Defective Workmanship Is Not An Accident.


The City of Naperville and Wil-Freds Construction Inc. entered into an agreement for the construction of a 3-story municipal building and adjoining parking garage. The contract between Wil-Freds and Naperville provided that Wil-Freds was solely responsible for all construction methods, techniques, and procedures.   Following the construction of the project, Naperville filed suit against Wil-Freds alleging breach of contract. The complaint alleged construction defects including abnormal voids and cracks in the concrete walls and columns in the parking garage, leaking in the parking garage, water damage to the lobby of the office building, and numerous miscellaneous construction defects.


Wil-Freds was insured by Monticello under a comprehensive general liability (CGL) policy. Wil-Freds tendered the defense of Naperville’s action to Monticello.  Monticello filed a declaratory judgment action against Wil-Freds seeking a determination of its obligation under the policy.


Monticello argued that because Naperville sought to recover for property damage resulting from a breach of contract, there was no occurrence under the policy.  Monticello also argued that coverage was precluded based on the policy’s exclusion for “property damage to the named insured’s products arising out of such products or any part of such products.”


Wil-Freds argued that the Monticello policy provided coverage because true but unpleaded facts showed that the allegedly defective construction had caused damage to property other than the project itself.  In addition, Wil-Freds argued that, based on the broad form property damage endorsement, coverage existed for defects that resulted from the work of subcontractors rather than from the work of Wil-Freds itself.  Wil-Freds’s project manager submitted an affidavit in support of its motion for summary judgment stating that the construction defects were attributable to the work of the subcontractors engaged by Wil-Freds, not Wil-Freds’s  own work.


The trial court granted Monticello’s motion for summary judgment and held that Monticello did not have a duty to defend or indemnify Wil-Freds under its CGL policy.


On appeal, the court held that he allegations of Naperville’s complaint, together with the affidavits and depositions testimony submitted in support of the motion for summary judgment, indicated that the Monticello policy did not provide coverage for Naperville’s claim.  According to the court, the complaint did not allege an occurrence.  In order to determine if there was an occurrence, the court looked to whether the complaint alleged an accident.  The court, relying on the decision in Indiana Insurance Co. v Hydra, 615 NE2d 70 (Ill app 1993) [[[see summary at (5) 135-13*], stated that “the natural and ordinary consequences of an act do not constitute an accident.”  Therefore, Naperville’s complaint did not allege an accident and there was no occurrence under the Monticello policy.


Accordingly, the appellate court affirmed the decision of the district court holding that Monticello had no duty to defend or indemnity Wil-Freds for the allegations in the Naperville complaint because the complaint did not allege an occurrence within the meaning of the policy.


Monticello Insurance Company v Wil-Freds Construction Inc., 661 NE2d 451 (Ill App 1996).


Note:  The conclusion that natural results of negligent and un-workmanlike construction of a building do not constitute an occurrence is supported by the following case law:  JZG Resources v King, 987 F2d 98, 103 (2nd Cir 1993) [see summary at (6) 360-1*] (defective workmanship of excavation contractor is not an occurrence);  Jakobson Shipyard v Aetna Cas. & Surety Co., 961 F2d 387, 389 (2nd Cir 1992) [see summary at (5) 105-2*] (applying New York law, faulty workmanship which does not comply with contract specifications is not an occurrence).