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Patricia O'Connell
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Wiley Rein's Laura Foggan Discusses North Dakota "Occurrence" Ruling

April 15, 2013

Laura Foggan, chair of Wiley Rein's Insurance Appellate Group, was quoted in an April 11 Law360 article about the ramifications of a recent North Dakota Supreme Court ruling that found coverage under a commercial general liability policy for a general contractor's exposure in a breach of contract suit concerning damage to the policyholder's product that resulted from a subcontractor's faulty construction work. The decision reverses a six-year old precedent set by the court.

Siding with builders, the state high court on April 5 said faulty work can be labeled as an occurrence if it is unintentional and unexpected, and the property damage is also unanticipated. Reacting to the ruling, Ms. Foggan told Law360 that insurance policies were never meant to cover shoddy workmanship.  She also pointed out that the court did not fully address the fact that in this instance the underlying suit against the general contractor was proceeding solely on breach of contract claims. As a result, she predicts more litigation in this contentious arena is likely. "I think we're going to continue to see some debate even here about coverage of breach of contract," Ms. Foggan said. With the division of authority in construction cases addressing the "occurrence" issue, she noted that "in some of these opinions, there's really a need to drill down a little more. That's something that unfortunately this ruling didn’t really do."

This opinion adds to a split of authority on the occurrence issue, which will have many more chances to be debated in court. "While courts generally are reluctant to overturn earlier precedent, the 'occurrence' issue in construction defect cases has proven so controversial and has already spurred so much litigation that it is likely to spawn additional challenges, including challenges of older existing precedent on this question," Ms. Foggan said.