Construction Defects, Standing Alone, Do Not Constitute Property Damage
Post 4858
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The Appeals Court of Massachusetts was asked to decide whether the costs of repairing or removing construction defects constitute "damages because of . . . 'property damage'" within the meaning of a commercial general liability policy.
In Lawrence H. Lessard & another v. R.C. Havens & Sons, Inc., & others, No. 23-P-346, Appeals Court of Massachusetts, Essex (August 14, 2024) the Appeals Court was faced with an issue of first impression in Massachusetts: are construction defects "property damage" as defined in a CGL policy?
THE UNDERLYING ACTION
In the underlying action, Lawrence H. Lessard and Jennifer A. Meshna (together, the homeowners) sued their builder for the faulty construction of their home. At trial a jury found numerous construction defects and awarded the homeowners damages. Meanwhile, Main Street America Assurance Company (MSA) -- the insurer that issued to the defendants R.C. Havens with a commercial general liability policy covering the relevant period -- intervened in the action and sought a declaration that it did not have a duty to indemnify R.C. Havens under the policy.
As the project neared completion, the homeowners began to discover substantial issues with the quality of the construction. A number of problems compromised the structural integrity of the home. A portion of a structural post that was supposed to run from the roof to the basement was missing, and partition walls, sill plates, and support beams were installed incorrectly. As a result, some partition walls were improperly weight bearing.
The jury in the underlying action awarded the homeowners $114,159 for the structural defects, $14,207 for the roof deck, $37,000 for the siding, and $52,500 for the metal roof. The jury also awarded the homeowners $925 for problems with the home's insulation, $18,036 for mold damage, $8,430 for loss of use of their home during repair work, and $27,276 for costs of investigating the defects.
A Superior Court judge ruled for MSA on all the issues.
DISCUSSION
As a general principle, the insured (or the individual seeking coverage) bears the initial burden of proving that the claimed loss falls within the coverage of the insurance policy. If the insured meets that burden, the burden then shifts to the insurer to show that a separate exclusion to coverage is applicable.
To resolve the homeowners' appeal, the Appeals Court only needed to address whether the losses constituted property damage within the meaning of the policy.
Policies define "property damage" as physical injury, which suggests the property was not defective at the outset, but rather was initially proper and injured thereafter. Because faulty construction is defective at the outset the cost to repair are not claims for property damage. For example an improperly installed window would not be "property damage," but resulting water damage to the surrounding wall would be.
The Appeals court held that construction defects, without more, do not constitute property damage within the meaning of a commercial general liability policy. The summary judgment record established that the underlying jury verdict awarded damages for the costs of repairing or removing the construction defects themselves.
Since there was no evidence that the construction defects caused injury to other property, MSA had no duty under its commercial general liability policy to indemnify R.C. Havens for the final judgment because construction defects, standing alone, do not constitute property damage within the meaning of a commercial general liability policy and the judgment was affirmed.
ZALMA OPINION
Liability insurance is designed to protect an insured against fortuitous events that cause direct physical damage and damage to the property of persons other than the insured. When there is no direct physical loss there can be no coverage because the only damage was the construction defects that were never undamaged and that did not cause damage to other property. The builder must pay from its own funds the judgment.
(c) 2024 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 ...
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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 ...
Qui Tam Relators are not officers of the United States
Posted on September 4, 2026 by Barry Zalma
Attempt to use Constitution to Stop a Qui Tam False Claims Act Case
Post 5486
FCA’s Qui Tam Provisions do not Violate the Appointments Clause.
In United States Of America, Clarissa Zafirov, ex rel; Dr. v. Florida Medical Associates, LLC, d.b.a. Vipcare, Physician Partners, LLC, Anion Technologies, LLC, Freedom Health, Inc., Optimum Healthcare, Inc., Physician Partners Specialty Services, LLC, et al., No. 24-13581, United States Court of Appeals, Eleventh Circuit (September 1, 2026).
The False Claims Act (“FCA”) allows the Attorney General to bring civil suits against perpetrators of fraud against the government. This case involves another portion of the FCA-the qui tam provisions-which allow people, called relators, who have knowledge about fraud against the government to pursue a case against the perpetrator of the fraud.
Dr. Clarissa Zafirov filed a qui tam action under the False Claims Act on behalf of...
Posted on September 3, 2026 by Barry Zalma
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Post 5484
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Cromp sued Able in 2022 for breach of contract based on the allegedly defective toilet installation. During that case, Cromp attempted to add claims related to Able’s conduct during the insurance claim process, including fraud, bad faith, tortious conduct, and bond-related claims, but the superior court denied leave to amend. The 2022 breach-of-contract claim was later dismissed with prejudice on summary judgment as time-barred.
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Post 5483
Posted on September 2, 2026 by Barry Zalma
Over Staying Visa & Charge of Insurance Fraud Still Entitled to Habeas Relief and a Bond Hearing
In Hernan Guillermo Palomino-Crespo v. Warden, Glades County Detention Center et al., No. 2:26-cv-02322-SPC-NPM, United States District Court, M.D. Florida, Fort Myers Division (August 26, 2026) Hernan Guillermo Palomino-Crespo’s Amended Petition for Writ of Habeas Corpus, the government’s response and Palomino-Crespo’s reply.
FACTUAL BACKGROUND
Palomino-Crespo is a native and citizen of Colombia who lawfully entered the United States on a B-2 non-immigrant visa on February 24, 2017. He resides in Miami, Florida with his wife and two minor children, owns and operates a residential restoration and remodeling business, and files U.S. tax returns.
On June 4, 2026, the State of Florida charged Palomino-Crespo with insurance fraud.
Palomino-Crespo claimeds he did not meet the requirements for mandatory detention under § ...
