In Builders Mut. Ins. Co. v. R Design Construction Co., LLC, No. 2:07-1890-JFA (D. S.C. May 24, 2010), Jade Street hired insured R Design to serve as general contractor for the construction of a condominium. R Design in turn subcontracted with Catterson for the framing. During construction, an inspection determined that some of Catterson’s framing was defective and required repair. Several months later, Catterson quit or was fired. Several months after Catterson, R Design quit or was fired without having corrected any of Catterson’s defective framing work. Jade Street then sued R Design and Catterson and judgment was entered against R Design for the repair costs. The trial court in the underlying action determined that, as a result of Catterson’s defective framing, there was resulting damage to other parts of the structure, including sagging floors, which occurred after Catterson and R Design left the job. R Design’s CGL insurer, Builders Mutual, filed suit seeking a judicial declaration of no coverage. The federal district trial court entered summary judgment in favor the Builders Mutual, holding that there was no “property damage” caused by an “occurrence.” The court determined that, because the damage to other parts of the structure that did result from Catterson’s defective framing—sagging floors—occurred after the defective framing was discovered and R Design had an opportunity to correct, it was not caused by an “occurrence.” The court states:
Numerous defects were discovered early in the construction process and could have been corrected before the project was completed. [R Design] knew that [Catterson’s framing] did not comply with the plans, and should have known that if left uncorrected, damage could occur. There was nothing accidental or unexpected about what happened to other parts of the structure.