Summary Judgment Secured in Coverage-Related Matter / No Duty to Defend Insured Builder in Construction Defect Claim

Attorney Matthew G. Lindberg secured summary judgment in favor of an insurance company in a coverage-related matter arising from the construction of a home in Bristol County, Massachusetts. The ­­­plaintiffs were property owners who in 2004 contracted with a home builder insured by the defendant insurance company.  In 2005, the plaintiffs terminated the contract claiming multiple problems with the construction project.  In 2008, they filed suit against the builder, alleging defective workmanship, failure to supervise subcontractors and cost over-runs, among other things.  The underlying complaint against the builder included counts for negligence, breach of contract and M.G.L. Ch. 93A. Upon being served with the underlying complaint, the builder notified its insurer, and asked that it provide a defense to the plaintiffs’ claims.  The insurer denied coverage, and denied the builder’s request for a defense, relying in part on the business risk exclusions within the contractor’s policy issued to the builder.

Thereafter, the plaintiffs reached a settlement with the builder, whereby the builder agreed to judgment against itself in the amount of $433,600.  Of that sum, the builder was to pay $15,000 in exchange for a promise that the plaintiffs would not look to the builder for the balance.  According to the settlement agreement, the builder also purported to assign its rights under the insurance policy to the plaintiffs.

Based on the assignment of rights, the plaintiffs brought suit directly against the insurer, seeking recovery of the balance of the agreed judgment.  The sole count of the Complaint was for breach of contract.  Attorney Lindberg brought a counterclaim for declaratory judgment, seeking a declaration that the builder’s insurance policy did not provide coverage for the claims brought by the plaintiffs in the underlying action.  Upon completion of written discovery, Attorney Lindberg filed a Motion for Summary Judgment on the plaintiffs’ claim as well as the Declaratory Judgment counterclaim.  The court allowed the insurer’s motion and dismissed the plaintiffs’ complaint.

The Honorable Richard T. Moses of Bristol Superior Court examined the policy language in a twenty (20) page Memorandum of Decision.  Judge Moses agreed with the insurer that the subject claims were “either not covered by the terms of the policy or fit within [one] or more of the cited exclusions.”

The court went on to analyze the insurer’s duty to defend.  The court noted that on March 30, 2009, the insurer sent a letter to the builder, in which it articulated its reasons for denying coverage.  Upon review of the underlying Complaint and the policy issued to the builder, the court found that the insurer did not owe a duty to defend.