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Sixth Circuit Finds Faulty Construction is Not an Occurrence under Kentucky Law




by:
George B. Hall
Phelps Dunbar LLP - New Orleans Office

 
February 10, 2014

Previously published on January 29, 2014

Reversing the decision of a federal district court in Kentucky, the U.S. Sixth Circuit Court of Appeals has held that claims against a subcontractor for faulty work in preparing a building pad did not allege an "occurrence." Liberty Mut. Fire Ins. Co. v. Kay & Kay Contracting, LLC, 2013 WL 6084276 (6th Cir. Nov. 19, 2013) (unpublished opinion).

The insured subcontractor was hired to perform site preparation work and construct a pad for a commercial building. After the building was completed, it experienced damage as a result of settling allegedly caused by the faulty site preparation work of the insured. The insured's CGL carrier denied coverage and filed a declatory judgment action seeking a determination that there was no "occurrence." The parties filed cross-motions for summary judgment and the trial court held that there was an "occurrence." The insurer appealed.

The Sixth Circuit reversed, finding that the damage to the building was within the control of the insured, and not a fortuitous event which damaged other property. Because the site preparation work was needed to avoid the settling and resultant structural damage and the insured was hired to prevent this type of damage, the faulty work and resulting damage were not fortuitous and thus not an "occurrence" under the CGL policy.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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