Opinion ID: 181552
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Heading: The Ohio Casualty CGL Policy

Text: Beazer sought coverage under the Ohio Casualty policy for the liability from one of its thirteen lawsuits. As part of that suit's settlement, Beazer agreed to repair water damage to a number of homes caused by faulty subcontractor work. Ohio Casualty denied Beazer's claim, stating that the policy does not cover liability stemming from that type of damage. Ohio Casualty's policy is a standard-form CGL policy. In relevant part, the policy provides that Ohio Casualty will cover those sums that the insured becomes legally obligated to pay as damages due to property damage caused by an occurrence. The policy goes on to define property damage as [p]hysical injury to tangible property, including all resulting loss of use of that property and [l]oss of use of tangible property that is not physically injured. The policy states that an occurrence means an accident, including continuous or repeated exposure to substantially the same general harmful conditions. Notably, the policy does not define the word accident. In granting summary judgment in favor of Ohio Casualty, the district court held that the faulty subcontractor work was not property damage caused by an occurrence. The district court first held that the term property damage did not include damage done to the home itself. Relying on Indiana state court decisions, including Sheehan Constr. Co. v. Cont'l Cas. Co., 908 N.E.2d 305 (Ind.Ct.App.2009), the court drew a distinction between two types of damage caused by a subcontractor's work: damage to property distinct from the home, which would typically be covered by a standard CGL policy, and damage to the home's structure itself, which would not be covered. The district court went on to hold that, even if there was property damage, it was not caused by an occurrence. To be an occurrence under the policy, the event must be an accident. Again citing to Indiana case law, the district court ruled that the ordinary consequences of faulty workmanship did not constitute an accident within the policy's coverage. After the district court granted summary judgment for Ohio Casualty, the Indiana Supreme Court authoritatively weighed in on the Sheehan case. Sheehan Constr. Co. v. Cont'l Cas. Co., 935 N.E.2d 160 (Ind.2010). Similar to the case at bar, Sheehan involved a homebuilder who was sued for damages caused by faulty subcontractor work and sought coverage under his CGL policya policy identical in all relevant respects to Ohio Casualty's. The Indiana Supreme Court vacated the opinion of the Indiana Court of Appeals and clarified that a standard CGL policy does cover damage to a home's structure resulting from shoddy subcontractor work unless the subcontractor work was intentionally faulty. Id. at 170. Because the precedential landscape has changed, the district court's grant of summary judgment in favor of Ohio Casualty must be reversed, and the case remanded for reconsideration in light of Sheehan. We leave the application of any exclusions or limitations in the policy, as well as any other state law doctrines, for the district court on remand.