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Ruling for Lloyd's of London in construction dispute overturned

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A U.S. appeals court has overturned a lower court ruling that granted Lloyd's of London underwriters summary judgment dismissing a case in a construction-related dispute.

The focus of the dispute is the common wall that was shared by structures located at 55 and 57 Bryant St. in Washington, D.C., according to Wednesday's ruling by the 4th U.S. Circuit Court of Appeals in Richmond, Virginia, in Capital City Real Estate L.L.C. v. Certain Underwriters at Lloyd's London.

Washington-based real estate developer Capital City was the general contractor for renovation of 57 Bryant St. in 2008 and 2009. It subcontracted the foundation, structural and underpinning work to Lanham, Maryland-based Marquez Brick Work Inc.

The contract between Capital City and Marquez required Marquez to maintain a general liability insurance policy naming Capital City as an additional insured. Marquez obtained a policy through Lloyd's underwriters in 2008 that included an endorsement listing Capital City as an additional insured, and that covered Capital City for liability for any property damage caused by Marquez's acts or omissions.

The common wall between 55 Bryant and 57 Bryant collapsed during the course of Marquez's work in June 2009. Standard Fire Insurance Co., a unit of Travelers Cos. Inc., the insurer for the owner of 55 Bryant, sued Capital City, among others, charging it with negligence and seeking $600,000 in damages plus attorneys' fees, costs and interest.

Capital City then filed a third-party complaint against Marquez. The Lloyd's underwriters denied coverage, and Capital City sought a declaration in U.S. District Court in Baltimore that they had a duty to defend it under the policy.

The District Court granted the underwriters summary judgment dismissing the case, and Capital City appealed.

A unanimous three-judge panel of the 4th Circuit unanimously held Capital City had coverage under the policy's endorsement.

The endorsement's language “is quite clear that coverage is provided for Capital City, as the additional insured, for 'property damage … caused in whole or in part by' Marquez,” said the ruling, in remanding the case to the lower court for a determination whether Capital City is also entitled to expenses and attorneys' fees.