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Judges differ on if 'property damage' occurred

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A majority of Indiana Court of Appeals judges affirmed summary judgment in favor of a homebuilder's insurance provider, insurance broker, and subcontractor's insurer, ruling the damage to the homes wasn't "property damage" as covered by the insurance policies. The dissenting judge looked to other jurisdictions to support her belief the claims would be covered.

In Sheehan Construction Co., et al. v. Continental Casualty Co., et al., No. 49A02-0805-CV-420, Sheehan Construction and a class of homeowners whose homes were damaged allegedly by negligent Sheehan subcontractors appealed the affirmation of summary judgment in favor of Sheehan's insurer, Continental Casualty, Sheehan's insurance broker MJ Insurance, and a subcontractor's insurer, Indiana Insurance.

Continental brought an action seeking a declaration it wasn't obligated to indemnify Sheehan; Sheehan counterclaimed and filed complaints against Indiana Insurance and MJ Insurance.

The homes suffered water damage including leaks around windows, discolored carpet, mold, and decay of window frames, all caused by the subcontractors' faulty workmanship.

At issue in the appeal is whether the property damage falls under the Continental and Indiana insurance policies comprehensive general liability coverage for "property damage" caused by an "occurrence."

Judges Melissa May and Patricia Riley relied on Amerisure Inc. v. Wurster Const. Co. Inc., 818 N.E.2d 998 (Ind. Ct. App. 2004), and R.N. Thompson & Assn., Inc. v. Monroe Guar. Ins. Co., 686 N.E.2d 160 (Ind. Ct. App. 1997), in their affirmation of summary judgment for the insurers. These cases found damage to a construction project due to faulty workmanship or defective materials weren't considered "property damage" for purposes of CGL coverage.

Using the reasoning in R.N. Thompson - which held damage to a roof's plywood caused by excessive heat and moisture as a result of faulty workmanship was inseparable from the faulty workmanship - the damage to the homes in the instant case can't be treated as distinct from the underlying faulty workmanship that allowed the water penetration, wrote Judge May.

The majority also affirmed the trial court's holding that Sheehan's claim against MJ Insurance for negligent failure to procure insurance was barred by the statute of limitations.

Judge Elaine Brown used caselaw from Florida, New Hampshire, and Kansas to support reversal of summary judgment in favor of the insurers. In her dissent, she wrote there was a question of fact regarding whether Sheehan's claims are for "property damage" caused by an "occurrence." She would hold the type of damage suffered in the instant case may constitute "property damage," and that damage to property other than that installed by the subcontractors may constitute an "occurrence" under the policies.

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  3. The practitioners and judges who hail E-filing as the Saviour of the West need to contain their respective excitements. E-filing is federal court requires the practitioner to cram his motion practice into pigeonholes created by IT people. Compound motions or those seeking alternative relief are effectively barred, unless the practitioner wants to receive a tart note from some functionary admonishing about the "problem". E-filing is just another method by which courts and judges transfer their burden to practitioners, who are the really the only powerless components of the system. Of COURSE it is easier for the court to require all of its imput to conform to certain formats, but this imposition does NOT improve the quality of the practice of law and does NOT improve the ability of the practitioner to advocate for his client or to fashion pleadings that exactly conform to his client's best interests. And we should be very wary of the disingenuous pablum about the costs. The courts will find a way to stick it to the practitioner. Lake County is a VERY good example of this rapaciousness. Any one who does not believe this is invited to review the various special fees that system imposes upon practitioners- as practitioners- and upon each case ON TOP of the court costs normal in every case manually filed. Jurisprudence according to Aldous Huxley.

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