Court Opinion

ID: 9884591
Source: CourtListenerOpinion
Date Created: 2023-10-06 03:02:41.580236+00
Date Added: 2024-06-11T07:48:39.679053
License: Public Domain

BROWN, Judge
dissenting.
I respectfully dissent. I conclude that summary judgment is improper because there is a question of fact regarding whether the Class's and Shechan's claims are for "property damage" caused by an "occurrence."
A. Property Damage
First, there is an issue of fact regarding whether the damages claimed constitute "property damage" under the policies. Shechan and the Class allege damage caused by the subcontractors' failure to properly seal the houses. This failure allegedly caused damage not only to the windows and the roof, but also to the floors, carpet, and ceilings. Further, Sheehan and the Class claim that it caused mold to accumulate throughout the homes, including near the windows, on floors, and in crawl spaces. I would hold that these types of damages may constitute "property damage" under the policies.
The majority cites Amerisure, Inc. v. Wurster Construction Co., 818 N.E.2d 998 (Ind.Ct.App.2004), clarified on reh'g 822 N.E.2d 1115 (Ind.Ct.App.2005), and R.N. Thompson & Associates, Inc. v. Monroe Guaranty Insurance Co., 686 N.E.2d 160 (Ind.Ct.App.1997), trams. denied, for its conclusion that Sheehan and the Class do not allege property damage. But these cases are distinguishable because of the types of damages alleged. First, the claims rejected in Amerisure included the cost of replacing and repairing defective materials installed by subcontractors. As that court explained, while the defectively installed materials failed, "there are no allegations that any person or property other than these interconnected systems on the buildings being constructed by Wurster, was damaged due to these de-feets." 818 N.E.2d at 1004. Similarly, in RN. Thompson, the developer sought damages consisting of the expense it would incur to repair or replace the defectively designed, constructed, inspected, or maintained units The, court held that the plaintiffs had not alleged "property damage" because the claim was not based on damage to property other than the contractor's work. 686 N.E.2d at 168. Here, unlike the plaintiffs in Amerisure and R.N. Thompson, Sheehan and the Class claim damage to property other than just the defectively installed materials.
The majority also cites Indiana Insurance Co. v. DeZutti, 408 N.E.2d 1275 (Ind.1980). However, the Court in that case held that coverage should be denied based on the exelusions in the insurance policy, not on the definition of "property damage" that is at issue here. In that case, the Court held that Indiana Insurance Company's insurance policy excluded coverage for claims of faulty home construction. The exclusion the Court relied upon denied coverage "to property damage to work performed by or on behalf of the named insured arising out of the work or any portion thereof, or out of materials, parts, or equipment furnished in connection therewith...." 408 N.E.2d at 1278. The Court explained that "[tlhe language of the exclusion is broad, unambiguous, and all-inclusive. It clearly provides that the insurance does not apply to property damage to work performed by or on behalf of the insured arising out of either the work *312or any portion thereof, or out of materials, parts, or equipment furnished in connection therewith." Id.
Looking at cases from other jurisdictions, I find that this case is more like the situation presented in United States Fire Ins. Co. v. J.S.U.B, Inc., 979 So.2d 871 (Fla.2007). There, J.S.U.B., Inc. contracted to build several homes. After the homes were completed, the owners discovered damage to the foundations, drywall, and other interior portions of the homes. The damage was caused by subcontractors' use of poor soil and improper soil compaction and testing. The Florida Supreme Court rejected the insurer's contention that there can never be "property damage" in cases of faulty construction. "To the contrary, faulty workmanship or defective work that has damaged the otherwise non-defective completed project has caused 'physical injury to tangible property' within the plain meaning of the definition in the policy." 979 So.2d at 889. The court found in favor of coverage because the case did not involve a claim for the cost of repairing the subcontractor's defective work, but rather a claim for repairing the structural damage to the completed homes caused by the subcontractor's defective work. Id. at 890.
The New Hampshire Supreme Court reached a similar conclusion in High Country Associates v. New Hampshire Insurance Co., 139 N.H. 39, 648 A.2d 474 (1994). In that case, a condominium association representing the owners of the condominium sued the developer when moisture seepage into the buildings caused mildew, rotting of the walls, and loss of structural integrity. The court held that the association had made claims for "property damage" because "[the damages claimed [were] for water-damaged walls, not the diminution in value or cost of repairing work of inferior quality." 648 A.2d at 477. Like the plaintiffs in J.S.U.B. and High Country Associates, the Class and Shee-han seek recovery for damages caused by poor workmanship, not merely the costs of repairing the work.
B. Occurrence
I would also find that the "property damage" alleged in this case was caused by an "occurrence." The policies provide that an "occurrence" is "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." Appellant's Appendix at 255. Interpreting the same language, the court in High Country Associates concluded that the damage alleged-mildew, rotting, and loss of structural integrity-was unexpected and was caused by continuing exposure to moisture seeping through the walls of the units. 648 A.2d at 478. According to the court, "The Association alleged negligent construction that resulted in an occurrence, rather than the occurrence of negligent construction." Id. Similarly, in Lee Builders, Inc. v. Farm Bureau Mut. Ins. Co., 281 Kan. 844, 137 P.3d 486 (2006), the Kansas Supreme Court held that water damage to a home built by Lee Builders and its subcontractors caused by leaking windows constituted an "occurrence." That court explained that the "damage ... is an occurrence because faulty materials and workmanship provided by [] subcontractors caused continuous exposure of the home to moisture. The moisture in turn caused damage that was both unforeseen and unintended." Id. at 495.
Because the damages in this case are similar to those in High Country Associates and Lee Builders, I would follow the reasoning of those courts. In this case, the Class and Shechan also alleged negli-genee that resulted in an occurrence. Like the damages in High Country Associates and Lee Builders, the damages al*313leged here, including warped flooring and mold, were unexpected and caused by water leakage.
Amerisure held "that defective workmanship that results in damages only to the work product itself is not an occurrence under a CGL policy." 818 N.E.2d at 1005. However, as explained above, the Class and Shechan alleged damages to property other than that installed by the subcontractors. Amerisure therefore did not address the situation at issue in this case. I would therefore hold that damage to property other than that installed by the subcontractors may constitute an occurrence under the policies.
For these reasons, I respectfully dissent and would reverse the trial court's entry of summary judgment and remand for further proceedings.