Cincinnati Insurance Co. Files Complaint Against Gate City Contract Glazing for Alleged Condo Damages
April 20, 2009

The litigious nature of condo construction is not new for contract glaziers. In fact, the high risk involved has sometimes steered contract glaziers away from the work. According to the white paper, "Risk Management Ideas for Condominium Projects," written by G. William Quatman, FAIA, Esq. Of Shughart Thomson & Kilroy, P.C., condominium projects carry a higher than average number of claims. The white paper states: "Individual residential condominium units often sell for prices ranging from $250,000 to $1 million and more. High-end residential construction generally leads to high expectations by purchasers. When you stack 50 to 100 of these luxury homes in a high-rise tower there is the potential for a major lawsuit if the building fails to match up to the marketing materials or, worse yet, contains code violations, leaks or mold." (CLICK HERE to read the white paper.)

While those in the condo construction industry may not be seeing the same building boom that it did several years ago, that doesn't mean the market is any more insulated from litigation. Cincinnati Insurance Co. filed a complaint on March 20, 2009, against Gate City Contract Glazing LLC; Greenwood Development Corp.; Weaver Cooke Construction LLC (formerly known as Weaver Construction LLC); Somerset Horizontal Property Regime; the owner's association for Somerset Inc.; and John and Kathleen Affeldt to determine the rights of the parties under a policy of commercial general liability insurance, which it issued to Gate City Contract Glazing.

According to court documents, Cincinnati issued an insurance policy to Gate City that was effective January 1, 1997 to January 1, 1999. The policy covered "sums that the insured becomes legally obligated to pay as damages of 'bodily injury' or 'property damage' … We will have the right and duty to defend the insured against any 'suit' seeking those damages. We may at our discretion investigate any 'occurrence' and settle any claim or 'suit' that may result …"

Several complaints were later filed against Gate City and Weaver Cooke Construction alleging construction defects on the Somerset condominium project in Beaufort County, S.C.

In 2006 Greenwood Development Corp. filed a complaint alleging that the project "experienced property damage resulting from 'water infiltration in and around improperly utilized and installed doors and windows …'" Two years later Somerset Horizontal Property regime and its owners' association filed an amended complaint alleging water infiltration "in and around improperly designed, manufactured and installed doors and windows …" Also in 2008, the Affeldts filed an amended complaint against Gate City and Weaver Cooke alleging water infiltration "in and around improperly utilized and installed doors and windows." (Note: These complaints will be heard in state court and are separate from the pending lawsuit Cincinnati Insurance Co., has filed against Gate City.)

The following points were noted in the complaint filed by Cincinnati:

• · Gate City's policy ended on January 1, 1999;
• · A certificate of occupancy was not issued for the project before January 1, 1999, nor was a certificate of substantial completion;
• · Neither the insured nor a subcontractor of the insured installed doors and/or windows in the project before January 1, 1999;
• · Neither the insured nor a subcontractor of the insured installed finished aluminum building components at the project before January 1, 1999;
• · Neither the insured nor a subcontractor of the insured installed exterior cladding, sealants, joints, grout and/or caulk at the project before January 1, 1999;
• · No property damage attributable to the insured occurred at the project before January 1, 1999;
• · No property damage attributable to a subcontractor of the insured occurred at the project before January 1, 1999;
• · No water intrusion occurred at the project before January 1, 1999; and
• · No property damage resulting from water intrusion occurred at the project before January 1, 1999.

Rick McDuff, an attorney for Cincinnati Insurance Co., explained to USGNN.com that the complaint will be heard in South Carolina federal court, at which time they will be requesting that the judge review what has been claimed in the state suits and rule that based on the policy Gate City had with Cincinnati, the alleged damages were not covered. McDuff added that if the state court finds Gate City responsible for the alleged damages Cincinnati will not have the duty to pay the claims.

"We are suing all of the injured property owners and Weaver Cooke (the general contractor) because they are seeking monetary recovery from Gate City," McDuff explained. "If Cincinnati had insurance coverage for Gate City, it would have the obligation to pay damages on behalf of Gate City to those persons or entities. Without them also being parties to our case, the federal court would not have the power to rule that Cincinnati is not liable to them if Gate City caused damage. We are not seeking money from them; only a ruling that we owe them nothing should they win against Gate City."

At press time, Gate City's attorney had not returned USGNN.com's calls for further comment.

CLICK HERE to read the entire complaint.

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