SDV won a major appellate victory on behalf of Mosser Construction, Inc. ("Mosser") regarding the scope of the subcontractor exception to the "your work" exclusion in a standard form commercial general liability insurance policy.  The United States Court of Appeals for the Sixth Circuit (Judges Merritt, Rogers and White) released its decision on July 14, 2011 reversing the United States District Court's decision and finding that The Travelers Indemnity Company had a duty to defend Mosser in an underlying action involving improvements to a waste-water treatment facility in Port Clinton, Ohio.  In the underlying action, the owner alleged that a new odor-control building sustained property damage as a result of defective backfill used in the construction of the building.  The contract between Mosser and the backfill supplier was a standard two-page purchase order which constituted only .5% of the total contract price.  Furthermore, the supplier never stepped foot on the project site and did not deliver the backfill.  Mosser and SDV argued successfully that the District Court erred in finding that the "your work" exclusion's exception regarding work performed by a subcontractor did not apply because the supplier was a mere materialman, not a subcontractor.  The Sixth Circuit agreed with Mosser and SDV, finding that because the undefined term "subcontractor" in the exception is subject to multiple reasonable interpretations, it is ambiguous and must be construed against the insurer.  Therefore, the Sixth Circuit found that the supplier was a subcontractor, and accordingly, that the exception to the "your work" exclusion applied, affording coverage for Mosser. You can read the full text of the court's opinion here.

SDV was pleased to find that this decision was recently discussed and cited as one of 2011's most significant coverage decisions in the January 11, 2012 issue of Mealey's Litigation Report on Insurance.