Duty to Defend
"Occurance"-Homeowners

Late completion of construction not an occurrence under policy.
Jennings v. State Farm Lloyds
No. 03-04-00477 (Tex. App. Jan.12, 2006)

    The Texas Court of Appeals affirmed a trial court's grant of summary judgment to a homeowner's insurer and an umbrella policy insurer who disclaimed coverage of damages arising out of the late completion of construction of the insureds' home. Late completion of construction does not constitute an occurrence under the policies.

    In early to mid-2000, Joseph and Patricia Rotunda agreed to purchase a house that was still under construction from Richard and Nancy Jennings. The Rotundas moved themselves and two trailers of belongings cross-country in the expectation that the house would be completed by an agreed date. The construction was not completed for another two months, causing inconvenience and expense to the Rotundas.

    The Rotundas sued the Jennings's, who requested that State Farm Lloyds, their homeowner's insurer, and State Farm Fire and Casualty Co., with whom they had a personal liability umbrella policy, defend and indemnify the claim. Both insurers declined. After reaching a settlement, the Jennings's sued State Farm Lloyds and State Farm Fire. The trial court granted summary judgment to the insurers, and the Jennings's appealed.

    The court of appeal noted both policies extended coverage to property damage caused by an occurrence. The term occurrence was further defined to include an accident, including exposure to conditions. The late completion of construction of the house sold to the Jennings's did not constitute an occurrence under the policy definitions. Accordingly, the trial court's grant of summary judgment to Sate Farm and State Farm Fire was affirmed.

Strafford Texas Insurance Law & Litigation Alert
February 15, 2006