Faulty Workmanship Exclusion Bars Coverage For Damage Caused By Workmanship "External" To Covered Property

On April 16, 2007, Washington Appellate Court Judge Ronald Cox issued an Opinion in City of Oak Harbor v. St. Paul Mercury Insurance Co., Case No.: 57959-2-I (Wash. Ct. App. April 16, 2007), affirming the trial court’s grant of summary judgment in favor of St. Paul Mercury Insurance Company ("St. Paul") based on an "all-risks" insurance policy’s faulty workmanship exclusion. On June 11, 2007, the court granted St. Paul’s motion to publish the opinion.

The opinion arose out of a dispute between the City of Oak Harbor ("City") and St. Paul as to whether the "faulty workmanship" exclusion of an "all-risks" insurance policy applied to bar coverage for damage to a lagoon liner. The City had hired a company to dredge biosolids from lagoons located in the City's wastewater treatment plant. Slip Opinion at *1. The contract prohibited the company from causing any damage to the liner and required the company to repair any damage to the liner that may have resulted. After the company performed