NEW JERSEY, April 13 – A New Jersey appeals court ruled insurer Crum & Forster had no duty to defend an insured contractor against claims of faulty installation of insulation and cladding at a condominium complex.
The appeals court affirmed a lower court grant of summary judgment in favor of Crum & Forster Insurance Co. relieving it of the obligation to defend contractor Breese Corp. Breese was a defendant in an underlying suit brought by a condominium association alleging defective work in the installation of an external insulation and finishing system, EIFS. Breese installed insulation boards at Lakeside at North Haledon condos.
The policy contained an exclusion for EIFS-related claims, and the appeals court ruled it applied to bar coverage. At the trial court level, the court there determined that the system installed by Breese met the specifications of an EIFS — a rigid insulation board, an adhesive layer attached to the substrate, a reinforced base coat and a finish coat.
Lakeside argued that stucco did not meet the definition of substrate, and therefore that the exclusion did not apply. The appeals court disagreed:
“It was undisputed that the installation was not made in accordance with the plans, and so Lakeside’s reliance on using the plans to define ‘the’ only permissible ‘substrate’ is misplaced…The experts’ disagreement does not make the language of the exclusion ambiguous,…[trial ] Judge [Ralph] DeLuccia listened to the testimony, had the opportunity to observe the witnesses and his factual findings were based upon substantial, credible evidence in the record. We find no reason to disturb them.”
The underlying litigation commenced, as it so often does, after the condominium experienced water infiltration problems, including mold and bacteria issues. Crum & Forster also argued the a bacterial and mold related exclusion also barred coverage.
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Author: CJ Haddick
C.J. Haddick is a Director with the law firm of Dickie, McCamey, & Chilcote, PC, based in Pittsburgh, Pa.
He has advised and represented insurers in insurance coverage and bad faith litigation for more than a quarter of a century, and written and spoken throughout the United States on insurance coverage and bad faith prevention and litigation.
He is Managing Director of the firm's Harrisburg, Pa. office. Reach him at
chaddick@dmclaw.com or 717-731-4800.
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