Two Cases Analyze Faulty Workmanship Claims Under CGL Policies, With Contrary Results

Insurance Coverage Case Advisory, Issue 43

Less than two weeks apart, two appellate courts issued opinions analyzing whether faulty work claims are covered under commercial general liability policies, each reaching a different result.  The United States Court of Appeals for the Third Circuit issued an unpublished opinion in Zurich American Insurance Company v. R.M. Shoemaker Company, No. 12-2268, 2013 WL 1224104 (3d Cir. Mar. 27, 2013).  The Supreme Court of North Dakota issued an opinion in K&L Homes, Inc. v. American Family Mutual Insurance Company, No. 20120060, 2013 WL 1364704 (N.D. Apr. 5, 2013).

In R.M. Shoemaker, the Third Circuit, applying Pennsylvania law, affirmed the district court's summary judgment order holding that a general liability insurer had no duty to defend or indemnify a policyholder in a lawsuit seeking damages resulting from faulty workmanship of the policyholder's subcontractor.  2013 WL 1224104, at *4.