Columbia Insurance Group, Inc. v. Cenark Project Management Services, Inc.
135 F. Supp. 3d 891
E.D. Ark.2015Background
- Property Owners sued All, Barron, and Cenark in state court for breach of contract and fraud related to earthwork pads and engineering plans.
- Columbia issued CGL policies to All and Barron (2005–2009), covering property damage caused by an occurrence during the policy period.
- Columbia defended All initially and participated through discovery; Barron was not separately defended by Columbia.
- Underlying complaint alleges nonconforming work, foundation cracks, loss of value, and future remediation costs.
- Columbia filed a declaratory judgment action arguing there is no coverage or duty to defend for breach of contract and fraud; All and Barron counterclaimed for defense costs and sought a declaration of duty to defend.
- Court held All and Barron’s motion grants the duty to defend; Columbia’s and Property Owners’ motions for summary judgment denied without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to defend exists? | Columbia contends no defense duty for breach/fraud claims. | All and Barron argue policy requires defense for possible coverage. | Columbia has a duty to defend. |
| Does the complaint allege property damage from an occurrence? | Damages arise from contract and fraud, not property damage under policy. | Some allegations could fall within product-completed operations/occurrence. | There is a possibility of coverage; need further analysis on exclusions. |
| Are the intentional acts and contractual liability exclusions applicable? | Exclusions bar coverage for intentional acts and contract-based damages. | Exclusions do not apply as there is not explicit intent to cause property damage and ambiguity in contractual liability. | Intentional acts exclusion not provable as a matter of law; contractual liability exclusion ambiguous; defense duty remains. |
| Does products-completed operations hazard provide coverage for the alleged damages? | Policy language could encompass post-completion property damage. | Damages are for breach of contract; products-completed operations may not apply. | Motions denied regarding coverage; not conclusively resolved at this stage. |
| Contractual liability exclusion defeats defense obligation? | Exclusion defeats Columbia’s duty to defend for contract-based damages. | Exclusion is ambiguous and not clearly applicable to these claims. | Ambiguity prevents outright exclusion; duty to defend remains. |
Key Cases Cited
- Murphy Oil USA, Inc. v. Unigard Security Ins. Co., 347 Ark. 167 (Ark. 2001) (duty to defend broader than indemnify; doubt resolved in insured's favor)
- Deschner v. State Farm Mutual Auto. Ins. Co., 290 S.W.3d (Ark. 2008) (examines applicability of exclusions in coverage analysis)
- Geurin Contractors, Inc. v. Bituminous Cas. Corp., 636 S.W.2d 638 (Ark. App. 1982) (interpretation of insurer obligations and exclusions in coverage)
- U.S. Fidelity & Guar. Co. v. Continental Cas. Co., 353 U.S. 834 (U.S. 1953) (definition of accident/occurrence for coverage purposes)
- Pate v. U.S. Fid. & Guar. Co., 14 Ark. App. 133 (Ark. Ct. App. 1985) (contractual liability exclusions and coverage interpretation)