No Duty to Indemnify $1.8M Judgment
Mar 25, 2021
Harrison Yoss, partner in Thompson Coe’s Dallas office, recently obtained a summary judgment in a declaratory action on behalf of an insurer. In a case filed in Oklahoma federal court, the court ruling involved the duty to indemnify in a construction defect claim.
The owner of a hotel based in Oklahoma had previously obtained a $1.8M judgment against the insured general contractor regarding a breach of the warranty to repair a claim in arbitration. The owner of the hotel, as a judgment creditor, then sought recovery of the judgment from the insured general contractor’s primary commercial general liability insurer.
Because the arbitration award was based solely on the insured general contractor’s failure to abide by its contractual warranty obligation to repair the damage following company voluntary dissolution, the court agreed there was no “occurrence” under Mississippi law. The court rejected the hotel owner’s argument that there was an “occurrence” because the arbitrator’s finding was rooted in negligence and the named insured’s faulty construction led to the damages at the hotel.
The court also agreed that even if there were an “occurrence,” the Continuous or Progressive Injury and Damage Exclusion applied to preclude coverage under the later policies. The court also held that even if Oklahoma law applied to the interpretation of the policies, as argued by the hotel owner, the result would be the same under Tenth Circuit authority.