Kotula and Jones Win Summary Judgment in Construction Defect Coverage Case

September 13, 2018 | Insurance Coverage

A New Jersey state court awarded our insurer client, Interstate Fire and Casualty Co., summary judgment, dismissing with prejudice claims for defense and indemnity in a construction defect coverage action.

In First Specialty Ins. Co. v. Interstate Fire & Cas. Co., Docket No. L-996-16 (N.J. Super. Mercer Cty. Sept. 4, 2018), the insured, American Properties at Madison, LLC, and a successive insurer, First Specialty Insurance Co., sought insurance coverage from Interstate and Crum and Forster Specialty Insurance Co., for the defense and indemnity of an underlying construction defect action.

In the underlying case, Madison at Ewing Condominium Association sought damages from American Properties as the sponsor and developer of Madison at Ewing, a project involving 192 residential units in six buildings and common areas. That case involved allegations of pervasive water intrusion.

All parties moved for summary judgment at the conclusion of discovery. The Court granted Interstate’s motion, and denied the motions of American Properties and First Specialty. The Court held that the Pre-Existing Damage Exclusion in Interstate’s primary policies barred coverage for damages for water intrusion and concrete slab cracks, as they began and were alleged to have begun before the Interstate policies incepted, and certain other damage from plumbing defects and pipe leaks began in 2015, after Interstate’s policies had already expired.

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