Superior Court of Rhode Island Holds Property Damage Caused By Faulty Work of Subcontractor to Property Other Than Its Own Work Is Covered By CGL Policy

WM Hotel Group, LLC v. Pride Construction, Inc.
2008 R.I.Super.LEXIS 9 (2008)

WM Hotel, owner of the Hampton Inn & Suites, located in Middletown, R.I. initiated a lawsuit against Pride Construction, the general contractor for the construction of its hotel, Antcil Plumbing & Mechanical Contractors, Inc., the plumbing subcontractor that installed the hotel bathtubs and Travelers, Antcil’s insurer under a CGL policy.

Antcil installed the tubs, tested them for leaks, placed “tub protectors” in each and transferred control of them to Pride. The tubs began evidencing cracking, rust, and sagging. WM Hotel asserted that 93 of the 95 tubs were defective as manufactured and/or installed and that it was Antcil’s faulty installation that resulted in the damage to the tubs. Forensic testing and analysis indicated that a styrofoam sound deadening pad was missing from beneath the tubs, and that the omission could have contributed to deflection of the bathing surface. Travelers filed a motion for summary judgment asserting that the CGL policy issued on behalf of Antcil did not provide coverage for the damage incurred. Travelers asserted that the damages were not the result of an “occurrence” as defined in the policy and that exclusionary language in the policy precluded coverage.

Travelers argued WM Hotel’s damages did not result from an “occurrence” as defined by the policy. The policy stated that it applied to “property damage” only if it was caused by an “occurrence.” “Occurrence” was defined as “an accident, including continuous or repeated exposure to substantially the same general harmful condition.” Travelers maintained that WM Hotel sought recovery for Antcil’s allegedly defective workmanship and that “faulty workmanship” does not constitute an “occurrence” under the policy.

WM Hotel acknowledged that the faulty workmanship of Antcil was not an “occurrence”, but contended that its claim was for “after the fact” damages covered by the CGL policy. WM Hotel stated that Antcil’s “work” was the installation of the tubs, and that the damage did not occur until three to four months after the completion of the installation and that was not directly inflicted by Antcil employees. WM Hotel asserted that “after the fact” damage to the bathtubs was the kind of fortuitous event that us covered by the CGL policy. The Court, however, noted noted the definition of “work” as expressed in the policy included material, parts or equipment furnished in connection with such work or operations. Because the bathtubs were clearly materials, parts or equipment furnished in connection with such work or operations, the bathtubs themselves must be considered part of Antcil’s “work”, so that Travelers could not be held liable for any damage to the bathtubs themselves.

WM Hotel also alleged that the negligence or improper work of Antcil caused it to suffer damage for the “cost of the reconstruction of the premises inherent in the replacement of [the] tubs.” WM Hotel sought damages for the reconstruction of the premises and replacing the tubs. The Court found that property damage sustained by WM Hotel likely included damage caused while removing and replacing the tubs, such as damage to the wall and tile work covering the flanges of the tubs. The Court held that such damage could not be considered “impaired property” within the meaning of an exclusion cited by Travelers because it did not constitute Antcil’s product or work, and therefore did not fall under the definition of either “your product” or “your work” as defined in the policy. The Court determined that the CGL policy’s exclusion did not apply to damage to other property in addition to the tubs installed by Antcil because the exclusion only applied to “that particular part of any property that must be restored, repaired, or replaced because Antcil’s work was incorrectly performed on it.”

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