Delaware “occurrence” and exclusions j(5) and j(6)

In Goodville Mut. Cas. Co. v. Baldo, No. 09-338 (D. Del. June 2, 2011), claimants condominium association and unit owners sued project developer Rehoboth and general contractor Capano seeking damages because of moisture penetration property damage to common elements and individual units resulting from construction defects.  Rehoboth and Capano filed a third party complaint against insured property manager Baldo alleging that, if Rehoboth and Capano were liable to claimants, Baldo was also liable because of Baldo’s failure to properly manage, maintain, and repair the property.  Baldo’s CGL insurer Goodville filed a declaratory judgment action.  The federal district court granted Goodville’s motion for summary judgment, holding that Goodville did not have a duty to defend or indemnify Baldo against the Rehoboth and Capano third party complaint.  Applying Delaware law, the court specifically held that, “because the situation that caused the damage was not an accident, but was within the control of” Baldo, the third-party complaint did not allege an “occurrence.”  The court goes on to state that, even assuming an “occurrence,” all of the damages would fall within exclusions j(5) and j(6).