North Carolina “occurrence” and “your work” exclusion.

In General Cas. Co. of Wis. v. Image Builders, Inc., No. 1:09CV159 (W.D. N.C. Oct. 29, 2010), claimant Schneider hired insured general contractor Image Builders to construct a home. Schneider filed for arbitration against Image Builders for breach of contract, breach of warranty, and negligence, alleging that, as a result of Image Builders’ failure to properly place water drainage pipes and compact soil, following heavy rains, soil in front of the home slid down the front slope, damaging the land and entrance road.  Image Builders’ CGL insurer, General Casualty, defended under a reservation of rights.    Following the entry of an arbitration award against Image Builders, General Casualty filed suit against Image Builders and Schneider seeking a judicial declaration of no duty to indemnify.   The federal district trial court, applying North Carolina law, entered summary judgment for General Casualty, holding that the evidence presented by Schneider did not raise any genuine issue of material fact demonstrating that there was an “occurrence” that resulted in any “property damage.”  The court rejected the argument that the heavy rains constituted the “occurrence,” holding instead that, absent any cause of the slope failure separate from the defective work, of which the slope failure was a natural consequence, there was no “occurrence.”  The court additionally states that, even assuming an “occurrence,” all of the damages would fall within the “your work” exclusion.    The opinion does not reflect whether the “your work” exclusion applied to completed work.