Shareholder Thomas Orlando secured a win in the 9th Circuit for Travelers Property Casualty Company regarding the application of the insurer’s defective construction exclusion to a claim for damages incurred to an underground fuel storage tank.
A construction company and its subcontractor were contracted to build a fueling station in Oregon, and during the installation, the underground fuel storage tank was damaged when it floated due to inadequate ballast. The company filed a claim with Travelers, which denied coverage citing the faulty workmanship and construction exclusion in the builder’s risk policy.
In the original decision, the U.S. District Court for Idaho found that the insurance company’s exclusion was ambiguous and did not apply to the repair and reinstallation costs of the fueling station’s damaged tank.
In the 9th U.S. Circuit Court of Appeals, Tom argued that the phrase “defective construction” was not ambiguous and was wrongly interpreted as a flaw of a finished product instead of the project’s process. The 9th Circuit agreed that “’construction’ carries an unambiguous, process-oriented meaning in the Exclusion.”
The three-judge panel remanded the case for further proceedings.
Thomas Orlando concentrates his practice in insurance and appellate law.