FEDERAL DISTRICT COURT EXAMINES “YOUR WORK” EXCLUSION IN CGL POLICY

A federal district judge in Houston recently examined the CGL policy’s “your work” exclusion  and held it excluded all claims against a general contractor for damages to a house the contractor built.  In Patton v. Mid-Continent Cas. Co., CV H-15-1371, 2016 WL 3900799 (S.D. Tex. July 19, 2016), the insured, Black Diamond, was a homebuilder facing a construction defect claim by its customers, the Pattons.  After winning an arbitration award against Black Diamond for claims associated with foundation movement of the house, the Pattons brought this suit against Mid-Continent to recover their award.

The case turned on whether the damages alleged by the Pattons, and for which they had obtained an arbitrator’s award, fell within the “your work” exclusion.  Because Black Diamond was the general contractor on the project, its work was the entire house, and therefore all damage to the house itself fell within the “your work” exclusion. There was some dispute whether Black Diamond’s work also caused damage to the swimming pool, which was built by a separate contractor.  However, the arbitrator did not award any damage for the pool.  Ultimately, the court adopted the magistrate’s recommendation in full, granting judgment on the pleadings in favor of Mid-Continent because all the damages awarded by the arbitrator fell within the “your work” exclusion.