ASA Supports Appellants in Seeking a Rehearing in Texas CGL Case
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An opinion in yet another
In an amici curiae brief (http://www.asaonline.com/eweb/upload/ACG-TBB_ASA_Amicus_Brief-rehearing.pdf) filed on
"This Court's opinion denying coverage for defects in the construction of the Crownover home will have a profoundly negative effect, not only upon the construction industry and the insurance brokers and agents that service it, but also upon the 'consumer' side of the industry, that is, owners of projects, whether commercial, public or residential," ASA, AGC-TBB and TAB wrote in the brief. "The commercial general liability coverage at stake here is completed operations coverage, which is virtually the only insurance available to repair property damage arising out of defective construction once a construction project is completed."
"In terms of the Contractual Liability Exclusion and completed operations coverage under a contractor's CGL policy," they continued, "there is no substantive difference between an implied workmanship warranty against defects and an express warranty to repair those defects. The effect is the same, i.e., the damages awarded to a homeowner are the costs of repair, whether assumed by means of an implied or an express warranty, where the claim involves property damage caused by an occurrence."
The underlying dispute involved a home construction contract entered into between the owners, the Crownovers, and their contractor,
The home was completed in
The parties went to arbitration, where the owners recovered an award for breach of warranty. Though the contractor raised a statute of limitations defense, the arbitrator did not rule on it, finding that the warranty claim was not time-barred.
On dueling motions for summary judgment the district court granted
On appeal, the
Lacking guidance on that issue, the 5th Circuit held that an express warranty essentially disclaims and replaces any implied warranties of good and workmanlike performance, stating: "Whereas contractually agreeing to repair damage resulting from a failure to exercise reasonable care in performing the work or agreeing to perform work in a good and workmanlike manner would mirror a contractor's duty under general law, see Ewing, 420 S.W.3d at 37-38; Gilbert, 327 S.W.3d at 127, contractually agreeing to repair damage resulting from a failure to comply with the requirements of the contract would not, see Gilbert, 327 S.W.3d at 127. We therefore conclude that [the Insurer] has demonstrated that the contractual-liability exclusion applies." The 5th Circuit held that the contractual liability exclusion in the policy excluded coverage of any damages for breach of express warranty.
"Amici Curiae respectfully submit that the Court's opinion misapprehends the scope of the coverage available to a contractor or builder for completed operations losses under its CGL policy," ASA, AGC-TBB and TAB wrote. "In applying the Contractual Liability Exclusion to the express warranty context before it, the Court over-extended the exclusion's scope far beyond the
[Category: Construction]
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