Archive:2013

By: Joseph C. Safar & Kimberly L. Karr, K&L Gates, Pittsburgh

Whether a construction defect constitutes a covered “occurrence” under a commercial general liability (“CGL”) policy has been the subject of a national debate among state courts in recent years.  Armed with a small minority of seemingly pro-insurer decisions finding no coverage for a contractor’s “faulty workmanship,” some insurers have sought to broaden the coverage-divesting implications of such cases by arguing that the defective design or manufacturing of products should also be deemed “faulty workmanship,” and thus, not covered.  This expansive view of what constitutes “faulty workmanship” disregards important distinctions made in earlier cases and significantly degrades, if not completely undermines, the broad products liability coverage commonly recognized to exist under CGL policies.  For example, if taken to its logical conclusion, this would mean that product manufacturers whose off-the-shelf products unexpectedly cause property damage or bodily injury to others would not be able to obtain coverage—thereby defeating the very purpose of securing CGL coverage.

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By Richard Paciaroni, K&L Gates, Pittsburgh

In April, I participated as a panelist for a program titled Failure is an Option, which addressed best practices for developing a construction project.  Being the only lawyer on the panel among seasoned construction professionals, I was prepared to tackle the topic from a lawyer’s perspective.  I was told to expect the following questions: 1) Is there such a thing as a “good” construction contract?; 2) Can a “good” contract increase the likelihood of success?; and 3) What are the attributes of a “good” construction contract?

After nearly 30 years of handling construction claims and disputes, I felt that I was qualified to address these points.  Specifically, my answers to the first two questions were “yes.”  A good analogy that I can offer is that a “good” construction contract is like a well-constructed ship—it will get you safely through rough water.  Conversely, a “bad” construction contract is analogous to a poorly constructed ship—in rough water, it is likely to capsize, resulting in disaster.

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This article was originally published in the Summer, 2013 edition of The Voice—The Official Magazine of the Construction Users Roundtable.

By: Frederic J. Giordano & Ashley L. Turner, K&L Gates, Newark

Jurisdictions are split over whether defective construction can give rise to an occurrence under commercial general liability insurance policies.  Some jurisdictions have held that faulty workmanship cannot constitute the basis for an occurrence because it is not the type of risk intended to be insured by commercial general liability policies or lacks the fortuity necessary to be considered an accident.  In contrast, other jurisdictions have held that faulty workmanship may constitute the basis for an occurrence because it is unintended.  The Connecticut Supreme Court joined those courts holding that faulty workmanship may give rise to an occurrence in the recent decision Capstone Building Corp. v. American Motorists Ins. Co., SC 18886, 2013 WL 2396276 (Conn. June 11, 2013) (“Capstone”).

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