Robert A. Justman

The United States District Court for the District of Connecticut held that 19 claims and suits alleging defective construction of swimming pools did not state an "occurrence" under the CGL policy.

The insured built high-end swimming pools in Connecticut. The swimming pools cracked and failed: their walls and floors cracked. During the insured’s attempted repairs, the appurtenant structures and surrounding landscaping were damaged. Nineteen pool owners made claims and/or filed lawsuits against the insured pool builder.

Meager & Geer persuaded the Chief Judge of the District of Connecticut that defective construction is not an "occurrence." There was no published or precedential Connecticut case law. Meagher & Geer showed that the courts in Connecticut’s backyard – New York, New Jersey, Massachusetts, and Pennsylvania – all held that resulting damages to the insured’s work is not caused by an "occurrence" or "an accident." An "occurrence" implied a degree of fortuity that was not present in the claims and suits for defective construction. The damages to the appurtenant structures and landscaping were likewise not caused by an "occurrence." The nature of the repairs could not create coverage where none existed. The subcontractor exception to the "your work" exclusion did not manufacture coverage under the CGL policy’s insuring agreement. Courts in Pennsylvania, Massachusetts, New York, and New Jersey had already considered and rejected such an argument.

The United States District Court for the District of Arizona held that an ATV accident resulting from the use of the insured’s ATV on her cul-de-sac did not occur on an “insured location” under homeowners liability coverage. Whether the area directly adjacent to an insured’s home qualifies as an “insured location” for an ATV accident has generated divergent case law. The issue was recently certified by the U.S. Court of Appeals for the Second Circuit. Arrowood Indem. Co. v. King, 605 F.3d 62 (2nd Cir. 2010).

Two women were in a catastrophic accident while riding the insured’s ATV. The ATV rolled-over on the cul-de-sac directly in front of the insured’s home. The insured testified that the cul-de-sac was “my cul-de-sac.” The two women were not wearing helmets, and one was knocked into a coma. She had over $500,000 in medical bills. The homeowners policy provided liability coverage for the ATV while on an “insured location.” “Insured location” was defined by the standard policy as the residence premises or “premises used in connection with the residence premises.”

Meagher & Geer persuaded the Arizona federal court that the homeowners policy was structured to provide liability coverage for the ATV only while on the insured’s private property or premises integral to the private property, such as a deeded right-of-way or easement. The homeowners policy never afforded liability coverage for an ATV when on a public street. Although out-of-state case law suggested the regular use of a field, trail, or private street near the insured’s home could allow for coverage, the homeowners policy never covered an ATV accident on a public street. The homeowners policy could not be squared with a motor vehicle accident on a public street.