Bob Robison Commercial Floor v. RLI Insurance Company, 131 F.4th 832

Nabholz Construction hired Bob Robison Commercial Flooring, Inc. (BRCF) to install a gym floor at a middle school in Arkansas, and BRCF subcontracted the painting to another company whose work was defective.
The defective paint job (crooked lines, incorrect markings, smudging) rendered the gym floor unusable, requiring total floor replacement at a cost exceeding $130,000.
BRCF filed a claim under its RLI Insurance builder’s risk policy, which generally covered direct physical loss but excluded losses due to defective workmanship, subject to an "ensuing loss" exception.
RLI denied coverage, relying on the policy’s exclusion for losses caused by defects in workmanship.
BRCF sued for declaratory judgment and breach of contract, arguing that the ensuing loss clause restored coverage.
The district court granted summary judgment to RLI, ruling the policy was unambiguous and did not cover the loss; BRCF appealed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Is policy language ambiguous?	Policy language is ambiguous and should be construed in favor of insured; coverage is illusory otherwise	Policy is clear; exclusions and ensuing loss clause are consistent and not conflicting	Policy is unambiguous; exclusions and ensuing loss provision harmonize
Does the ensuing loss clause restore coverage?	Ensuing loss clause covers irreparable gym floor damage resulting from faulty painting	Ensuing loss only applies if excluded peril leads to a separate covered peril causing additional damage	Ensuing loss clause does not apply; damage solely caused by excluded peril, no separate covered peril
Does Arkansas law favor a broad or narrow view of ensuing loss clauses?	Arkansas would follow jurisdictions applying a broad view that does not require separate peril	Arkansas would follow a narrow view requiring a separate, distinct peril to trigger coverage	District court’s narrow interpretation affirmed; separate covered peril is required
Was RLI entitled to summary judgment?	No, because coverage ambiguity and ensuing loss clause should be resolved for insured	Yes, because undisputed facts show loss solely from excluded peril	RLI properly granted summary judgment; no coverage under policy

Balfour Beatty Constr., LLC v. Liberty Mut. Fire Ins. Co., 968 F.3d 504 (5th Cir. 2020) (ensuing loss provision triggered only by distinct, separate peril)
United States Fidelity & Guaranty Co. v. Loarn Forbess Constr. Co., 262 Ark. 713 (Ark. 1978) (no ambiguity in policy exclusion with ensuing loss provision)
Ratliff Enterprises, Inc. v. American Employers Ins. Co., 332 Ark. 401 (Ark. 1998) (coverage analysis when covered peril leads to excluded ensuing type of loss)
Smith v. Southern Farm Bureau Cas. Ins. Co., 349 Ark. 72 (Ark. 2003) (insurance policy should not be construed to nullify express exclusions)
Castaneda v. Progressive Classic Ins. Co., 357 Ark. 345 (Ark. 2004) (policies not to be rewritten to cover plainly excluded risks)