In Breezewood of Wilmington Condominiums Homeowners’ Assoc., Inc. v. Amerisure Mut. Ins. Co., No. 08-1476 (4th Cir. July 1, 2009)(unpublished), insured Quality was the general contractor for the Breezewood condominiums project. Following completion, the Breezewood homeowners association (“Breezewood CHOA”) sued Quality seeking damages for the repair and loss of use of common elements of the project resulting from Quality’s defective construction, including damage resulting from moisture penetration. Quality’s CGL insurer, Amerisure, denied a defense. Quality entered into a consent judgment and assigned its rights to Breezewood CHOA which subsequently filed suit against Amerisure. The federal district court, finding no duty to defend, entered summary judgment for Amerisure. On appeal the U.S. Court of Appeals for the Fourth Circuit affirmed. Applying North Carolina law, the court held that, because the alleged damages were limited to Quality’s work—the condominium project—the underlying complaint did not allege any “property damage.” The court relied in part on the subcontractor work exception to exclusion l. for damage to “your work,” stating in footnote 12:
Breezewood CHOA’s argument that the CGL covers damage caused by the insured’s faulty workmanship to the insured’s own property would make the subcontractor exception meaningless. The purpose of the subcontractor exception is to restore coverage for damage to the insured’s property only to the extent it was caused by a subcontractor’s faulty workmanship.
However, because Breezewood CHOA did not produce any evidence that any of the defective work was performed by a subcontractor, this restoration of coverage did not apply.