FIFTH CIRCUIT ENFORCES EWING BUT STILL FINDS NO DUTY TO DEFEND
Last Tuesday, the Fifth Circuit found occasion to apply the Texas Supreme Court’s recent holding in Ewing Const. Co., Inc. v. Amerisure Ins. Co. However, the court still found several reasons why the CGL insurer did not owe a duty to defend its insured in a suit alleging breach of contract and negligent work.
In Blanton v. Cont'l Ins. Co., 2014 WL 1679014 (5th Cir. Apr. 29, 2014), the insured faced allegations that it negligently repaired a boat engine resulting in extra repair costs and resulting loss of use of the boat. Following Ewing, the court noted that the alleged breach of the contract to repair the boat engine did not trigger the Contractual Liability exclusion because it was not an “assumption of liability.” Nevertheless, the court held the boat, which was not itself damaged, constituted “impaired property” and any damage to the engine was damage to the insured’s own “work” or “product.” In short, even under Ewing and its limitations on the use of the Contractual Liability exclusion, claims alleging poor work by the insured and resulting loss of use are still likely to be excluded.