CBY Files Amici Curiae Brief

January 25, 2016 – Pat Wielinski and the insurance coverage team at Cokinos, Bosien & Young – Rene Pinson and Amy Rauch – filed an amici curiae brief on behalf of the Associated General Contractors of America and its New Jersey chapter in Cypress Point Condominium Association, Inc. v. Adria Towers, L.L.C., No. 076348, which is currently pending before the New Jersey Supreme Court. In Cypress Point,a condominium association sued its developer/general contractor on the condominium project, the developer’s insurer, and various subcontractors seeking coverage under the developer’s CGL policy for damage to common areas of the condominium building and unit owners’ property caused by the subcontractors’ defective installation work. The trial court determined that that there was no property damage or occurrence, so coverage was not triggered under the developer’s policy because there was no damage to third party property, but only to the work of the insured. However, on appeal, the Appellate Division, in Cypress Point Condominium Association, Inc. v. Adria Towers, L.L.C., 118 A.3d 1080 (N.J. Super. Ct. App. Div. 2015), distinguished prior case law because the policy before it was written on the 1986 ISO form, which, in its view, created a reasonable expectation that a subcontractor’s faulty workmanship is to be treated differently from the work of a general contractor based upon the exception for property damage arising out of a subcontractor’s work. In addition, the court determined that property damage to other work besides the subcontractor’s own defective work constituted an occurrence. The court also emphasized the fact that coverage was not sought for the subcontractors’ work itself, but only for damage to other portions of the work. The insurers appealed to the New Jersey Supreme Court.

Cypress Point is a significant opinion because it is the first New Jersey opinion to clearly distinguish Weedo v. Stone-E-Brick, 405 A.2d 788 (N.J. 1979), a notorious, but dated decision from the New Jersey Supreme Court. The appeal of the Appellate Division’s opinion decision, particularly as it relates to Weedo, is significant because insurers across the country have relied on Weedo and its progeny for nearly forty years to justify denying coverage to contractors for damage caused by the defective work on the basis that such damage does not constitute an occurrence of property damage under CGL policies. It has been cited to courts literally hundreds of times, including the courts of Texas, even though it did not address the definition of “occurrence,” but rather addressed only exclusions in a prior policy form that are no longer part of the standard CGL policy, and despite the fact that the CGL policy form was revised in 1986 to provide coverage for damage caused by the defective work of subcontractors through the subcontractor exception to the “Your Work” Exclusion, which excludes coverage for the named insured’s own defective work. Unfortunately, too many courts followed the Weedo v. Stone-E-Brick outmoded rationale to deny coverage to insured contractors that should otherwise have been provided coverage under their policies.

By sponsoring the brief, the Amici Curiae hope through clarification and relegation of Weedo to its proper place, that is, a historical line of reasoning that applies to policy forms that at are, for the most part, no longer in use, that the net result will be the intended scope of coverage for the construction industry for inadvertent construction defects. If you have any questions, please contact Pat Wielinski.