Oregon Construction Case Law Update: Prior Continuous Property Damage Will Trigger Policy
From the desk of Paul Sheely: Where coverage is in dispute, the courts will interpret the insurance policies to determine whether the alleged damage falls under a policy provision, whether coverage is triggered, and whether any exclusion applies. It is possible that when damage is ongoing and spans several policy periods, one insurer will be liable for the entire award.
Claims Pointer: In this case arising out of alleged property damage caused by long-term water intrusion, the Oregon Supreme Court held that an insurer litigating coverage issues after an insured is held liable cannot retry the insured’s liability. The case is a significant reminder that once liability has been determined, the insurer cannot re-litigate the liability on which the claim for coverage is based. Where coverage is at issue, the courts will examine the policy language to determine whether coverage has been triggered, and if so, whether any exclusion applies.
FountainCourt Homeowners v. FountainCourt Development, LLC, et al., 360 Or 341 (September 22, 2016).
FountainCourt Homeowners’ Association (FountainCourt) sued the developer and General Contractor for damage to its property caused by water intrusion. The subcontractors were brought in as third-party defendants by the developer, after which FountainCourt amended its complaint to allege direct claims of negligence against some of the subcontractors, including Sideco, Inc. (Sideco), the company that installed the siding and windows. Sideco tendered defense of the action to its insurers, including American Family Mutual Insurance Company (Am Fam). Sideco had general liability insurance policies issued by Am Fam covering the period of May 1, 2004 through May 1, 2006, and a general liability policy issued by Clarendon National Insurance Company (Clarendon) covering the period of April 15, 2003 through May 15, 2004. Both Am Fam and...