Summary Judgment Granted in Nevada Contribution Action in Favor of Subcontractor Insurer with "Ongoing Operations" Additional Insured Endorsement

January 14, 2011

In A Case of First Impression In Nevada , General Contractor Found To Not Be An Additional Insured in CD Action Where Endorsement Was Limited To "Ongoing Operations" - ISO Form CG 2010 10/93

The Clark County District Court granted summary judgment on a cross-complaint for contribution, arising out of an underlying construction defect action, defended by Jean M. Lawler, Michael J. Nunez and Carolyn A. Mathews. Mid Century Insurance Company’s insured, Sunstate Landscape & Lawn, was a landscape subcontractor for National Union’s insured General Contractor, Falcon Development, on four large condominium developments in Las Vegas, Nevada. Mid Century issued CG 2010 10/93 Endorsements on Sunstate’s policies naming Falcon Development as an additional insured. The endorsement limited coverage for Falcon to property damage that occurred during Sunstate’s “ongoing operations” and did not provide complete operations coverage for Falcon.

Construction defect litigation was filed against Falcon by the owners and homeowners associations of the four condominium developments. Arrowpoint Capital Corp., the insurer that defended and indemnified Falcon in the four construction defect actions, sued National Union for indemnity and contribution, and National Union filed a third party complaint against Falcon’s subcontractors’ insurers, including Mid Century.

The M&C team moved for summary judgment in favor of Mid Century on the basis that coverage did not exist under Sunstate’s policy for the claims asserted against Falcon Development in the four construction defect actions because the damages involved did not occur during Sunstate’s ongoing operations. The suits were brought by the homeowners and their associations after the condominiums were purchased and occupied and the damages, therefore, did not occur during Sunstate’s ongoing operations. The Clark County District Court agreed that, under the plain and ordinary meaning of the CG2010 10/93 endorsement, coverage for Falcon was limited to claims for property damage that occurred during Sunstate’s ongoing operations and there was no completed operations coverage for Falcon. The complaints filed against Falcon in the four underlying construction defect actions alleged only property damage that occurred after Sunset’s work on those project was completed. This issue was one of first impression in Nevada.

Final Order Attached Below
 

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