Construction Defect Coverage

As part of its casualty coverage experience, Our firm represents insurers in coverage disputes involving construction projects, including some of the largest commercial projects in the country, large-scale residential developments and mixed commercial/residential projects. Acting as both coverage counsel in underlying disputes as well as defending bad faith claims, Our firm attorneys have particular experience in wrap policies, including OCIPs and CCIPs, and other complex coverage disputes involving construction projects.  In addition to our coverage analysis and litigation of coverage disputes, our team advises clients on legislation impacting coverage for construction defects and construction defect insurance coverage issues that may arise from the construction of “green” buildings, including green building codes, standards and rating system requirements.

Representative Experience

• Representing one of the world’s largest insurance carriers in a high-profile insurance dispute involving alleged construction defects in the largest and most-expensive private development project in U.S. history, located in Las Vegas, Nevada. Our firm’s representation includes serving as lead counsel in two coverage litigations arising from the matter (in San Diego and in Las Vegas) and in providing advice to the client with respect to the claims.
• Representing a major OCIP insurance carrier in a $25 million construction defect insurance coverage action in Las Vegas federal court as well as representing that insurer for all claims made by the developer, general contractor and wrap-enrolled subcontractors.
• Represented a major OCIP insurance carrier in numerous claims and two lawsuits in San Diego, California, concerning insurance coverage for construction defect claims at six new high-rise condominium projects involving claims valued as much as $42 million on a single project.
• Successfully defended, and then favorably settled for, a large insurer a bad faith action in which a ski resort developer sought coverage under a wrap policy for alleged damages suffered during and following construction at a ski resort base area. Our firm was able to convince the plaintiff during the litigation that much of the underlying claim was not covered by the policy at issue.
• Successfully defended one of the world’s largest insurance companies in a $65 million lawsuit in Hartford, Connecticut, concerning builders’ risk/delay-in-startup coverage for damages arising out of the collapse of a massive power plant under construction.
• Obtained summary judgment on behalf of an insurer in Texas state court in a case where the plaintiffs, developers of luxury condos, were sued by owners asserting extensive water damage to their home as a result of faulty construction. The plaintiffs sought a defense and indemnity under a commercial general liability policy issued by our client, which denied the coverage. After settling with the condominium owners, the plaintiffs filed suit against their insurance company seeking their defense and indemnity costs and asserting extra-contractual claims. In the motion for summary judgment, we argued that a policy exclusion precluded coverage for any defense or indemnity obligation because the plaintiffs owned the condominium at issue at all times during the policy period. Accordingly, even if there was covered property damage that occurred during the policy period, the policy exclusion precluded coverage for property damage to property owned by the insured. We also argued that the extra-contractual claims failed, as a matter of law, because our client’s denial was reasonable.
• Obtained a dismissal for our client, an excess insurer, in New York state court in a liability insurance coverage dispute arising out of a construction accident that resulted in a $5.5 million personal injury settlement. The subcontractor for whom our client was an excess insurer sought coverage for the settlement, which was denied. The additional insureds then sued our client to cover the last $1 million of the underlying settlement. After four years of difficult litigation, the additional insureds decided to dismiss their case against our client with no payment based on priority of coverage (that the $1 million should be paid by another insurer – not our client).