TX LEGAL EDGE

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Defective Tennis Court Not Excluded Under CGL Policy

Carol Keough February 21, 2014

The Texas Supreme Court concluded that damages caused by the defective work of Ewing Construction Company in constructing tennis courts for a school district was not excluded from coverage by the contractual liability exclusion in a CGL policy.  The Fifth Circuit certified a question to the Supreme Court in Ewing v. Amerisure, 2014 WL 185035 (Tex. 2014) to determine if a promise by Ewing to perform its work in a good and workman like manner is an assumption of liability for damages arising out of defective work so as to trigger the contractual liability exclusion.

The federal district court held that there was no coverage for Ewing because the exclusion was triggered.  At first the Fifth Circuit agreed with the district court and then withdrew that opinion and certified questions to the Texas Supreme Court.

The Texas Supreme Court reviewed its prior decisions where it found damages for defective workmanship were covered under a CGL policy.  The court then looked at the exclusion wording “assumption of liability” and found that it meant the insured would have to assume obligations which exceeded the obligations that it had under general law.  The court held that a construction company’s agreement to perform its work under a contract in a good and workman like manner does not enlarge its duties under the contract to trigger the contractual liability exclusion.

The Texas Supreme Court only answered the certified question asked.  However, the Court emphasized that there may be remaining questions of coverage based on other exclusions not asserted in this part of the litigation, but reserved for a later time by Amerisure.

 

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