Georgia Court of Appeals Rules That Defective Workmanship May Be An “Occurrence” Under a CGL Policy, But Excluded As a “Business Risk”

Couch Pipeline & Grading, Inc. (“Couch”) contracted to perform grading and pipe work during the construction of an office building. QBE issued a commercial liability insurance policy providing coverage to Couch. The company that hired Couch alleged that some of the grading work was defective and that the soil building pad had not been compacted to the required compaction ratio. When Couch was sued over this issue, QBE filed this declaratory judgment action. The trial court denied QBE’s motion for summary judgment and the Court of Appeals agreed to review the case and reversed the trial court’s decision.

QBE argued that the claims did not arise from an “occurrence” as defined in the policy because the alleged negligence of Couch was not “an accident, including continuous or repeated exposure to substantially the same general harmful conditions,” as the policy defined an “occurrence.” Following recent precedent, the Court of Appeals rejected that argument and found that defective workmanship which was not “intentionally defective” could be construed as an accident and therefore could be an occurrence under the policy. However, the Court of Appeals found that QBE was entitled to summary judgment because the work was excluded pursuant to the “business risk” exclusions for defective workmanship under the policy.

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About the Author

Michael Rust graduated from Emory University in 1980 and Emory University School of Law in 1983 where he was Notes and Comments editor of the Emory Law Journal (Law Review). Since that time, he has maintained an active trial practice in the state of Georgia both in State and Federal Courts. Mr. Rust teaches litigation as part of Emory University School of Law’s annual Trial Practice Program. He has received AV rating from Martindale Hubble, the highest rating afforded to lawyers by their peers.