Texas contractual liability exclusion

In Ewing Construction Co., Inc. v. Amerisure Ins. Co., No. C-10-256 (S.D. Tex. April 28, 2011), insured Ewing was the general contractor for an athletic facility constructed for a school district.  The school district sued Ewing alleging defective construction of the project.   The underlying complaint included contract and negligence causes of action, and sought damages for the repair of the damages and loss of the use of the project.  The complaint did not allege damage to any property other than the project itself.    Ewing tendered its defense to its CGL insurer Amerisure.  Amerisure denied a defense and Ewing filed suit against Amerisure.  The federal district trial court entered summary judgment for Amerisure.  Applying Texas law, the court held that all of the damages fell within the “contractual liability” exclusion precluding any duty to defend or indemnify.  With respect to the “assumption of liability” requirement of the exclusion, relying on Gilbert Texas Construction, LP v. Underwriters at Lloyd’s London, 327 S.W.3d 118 (Tex. 2010), the court rejected Ewing’s argument that the exclusion was limited to instances where the insured has assumed the liability of a third party.  The court determined that, under its contract with the school district, Ewing assumed the liability that it would construct the project in accordance with the contract requirements.  With respect to the exception for liability the insured would have in the absence of the contract, the court rejected Ewing’s argument that the negligence cause of action alleged liability Ewing would have in the absence of its contract with the school district.   Specifically, because the damages sought were limited to the subject matter of the contract and there were no allegations of damage to property other than the project, the underlying complaint failed to make specific factual contentions sufficient to properly allege a tort cause of action; thus, the school district’s claims sounded only in contract.