Atain Specialty Ins. Co. v. North Bay Waterproofing, 2015
U.S. Dist. LEXIS 11404 (N.D. Cal. Jan. 30, 2015)
In Atain Speciality, the Northern District of California
entered a default judgment in favor of the insurer because the damages alleged
in an underlying construction defect action were not discovered until after the
policy period and because the “Total Residential Construction” exclusion
applied.
The underlying construction defect action alleged property
damage in connection with the construction of a 429-unit apartment
complex.
The insured general contractor and subcontractor tendered
their defense to their CGL carrier, which had issued a policy that provided
coverage only for property damage that is discovered within its policy
period.
The policy also contained a “Total Residential Construction”
exclusion, which eliminated coverage for property damage to “any condominium,
townhome, single family dwelling and other residential or track housing
project.”
The carrier denied coverage because the property damage at
issue was discovered almost two years after the expiration of the policy
period, and because the units at issue were residential properties.
The carrier filed a declaratory relief action against the
insureds, and the Northern District of California granted a default judgment
for the carrier on both grounds.