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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