Archive: September 7, 2007

1
Unintended Construction Defects May Constitute an “Accident” or “Occurrence” Under Commercial General Liability Policy
2
Property Owner’s Claims Against Professional Engineer Reinstated Where Contractor Placed Water Line Outside of Utility Easement

Unintended Construction Defects May Constitute an “Accident” or “Occurrence” Under Commercial General Liability Policy

Lamar Homes, Inc. v. Mid-Continent Cas. Co., 242 S.W.3d 1 (Tex. 2007)

In this landmark decision, the Texas Supreme Court ruled that commercial general liability policies provide a duty to defend claims for property damage caused by an insured contractor’s defective construction.  Resolving a split of authority on certified questions from the Fifth Circuit, the court ruled that unintended construction defects may constitute an “accident” or “occurrence” within the meaning of a commercial general liability policy.  It also ruled that the resulting damage to or loss of use of the building may constitute “property damage” sufficient to trigger the insurer’s duty to defend.  The court also held that the CGL policy made no distinction between tort and contract damages, rejecting the insurer’s economic loss rule defense.

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Property Owner’s Claims Against Professional Engineer Reinstated Where Contractor Placed Water Line Outside of Utility Easement

Merlini v. Gallitzin Water Auth., 934 A. 2d 100 (Pa. Super. Ct. 2007)

In this case, the Superior Court of Pennsylvania held that a professional engineer can be either “ordinarily negligent” or “professionally negligent” in the performance of his consulting engineering tasks, or both.  He can be accountable in damages for mere negligence under common law theories of trespass, even if a plaintiff is not suing him for professional negligence.

This odd outcome is the result of an engineer directing a contractor to install a water line, without right-of-way, easement or permission, in the wrong place on the property owner’s property, that is, in a location outside of the recorded easement.  When the property owner filed a complaint in the court, but did not file the technically required certificate of merit of professional negligence required by the Pennsylvania Rules of Court, the property owner’s complaint was dismissed.  The property owner appealed, and the Superior Court had to determine whether the property owner’s complaint was asserting ordinary negligence or “professional negligence.”
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