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Viking Construction, Inc. v. 777 Residential, LLC

Appellate Court of Connecticut

May 28, 2019

VIKING CONSTRUCTION, INC.
v.
777 RESIDENTIAL, LLC, et al.

         Argued February 14, 2019

Page 655

[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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          Stephen E. Goldman, with whom was Wystan M. Ackerman, Hartford, for the appellant (defendant Liberty Mutual Fire Insurance Company).

         Jeffrey J. Vita, with whom was Theresa A. Guertin, Trumbull, for the appellees (named defendant et al.).

         Alvord, Keller and Eveleigh, Js.

          OPINION

         EVELEIGH, J.

         [190 Conn.App. 248] The cross claim defendant, Liberty Mutual Fire Insurance Company (Liberty Mutual),[1] appeals from the summary judgment rendered against it in favor of the cross claim plaintiffs, 777 Main Street, LLC (777 Main) and 777 Residential, LLC (777 Residential).[2] On appeal, Liberty Mutual argues that the trial court erred in granting the 777 entities’ motion for summary judgment on their cross claim and in denying Liberty Mutual’s motion for summary judgment, on the basis of its interpretation of the insurance policy issued by Liberty Mutual to the 777 entities. Specifically, Liberty Mutual argues that (1) the defects, errors, and omissions exclusion in the insurance policy bars coverage, and (2) the resulting loss clause in the policy does not reinstate coverage. We agree with Liberty Mutual and reverse the judgment of the trial court.

          The following facts and procedural history are relevant to the resolution of this appeal. The 777 entities are the owners of a high-rise building at 777 Main Street in Hartford (building), which they planned to renovate and convert from an office building into a 285 unit apartment complex. On March 27, 2014, the 777 entities hired Viking Construction, Inc. (Viking), as the general contractor for the renovation. Viking’s work on the renovation included cleaning the concrete facade of the building. On October 2, 2014, Viking subcontracted with Armani Restoration, Inc. (Armani), to clean the concrete facade of the building.

          From September to December, 2014, Armani cleaned the building’s facade using a crushed glass cleaner [190 Conn.App. 249] that was sprayed onto the building using power washers. The cleaning inadvertently damaged the building’s approximately 1800 windows, all of which had to be replaced at a cost of over $ 4 million.

         In July, 2015, the 777 entities claimed coverage of the loss under a builder’s risk insurance policy (policy) that they had purchased from Liberty Mutual. This policy, which was in effect when the damage occurred, provides: "[Liberty Mutual] cover[s] direct physical loss or damage caused by a covered peril[3] to ‘buildings or structures’

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while in the course of construction, erection, or fabrication." (Footnote added.) The policy contains several exclusions, including a "Defects, Errors, And Omissions" exclusion, which provides that Liberty Mutual is not responsible for "loss or damage consisting of, caused by, or resulting from an act, defect, error, or omission (negligent or not) relating to: a) design, specifications, construction, materials, or workmanship; b) planning, zoning, development, siting, surveying, grading, or compaction; or c) maintenance, installation, renovation, remodeling, or repair." The exclusion, however, contains an exception, also known as a "resulting loss" clause, which provides: "[I]f an act, defect, error, or omission as described [in the exclusion] results in a covered peril, [Liberty Mutual] do[es] cover the loss or damage caused by that covered peril."

          The policy also includes an optional renovation endorsement, which the 777 entities added to the policy because the project involved the renovation of an [190 Conn.App. 250] existing building rather than the construction of a new structure. The renovation endorsement provides: "[Liberty Mutual] cover[s] direct physical loss or damage caused by a covered peril to ‘building materials’ and ‘existing buildings’ that are part of [the 777 entities’] ‘rehabilitation or renovation project.’ "

          On August 12, 2015, after investigating the 777 entities’ claimed loss under the policy, Liberty Mutual denied coverage. On December 24, 2015, Viking filed an action against 777 Residential, alleging breach of contract on the basis of 777 Residential’s alleged refusal "to remit the outstanding contract balance ... for work Viking performed on the [renovation]." On May 12, 2016, Viking filed a motion to cite in as defendants, inter alia, 777 Main, Liberty Mutual, and Armani, which the court subsequently granted. On August 19, 2016, the 777 entities filed a cross claim, alleging a breach of contract on the basis of Liberty Mutual’s refusal to cover the claimed loss under the policy. In March, 2017, the 777 entities settled their case with Viking and Armani for $ 1.6 million. The 777 entities continue to seek the remaining balance of the cost to replace the windows from Liberty Mutual.

         On November 6, 2017, after the close of discovery, Liberty Mutual filed a motion for summary judgment on the cross claim. On January 11, 2018, following oral argument on the motion, the trial court denied Liberty Mutual’s motion for summary judgment. In its memorandum of decision on the motion, the court explained that its conclusion was based on a reading of the policy’s exclusion in conjunction with the loss peril clause.[4]

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          [190 Conn.App. 251] On January 31, 2018, the 777 entities filed a motion for summary judgment on their cross claim, which the court subsequently granted on February 14, 2018 "[f]or the reasons stated in the court’s memorandum of decision on Liberty Mutual’s motion for summary judgment ...." On February 16, 2018, the parties filed a stipulation as to the amount of damages. On February 20, 2018, the 777 entities filed a motion for judgment in accordance with the stipulation and Liberty Mutual filed an objection to the motion. On February 22, 2018, the court granted the motion for judgment and rendered judgment on the cross claim in the amount of $ 1,950,000 ...


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