Where a contractor on a school renovation project applied adhesives not knowing that they contained asbestos, it sued the material supplier of the material to recover its costs of tearing out and replacing the materials.   The supplier’s commercial general liability (CGL) carrier refused to defend the suit because the suit was not for a claim arising out of bodily injury or property damage, as required for coverage.  The appellate court agreed that the insurance carrier owed no duty to defend the suit since there was no potential coverage.

The contractor’s action was based on the alleged economic loss it incurred in removing the adhesives.  It asserted lost profit, delay, extra work, breach of contract, breach of warranty, negligence, negligent misrepresentation, fraud, and false advertising.   Since the contractor did not own the property on which it was working, it did not seek recovery of property damage.  And, since no one was physically injured by the asbestos, the contractor did not seek recovery for bodily injury.   Without either property damage or bodily injury, there was no basis for recovery under the policy.

In addition, the contractor’s claim against the supplier for false advertising and misleading trade practices (based on the supplier’s representation that the materials did not contain asbestos) was not covered by the policy because the representation did not fall within the Advertising Liability Offense definition of the policy.  Structural Building Products Corp. v. Business Insurance Agency, Inc., No. 2000-00252, 2001 NY App. Div. LEXIS 3055, (N.Y. App. Div., 2d Dep. 2001).

About the author: Article written by J. Kent Holland, Jr.,  a construction lawyer located in Tysons Corner, Virginia,  with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners.  He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects.  He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  This article is published in ConstructionRisk.com Report, Vol. 3, No. 4 (Jul 2001).

Copyright 2001, ConstructionRIsk.com, LLC