NJ Court Reaffirms Rule Against Coverage for Faulty Workmanship Claims and Finds Fraud Claims Inherently Intentional

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In Velez v. AR Management Company, et al., owners of a condominium unit rebuilt after a fire sued the condominium association, several association board members, the association’s property management company and the general contractor for the reconstruction work.

September 20, 2021
Anthony L. Miscioscia & Frank J. Perch, III - White and Williams LLP

Awarding summary judgment to an insurer under both liability and directors & officers (D&O) coverage parts, a New Jersey trial court reaffirmed the principle that claims of defective workmanship without resulting “property damage” are not covered under a general liability policy, and further dismissed claims for fraud and breach of fiduciary duty, finding that such claims were inherently intentional and do not state a covered “occurrence.”

In Velez v. AR Management Company, et al., 2021 N.J. Super. Unpub. LEXIS 1675 (Law Div. Bergen Co. Aug. 10, 2021), owners of a condominium unit rebuilt after a fire sued the condominium association, several association board members, the association’s property management company and the general contractor for the reconstruction work. The owners’ suit alleged faulty workmanship and incomplete repairs. In addition, the owners asserted fraud and breach of fiduciary duty claims against the management company, alleging conflicts of interest and self-dealing between the management company and the general contractor, which had common ownership.

In a third-party complaint, the management company sought coverage from the condo association’s liability and D&O insurer. The court dismissed the D&O coverage claim, noting that the management company was not a director or officer or otherwise entitled to insured status for the D&O coverage part.

Reprinted courtesy of Anthony L. Miscioscia, White and Williams LLP and Frank J. Perch, III, White and Williams LLP

Mr. Miscioscia may be contacted at misciosciaa@whiteandwilliams.com
Mr. Perch may be contacted at perchf@whiteandwilliams.com



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