company convinced the 5th Circuit in Crownover v. Mid-Continent, No. 11-10166 (5th Cir. June 27, 2014), [enhanced version available to lexis.com subscribers], that, despite Ewing, the contractual liability exclusion still precluded coverage for a garden variety construction defect claim. Lee Shidlofsky and Doug Skelley, who represented Ewing Construction, had much to say about Crownover in a blog post. [The Crownovers filed a Petition for Rehearing with the Fifth Circuit. Not surprisingly, trade associations for Texas builders have chimed-in with amicus briefs in support of rehearing – including one filed by Shidlofsky and Skelley.]

Now, in Travelers Prop. Cas. Co. of Am. v. Peaker Services, Inc., No. 315070 (Mich. Ct. App. July 22, 2014), [enhanced version available to lexis.com subscribers], a Michigan appeals court, following Ewing, held that a contractual liability exclusion did not apply: “In the context of a CGL policy, ‘assumption of liability’ means assuming the legal obligations or responsibilities of another. In this case, defendant did not assume the legal obligations or responsibilities of another when it contracted with the university to provide goods and services of a particular quality and to return the university’s property to ‘as was’ condition in the event the university’s property was damaged during completion of the contract. Therefore, the contractually-assumed liability exclusion in the CGL policy did not preclude coverage in this case and the trial court reached the correct result, albeit for different reasons.”

I’m not saying much about Peaker Services here because you can get that from another Shidlofsky and Skelley blog post.

Coverage Opinions is a bi-weekly (or more frequently) electronic newsletter reporting or providing commentary on just-issued decisions from courts nationally addressing insurance coverage disputes. Coverage Opinions focuses on decisions that concern numerous issues under commercial general liability and professional liability insurance policies. For more information visit www.coverageopinions.info.

The views expressed herein are solely those of the author and not necessarily those of his firm or its clients. The information contained herein shall not be considered legal advice. You are advised to consult with an attorney concerning how any of the issues addressed herein may apply to your own situation. Coverage Opinions is gluten free but may contain peanut products.

    Randy Maniloff is Counsel at White and Williams, LLP in Philadelphia. He previously served as a firm Partner for seven years and transitioned to a Counsel position to pursue certain writing projects including Coverage Opinions . Nonetheless he still maintains a full-time practice at the firm. Randy concentrates his practice in the representation of insurers in coverage disputes over primary and excess obligations under a host of policies, including commercial general liability and various professional liability policies, such as public official’s, law enforcement, educator’s, media, computer technology, architects and engineers, lawyers, real estate agents, community associations, environmental contractors, Indian tribes and several others. Randy has significant experience in coverage for environmental damage and toxic torts, liquor liability and construction defect, including additional insured and contractual indemnity issues. Randy is co-author of “General Liability Insurance Coverage - Key Issues In Every State” (Oxford University Press, 2nd Edition, 2012). For the past twelve years Randy has published a year-end article that addresses the ten most significant insurance coverage decisions of the year completed.

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