United States Court of Appeals

for the Fifth Circuit

No. 20-50966

Zurich American Insurance Company,

Plaintiff—Appellant,

versus

Arch Insurance Company,

Defendant—Appellee.

Appeal from the United States District Court 

for the Western District of Texas

USDC No. 1:19-cv-24

Before Davis, Haynes, and Oldham, Circuit Judges.

Andrew S. Oldham, Circuit Judge:

This appeal arises from a highway construction project gone wrong. 

The question presented is whether the issuer of a commercial general liability 

policy, Arch Insurance Company, has a duty to defend the project’s general 

contractor. The district court answered no. We disagree and reverse.

I.

A.

SH 130 Concession Company, LLC (“Developer”) holds a 

concession to design and construct a 41-mile stretch of highway (“Project”) 

United States Court of Appeals

Fifth Circuit

FILED

December 14, 2021

Lyle W. Cayce

Clerk

Case: 20-50966 Document: 00516131058 Page: 1 Date Filed: 12/14/2021
No. 20-50966

2

running from Mustang Ridge to the I-10 connector near Seguin, Texas. The 

Developer hired Central Texas Highway Constructors, LLC (“CTHC”) as 

the Project’s general contractor. CTHC in turn hired Archer Western 

Contractors, Ltd. (“Archer Western”), among others, as a subcontractor. As 

most relevant here, Archer Western agreed to construct certain drainage 

systems for the Project.

Archer Western obtained annual commercial general liability 

(“CGL”) policies from Arch Insurance Company (“Arch”) that were 

effective from June 1, 2009, through June 1, 2018 (collectively, “Policy”). In 

the Policy, Arch assumed both a duty to indemnify and a duty to defend. As 

to the duty to indemnify, the Policy provides: “[Arch] will pay those sums 

that the insured becomes legally obligated to pay as damages because of 

‘bodily injury’ or ‘property damage’ to which this insurance applies.” As to 

the duty to defend, the Policy states: “[Arch] will have the right and duty to 

defend the insured against any ‘suit’ seeking those damages. However, 

[Arch] will have no duty to defend the insured against any ‘suit’ seeking 

damages for ‘bodily injury’ or ‘property damage’ to which this insurance 

does not apply.” This case involves only Arch’s duty to defend.

The subcontract required Archer Western to name CTHC as an 

“additional insured” on its Policy. Archer Western did so with two 

endorsements. First, the “Completed Operations Endorsement” extends 

coverage to the “additional insured [CTHC] . . . with respect to liability for 

‘bodily injury’ or ‘property damage’ caused, in whole or in part by, ‘your 

work’ [Archer Western’s] at the location designated . . . performed for that 

additional insured [CTHC].” Second, the “Ongoing Operations 

Endorsement” extends coverage under the Policy to the “additional insured 

[CTHC] . . . with respect to liability for ‘bodily injury’, ‘property damage’ 

or ‘personal and advertising injury’ caused, in whole or in part, by . . . [Archer 

Western’s] acts or omissions . . . in the performance of [its] ongoing 

Case: 20-50966 Document: 00516131058 Page: 2 Date Filed: 12/14/2021
No. 20-50966

3

operations for the additional insured [CTHC].” In sum, these two 

endorsements extend coverage under the Policy to CTHC for work Archer 

Western performed.

Work on the Project wrapped up in October 2012. On September 6, 

2017, the Developer sent CTHC a notice of claim. About six weeks later, on 

October 20, 2017, the Developer requested arbitration against CTHC. The 

Developer alleged that CTHC and two other named contractors “fell far 

short of meeting their contractual obligations.” Portions of the Project had 

“beg[un] to crack and heave before the road even opened to the public, and 

these pavement failures . . . indicated that a significant underlying error in 

design and construction was causing the pavement to fail.” The Developer 

also alleged that an investigation revealed that “CTHC improperly designed 

and constructed the pavement subgrade in such a way that it would inevitably 

expand” and caused the alleged deficiencies. It sought “to recover the full 

cost of remediating the project-wide defect in th[e] arbitration, along with 

other damages.” Throughout this opinion, we’ll refer to this arbitration 

proceeding (Developer v. CTHC) as the “underlying litigation” or the 

“underlying arbitration.”

The Developer’s request for arbitration also incorporated its notice of 

claim against CTHC. The notice of claim, in turn, referenced several bridge 

inspection reports detailing alleged defects in portions of the Project. As most 

relevant here, the bridge inspection reports found that at least one bridge 

abutment “appear[ed] to have rotated . . . due to moderate erosion caused by 

[a] deck drainage outlet pipe between girder 1 and 2[,] . . . which ha[d] created 

a [three-foot-deep] void.” The reports also noted that another bridge 

abutment had experienced “moderate erosion due to [a] deck drainage 

outlet.”

Case: 20-50966 Document: 00516131058 Page: 3 Date Filed: 12/14/2021
No. 20-50966

4

The Developer later filed a more detailed statement of claim in the 

underlying arbitration. In it, the Developer alleged three categories of defects 

in the Project: “(1) pavement defects, (2) slope defects, and (3) bridge 

defects.” As to category (1), the Developer alleged that “the cracking and 

heaving in the roadway was the result of differential movement related to 

subgrade heave and sulfate reactions,” which itself was “the direct result of 

CTHC’s failure to design and construct the [Project] subgrade and pavement 

structure in accordance with its contractual obligations.” As to category (2), 

the Developer alleged that CTHC’s design choices had caused slopes 

adjacent to the highway to fail. And as to category (3), the Developer alleged 

that CTHC “failed to properly account for the soils at the bridges, and in 

doing so, created problems such that multiple bridges—the most long-lived 

assets of a road’s infrastructure—are exhibiting early signs of aging and 

premature failure.” In sum, the Developer’s claims in the underlying 

arbitration alleged that poor drainage caused physical damage to parts of the 

Project.

B.

Given the Developer’s claims in the underlying arbitration against 

CTHC, CTHC’s insurer—Zurich American Insurance Company 

(“Zurich”)—invoked Arch’s duty to defend CTHC. Arch refused. So 

Zurich sued. It sought a declaration that Arch owes CTHC a duty to defend, 

as well as reimbursement for defense costs already incurred. The parties 

eventually cross-moved for summary judgment, which the district court 

referred to a magistrate judge.

The magistrate judge issued a report and recommendation that Arch’s 

motion for summary judgment be granted because none of the Developer’s 

claims potentially fell within the Policy’s coverage. In reaching that 

recommendation, the magistrate judge determined that some of the 

Case: 20-50966 Document: 00516131058 Page: 4 Date Filed: 12/14/2021
No. 20-50966

5

Developer’s allegations concerned damage to Archer Western’s own work, 

which was expressly excluded from the Policy’s coverage; that the Developer 

never alleged Archer Western caused the complained-of defects; and that 

some of the Developer’s allegations could only hypothetically implicate 

Archer Western’s work.

The district court adopted that recommendation and entered partial 

final judgment in favor of Arch under Federal Rule of Civil Procedure 54(b). 

Zurich timely appealed. We have jurisdiction under 28 U.S.C. § 1291. It’s 

undisputed that we must apply Illinois law. And our review is de novo. See

Landry’s, Inc. v. Ins. Co. of the State of Pa., 4 F.4th 366, 368 (5th Cir. 2021) 

(applying de novo review to summary judgment decision); Central Ill. Light 

Co. v. Home Ins. Co., 821 N.E.2d 206, 213 (Ill. 2004) (holding that, under 

Illinois law, interpretation of an insurance policy is a question of law that we 

review de novo).

II.

A.

It’s undisputed that if either of the Policy’s two endorsements 

potentially applies, then Arch (the issuer of the Policy) owes a duty to defend 

CTHC (the additional insured in the endorsements) in the underlying 

arbitration (Developer v. CTHC). It’s also undisputed that the applicability 

vel non of the endorsements turns on whether Archer Western (the primary 

insured) performed work that could trigger its Policy with Arch. Complicated 

as this might seem, the web of the insurance contracts creates a relatively 

straightforward question: Do the Developer’s claims against CTHC in the 

underlying arbitration potentially implicate Archer Western’s drainagesystem work, such that Archer Western’s insurer (Arch) owes a duty to 

defend the additional insured (CTHC)? The answer is yes.

Case: 20-50966 Document: 00516131058 Page: 5 Date Filed: 12/14/2021
No. 20-50966

6

“To determine whether an insurer has a duty to defend its insured 

from a lawsuit, a court must compare the facts alleged in the underlying 

complaint to the relevant provisions of the insurance policy.” Valley Forge 

Ins. Co. v. Swiderski Elecs., Inc., 860 N.E.2d 307, 314 (Ill. 2006). “If the 

[relevant documents] allege facts within or potentially within policy 

coverage, the insurer is obliged to defend its insured even if the allegations 

are groundless, false, or fraudulent.” Northbrook Prop. & Cas. Co. v. Transp.

Joint Agreement, 741 N.E.2d 253, 254 (Ill. 2000); see also Valley Forge, 860 

N.E.2d at 314–15. The alleged facts need only be “potentially within” the 

policy’s coverage. Am. States Ins. Co. v. Koloms, 687 N.E.2d 72, 75 (Ill. 1997)

(emphasis added); see also, e.g., Valley Forge, 860 N.E.2d at 314–15. For this 

reason, the “threshold that [the relevant documents] must satisfy to present 

a claim of potential coverage is low.” LaGrange Mem’l Hosp. v. St. Paul Ins. 

Co., 740 N.E.2d 21, 27 (Ill. App. Ct. 2000); see also, e.g., Bituminous Cas. 

Corp. v. Gust K. Newberg Constr. Co., 578 N.E.2d 1003, 1006 (Ill. App. Ct. 

1991) (Threshold is “minimal.”); Del Monte Fresh Produce N.A., Inc. v. 

Transp. Ins. Co., 500 F.3d 640, 643 (7th Cir. 2007) (Illinois law) (“In a dutyto-defend action, we begin with the deck stacked in favor of the insured.”).

In comparing the Policy’s language to the allegations in the underlying 

litigation, we must “liberally construe[]” the allegations “in favor of the 

insured.” Valley Forge, 860 N.E.2d at 314; see also, e.g., Diamond State Ins. 

Co. v. Chester-Jensen Co., 611 N.E.2d 1083, 1087 (Ill. App. Ct. 1993) (“The 

complaint must be liberally construed and all doubts resolved in favor of 

coverage for the insured.”); Westfield Ins. Co. v. W. Van Buren, LLC, 59 

N.E.3d 877, 882 (Ill. App. Ct. 2016) (same); Ill. Tool Works Inc. v. Travelers 

Cas. & Sur. Co., 26 N.E.3d 421, 428 (Ill. App. Ct. 2015) (describing the “wellsettled principle followed by Illinois courts: that vague, ambiguous 

allegations against an insured should be resolved in favor of finding a duty to 

defend”). We also must construe any ambiguity in the Policy “strictly against 

Case: 20-50966 Document: 00516131058 Page: 6 Date Filed: 12/14/2021
No. 20-50966

7

the insurer [that] drafted the policy.” Pekin Ins. Co. v. Wilson, 930 N.E.2d 

1011, 1017 (Ill. 2010) (quoting Koloms, 687 N.E.2d at 75). Put together, “[a]n 

insurer may not justifiably refuse to defend an action against its insured 

unless it is clear from the face of the [relevant documents] that the allegations 

[in the underlying litigation] fail to state facts which bring the case within, or 

potentially within, the policy’s coverage.” Northbrook, 741 N.E.2d at 254

(emphases added); see also Valley Forge, 860 N.E.2d at 315.

B.

We begin, as always, with the relevant text. The Policy provides in 

pertinent part:

b. This insurance applies to “bodily injury” or “property 

damage” only if:

(1) The “bodily injury” or “property damage” is 

caused by an “occurrence” that takes place in the 

“coverage territory”; and

(2) The “bodily injury” and “property damage” first 

takes place during the policy period regardless of when 

the “occurrence” giving rise to “bodily injury” or 

“property damage” takes place.

The Policy defines “occurrence” as “an accident, including continuous or 

repeated exposure to substantially the same general harmful conditions, 

which results in ‘bodily injury’ or ‘property damage’, neither expected nor 

intended from the standpoint of any insured.”1 It defines “property damage” 

as:

1 Before June 1, 2010, the Policy defined “occurrence” as “an accident, including 

continuous or repeated exposure to substantially the same general harmful conditions.” 

But in these circumstances, the definitions are materially identical for two reasons. First, 

the Policy before the June 1, 2010 clarification had an exclusion, stating that the “insurance 

does not apply to . . . ‘[b]odily injury’ or ‘property damage’ expected or intended from the 

Case: 20-50966 Document: 00516131058 Page: 7 Date Filed: 12/14/2021
No. 20-50966

8

a. Physical injury to tangible property, including all resulting 

loss of use of that property. All such loss of use shall be deemed 

to occur at the time of the physical injury that caused it; or

b. Loss of use of tangible property that is not physically injured. 

All such loss of use shall be deemed to occur at the time of the 

“occurrence” that caused it.

Put together, the Policy applies where Archer Western (1) causes an accident 

(2) that causes property damage (3) during the policy period.

With the Policy’s three requirements so understood, we turn next to 

the allegations in the underlying litigation. Here, the underlying litigation is

the Developer’s arbitration against CTHC. The parties agree that we may 

consider the allegations in the Developer’s request for arbitration, its notice 

of claim, and its statement of claim, including other documents incorporated 

by reference. The Developer’s allegations in those documents potentially 

satisfy all three of the Policy’s aforementioned requirements. That’s because 

the Developer is complaining that drainage work performed by Archer 

Western damaged the Project—thus potentially triggering Archer Western’s 

Policy and Arch’s duty to defend under that Policy.

standpoint of the insured.” Second, we must give the definition its “plain, ordinary, and 

popular meaning.” Traveler’s Ins. Co. v. Eljer Mfg., Inc., 757 N.E.2d 481, 494 (Ill. 2001) 

(quotation omitted); Antonin Scalia & Bryan A. Garner, Reading Law: 

The Interpretation of Legal Texts 228 (2012) (“Sometimes a definition itself 

contains a term that is not clear. When that is the case, the usual criteria of interpretation 

. . . are brought to bear.”). And according to Illinois courts, the ordinary meaning of 

“accident” in the context of an insurance policy indicates that the “result” was “neither 

expected nor intended.” Pekin Ins. Co. v. McKeown Classic Homes, Inc., 161 N.E.3d 1059, 

1070 (Ill. App. Ct. 2020); see also ibid. (“The use of the word ‘occurrence’ in insurance 

policies broadens coverage and eliminates the need to find an exact cause of damages as 

long as they are neither intended nor expected by the insured.” (quotation omitted)); W. 

Bend Mut. Ins. Co. v. People, 929 N.E.2d 606, 614 (Ill. App. Ct. 2010) (“The policies specify 

that an occurrence is an accident. The natural and ordinary consequences of an act do not 

constitute an accident.”).

Case: 20-50966 Document: 00516131058 Page: 8 Date Filed: 12/14/2021
No. 20-50966

9

First, the accident. The Developer alleged that work on the highway’s 

drainage system led to unintentional and unexpected damages to the Project.

Archer Western, of course, performed work on that drainage system. And 

there’s no contention that Archer Western intentionally constructed that 

system to damage the Project. Nor is there any contention that anyone 

expected Archer Western’s drainage system to damage the Project. So the 

allegations potentially meet the Policy’s definition of an “occurrence,” i.e., 

an “accident.”

Second, the property damage. The Developer alleged that the 

improperly installed drainage systems caused “soil erosion” that in turn 

caused, among other things, “abutment movements,” “shear[ed] . . . bearing 

pads,” and “crack[ed] . . . riprap.” Specifically, in the request for arbitration, 

the Developer incorporated by reference several bridge inspection reports 

that detailed alleged defects in the Project. Those reports alleged that 

abutments adjacent to SH 130 had “rotated towards [the highway] due to 

moderate erosion caused by [a] deck drainage outlet pipe.” And another 

abutment “ha[d] moderate erosion due to [a] deck drainage outlet.” The 

statement of claim further alleged “poor drainage” was the cause of various 

injuries:

[A]butment movements caused by differential soil movement 

. . . as well as soil erosion caused by poor drainage, have closed 

the expansion joints, sheared the bearing pads, caused heaving 

of the approach slabs, brought several of the girders into 

contact with the backwall, displaced the riprap, and resulted in 

cracks in the riprap, the backwalls and the wingwalls.

Soil, bearing pads, and riprap are “tangible property.” Erosion, 

piercing, and cracking are “physical injuries.” See Traveler’s Ins. Co. v. Eljer 

Mfg., Inc., 757 N.E.2d 481, 502 (Ill. 2001) (“[U]nder its plain and ordinary 

meaning, the term ‘physical injury’ unambiguously connotes damage to 

Case: 20-50966 Document: 00516131058 Page: 9 Date Filed: 12/14/2021
No. 20-50966

10

tangible property causing an alteration in appearance, shape, color or in other 

material dimension.”). And the allegations use the phrase “caused by”—the 

same phrase used in the applicable Policy provisions.

2 Thus, the Developer’s 

allegations in the underlying litigation potentially satisfy the Policy’s 

definition of “property damage.”

Third, timing. Under the Policy, “property damage” “is deemed to 

first take place at the earliest of when” the damage “began” or “first 

manifest[ed].” The Policy also makes clear that “all resulting loss of use of 

that property” is “deemed to occur at the time of the physical injury that 

caused it.” All agree that the Policy covered the time period between June 1, 

2009, and June 1, 2018. The Developer alleged that some of the defects “first 

manifest[ed]” in 2014. That’s well within the Policy’s effective period. Plus, 

all the allegations in the notice of claim and request for arbitration were sent 

in 2017—still before the coverage period ended.

There’s still more. The Developer also alleged that the defects are 

“rooted in the same problem” as earlier damage and are “due to” issues 

“present” earlier. So not only did the Developer allege that the physical 

injury manifested during the coverage period, but it also alleged that later 

injuries trace to when the work was performed. And there’s no dispute that 

Archer Western performed its actions during that coverage period. Because 

the Policy specifies that “all resulting loss of use of that property” is 

“deemed to occur at the time of the physical injury that caused it,” any 

2 It’s true that the Developer’s allegations in the underlying litigation sometimes 

also use the phrase “due to.” But given that we must liberally read the allegations (and the 

Policy) in the insured’s favor and that the allegations need only “potentially” fall within 

coverage, we see no material difference between “caused by” and “due to.” See, e.g., 

Valley Forge, 860 N.E.2d at 314–15; Wilson, 930 N.E.2d at 1017; Koloms, 687 N.E.2d at 75.

Case: 20-50966 Document: 00516131058 Page: 10 Date Filed: 12/14/2021
No. 20-50966

11

damage alleged to result from the initial injury potentially comes within the 

Policy’s effective dates.

3

C.

Arch makes two counterarguments. Both fail.

1.

Arch argues that the Developer does not expressly state a claim 

against Archer Western in the underlying arbitration (Developer v. CTHC). 

Indeed, the Developer’s claims in that underlying arbitration do not even 

mention Archer Western by name. Thus, Arch contends, the Developer’s 

claims against Archer Western are at most implied by its claims against 

CTHC and thus should not trigger Arch’s duty to defend under the Policy.

We disagree. That’s for at least three reasons.

First, the Developer’s allegations implicating Archer Western are 

specific enough. The Developer alleged that Archer Western’s work 

(installation of the drainage system) was defective and caused erosion that in 

turn caused damage to other property (e.g., bearing pads and riprap). That is 

an express allegation, not an implied one.

In these circumstances, it doesn’t matter that the allegations failed to 

expressly name Archer Western while naming other subcontractors. Arch 

hasn’t pointed to anything in the allegations that suggests the named 

subcontractors were exhaustive. See Am. Econ. Ins. Co. v. Holabird & Root, 

886 N.E.2d 1166, 1179 (Ill. App. Ct. 2008) (“The underlying complaint does 

3 Arch insists that Zurich forfeited any arguments on timing for failing to argue it 

in its opening brief. Not so. “We do not require a litigant to anticipatorily rebut all potential 

arguments his adversary may raise. Failing to do so is not a forfeiture.” Hoyt v. Lane Constr. 

Corp., 927 F.3d 287, 296 n.2 (5th Cir. 2019); see also United States v. Ramirez, 557 F.3d 200, 

203 (5th Cir. 2009).

Case: 20-50966 Document: 00516131058 Page: 11 Date Filed: 12/14/2021
No. 20-50966

12

not allege that these were the only entities involved in the construction of the 

City’s space and the third-party complaint confirms that there was at least 

one other subcontractor on the site.”). The allegations therefore “impl[y] 

. . . that other parties may have been involved in the project.” Id. at 1180. 

That’s especially true given that we must read the allegations in the insured’s 

favor. So in this respect, the allegations are specific enough.

It also doesn’t matter that the Developer’s primary focus in the 

arbitration documents is on the work done by CTHC rather than Archer 

Western. That’s because the “duty to defend extends to cases where the 

complaint alleges several causes of action or theories of recovery against the 

insured, one of which is within the coverage of a policy while the others may 

not be.” Md. Cas. Co. v. Peppers, 355 N.E.2d 24, 28 (Ill. 1976); see also Gen. 

Agents Ins. Co. of Am. v. Midwest Sporting Goods Co., 828 N.E.2d 1092, 1098 

(Ill. 2005). That’s so even though “the insurer may become obligated to 

defend against causes of action and theories of recovery that the policy does 

not actually cover.” Stoneridge Dev. Co. v. Essex Ins. Co., 888 N.E.2d 633, 644 

(Ill. App. Ct. 2008). The bottom line is that it doesn’t matter that most of the 

Developer’s causation allegations concern CTHC’s defective construction; 

what matters is that some of those allegations concern Archer Western’s 

allegedly defective work on the Project’s drainage systems.

Second, Illinois law doesn’t require express allegations. As one Illinois 

state court put it, the contention that the relevant documents “must 

explicitly identify the claim that is within the ‘additional insured’ coverage 

represents an unduly narrow reading of the applicable test.” Pekin Ins. Co. v. 

Hallmark Homes, LLC, 912 N.E.2d 250, 257 (Ill. App. Ct. 2009). And as 

another explained, the relevant documents “need not allege or use language 

affirmatively bringing the claims within the scope of the policy.” W. Cas. & 

Sur. Co. v. Adams Cnty., 534 N.E.2d 1066, 1068 (Ill. App. Ct. 1989); see also 

Int’l Ins. Co. v. Rollprint Packaging Prods., Inc., 728 N.E.2d 680, 688 (Ill. App. 

Case: 20-50966 Document: 00516131058 Page: 12 Date Filed: 12/14/2021
No. 20-50966

13

Ct. 2000). That’s for good reason: “The question of coverage should not 

hinge on the draftsmanship skills or whims of the plaintiff in the underlying 

action.” Int’l Ins. Co., 728 N.E.2d at 688 (citing W. Cas. & Sur. Co., 534 

N.E.2d at 1068).

Third, Arch’s principal authority—Amerisure Mutual Insurance Co. v. 

Microplastics, Inc., 622 F.3d 806 (7th Cir. 2010)—is critically different. In that 

case, a vehicle-parts manufacturer (Microplastics) produced faulty doorlatch assemblies and then sold them to an original equipment manufacturer

(Valeo). Id. at 808. Microplastics sued for breach of contract, id. at 809;

Valeo counterclaimed seeking “setoff or recoupment of all damages it has 

incurred on account of Microplastics’ breaches,” including “costs charged 

to Valeo [by its customers] associated with the defects,” id. at 811.

The question presented was whether the “general allegations” in 

Valeo’s counterclaim triggered the insurance provider’s duty to defend 

Microplastics. Ibid. The Seventh Circuit answered no. In reaching that 

answer, the court recognized that the allegations “d[id] not logically 

foreclose the theoretical possibility that” there was “potentially covered 

damage to property beyond the defective products.” Ibid. Still, the 

allegations were so “vague” that it required “hypothesizing situations” to 

“fill in details” to show the potentiality of covered “property damage.” Id.

at 812.

Such hypothesizing isn’t necessary here. The Developer specifically 

alleged the relevant defective construction, the property damage caused by 

the drainage systems, and when the damage occurred. There’s no reasonable 

dispute that multiple parties, including Archer Western, were working on the 

Project. And it’s reasonable to infer that work performed by one 

subcontractor likely damaged another subcontractor’s work on this Project.

Case: 20-50966 Document: 00516131058 Page: 13 Date Filed: 12/14/2021
No. 20-50966

14

It’s therefore more than a “theoretical possibility” that the allegations in the 

Developer’s underlying arbitration raised a covered-property-damage claim.

2.

Arch also argues that the Developer’s allegations do not trigger the 

Policy’s “property damage” provision because Archer Western damaged 

only its own work. It’s true that, under Illinois law, an insured’s damage to 

its own work cannot constitute covered “property damage.” Eljer Mfg., 757 

N.E.2d at 503 (quotation omitted). But it’s incorrect that the own-work 

exclusion applies here.

Take, for example, Ohio Casualty Insurance Co. v. Bazzi Construction

Co., 815 F.2d 1146 (7th Cir. 1987) (Illinois law). There, a construction 

company negligently poured concrete while renovating a building parking 

garage, compromising the structural integrity of the whole garage. Id. at 1147.

The court concluded that the company caused damage to work other than its 

own. Id. at 1148. Specifically, the court explained: “Had [the company]

contracted to construct an entirely new building . . . any damage to or defects 

in that building, which would be defined as the property or work product of 

[the company], would not be covered under the policy. But that is not the 

case now before us.” Id. at 1148–49. Rather, the complaint alleged “damage 

to property other than [the company’s] own work or product, namely the 

structure of the existing garage.” Id. at 1149.

So too here. Archer Western’s work involved installing the drainage 

systems. And the subcontract expressly exempted from Archer Western’s 

scope of work the property that was damaged—e.g., preparing the abutment 

Case: 20-50966 Document: 00516131058 Page: 14 Date Filed: 12/14/2021
No. 20-50966

15

soil, as well as providing bearing pads and riprap. So the Developer alleged 

damage to property outside Archer Western’s own work.4

* * *

The Developer’s claims against the Project’s general contractor 

implicate defective construction of the Project’s drainage systems. Archer 

Western constructed those drainage systems. Therefore, Archer Western’s 

CGL insurer (Arch) owes a duty to defend the general contractor (CTHC) 

in its underlying litigation with the Developer. The district court’s judgment

in favor of Arch is REVERSED.

4 Arch insists that Zurich forfeited any arguments responding to this “alternative 

reason[].”Again, no. See supra n.3; Hoyt, 927 F.3d at 296 n.2; Ramirez, 557 F.3d at 203.

Case: 20-50966 Document: 00516131058 Page: 15 Date Filed: 12/14/2021