Failure To Deliver Benefit of the Bargain Excluded.


The Silks acted as their own general contractor while building their home. Flat Top Construction was the primary sub-contractor.  Craft Builders and Gallagher, its president, agreed to serve as supervisory consultants for the construction.  The Silks subsequently sued Flat Top, Craft, and Gallagher, alleging excessive construction costs and delays.  The Silks alleged that Craft and Gallagher breached the supervisory consulting agreement and also made false representations that Flat Top was in fact complying with the terms of its contract.


Craft and Gallagher tendered the complaint to USF&G, their commercial general liability insurer [the policy edition cannot be determined].  USF&G refused to defend, relying on the policy’s exclusions for liability assumed under contract and intentional acts.  The trial court ruled for USFG on both the duty to defend and indemnify.


On appeal, the court found that the Silks’ damages arose out of a breach of contract, which was not covered by the policy.  The Silks were seeking compensation for the benefit of their bargain, which is governed by contract.  The court found that the damages sought by the plaintiffs did not constitute property damage, but rather cost overruns and delays, and thus had their origins solely in contract.   The court also found that the Silks’ claims of false representations were intentional acts, and thus did not constitute an occurrence within the policy coverage.


Thus, judgment in favor of USF&G was affirmed.


Silk v Flat Top Construction, Inc., 453 SE2d 356 (W Va 1994).