The BILD Foundation is continuing its push to ensure that insurance coverage is readily available to cover potential construction defect claims. Since 2015, BILD has worked on the case of Navigators Specialty Insurance Company v. Moorefield Construction, Inc., first filing a brief as a friend of the court in 2015, and then appearing on behalf of the building industry in oral arguments before the California Court of Appeal in 2016.
BILD’s arguments focused on the fact that the lower court’s ruling in the matter could be used by the insurance industry to deny all construction defect coverage under a theory that every act done by a contractor at a construction site is an intentional act and, thus, is not an “accident” eligible for insurance coverage. Through its outside counsel, Gerard Mooney with the law firm of Rutan & Tucker, LLP, BILD has argued that contractors do not intend to do their work defectively, and that any reasonable interpretation of the term “accident” should cover a contractor’s allegedly defective work, particularly given nearly all construction work is done with knowledge of a potential risk of product failure.
The ruling issued by the Court of Appeal in December 2016 held that no insurance coverage would be available for the contractor in the matter as the contractor’s actions were deliberate acts, not accidents, and that the insured was liable to reimburse the insurer for settlement payments attributed to the required repairs. The Court of Appeal, however, was very careful to limit its ruling to the facts of the case, stating that it was only deciding the particular matter before it and not ruling on all construction defect matters generally. The Court found that in this particular matter, the contractor knew it was performing defective work with either the hope or mistaken belief that the defective work would not cause damage at a later time.
BILD, has now filed a request with the California Supreme Court to depublish the case. Depublishing the case would lessen its potential impact on the building industry as no future court would be able to cite to the case as precedent in future construction defect/insurance lawsuits. BILD seeks to have the case depublished based on our belief that: 1) the Court of Appeals’ opinion goes against well-settled California law that would hold contractor’s actions are “accidents” deserving of coverage; and 2) that the Court’s opinion goes against public policy encouraging building professionals not to consider the consequences of their actions and not to attempt to eliminate or minimize risk of damage; and 3) that the opinion would effectively nullify construction defect policies across the state. BILD has been joined in its Depublication request by the California Building Industry Association and the California Business Properties Association.
On its own motion, the California Supreme Court has extended its time for review in the matter, perhaps signaling its desire to overturn the Court of Appeals’ ruling or, at the least, grant BILD’s Depublication request. As stated by BILD’s outside counsel, Gerard Mooney: “The Court of Appeal's opinion has the potential to jeopardize the insurance coverage upon which many in the building industry rely. It is our hope the California Supreme Court will grant review to consider this important public issue.”