Scottsdale Insurance Co. v. R.I. Pools
An insurance policy may include defects in the insured's own work within the category of an "occurrence" or "accident." Allegedly, the defendant Connecticut pool manufacturer, R.I. Pools, obtained concrete materials from O&G Industries until 2006, when it changed its supplier and obtained concrete materials from Paramount Concrete. R.I. Pools used subcontractors to shoot the concrete into the ground. In 2007, the owners of swimming pools manufactured by the defendant pool manufacturer allegedly complained about cracking in the concrete walls and floors, for which Paramount Concrete allegedly furnished the concrete. The owners of the swimming pools sued the pool manufacturer, R.I. Pools, for damage to the swimming pools. The plaintiff insurance company, Scottsdale, filed a request for a declaratory judgment and requested that the District Court find it owed no duty to defend or to indemnify the defendant, R.I. Pools, pursuant to commercial general liability insurance policies. The insurance provided coverage for injury or damage caused by an "occurrence," which was defined as an "accident." The District Court found that the commercial general liability insurance policies did not cover claims for faulty workmanship, because faulty workmanship alone did not qualify as an "accident," pursuant to Jakobson Shipyard Inc. v. Aetna Casualty & Surety Co., a 1992 decision of the 2nd Circuit. The District Court, Thompson, J., granted summary judgment to the plaintiff insurance company and held that the insurance company possessed no duty to defend or to indemnify. The 2nd Circuit distinguished its earlier decision in Jakobson and reversed. "[T]hese policies, unlike the Jakobson policy," wrote the 2nd Circuit, "unmistakably include defects in the insured's own work within the category of an `occurrence.' " The District Court wrongly ruled that defects in the insured's work were not within the scope of an "occurrence." It did not consider whether the defects were within a subcontractor exception. The 2nd Circuit reversed and remanded. Matthew Lerner represented the plaintiff, Scottsdale Insurance Co. Charles Fleischmann represented the defendant, R.I. Pools.