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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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  1. As one of the many consumers affected by this breach, I found my bank data had been lifted and used to buy over $200 of various merchandise in New York. I did a pretty good job of tracing the purchases to stores around a college campus just from the info on my bank statement. Hm. Mr. Hill, I would like my $200 back! It doesn't belong to the state, in my opinion. Give it back to the consumers affected. I had to freeze my credit and take out data protection, order a new debit card and wait until it arrived. I deserve something for my trouble!

  2. Don't we have bigger issues to concern ourselves with?

  3. Anyone who takes the time to study disciplinary and bar admission cases in Indiana ... much of which is, as a matter of course and by intent, off the record, would have a very difficult time drawing lines that did not take into account things which are not supposed to matter, such as affiliations, associations, associates and the like. Justice Hoosier style is a far departure than what issues in most other parts of North America. (More like Central America, in fact.) See, e.g., http://www.theindianalawyer.com/indiana-attorney-illegally-practicing-in-florida-suspended-for-18-months/PARAMS/article/42200 When while the Indiana court system end the cruel practice of killing prophets of due process and those advocating for blind justice?

  4. Wouldn't this call for an investigation of Government corruption? Chief Justice Loretta Rush, wrote that the case warranted the high court’s review because the method the Indiana Court of Appeals used to reach its decision was “a significant departure from the law.” Specifically, David wrote that the appellate panel ruled after reweighing of the evidence, which is NOT permissible at the appellate level. **But yet, they look the other way while an innocent child was taken by a loving mother who did nothing wrong"

  5. Different rules for different folks....

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