Exclusion for Work Performed by Insured Defeats Claim for Construction Defects
Post 4935
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The question presented to the U.S. First Circuit Court of Appeals was whether a contractor’s CGL insurance policy covers general damage to a non-defective part of the contractor’s project resulting from a subcontractor’s defective work on a different part of that project.
APPLICATION OF OCCAM’S RAZOR
The analysis technique that proposes that the simplest of competing theories be preferred to the more complex.
FACTUAL BACKGROUND
Applying Massachusetts law, the district court concluded that Admiral had no duty to defend Tocci in Admiral Insurance Company, Starr Indemnity & Liability Company, Great American Assurance Company v. Tocci Building Corporation, Tocci Residential LLC, John L. Tocci, Sr., No. 22-1462, United States Court of Appeals, First Circuit (November 8, 2024) and Tocci appealed.
From 2013 to 2016, Tocci was the construction manager for an apartment project owned by Toll JM EB Residential Urban Renewal LLC (“Toll”). There were several work quality issues and delays on the project, and Toll eventually terminated Tocci in March 2016 for alleged mismanagement of the project.
Toll sued with allegations regarding instances of defective work leading to property damage. The allegations included defective work by Tocci’s subcontractors resulting in various instances of property damage to non-defective work on the project, including (1) damage to sheetrock resulting from faulty roof work; (2) mold formation resulting from inadequate sheathing and water getting into the building; and (3) damage to a concrete slab, wood framing, and underground pipes resulting from soil settlement due to improper backfill and soil compaction.
DUTY TO DEFEND
Tocci sought defense and indemnity coverage under the Admiral insurance policies. Admiral denied coverage.
The district court granted Admiral’s motion on duty to defend because the damage alleged in Toll’s complaint did not qualify as “property damage” as defined in the policy because the allegations consisted entirely of damage at Tocci’s own project.
ANALYSIS
The First Circuit considered three steps to the coverage analysis: (1) Do the damages alleged in the action fall within the scope of coverage?; (2) if so, do the exclusions to coverage apply?; and (3) if so, do any exceptions to the exclusions apply?
The First Circuit noted that there is a sharp split of authority on whether damage to non-defective work resulting from a subcontractor’s defective work constitutes “property damage” or is caused by an “occurrence.” The First Circuit decided to avoid the issues of what constitutes “property damage” by focusing on the exclusions which were sufficient to resolve the complete dispute.
THE HOLDING
There are two “Damage to Property” exclusions that provide that there is no coverage for “property damage” to: that particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the ‘property damage’ arises out of those operations; or that particular part of any property that must be restored, repaired or replaced because “your work” was incorrectly performed on it.
The First Circuit, applying Occam’s Razor, focused its analysis on the exclusion it concluded covers the allegations in the Toll complaint. Since the complaint alleges damage resulting from Tocci’s “incorrectly performed” work on the entire project “[t]hat particular part of any property that must be restored, repaired or replaced because ‘[Tocci’s] work’ was incorrectly performed on it” refers to the entirety of the project where Tocci was the general contractor charged with supervising and managing the project as a whole.
Therefore, the First Circuit concluded that Admiral met its burden of establishing that the Toll action only alleges damage falling within the exclusion and that there was no exception to that exclusion that applied.
ZALMA OPINION
This is a case of a court applying Occam’s Razor, by picking an easy and obvious solution – the application of an exclusion – and avoiding the problem of different court rulings on coverage about “property damage” and “occurence.” Since the exclusion clearly applied there was no duty to defend.
(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 ...
The Largest Residential Burglary of All Time
Post 5407
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
You Only Get One Chance to Sue
Post 5484
In David Cromp v. Johnny Harkrider, Monique Harkrider, and their Marital Community, dba Able Plumbing Plus, No. 61678-5-II, Court of Appeals of Washington, Division 2 (August 25, 2026) David Cromp hired Able Plumbing Plus in 2018 to install plumbing, including two toilets, at his residence. In 2019, both toilets allegedly leaked, causing damage. Insurance claims were submitted through Able’s contractor policy, but the insurer eventually denied the claims.
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.
On the same day the 2022 case was dismissed, Cromp filed a ...
Habeas Corpus Petition Granted
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 § ...
