Berkley unit must defend construction firm
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A W.R. Berkley Corp. unit has a duty to defend a construction firm charged with defectively designing and constructing homes, said a federal appeals court Thursday, in affirming a lower court ruling.
Cherry Hill, New Jersey-based 200 Christian Street Partners LLC, Virginal Procaccino and Arthur Elwood were sued in two underlying lawsuits in which homeowners claimed they were liable for defects in their homes’ construction, according to the ruling by the 3rd U.S. Circuit Court of Appeals in Philadelphia in Nautilus Insurance Co. v. 200 Christian Street Partners LLC; Virgil Procaccino; Arthur Elwood; Milo LLC.
W.R. Berkley unit Nautilus, which is defending the insureds subject to a reservation of rights, filed suit in U.S. District Court in Philadelphia seeking declaratory judgments it is not obligated to defend and indemnify the insureds.
The district court ruled against the insurer, and was affirmed by a unanimous three-judge appeals court panel. Nautilus argues that the claims in the underlying litigation stem from the insureds’ faulty workmanship, “so the defects alleged are not ‘occurrences,’” said the ruling.
“Liberally construing the Complaints in favor of the Insureds, however, the Complaints allege the use of faulty materials, and the active malfunction of products, such as the windows and moisture barriers,” the ruling said.
“These active product malfunctions constitute ‘occurrences’ under the Commercial Lines Insurance policies relevant here,” it said, in affirming Nautilus has a duty to defend the insureds.
Attorneys in the case could not be reached for comment.
Last month, a Berkley unit prevailed in litigation with a construction firm over a Miami Dolphins football stadium renovation, with the court ruling the claim was filed outside the time limit imposed by its claims-made coverage.
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