CGL Policies, “property damage,” Ongoing Operations Exclusion and Products-Completed Operations Hazard Exclusion, and Coblentz Agreements - Owners of a defectively constructed home sued the homebuilders’ commercial general liability insurer pursuant to an agreement whereby the homebuilders received a release of liability under a consent judgment (entered into with the homeowners) in exchange for assigning their failure-to-defend claim against their insurer to the homeowners (i.e., a
Coblentz agreement). On cross motions for summary judgment, the Middle District held that insurer had no duty to defend the homebuilders or satisfy the
Coblentz agreement. No obligation to defend or indemnify the builder Horgo Signature existed because no written document identified it as an insured or additional insured, and although it was related to an insured entity involved in the construction, Horgo Enterprises, the homeowners had not pursued a theory of vicarious liability. The insurer also owed no duty to defend the other builder, Winfree, because the underlying complaint alleged damages only for the cost of repairing or replacing Winfree’s defective work and/or materials, which did not fall within the policy’s definition of “property damage.” Similarly, the complaint’s conclusory allegation that “latent construction defects” materially affected the home’s “structural integrity” was also insufficient to trigger the insured’s duty to defend “absent any allegations that the various latent defects damaged some specific non-defective portion of the [home].” Although this conclusion resolved the parties’ motions, the Court assumed for the sake of argument that the insurer
did have a duty to defend, and analyzed the insurer’s remaining arguments against the
Coblentz agreement: that a defense to coverage existed and that the agreement was unreasonable and not made in good faith. Looking first to the insurer’s coverage defenses, the Court held that the CGL policy’s Section (j)(5) and (j)(6) exclusions—which, when read together, preclude coverage for the costs of repairing, removing, or repairing defective work that occurs while the insured is still performing work—precluded coverage because the homeowners’ inspectors and experts had stated in their reports and depositions that the property damage began to occur immediately upon installation while Winfree, the primary builder of the home, was still working. Turning to the
Coblentz agreement itself, the Court concluded the settlement was unreasonable and not made in good faith because (i) the consent judgment and settlement agreement failed to categorize and allocate between covered and uncovered damages, (ii) the homeowners’ experts never opined on the agreement’s reasonableness such that the homeowners failed to carry their burden to prove the agreement’s reasonableness, and (iii) the homebuilders made no effort to minimize the amount and abandoned their viable affirmative defenses. Accordingly, the insurer had no obligation to defend the homebuilders or to satisfy the judgment and
Coblentz agreement.
Bradfield v. Mid-Continent Casualty Company, 2015 WL 6956543 (M.D. Fla. Nov. 10, 2015) (NOTE: appeal filed by Bradfield with 11
th Circuit Court of Appeals on December 14, 2015).