Breach of Contract is not an Occurrence
Barry Zalma
Jun 8, 2023
Read the full article at https://lnkd.in/gkjauQQB and see the full video at https://lnkd.in/gfefkDTa and at https://lnkd.in/g7cwC_bY and at https://zalma.com/blog plus more than 4500 posts.
In American Home Assurance Company v. Superior Well Services, Inc., No. 22-1498, United States Court of Appeals, Third Circuit (May 31, 2023) American Home Assurance Co. (“American Home”) appealed the District Court’s order grant of summary judgment for policy holder Superior Well Services, Inc. (“Superior”).
BACKGROUND - The Underlying State Law Claim
U.S. Energy contracted with Superior for hydraulic fracking services to extract natural gas from wells owned by U.S. Energy. In November 2007, Superior notified its insurance provider, American Home, about the potential claim for damage to wells. In February 2008, American Home agreed to provide Superior with defense counsel, but it also sent Superior a letter reserving its right to contest insurance coverage.
U.S. Energy sued Superior in New York state court, alleging that Superior had damaged 97 of its wells. After trial the jury found that Superior breached the contract by failing to perform services with reasonable care, skill and diligence. The jury found Superior had damaged 53 of the 97 wells and specified that Superior “fail[ed] to perform its contract with U.S. Energy in a workman like manner” and that this “failure” was “a substantial factor in causing damage to the U.S. Energy wells[.]” Accordingly, it awarded U.S. Energy $6.16 million, a figure that was increased to approximately $13.18 million after the state court tabulated interest.
THE DISPUTE BETWEEN SUPERIOR AND AMERICAN HOME
Superior’s policy provided coverage for “property damage” arising out of an “occurrence.” The policy defined “property damage” as both “[p]hysical injury to tangible property, including all resulting loss of use of that property.”
Superior also purchased an “underground resources and equipment coverage” (“UREC”) endorsement that amended the CGL policy to provide additional coverage “against risks associated with well-servicing operations[.]” Specifically, the endorsement “added” coverage “with respect to ‘property damage’ included within the ‘underground resources and equipment hazard’ arising out of the operations performed by [Superior] or on [Superior’s] behalf[.]”
American Home sued seeking a declaratory judgment that Superior’s policy does not indemnify Superior for any damages that might be awarded to U.S. Energy and which were caused by Superior’s breach of contract.
THE DISTRICT COURT’S OPINION
The District Court granted summary judgment for Superior and, by extension, for U.S. Energy, and it ordered American Home to indemnify Superior for the state court judgment. The Court concluded that each of the 53 damaged wells gave rise to a separate occurrence, triggering an independent coverage limit for each respective well.
DISCUSSION
The definition of “accident” required to establish an “occurrence” under the policies cannot be satisfied by claims based upon faulty workmanship. Such claims simply do not present the degree of fortuity contemplated by the ordinary definition of “accident” or its common judicial construction in this context.
To hold otherwise would be to convert an insurance policy into a performance bond. The Court was unwilling to do so, especially since such protections are already readily available for the protection of contractors.
The UREC endorsement reinstates coverage by providing that the exclusion “does not apply to any ‘property damage’ included within the ‘underground resources and equipment hazard[.]'” Notably, to trigger coverage, the endorsement expressly requires “property damage,” which, under the underlying policy, is covered only if it “is caused by an ‘occurrence.'” The endorsement incorporates the “occurrence” requirement by way of the “property damage” requirement.
No provision in the endorsement implicitly, let alone expressly, repudiates the “occurrence” requirement.
The Third Circuit Court of Appeal concluded that the endorsement does not displace the underlying policy’s occurrence requirement and reversed the District Court’s summary judgment order and remanded the case to the District Court with instructions to enter judgment for American Home.
ZALMA OPINION
The key to every liability insurance policy is that for coverage to apply the loss must be fortuitous, that is, it must be neither expected nor intended by the insured and must fit within the generally understood meaning of the term “accident.” Under no definition of fortuity is faulty workmanship by the insured. Since the jury found the insured responsible for its breach of contract by means of faulty workmanship there was no occurrence and no coverage
(c) 2023 Barry Zalma & ClaimSchool, Inc.
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Policy Limits Demand Accepted Settles Claim
Post 5434
Posted on August 26, 2026 by Barry Zalma
See the full video at https://lnkd.in/g-ZtsSgK and at https://lnkd.in/ghMBdYWR
A Contingent Offer Accepted Ends the Dispute
In Farmers Insurance Exchange, a California Reciprocal Insurance Exchange, The Superior Court For The County Of San Bernardino, Kathleen Ann Wood, E087128, California Court of Appeals, (July 9, 2026) Farmers Insurance Exchange insured Doyle Archer under an automobile policy with bodily injury limits of $15,000 per person and $30,000 per accident.
FACTUAL BACKGROUND
Archer rear-ended Kathleen Ann Wood at a red light, causing Wood to assert a bodily injury claim against him. Wood’s counsel sent Farmers a pre-litigation settlement demand offering to resolve Wood’s claim for the available policy limits, stating that if the $100,000 demand exceeded the policy, the offer was for the policy limits.
Farmers timely responded in writing, agreed to pay Wood the $15,000 per-person policy limit, and provided the requested ...
Policy Limits Demand Accepted Settles Claim
Post 5434
Posted on August 26, 2026 by Barry Zalma
See the full video at https://lnkd.in/g-ZtsSgK and at https://lnkd.in/ghMBdYWR
A Contingent Offer Accepted Ends the Dispute
In Farmers Insurance Exchange, a California Reciprocal Insurance Exchange, The Superior Court For The County Of San Bernardino, Kathleen Ann Wood, E087128, California Court of Appeals, (July 9, 2026) Farmers Insurance Exchange insured Doyle Archer under an automobile policy with bodily injury limits of $15,000 per person and $30,000 per accident.
FACTUAL BACKGROUND
Archer rear-ended Kathleen Ann Wood at a red light, causing Wood to assert a bodily injury claim against him. Wood’s counsel sent Farmers a pre-litigation settlement demand offering to resolve Wood’s claim for the available policy limits, stating that if the $100,000 demand exceeded the policy, the offer was for the policy limits.
Farmers timely responded in writing, agreed to pay Wood the $15,000 per-person policy limit, and provided the requested ...
The Largest Residential Burglary of All Time
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Fraud & the Fear of Bad Faith Suits
Posted on July 22, 2026 by Barry Zalma
See the full video at https://lnkd.in/gWQQEySW and at https://lnkd.in/gyhdK6wv
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
After ...
Communications with Arson Investigation is Privileged
Post 5488
Posted on September 11, 2026 by Barry Zalma
ACE Was Not Required To Produce Any Disputed Document Because Each Was Protected By The Attorney-Client Privilege, or The Work-Product Doctrine.
See the full video at and at https://rumble.com/v7fbzvo-arson-for-profit-is-ground-to-deny-claim.html
In Rubesne Resources LLC, a Colorado Limited Liability Company v. ACE Property And Casualty Insurance Company, a Foreign Corporation, Civil Action No. 1:24-cv-02300-DDD-SBP, United States District Court, D. Colorado (August 30, 2026) Rubesne Resources LLC sought insurance coverage from ACE Property and Casualty Company after a January 5, 2024 fire destroyed its business.
South Metro Fire Rescue classified the ignition as intentional, and ACE’s retained expert concluded that gasoline had been poured in multiple areas and ignited. ACE retained coverage and subrogation counsel, National Subrogation Services, and a cause-and-origin expert ...
Arson for Profit is Ground to Deny Claim
Posted on September 11, 2026 by Barry Zalma
Communications with Arson Investigation is Privileged
Post 5488
ACE Was Not Required To Produce Any Disputed Document Because Each Was Protected By The Attorney-Client Privilege, or The Work-Product Doctrine.
See the full video at and at https://rumble.com/v7fbzvo-arson-for-profit-is-ground-to-deny-claim.html
In Rubesne Resources LLC, a Colorado Limited Liability Company v. ACE Property And Casualty Insurance Company, a Foreign Corporation, Civil Action No. 1:24-cv-02300-DDD-SBP, United States District Court, D. Colorado (August 30, 2026) Rubesne Resources LLC sought insurance coverage from ACE Property and Casualty Company after a January 5, 2024 fire destroyed its business.
South Metro Fire Rescue classified the ignition as intentional.
After reviewing the disputed documents in camera, the court found that each was protected.
LAW
Colorado Revised Statutes § 10-4-1003 requires ...
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Post 5487
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Wiz Collision sued on its own behalf and as purported assignee of three customers, asserting contract, good-faith, consumer-protection, and injunctive claims. GEICO removed the case and moved to dismiss under Rule 12(b)(6).
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Under Rule 12(b)(6), a complaint must plead facts supporting a facially plausible claim. Article III standing requires a concrete injury, ...
