No Coverage for Subcontractor's Faulty Workmanship

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The case involved a construction project on Elba Island, Georgia.

November 28, 2022
Tred R. Eyerly - Insurance Law Hawaii

Finding faulty workmanship that did not cause property damage beyond the subcontractor's work, the court found there was no coverage under the CGL policy. Middlesex Ins. Co. v. Dixie Mech., Inc., 2022 U.S. Dist. LEXIS 175190 (N. D. Ga. Sept. 27, 2022). 

The case involved a construction project on Elba Island, Georgia. IHI E&C International Corporation (IHI) filed suit against Robinson Mechanical Contractors ("Robinson") for faulty construction work, including a pipe rack and process module installation. The pipe racks allegedly contained defective welds. Robinson filed a third-party complaint against Patriot Modular, Inc. (Patriot), Robinson's subcontractor, for faulty work for IHI. Finally, Patriot filed a fourth-party complaint against Dixie Mechanical, Inc. (Dixie), alleging it subcontracted with Dixie to perform fabrication, welding, testing, and inspection of pipes under Patriot's subcontract with Robinson. Patriot contended that to the extent it was found liable to Robinson for any defective work, delays or breaches of contract for Dixie's work, Patriot was entitled to recover such amounts from Dixie.

In this case, Dixie's insurer, Middlesex Insurance Company, sought a declaration that it had no duty to defend or to indemnify Dixie. Middlesex contended that the claims of faulty workmanship in the underlying complaints constituted neither an "occurrence" nor "property damage."

Mr. Eyerly may be contacted at te@hawaiilawyer.com



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