Trinity Homes LLC v. Ohio Casualty Insurance
2010 U.S. App. LEXIS 25985
| 7th Cir. | 2010Background
- Beazer acted as general contractor using subcontractors for Indiana homes; defects from subcontractors caused damage and homeowners sued Beazer in Indiana courts beginning in 2002.
- Beazer had multiple primary CGL policies and an umbrella with Cincinnati; insurers denied coverage for the defective-work liability.
- Beazer settled with many CGL insurers, exhausting those policies; Ohio Casualty refused coverage for water-damage claims tied to subcontractor work.
- Umbrella insurer Cincinnati argued its policy was not triggered since underlying CGL policies were still available or not exhausted.
- District court granted summary judgment for Ohio Casualty and Cincinnati; Beazer appealed seeking coverage and declaratory relief; Seventh Circuit reversed and remanded for reconsideration in light of Sheehan Constr. Co. v. Cont'l Cas. Co.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Ohio Casualty's CGL policy covers damage to a home's structure caused by faulty subcontractor work | Beazer argues policy covers property damage to the structure | Ohio Casualty asserts no coverage for structural damage within policy terms | Policy covers structural damage unless explicitly excluded |
| Whether Cincinnati's umbrella policy requires exhaustion of underlying coverage by insurer payout or can be triggered by settlements | Beazer contends settlements can exhaust underlying coverage even if insurers pay less than full limits | Cincinnati argues exhaustion requires full payout by the CGL insurer | Ambiguity favors insured; settlement can exhaust under umbrella if underlying insurance is unavailable |
| Whether Beazer provided sufficient evidence that certain CGL policies were unavailable | Beazer supplied nonconclusory declarations establishing denial/settlement | District court properly found evidence insufficient | Beazer created a genuine issue of material fact on unavailability of two policies |
Key Cases Cited
- Zeig v. Mass. Bonding & Ins. Co., 23 F.2d 665 (2d Cir.1928) (exhaustion by settlement can trigger excess coverage under umbrella policies)
- Koppers Co. v. Aetna Cas. & Sur. Co., 98 F.3d 1440 (3d Cir.1996) (settlement can functionally exhaust primary coverage)
- Comerica Inc. v. Zurich Am. Ins. Co., 498 F.Supp.2d 1019 (E.D. Mich.2007) (clear policy language required full payout by insurer to exhaust)
- Qualcomm, Inc. v. Certain Underwriters at Lloyd's, London, 161 Cal.App.4th 184, 73 Cal.Rptr.3d 770 (Cal.App. 2008) (Cal. appellate decision on CGL exhaustion)
- Tate v. Secura Ins., 587 N.E.2d 665 (Ind.1992) (pricing ambiguity rule; interpret in insured's favor when ambiguous)
- Sheehan Constr. Co. v. Cont'l Cas. Co., 935 N.E.2d 160 (Ind.2010) (standard CGL covers damage to a home's structure absent intentional faulty work)
- Midwest Mut. Ins. Co. v. Ind. Ins. Co., 412 N.E.2d 84 (Ind.Ct. App.1980) (public policy favoring settlements)