UNPUBLISHED

UNITED STATES COURT OF APPEALS 

FOR THE FOURTH CIRCUIT 

No. 07-2102 

STANLEY MARTIN COMPANIES, INCORPORATED, 

 Plaintiff - Appellant, 

 v. 

OHIO CASUALTY GROUP, 

 Defendant – Appellee. 

------------------------------ 

NATIONAL ASSOCIATION OF HOME BUILDERS, 

 Amicus Supporting Appellant. 

Appeal from the United States District Court for the Eastern 

District of Virginia, at Alexandria. James C. Cacheris, Senior 

District Judge. (1:06-cv-01035-JCC) 

Argued: December 2, 2008 Decided: February 12, 2009 

Before KING, SHEDD, and DUNCAN, Circuit Judges. 

Reversed and remanded by unpublished per curiam opinion. Judge 

Shedd wrote a separate opinion concurring in part and dissenting 

in part. 

ARGUED: David T. Dekker, HOWREY, L.L.P., Washington, D.C., for 

Appellant. Elizabeth S. Skilling, HARMAN, CLAYTOR, CORRIGAN & 

WELLMAN, Richmond, Virginia, for Appellee. ON BRIEF: Jeffrey R. 

Gans, Stephen D. Palley, THELEN REID BROWN RAYSMAN & STEINER, 
L.L.P., Washington, D.C., for Appellant. Thomas S. Garrett, 

HARMAN, CLAYTOR, CORRIGAN & WELLMAN, Richmond, Virginia, for 

Appellee. David S. Jaffe, NATIONAL ASSOCIATION OF HOME 

BUILDERS, Washington, D.C., for Amicus Supporting Appellant.

Unpublished opinions are not binding precedent in this circuit. 

2 
3 

PER CURIAM: 

This appeal raises the issue of whether damage that a 

subcontractor’s defective work causes to a general contractor’s 

otherwise nondefective work constitutes an “occurrence” under 

the general contractor’s commercial general liability (“CGL”) 

insurance policy. Stanley Martin Companies (“Stanley Martin”) 

sued its insurer, Ohio Casualty Co. (“Ohio Casualty”), seeking a 

declaratory judgment that Ohio Casualty had breached its duty to 

indemnify Stanley Martin for costs Stanley Martin incurred to 

remediate mold damage caused by a subcontractor’s defective 

work. The district court granted summary judgment in favor of 

Ohio Casualty, finding that damage caused by a subcontractor’s 

defective work does not constitute an “occurrence” triggering 

coverage under the Ohio Casualty policy. Stanley Martin now 

appeals. For the reasons that follow, we reverse the district 

court. 

I. 

Stanley Martin is a residential builder. During 1999 and 

2000, Stanley Martin was the general contractor for the 

construction of 24 duplex townhouses in a development in 

Gaithersberg, MD. Shoffner Industries (“Shoffner”), a 

subcontractor, supplied wood trusses for the townhouses. 
4 

Shoffner warranted to Stanley Martin that the trusses were free 

of mold and agreed to indemnify Stanley Martin for any 

liability, damages, or costs that arose from negligence or 

default under the subcontract. Homeowners subsequently reported 

mold growth in the townhouses, and an investigation revealed 

that the mold had originated from Shoffner’s defective trusses 

and the surrounding gypsum firewalls. The mold problems in the 

townhouses eventually led to protracted litigation, and Stanley 

Martin incurred over $1.7 million in remediation efforts. 

 The parties’ dispute in this case arises out of an umbrella 

insurance policy that Ohio Casualty issued to Stanley Martin 

with an effective period of April 1, 2000 to April 1, 2001. The 

policy stated as follows: 

We will pay on behalf of the “Insured” those sums in 

excess of the “Retained Limit” that the “Insured” 

becomes legally obligated to pay by reason of 

liability imposed by law or assumed by the “Insured” 

under an “insured contract” because of “bodily 

injury,” “property damage,” “personal injury,” or 

“advertising injury” that takes place during the 

Policy Period and is caused by an “occurrence” 

happening anywhere. 

J.A. 431. The policy defined an “occurrence” as “an accident, 

including continuous or repeated exposure to substantially the 

same general harmful conditions.” Id. at 432. Section IV.1.b.2 

of the policy (the “‘your work’ exclusion”) excluded from 

coverage the following: 
5 

[A]ny property damage . . . to “your work” arising out of it or 

any part of it included in the “products – completed operations 

hazard”; (but this Subparagraph (2) does not apply if the 

damaged work or the work out of which the damage arises was 

performed on your behalf by a subcontractor) . . . . 

J.A. 448. The policy provided excess insurance coverage to 

supplement coverage from Stanley Martin’s primary insurance 

policy, issued by One Beacon Insurance (“One Beacon”), for the 

same effective period. 

 At issue in this case is whether Ohio Casualty breached its 

duty to indemnify Stanley Martin when it refused to contribute 

to the remediation costs Stanley Martin incurred to address the 

mold problems in the townhomes. The district court granted 

summary judgment in favor of Ohio Casualty, finding that damage 

caused by a subcontractor’s defective workmanship does not 

constitute a covered “occurrence.” In reaching this conclusion, 

the district court cited several Virginia lower court cases and 

federal cases interpreting Virginia law to support the 

proposition that “damage caused by the defective workmanship of 

the insured or the insured’s subcontractor and limited to the 

insured’s work does not constitute an ‘occurrence’ triggering 

coverage.” J.A. 1660. Based on this case law, the district 

court found: 
6 

As general contractor, [Stanley Martin] was 

responsible for fulfilling the terms of its contracts, 

and Shoffner’s faulty workmanship falls on [Stanley 

Martin’s] shoulders. . . . Because [Stanley Martin’s] 

remediation costs arose out of damage to [Stanley 

Martin’s] own ‘work’ caused by the faulty workmanship 

of its subcontractor, the property damage was not 

‘unexpected’ or an ‘accident.’ Therefore, this Court 

will find that under Virginia law there was no 

‘occurrence’ and the Ohio Casualty policy was not 

triggered. 

J.A. 1662–63. The district court did find that Virginia law 

defines “occurrence” to provide coverage for “faulty workmanship 

that results in bodily injury or property damage to property 

other than the insured’s work.” J.A. 1663–64. However, the 

court found that Stanley Martin failed to show any evidence of 

such third-party damage beyond the costs it incurred to repair 

the defective trusses and gypsum firewalls. 

Stanley Martin now appeals. 

II. 

We have jurisdiction over this case under 28 U.S.C. § 1291. 

We review a district court’s grant of summary judgment de novo. 

Jennings v. Univ. of N.C. at Chapel Hill, 482 F.3d 686, 694 (4th 

Cir. 2007) (en banc) (citing Hill v. Lockheed Martin Logistics 

Mgmt., Inc., 354 F.3d 277, 283 (4th Cir. 2004) (en banc)). 
7 

III. 

 The primary issue raised on appeal is whether under 

Virginia law the Ohio Casualty policy, which contains language 

identical to most CGL policies, covers costs that Stanley Martin 

incurred to repair damage caused to its own work by Shoffner’s 

faulty workmanship. Because the CGL policy covers only 

“occurrences,” at oral argument the parties focused on whether 

the spread of mold from the defective trusses to nondefective 

surrounding components constituted “an accident, including 

continuous or repeated exposure to substantially the same 

general harmful conditions.” Two recent cases from this circuit 

diverge on the issue of what constitutes a triggering occurrence 

and frame our analysis. 

In Travelers Indemnity Co. of America v. Miller Building 

Corp., 142 F. App’x 147 (4th Cir. 2005) (unpublished), a general 

contractor was responsible for completing site development work 

on two properties and then constructing a building on one of the 

properties. The general contractor hired a subcontractor to 

perform part of the site development work. The subcontractor 

allegedly selected and used defective fill material for the 

foundation, which eventually expanded and damaged the building 

that the general contractor had constructed. The general 

contractor sought a declaratory judgment that its insurance 
8 

company had a duty to indemnify it for the damage to the 

building. Applying Virginia law, the Miller court noted that 

“damages resulting from the insured’s defective performance of a 

contract and limited to the insured’s work or product [are] not 

covered” by a CGL policy because such damages are “‘expected’ 

from the standpoint of the insured.” 142 F. App’x at 149 

(quoting Hotel Roanoke Conference Ctr. Comm’n v. Cincinnati Ins. 

Co., 303 F. Supp. 2d 784, 786 (W.D. Va. 2004)). The Miller

court held that the damage to the general contractor’s building 

“allegedly was a result of [the insured’s] subcontractor’s 

defective performance” and “[a]s a result . . . is not 

considered to be ‘unexpected,’ or caused by an ‘occurrence.’” 

142 F. App’x at 149. Because the damage to the general 

contractor’s work did not constitute an occurrence, it did not 

trigger the insurer’s duty to indemnify. 

In contrast, the court in French v. Assurance Co. of 

America, 448 F.3d 693 (4th Cir. 2006), distinguished between the 

subcontractor’s defective work itself and the damage that the 

defective work caused to surrounding nondefective components. 

In French, the general contractor was responsible for building a 

residential home and hired a subcontractor to clad the exterior 

of the home with a synthetic stucco system known as Exterior 

Insulating Finishing System (“EIFS”). Defects in the EIFS 
9 

exterior allowed moisture intrusion that caused extensive 

moisture and water damage to the home’s structure and walls. 

Applying Maryland law, the French court found that by itself, 

the subcontractor’s defective work did not constitute an 

accident or occurrence under the policy because an insured’s 

obligation to repair the defective work “is not unexpected or 

unforeseen under the terms of the [general] contract.” Id. at 

703 (citation and quotations omitted). On the other hand, the 

French court found that damage caused to surrounding 

nondefective components did constitute “an accident, and 

therefore, an ‘occurrence’ under the initial grant of coverage 

of the [CGL policy]” because “[a]s delivered per the 

construction contract,” those components were “defect-free,” 

such that their subsequent damage was unexpected. Id. at 704-

05. 

 As noted, the unpublished Miller opinion relied on Virginia 

law, while the published French opinion relied on Maryland law. 

The parties in this case do not dispute that Virginia law 

applies to the Ohio Casualty policy and that the Virginia 

Supreme Court has not addressed the issue of whether damage that 

a subcontractor’s defective work causes to the insured’s 

nondefective work constitutes an occurrence. The parties 

likewise agree that French involved a CGL policy with 
10 

substantially the same language as the Ohio Casualty CGL policy 

in this case, and that Virginia insurance law is not materially 

different from Maryland insurance law. 

 Having considered the parties’ arguments, we find Miller to 

be inapposite and, in any event, not binding on this court. 

Miller predates French, and its holding ultimately rests on case 

law that addressed damage that a general contractor’s defective 

work caused to its own finished product, not damage that a 

subcontractor’s defective work caused to the general 

contractor’s nondefective work.1 By contrast, the analysis in 

French is grounded in the plain language of the policy and the 

interplay between the policy’s broad definition of an 

 

 1

See, e.g., Am. Fire & Cas. Ins. Co. v. Doverspike, 1995 WL 

1055839, at *1 (Va. Cir. Ct. Apr. 25, 1995) (insured builder 

sought coverage for damages arising out of its breach of 

construction contract due to substandard, late, or nonexistent 

work); Boiler Brick & Refractory Co., Inc. v. Md. Cas. Co., 168 

S.E.2d 100 (Va. 1969) (subcontractor sued insurer to recover 

repair and replacement costs for its own work under its own 

policy). Aside from Miller, only one Virginia lower court case 

that the parties cite holds that a general contractor is 

responsible for its subcontractor’s defective workmanship, such 

that any defective work, as well as any damage it may cause to 

nondefective components, is foreseeable and therefore not an 

occurrence. See RML Corp. v. Assurance Co. of Am., No. CH02-127 

(Va. Cir. Ct. Dec. 31, 2002), reprinted in 17 Mealey’s 

Litigation Report #11, at 7. The language of the policy at 

issue supported this conclusion because the policy’s exclusions 

“specifically exclude[] any property damage to real property 

that arises out of operations by a subcontractor on behalf of 

[the general contractor].” Id. at 9–10. The Ohio policy, in 

contrast, contains no such exclusion. 
11 

“occurrence” and the policy’s “your work” exclusion.2 See

French, 448 F.3d at 703 (noting that the subcontractor’s 

defective work caused “property damage to otherwise nondefective 

parts of the building” -- a distinction “which brings into play 

the subcontractor exception to the ‘Your Work’ exclusion” in the 

CGL policy). 

At oral argument, Ohio Casualty attempted to distinguish 

French on the ground that the moisture intrusion that damaged 

the home’s nondefective structure in that case was a separate 

event that could constitute an occurrence. In contrast, Ohio 

Casualty emphasizes that in this case the defective trusses, the 

source of the ensuing damage, were already present in the 

 

2

The “your work” exclusion excludes coverage for damage that 

the insured might cause to its own work, but exempts from that 

exclusion any damage that an insured’s subcontractor might cause 

to the insured’s work. The Miller court rejected the argument 

that exclusions “create” coverage. 142 F. App’x at 149. 

Although this is a valid point, it misses the mark slightly. 

The import of the “your work” exclusion and its subcontractor 

exception is not that the exclusion “creates” coverage. Rather, 

the import is that the exception lends insight into the baseline 

definition of “occurrence” from which parties and courts 

interpreting CGL policies should operate. If the definition of 

“occurrence” cannot be understood to include an insured’s faulty 

workmanship, an exclusion that exempts from coverage any damage 

the insured’s faulty workmanship causes to its own work is 

nugatory. If, on the other hand, the definition of “occurrence” 

does include an insured’s faulty workmanship, such an exclusion 

functions as a meaningful “limitation or restriction on the 

insuring clause.” Nationwide Mut. Ins Co. v. Wenger, 278 S.E.2d 

874, 876 (Va. 1981) (quoting Haugan v. Home Indem. Co., 197 

N.W.2d 18, 22 (S.D. 1972)). 
12 

townhouses when they were completed. Ohio Casualty argues that 

the subsequent spread of mold in the townhouses represented only 

a further deterioration of already defective work, rather than a 

new, unexpected event that would trigger coverage. This labored 

distinction places more weight on the policy language than it 

can bear. The policy’s definition of occurrence is broad and 

inclusive, providing coverage for any “accident” -- that is, any 

“event that takes place without one’s foresight or expectation.” 

Wooden v. John Hancock Mut. Life Ins. Co., 139 S.E.2d 801, 804 

(Va. 1965) (citation omitted). As in French, there is no 

allegation here that Stanley Martin “either expected or intended 

that its subcontractor” would perform defective work, or that 

the spread of mold beyond the defective trusses was expected or 

intended. 448 F.3d at 704. At oral argument, Ohio Casualty was 

unable to point to language in the policy that would exclude 

from coverage the unintended, unexpected spread of mold from the 

defective trusses to surrounding nondefective components, nor 

could we find any. 

Under the analytical framework established by French, 

Stanley Martin’s obligation to repair or replace the defective 

trusses was not unexpected or unforeseen under the terms of its 

building contracts for the townhouses and does not trigger a 

duty to indemnify. However, any mold damage that spread beyond 
13 

 

the defective trusses and the gypsum fire walls to nondefective 

components of the townhouses was an unintended accident, or an 

occurrence that triggered coverage under the Ohio Casualty 

policy.3 

The parties dispute whether Stanley Martin has shown 

damages beyond the costs incurred to repair or replace the 

defective trusses. The district court did not reach this issue 

because it found that the spread of mold did not constitute a 

triggering occurrence. Instead, the district court considered 

only whether Stanley Martin had shown “damage to third-party 

property other than the insured’s work that triggered coverage 

under the Ohio Casualty policy.” J.A. 1664. Because a fact 

issue exists as to whether Stanley Martin has shown that it 

incurred costs to remediate mold damage beyond replacing or 

3

Although the dissent points out that the Miller court, 

applying Virginia law, found that “damages resulting from the 

insured’s defective performance of a contract and limited to the 

insured’s work or product [are] not covered” by a CGL policy, 

the Miller court did not base such a determination on an 

analysis of the “your work” exception. 142 F. App’x at 149 

(quoting Hotel Roanoke Conference Ctr. Comm’n v. Cincinnati Ins. 

Co., 303 F. Supp. 2d 784, 786 (W.D. Va. 2004)). Rather, the 

Miller court found that damage caused by a “subcontractor’s 

defective performance . . . is not considered to be . . . caused 

by an ‘occurrence.’” Id. Having found an occurrence, with 

which the dissent does not appear to disagree, our published

opinion in French would appear to govern the district court’s 

interpretation of virtually identical, standard contract 

language. 
14 

repairing the defective trusses and gypsum fire walls, we remand 

to the district court for further inquiry into this issue. 

IV. 

 Because we find that damage a subcontractor’s defective 

work causes to an insured’s nondefective work constitutes an 

occurrence under the Ohio Casualty policy, we reverse the 

district court and remand the matter for proceedings consistent 

with this opinion. 

REVERSED AND REMANDED

 
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SHEDD, Circuit Judge, concurring in part and dissenting in part: 

 I agree with the majority that the district court erred in 

not finding an occurrence in this instance based on the 

definition of “accident.” Nevertheless, I would not reach the 

question of whether there is coverage in this case in the first 

instance. The Supreme Court of Virginia has never determined 

whether there is coverage for damage that a subcontractor’s 

defective work causes to a general contractor’s otherwise 

nondefective work under the general contractor’s commercial 

general liability insurance policy. Unlike the majority, I 

would not adopt French v. Assurance Company of America, 448 F.3d 

693 (4th Cir. 2006). French is based on Maryland law, and in 

French, we were expressly persuaded by the Maryland state law 

case of Lerner Corp. v. Assurance Co. of Am., 707 A.2d 906 

(Md.App. 1998). See French, 448 F.23d at 705. Here, however, we 

are deciding Virginia law. Compare French with Travelers 

Indemnity Co. of America v. Miller Building Corp., 142 Fed.Appx. 

147, 149 (4th Cir. 2005) (applying Virginia law, we noted that 

“damages resulting from the insured’s defective performance of a 

contract and limited to the insured’s work or product [are] not 

covered” by a CGL policy). 

 This is a difficult and important area of the law. Thus, I 

would certify this issue to the Supreme Court of Virginia to 
16 

determine whether there is coverage in light of the “your work” 

exclusion and subcontractor exception. Therefore, I 

respectfully concur in part and dissent in part from the 

judgment of the majority.