U.S. Specialty Insurance Company v. Silver Electric Builders, Inc.

Background

U.S. Specialty Insurance Company (USSIC) sought summary judgment on its claim for a declaration that it had no obligation under certain insurance policies to indemnify Silver Electric Builders, Inc. (Silver Electric) for damages awarded in a California state-court action brought by Richard Spieker. Spieker allegedly claimed damages from Silver Electric’s negligent contractor work, including lost rental income and tenant relocation costs resulting from the alleged failure to obtain building permits and arrange an inspection.

Court’s Analysis

The court held that the case was directly controlled by All Green Electric, Inc. v. Security National Insurance Co., a California Court of Appeal decision interpreting materially identical language in Exclusion “m.” The court reasoned that, as in All Green, the claimed damages resulted from the inability to use particular property because of a condition caused by the insured contractor’s allegedly negligent work.

The court stated that summary judgment was proper under subpart (2) of Exclusion “m,” which excluded loss of use caused by a delay or failure by Silver Electric to perform a contract or agreement according to its terms. The record showed that local law required building permits and inspections, and that Spieker’s standard practice was to provide contractors with documents needed to obtain permits for each apartment unit. Those facts were not contested. The court concluded that even if the failure to obtain a permit resulted from carelessness and qualified as an “occurrence,” the resulting loss of use was caused by Silver Electric’s failure to perform the agreement’s terms.

The court considered the evidence in the light most favorable to Spieker but found no basis to infer that his agreement with Silver Electric differed from the norm. It therefore found no genuine dispute of material fact. The opinion also states that Spieker did not argue that the California Supreme Court would have decided All Green differently.

Ruling

Judge James Donato granted USSIC’s motion for summary judgment. The court held that the policies excluded coverage for the claimed damages and granted the declaratory relief USSIC sought. The opinion states that the court entered this ruling because there were no triable questions of material fact and the policy exclusion applied under All Green.