The terms of an owner-controlled insurance policy defined “occurrence” as “an accident, event, or happening, including continuous or repeated exposure to substantially the same general harmful conditions.” A New York appellate court has held that this arguably expanded definition was still not sufficiently broad to encompass curtain wall deficiencies and improper workmanship. So there was no insurance coverage for the damages and remedial work.
The project was a 42-story tower in Jersey City, and a portion of the curtain wall fell from the eighth floor level during construction. A consultant found numerous deficiencies in the pipe framing system for the curtain wall. The owner sued the contractor and curtain wall sub, and the two contractors initially convinced the OCIP carrier to defend them against the owner’s claims, which the carrier did under a reservation of rights. The carrier then sought declaratory relief, and in the coverage lawsuit argued that the owner’s claim was simply not covered by the policy.
The appellate court (the case is National Union Fire Ins. Co. v. Turner Construction, et al, 2014 N.Y. App. Div. LEXIS 3546, 2014 N.Y. Slip Op. 3607 (App. Div., 1st Dept., May 15, 2014)) cited New Jersey and New York cases to the effect that commercial liability insurance does not ordinarily encompass breach of contract and breach of warranty claims. Responding to the argument that the words “event” and “happening” broadened the scope of coverage, the court stated: “the addition of ‘happening’ or ‘event’ to the definition of ‘occurrence’ does not change the fact that fortuity is still an essential consideration under New Jersey and New York law when determining whether there is coverage under such a policy, and a claim for faulty workmanship simply does not involve fortuity.”
The court also declined to follow case law in other jurisdictions that has supported a broader scope of insurance coverage. Construing the policy under New Jersey law (per the contract), the court refused to expand the definition of occurrence to cover what by the court’s account was a failure to perform the work as designed.