Trinity Homes LLC and Beazer Homes Investments, LLC v. Ohio Casualty Insurance Company and Cincinnati Insurance Company

Summary

The Seventh Circuit held that Indiana law may provide coverage under a standard commercial general liability policy for damage to homes caused by faulty subcontractor workmanship, subject to applicable exclusions and limitations. The court also held that an umbrella policy was ambiguous regarding whether underlying coverage could be exhausted through settlements in which the insured paid the remaining policy limits. The court reversed summary judgment for both insurers and remanded for further proceedings.

Holdings

1. Under Indiana law, a standard CGL policy covers damage to a home's structure resulting from faulty subcontractor workmanship unless the subcontractor work was intentionally faulty.
2. Cincinnati's umbrella policy did not clearly require the primary insurers themselves to pay the full underlying policy limits before umbrella coverage could be triggered; the policy was ambiguous on that point and had to be construed in favor of the insured.
3. Only additional insurance policies applicable to the occurrence qualify as underlying insurance under Cincinnati's umbrella policy; not every policy held by Beazer must be unavailable.
4. Beazer's declaration from its Vice President of Risk Management was sufficient to create at least a genuine issue of material fact concerning whether the FCCI and American Employers policies were unavailable.

Questions Presented

1. Whether damage to homes caused by faulty subcontractor work constitutes property damage caused by an occurrence under Ohio Casualty's standard CGL policy.
2. Whether Cincinnati's umbrella policy requires the full underlying policy limits to be paid by the primary insurers before coverage is triggered.
3. Whether a settlement in which the primary insurer pays a substantial portion of the policy limit and the insured pays the remainder can functionally exhaust underlying coverage.
4. Whether Beazer presented sufficient evidence to create a genuine issue of material fact regarding the unavailability of the applicable CGL policies.

Disposition

reversed_and_remanded