Recently, a plaintiff in Brayman Construction Corp. v. Westfield Ins. Co., Inc. brought a claim against Westfield Insurance Company (“Westfield”) for breach of contract and insurance bad faith. In response, Westfield filed a Motion to Dismiss the Complaint arguing that the complaint fails to state a claim for breach of contract based on a theory that construction defects claims are not an “occurrence” qualifying for insurance coverage.
The Underlying Claim
Brayman Construction Corporation (“Brayman”) was a prime contractor for construction of a bridge. Gavco Materials, Inc. (“Gavco”) was a subcontractor who supplied concrete for the construction project. The concrete was procured, tested and utilized in construction of the bridge. However, the bridge collapsed soon after construction. It is claimed that the concrete was defective, causing damage to the drilled shafts made for the piers. Consequently, Brayman made repairs at its’ expense.
Brayman then initiated an action in Arbitration against Gavco to recover damages. Gavco sought insurance coverage from Westfield from whom it had contracted for a policy including Commercial General Liability Insurance (“CGL”). However, Westfield denied coverage to Gavco for defense costs and liability stating that the defects did not trigger the CGL policy because they did not meet the definition of an “occurrence.” Gavco settled with Brayman and provided an Assignment of rights to its claim for defense and liability against Westfield. Brayman is pursuing recovery of its damages against Westfield in the current lawsuit based upon the Assignment.
Insurance Coverage in Pennsylvania
Generally, Pennsylvania law does not view construction defects as an “occurrence” to trigger insurance coverage. The basis for this is that it is understood that a defect is not a “fortuitous event” amounting to an accident that would be covered under a CGL policy. However, an exception is made for claims that are products-related as opposed to a pure defect claim.
The judge in this case found that the facts of the case indicated that the property damage that occurred was “unexpected”, similar to accidents. Therefore, the Judge ruled that the Complaint filed by Brayman sufficiently alleged a breach of contract claim for Westfield’s failure to defend and indemnify its insured, Gavco, based upon an “occurrence.”
Case Set for Trial
This preliminary decision does not rule on whether Westfield is liable for defense and costs at this stage, only that Brayman presented sufficient facts in the case so that the case may be tried. It means that the Judge did not dismiss the case on the face of the complaint.
It remains to be seen if in fact the court will hold that Westfield is found liable for breach of contract and insurance bad faith and require insurance coverage for the underlying claim.
Philadelphia Defective Construction Lawyers at Harty Law Group Handle Construction Defects Litigation
Construction defect lawsuits are complex and require dealing with multiple parties and insurance companies. The Philadelphia real estate litigation attorneys at Harty Law Group understand the complexities and intricacies of insurance coverage in construction defects litigation. If you are looking for competent attorneys with excellent advocacy skills, contact us online or call our office at 267-262-5650 for a consultation. Our offices are located in Philadelphia and Haddonfield, New Jersey and we serve clients throughout New Jersey and Pennsylvania.