Insurer off hook for defense of construction defects suit

The 1st U.S. Circuit Court of Appeals Friday agreed with a federal judge in Boston that a W.R. Berkley Corp. unit is not obligated to defend a general contractor against a developer’s lawsuit over faulty work at an apartment building that led to damage to drywall, wood framing and piping.

The three-judge panel in Admiral Insurance Co. et al. v. Tocci Building Corp. et al. said a “your work” exclusion in a commercial general liability policy issued to the contractor barred coverage for the damage.

The appeals court’s conclusion, however, differed from that of U.S. District Judge Patti B. Saris, who said Admiral was not obligated to defend Tocci Building because the allegedly faulty work was not a covered occurrence or accident.

Toll JM EB Residential Urban Renewal LLC hired Tocci Building to oversee the construction of an apartment building in 2013 and terminated its relationship with the general contractor in 2016 over alleged mismanagement of the project. Toll later sued Tocci Building in New Jersey state court alleging the faulty work constituted a breach of contract, and the general contractor removed the lawsuit to federal court, court records show.

Tocci Building asked Admiral for a defense in January 2020, and the insurer denied coverage. Admiral then filed a lawsuit in federal court in Boston seeking an order saying it had no defense obligations.

The trial judge found in favor of Admiral, ruling that the allegedly faulty work did not constitute an occurrence, and Tocci Building appealed.

Representatives for the parties did not respond to requests for comment.