USDC-Rhode Island Grants Judgment for Insurer / No Duty to Defend Demolition Subcontractor

Insurance Litigation

Attorney Casey McCaffrey successfully obtained summary judgment on behalf of a large national insurer in a declaratory judgment action filed in United States District Court, District of Rhode Island.

Attorney McCaffrey filed the action seeking a determination that the insurer had no duty to defend its insured, a demolition subcontractor, in a matter arising from damage occurring during demolition work at a property in Lincoln, Rhode Island.  The insured allegedly destroyed more of the property than it had been directed to demolish and caused extensive interior and exterior damage including cutting through electrical wiring, destroying chimney and fireplaces, damaging the roof and gutters, driving nails into piping, and damaging the combustion chamber boiler.  Further, the insured allegedly damaged the garage when it drove a truck into the building and across the property’s landscaping. The insured was fired from the construction job in 2012.  The property owner filed suit against the contractor and several subcontractors in 2017, claiming that the extent of the damage to the property had not been discovered until 2014.

The insured demolition subcontractor knew about the lawsuit, but did not alert the insurer to the action filed against it.  Plaintiff counsel moved for default against the demolition subcontractor in 2018.  The demolition subcontractor finally put the insurer on notice in 2019, seven (7) years after that underlying incident and one (1) year after default entered.

Upon learning of the lawsuit, the insurer appointed counsel for the demolition subcontractor and attempted to remove the default entered against it.  The plaintiff property owner objected to the motion to remove default on the grounds that the subcontractor knew about the default application but chose to ignore it and therefore showed no good cause to remove the default.  The court agreed and denied the motion to vacate default.

In 2021, the state court permitted the general contractor to file crossclaims against the insured demolition subcontractor for contribution and indemnification.  Attorney McCaffrey filed a Declaratory Judgment action in USDC-RI, arguing that the insured failed to notify the insurer of the Occurrence, Offense, Claim Or Suit in accordance with the policy conditions, that the alleged damage did not occur within the period of coverage afforded under the policy and, lastly, that the policy did not cover damage caused by the insured’s vehicle.

Chief Judge John J. McConnell, Jr. of the United States District Court, District of Rhode Island agreed and granted summary judgment in favor of the insurance company, opining that the insurer had been was prejudiced by the late notice and, therefore, the insurer had no duty to defend or indemnify the demolition subcontractor.

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