New Jersey Supreme Court to Decide Whether Defective Construction Constitutes an “Occurrence”

The New Jersey Supreme Court will enter the fray to decide whether consequential damages caused by the faulty work of a subcontractor constitute “property damage” and an “occurrence” under a general contractor’s CGL Policy. Should the Court affirm the Appellate Court’s decision, which held that consequential damages constitute “property damage” caused by an “occurrence,” it will be taking the first step in correcting a series of anti-policyholder decisions on the issue in New Jersey.

Although the New Jersey Supreme Court has previously evaluated whether faulty construction itself constitutes an “occurrence,” the Court has not determined whether consequential damages caused by faulty work are covered by a CGL Policy. In hearing this appeal, the New Jersey Supreme Court will have to determine whether the Appellate Court properly held that the damages alleged meet the policy’s definition of “property damage” because there was “physical injury to tangible property” and that the damage was caused by an “occurrence” because there was no evidence that the subcontractors intended their faulty work to cause property damage.

SDV will continue to track Cypress Point Condominium Association, Inc. v. Adria Towers, LLC and its impact on New Jersey law.

For more details on the Appellate Court decision being appealed, see Theresa A. Guertin’s Case Alert here.

Nov 06, 2015

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