8th Circuit Nixes Contractor's Bid For $1M Defense Coverage03/05/2012
The Eighth Circuit recently decided that a breach of contract suit against contractor Weitz Co. LLC didn't trigger a duty to defend in insurance policies of a subcontractor who did defective plumbing work, saying the contract suit is not an "accident" that would be covered by the policies. The Eighth Circuit's decision affirms a lower court's ruling that the subject policies linked with the plumbing subcontractor, Horizon Inc., do not require the insurers to pay the more than $1 million in legal bills Weitz racked up in an unsuccessful fight with builder MH Metropolitan LLC. Weitz asked Horizon's insurers to cover its defense, claiming that it was covered as an additional insured under Horizon's policies. After a jury ruled in Metropolitan's favor and found that Weitz should pay $5 million in damages, a district court ordered Horizon to pay Weitz $128,000 for the cost defending claims related to its faulty plumbing work. Weitz, however, demanded that the insurers cover its legal bills for the entire breach of contract action -- more than $1.1 million in attorneys' fees and costs. The insurers filed a declaratory judgment action claiming they had no duty to defend Weitz. The Eighth Circuit's decision affirmed the District Court's ruling, finding that under Missouri law, Metropolitan's breach of contract action did not state a claim for property damage caused by an "occurrence," which would trigger a duty to defend, because failure to perform on a contract is not an unexpected or unanticipated event. The Eighth Circuit also ruled that the insurance policies expressly limit coverage for additional insured parties to damages arising out of Horizon's work -- money Horizon's insurers have already paid to Weitz. The case is Secura Insurance v. Horizon Plumbing Inc. et al., Case No. 11-2427, in the U.S. Court of Appeals for the Eighth Circuit. Secura was represented by John G. Schultz and Suzanne Bruss.