Jim Sams / www.claimsjournal.com
January 11th, 2022, a decision was issued by the United States Court of Appeals for the Fifth Circuit on behalf of Siplast, Incorporated v. Employers Mutual Casualty Company, 2022 U.S. App. LEXIS 795 (5th Cir. Jan. 11, 2022) found the insurer had the responsibility to defend what they had ensured in a construction defect case. The underlying complaint was that there was alleged damage to the property beyond what the insurance covered.
Siplast Incorporated signed a contract with the Archdiocese of New York (the Archdiocese) for the installation of a roof membrane system at a high school in the Bronx. Siplast guaranteed the roof membrane system would remain in a watertight condition for 20 years or the membrane system would be replaced at the expense of the company. Several years after the membrane system installation, water damage was noticed. Archdiocese contacted Siplast about the damage, Siplast made repairs to the damage; however, more damage and leaks continued to occur. Siplast refuses to make any more repairs on the membrane system.
Siplast filed a declaratory judgment action seeking coverage under the policies. Id. at 6. The District Court ruled against Siplast claiming the damage fell within the policies’ “Your Product/Your Work Exclusion.” Id. at *6-7. The Fifth Circuit specifically disagreed with the District Court’s finding that – while the underlying complaint mentioned damage to property other than Siplast’s roofing products – coverage was not owed as the Archdiocese did not actually make a claim to recover for any such damage. The reason is that complaints made by the Archdiocese often pointed to damages beyond the roof membrane such as roof leaks and water damage to ceiling tiles.