Mid-Continent Casualty Company v. Castagna, Vanessa
410 S.W.3d 445
Tex. App.2013Background
- Castagna sued McClure Brothers Custom Homes, LP and McClure Brothers Homes, LLC for foundation-related defects; arbitration awarded damages for property damage beginning in 2001 and progressing to 2006–2007.
- Mid-Continent and Great American issued CGL policies to McClure entities for multiple periods; Castagna sought indemnity for the arbitration judgment under those policies.
- Arbitrator found minor cracks in 2001–2002, 2002–2003, and a substantial foundation failure beginning 2006–2007 caused by McClure’s workmanship; damages were for property damage to the residence.
- Texas law requires two distinct insurer duties—defense and indemnity—and indemnity depends on actual coverage and timing under the policy terms; trigger rules follow OneBeacon and related precedent.
- The trial court denied Mid-Continent’s traditional and no-evidence motions but Castagna’s summary judgment was granted; on appeal, the court held the 2001–2002 and 2002–2003 policies triggered, while the 2006–2007 policy provided no indemnity for the arbitration award.
- The court concluded the contractual liability exclusion did not bar coverage because the implied warranty of good workmanship arises under common law, not a contract for which coverage was expressly assumed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which policies provide coverage for the property damage? | Castagna says 2001–2002 and 2002–2003 triggered. | Mid-Continent argues only the 2006–2007 policy triggered. | Triggered under 2001–2002 and 2002–2003; 2006–2007 provides no indemnity. |
| Is McClure Brothers Homes LLC covered for the liability of McClure Brothers Custom Homes, LP under the 2006–2007 policy? | LLC is a named insured; LP’s liability should be covered. | No coverage because LP isn’t named insured and policy precludes coverage for conduct of non-named entities. | No indemnity under 2006–2007 policy because LP’s liability was not insured. |
| Does contractual liability exclusion bar coverage for the arbitration damages? | Exclusion should apply to bar coverage. | Exclusion applies only if liability was assumed in contract. | Not applicable; implied warranty arises from common law, not a contractual assumption. |
Key Cases Cited
- OneBeacon Ins. Co. v. Don’s Bldg. Supply, Inc., 267 S.W.3d 22 (Tex. 2008) (determines when property damage occurred for occurrence-based policies)
- Don’s Building Supply, Inc. v. OneBeacon Ins. Co., 266 S.W.3d 592 (Tex. App.—Dallas 2008) (explains timing of property damage and duty to defend/indemnify)
- Gilbane Bldg. Co. v. Admiral Ins. Co., 664 F.3d 589 (5th Cir. 2011) (discusses contractual liability exclusion interpretation (federal, persuasive))