Plaintiff, the employee of a subcontractor, sued the general contractor for negligence after he suffered serious injury while working at the jobsite.  In Fernandes v. DAR Development Corp., 2015 N.J. LEXIS 811 (N.J. 2015), the Supreme Court of New Jersey considered whether the negligence of an employee injured in a workplace accident may be submitted to the jury.

Plaintiff was installing a sewer pipe on a residential construction site when the wall of the trench in which he was working collapsed, burying him up to his chest.  The jury returned a verdict in favor of the Plaintiff after the court rejected the general contractor’s request to instruct the jury on comparative negligence.  The jury’s verdict was later affirmed by the Appellate Division.

Plaintiff presented evidence that the general contractor violated Occupational Health and Safety Act regulations, which required a general contractor to prevent cave-ins by installing a trench protection system known as a trench box.  In response, the general contractor presented evidence that Plaintiff was an experienced trench worker who was well aware of the hazards associated with excavation and the necessary safety precautions.

The general contractor argued that the jury should be permitted to consider Plaintiff’s negligence based on his entry into the trench on the day of the accident, which it reasoned was unreasonable conduct in light of Plaintiff’s extensive excavation experience, his understanding of the hazards associated with trench excavation, and his occasional responsibility for deciding when it was necessary to use trench protection.  Plaintiff countered that, as a matter of public policy, comparative negligence had no place in a trial dealing with injuries sustained by a worker while performing his assigned task.  Plaintiff further argued that the evidence adduced at trial did not suggest that Plaintiff unreasonably proceeded in the face of a known risk.

In 1973, the New Jersey Legislature adopted the Comparative Negligence Act, which allowed a plaintiff to recover so long as his negligence was not greater than the negligence of the person against whom recovery is sought.  If the injured party is permitted to recover, his damages will be diminished by the percentage of negligence attributable to him.  Under the Appellate Division’s decision in Kane v. Hartz Mountain Industries, Inc., 278 N.J. Super. 29 (App. Div. 1994), this rule extends to an employee who is injured in a workplace accident and sues a third person in an ordinary negligence action.  Under Kane, the inquiry is whether the plaintiff failed to use the care of a reasonably prudent person under all of the circumstances either in incurring the known risk or in the manner in which he proceeded in the face of that risk.

The Supreme Court noted that a jury may consider a plaintiff’s negligence only when the evidence adduced at trial suggests that the plaintiff was somehow negligent and that negligence contributed to the plaintiff’s damages.  Whenever a party asserts a plaintiff is negligent, the defendant must prove that the plaintiff’s negligence contributed to the accident or was a substantial contributing factor to the injuries sustained.

Here, the Supreme Court found it abundantly clear that Plaintiff did not proceed unreasonably in the face of a known risk.  There was no evidence that Plaintiff knew that surrounding conditions were such that the risk of collapse was increased.  Plaintiff received no training about workplace safety from the general contractor or his employer.  Furthermore, Plaintiff had no opportunity to independently assess the stability of the trench.

The Supreme Court found that Plaintiff’s boss was the “competent person” on the jobsite, who thus bore the duty of inspecting the excavation work to determine if a cave-in was likely.  Regardless of Plaintiff’s years of experience or actual knowledge of the danger of this particular excavation, the burden of deciding when and where to take protective measures rested squarely with his boss, the “competent person,” and with the general contractor.  Because there was no evidence that Plaintiff failed to act with the care of a reasonably prudent person in choosing to complete his assigned task on the day of the accident, the Supreme Court affirmed the judgment of the Appellate Division.

Typically, in a personal injury suit alleging bodily injury in a premises liability case, the plaintiff would need to prove that the business owner had actual or constructive notice of the dangerous condition that caused the accident. If the “mode of operation” rule applies, the plaintiff is relieved of this burden and is entitled to an inference of negligence. In Prioleau v. Kentucky Fried Chicken, 2015 N.J. LEXIS 957 (Sept. 28, 2015), the New Jersey Supreme Court was asked to decide if this rule should be applied to the defendant Kentucky Fried Chicken’s operations.

This rule has been applied in self-service settings in which it is reasonably foreseeable that customers will interact directly with products or services, unassisted by the defendant or its employees. The rationale is that this business model, that encourages self-service on the part of the customer, is of benefit to the business, but creates a risk of harm to the customer. Because this business practice creates an inherent danger to the customer, the plaintiff does not need to prove that the business owner had actual or constructive notice of the dangerous condition.

In Prioleau, the plaintiff had stopped to have dinner at the KFC with her children. It was raining outside. After entering the restaurant, the plaintiff headed to the restroom. As she approached the restroom, she slipped and fell on what felt like a greasy, wet floor. As a result, she suffered a back injury and sued KFC for her injuries.

At trial, the trial court judge charged the jury with the mode of operation rule, based upon the plaintiff’s argument that oil may have been tracked in from the restaurant kitchen to the floor near the restroom. Thus, the plaintiff was relieved of the burden to show that the defendant had notice of the unsafe condition.

The defendant appealed and the Appellate Division reversed and remanded for a new trial. However, one of the judges dissented, giving the plaintiff an appeal as of right to the Supreme Court.

The Supreme Court agreed with the majority opinion of the Appellate Division. It found that the mode of operation rule applies only in situations where the customer serves himself or herself or otherwise directly engages with products or services unsupervised by an employee. Here, there was no evidence that the plaintiff’s accident bears any relationship to any self-service component of this business. Even if it was caused by the employees tracking oil and grease from the kitchen to the restroom area, it resulted from the preparation of food in the kitchen, an area off limits to patrons, and a component of the business in which customers played no part.

Because plaintiff’s theories of liability did not involve a self-service operation, it did not merit a mode of operation charge. Thus, defendant KFC was entitled to a new trial on the issue of liability.

On July 18, 2008, a fire ignited in the Khatri home, a multi-family dwelling, resulting in damage to the house as well as surrounding properties and serious bodily injury to an upstairs tenant and a firefighter responding to the fire. Khatri had a $300,000 homeowners policy with NJM. In Doitch v. Khatri, 2015 N.J. Super. Unpub. LEXIS 2134  (App. Div. Sept. 3, 2015), Khatri filed a third party action against NJM for failing to cover a claim after NJM had exhausted its policy limits in paying these claims.

Following the fire, Khatri faced multiple claims and lawsuits. Between property damage and bodily injury claims filed, claimants sought a total of more than $7.5 million in damages against him.

After NJM paid one small claim, $290,501 remained on the policy. A month before trial, the 3 remaining claimants agreed to take the policy limits for the remainder of the policy limits. NJM notified Khatri of the proposed settlement and also advised him that it was aware of one other property subrogation damage claim from State Farm in the amount of $36,000. This claim was for damage claimed by a tenant, Sharon Masgay-Doitch, for her contents. That claim was denied years before and NJM had heard nothing since from State Farm.

NJM recommended the settlement to its insured (Khatri) because a recovery would likely exceed the insured’s policy limits. However, it made the insured aware that this potential State Farm claim would not be satisfied with this settlement. Khatri did not object and these 3 claims were settled, exhausting the policy limits.

Based upon the language of NJM’s policy, its duty to settle or defend ended when it paid for damages from an occurrence that equaled its limit of liability. Further, its total liability for all damages from any one occurrence will not be more than the limit of its liability.

Three months after the settlement, NJM received notice that Masgay-Doitch filed suit against Khatri and then State Farm filed suit against Khatri about 10 months thereafter. Khatri filed this third party suit, demanding that NJM indemnify and defend him as to these claims. Khatri argued that NJM’s failure to defend was a breach of his insurance policy.

The trial court granted NJM summary judgment and dismissed the suit. The Appellate Division affirmed.

Khatri argued that NJM had a duty to initiate and engage in settlement negotiations with Masgay-Doitch before settling for its policy limits. However, absent bad faith, an insurer may settle with one or more claimants, even if the settlements may exhaust the policy limits. Here, the Appellate Division found no evidence of bad faith.

To the contrary, NJM negotiated a very favorable settlement within the $300,000 policy limits in a suit that exceeded $7.5 million. The court found unpersuasive the plaintiff’s argument that NJM should have proactively searched for other claims to include in the settlement, in light of the magnitude of the pending claims in the lawsuit. Further, the court pointed out that the insured knew that the global settlement would exhaust the policy limit and would not include the Masgay-Doitch claim – yet the insured nevertheless agreed with the proposed course of action.

Thus, the Appellate Division found nothing to suggest that NJM acted in bad faith or breached its duty owed to its insured. Hence, it determined that summary judgment was properly granted to NJM.

Insurance policies typically do not permit assignment of the policy to third persons without the insurer’s consent. In Givaudan Fragrances Corp. v. Aetna Casualty & Surety Co., 2015 N.J. Super. LEIXS 131 (App. Div. Aug. 12, 2015), in a published decision, the Appellate Division decided the issue as to whether the plaintiff may be assigned the rights under insurance policies issued years earlier to one of the assignor’s predecessor corporations.

These insurance policies were issued to a predecessor corporation (Givaudan Corporation) between 1964 and 1986. It later merged into the Givaudan Flavors Corporation. The plaintiff claimed that, due to an assignment, it was covered by such policies. The insurers disputed the claim and contended that the plaintiff was not insured under any of the policies.

This case involved environmental claims against the plaintiff for a hazardous discharge of a predecessor corporation. In August 2004, the plaintiff was notified by the EPA of potential liability under CERCLA for such discharge. In 2005, the DEP commenced an action against several companies that had operated sites within the contaminated area. In February 2009, two of the defendants in this DEP action filed third-party contribution claims against more than 300 entities, including the plaintiff.

In March 2010, the Givaudan Flavors Corp. (“Flavors”), a successor by merger to the Givaudan Corp., assigned its rights to these policies to the plaintiff Givaudan Roure Fragrances Corp. (“Fragrances”), the entity sued in this DEP action. Hence, Fragrances claimed that it was an insured under these policies.

The Appellate Division pointed out that these policies were occurrence policies. Once the occurrence takes place, coverage attaches even though the claim may not be made for years afterwards. While these policies contained provisions that they could not be assigned without the insurer’s consent, once a loss occurs, an insured’s claim under a policy may be assigned without the insurer’s consent.

The purpose of a no assignment clause is to protect the insurer from having a different risk than what the insured intended when it issued the policy. However, if there is an assignment after a loss has occurred, the insurer’s risk is the same because the liability of the insurer becomes fixed at the time of the loss. Moreover, at that point, an assignment of rights to collect under a policy is not a transfer of the actual policy but a transfer of the right to a claim of money.

The Appellate Division found that any loss that occurred during the policy period of any of the policies, clearly occurred long before the assignment in 2010. Thus, Flavors did not require the insurer’s consent to assign its rights under the policies. Thus, the court found that the carriers were obligated to provide coverage to the plaintiff.

The Plaintiff Joan Mernick was involved in an automobile accident and sued the defendants Wanda McCutchen and Hudson News Distributors for her injuries. The defendants conducted surveillance of the plaintiff on 9 separate occasions and so advised the plaintiff in answers to interrogatories. In Mernick v. McCutchen, 2015 N.J. Super. LEXIS 143 (App. Div. Sept. 3, 2015), the plaintiff’s attorney insisted on viewing the videotapes before he would produce the plaintiff for a deposition.

Surveillance videos can be powerful tools used to impeach a plaintiff in a personal injury action. Defendants typically do not want to produce the videos before the plaintiff is deposed.

Because the plaintiff refused to be deposed before the videos were produced, the defendants moved to the trial court to compel her deposition. The plaintiff cross-moved to require the production of the surveillance videos. The trial court found the videos to be work product. However, the trial court ordered their production on the basis that they were unique evidence that could not be obtained by other means. Thus, the plaintiff established undue hardship in acquiring a substantial equivalent of the relevant surveillance recordings and  the defendants were ordered to produce the tapes immediately.

The defendants sought leave to appeal on an interlocutory basis and the Appellate Division granted leave, along with a stay. After considering the arguments, the Appellate Division reversed the trial court decision.

The court found that this issue was governed by the New Jersey Supreme Court case of Jenkins v. Rainner, 69 N.J. 50 (1976). Jenkins made it clear that the defendants with a surveillance video were permitted to depose the plaintiff about the activities it had filmed before turning it over in order to preserve the evidentiary value of the video.

The Appellate Division found that Jenkins was still good law, even though decided many years ago. Since Jenkins, no other New Jersey cases have addressed this exact issue. Although in Jenkins, the video was taken after the plaintiff’s deposition had been conducted, the court directed that the films be provided after a second deposition limited to damages. The Appellate Division could find no facts that distinguished this case from Jenkins. Hence, it concluded that the trial court mistakenly exercised its discretion in departing from the Jenkins general rule and found that the videos did not need to be produced until after the plaintiff was deposed.

There is often a dispute between the parties as to the fee charged by the opposing expert for a discovery deposition, which must be paid by the party requesting the deposition. Specialists sometimes charge exorbitant flat fee rates and counsel argue over which party must pay that fee. In a recently published Law Division decision, just approved for publication on August 26, 2015, Jusino v. Lapenta, 2014 N.J. Super. LEXIS 192  (Law Div. May 23, 2014), Judge Savio (Atlantic County) refused to require the defendant to pay the flat fee charged by the plaintiff’s neurosurgeon for his discovery deposition.

In Jusino, the defendant noticed the discovery deposition of the plaintiff’s expert, Dr. Andrew Glass, a board certified Neurological Surgeon, and inquired as to his fee schedule. The plaintiff responded that Dr. Glass’s current fee for attending a discovery deposition was $1000/hour with a 3 hour minimum fee of $3000, as well as a $500 preparation fee and if there were excessive medical records to review, excessive time requirement fees may apply.

The defendant refused to pay for any of the preparation time and protested the amount of the attendance fee. Defendant suggested that a reasonable fee should be between $300 to $400/hour. When the plaintiff refused to produce Dr. Glass unless the defendant agreed to pay Dr. Glass his proposed attendance fee in advance of the deposition, the defendant moved to have the court set the fee for him to attend.

Judge Savio pointed out that there was no published or unpublished opinion in the New Jersey Supreme Court or Appellate Division defining the term “reasonable fee” as the words are used in the civil rules governing expert depositions. The only reported decision was a 30 year old Law Division decision that found that $200/hour was a reasonable fee to pay a physician to be deposed.

The court rejected the plaintiff’s suggestion that the defendant be required to pay Dr. Glass to prepare for his deposition. Judge Savio found that it was the plaintiff’s responsibility to pay for his preparation.

The plaintiff argued that the court should consider the fee schedules of 3 other neurosurgeons in the Southern New Jersey region in setting a reasonable fee for Dr. Glass. These other physicians charged even more than Dr. Glass for their depositions. Regardless, Judge Savio found that the issue was not how much money the expert charges for the deposition or what a majority of similarly credentialed experts charged but what is a reasonable amount of money for an opponent to pay the expert for attending a deposition.

The court determined that the plaintiff had not met her burden that Dr. Glass’s flat fee of $3000 was reasonable. Judge Savio assumed that Dr. Glass would generate at least $750/hour while performing services as a neurosurgeon. Hence, the court ordered that the defendant pay $750 for the first hour and an additional $750 for each hour or portion of each hour of his deposition after the first hour. The court denied the request for a prepayment fee.

The upshot of this ruling is that the plaintiff (or whomever is the party producing the expert) would responsible to front any prepayment and to pay the balance between the fee charged by the expert and the amount to be paid by the opposing party. It is not clear, however, how the court arrived at the rate of $750/hour to be generated by a neurosurgeon in his daily practice. Nevertheless, this case may provide guidance in future disputes over the payment of expert fees for a discovery deposition.

This week’s article was written by my Litigation Department associate Charles F. Holmgren, Esq.

While an insurance company may appear to be in the clear when it has successfully rescinded an insurance policy as a result of the insured’s fraud, it may still be liable to an innocent third party under that same policy. As shown in the New Jersey Supreme Court case Citizens United Reciprocal Exch. (CURE) v. Perez, A-67-13 (N.J. Aug. 13, 2015), an insurer is still liable to an innocent third party for the minimum amount bargained for by the insured, despite the policy’s rescission by the insurer.

The Perez case arose as a result of an automobile insurance policy for which the defendant, Sabrina Perez, purchased from the plaintiff, CURE. Ms. Perez opted for the “basic” coverage policy, as well as a $10,000 limit against third party bodily injury claims. Despite the policy requiring her to name all individuals in her household of driving age, she did not include Luis Machuca. About a month after CURE issued the policy, Mr. Machuca, while driving Ms. Perez’s vehicle, was involved in an automobile accident with Dexter Green. Mr. Green filed a personal injury lawsuit against Ms. Perez’s policy. CURE denied Mr. Green’s claim and voided Ms. Perez’s policy from its outset due to her fraudulent failure to list Mr. Machuca as a household member. CURE then filed a declaratory judgment action asking the court to find it had no obligation to cover the innocent third-party claim of Mr. Green.

Though both the trial court and the Appellate Division both found that the policy could be rescinded and voided, they determined that when the policy is voided due to the insured’s fraudulent misrepresentations, innocent third parties are entitled to the state mandated minimum policy coverage of $15,000. The Supreme Court disagreed. The Supreme Court found that the insurance company can only be held liable for the minimum amount it contracted with its insured. While New Jersey law holds that an insurance policy may be rescinded due to misrepresentation, that rescission does not mean an insurer can escape liability to innocent third parties. Thus, a claimant under an automobile policy must be evaluated as if he had the status to which he would have been entitled but for the fraudulent application of the named insured.

Therefore, here, CURE is not wholly absolved of any liability to Mr. Green as a result of Ms. Perez’s fraudulent application, despite the voiding of her policy. While CURE is not liable for the state mandated minimum limits of $15,000, it is liable for Ms. Perez’s option for the policy’s third party coverage of $10,000. This determination strikes a balance between the basic policy considerations of providing innocent third parties coverage under a tortfeasor’s insurance policy and limiting the liability of an insurance company as a result of its insured’s fraudulent misrepresentations.

Under the Insurance Fraud Prevention Act (“IFPA”), an insurance company may sue to recover compensatory damages against those who commit insurance fraud. In Allstate Insurance Co. v. Lajara, 2015 N.J. LEXIS 797 (2015), Allstate sue 63 defendants alleging violations of the IFPA. It claimed that the defendants (doctors, billing companies, employees and shareholders of these companies) engaged in a broad scheme to defraud Allstate of $8.14 million in personal injury benefits. The issue in the Lajara case was whether the defendants were entitled to a jury trial.

The trial court and the Appellate Division found that there was no right to a jury trial. The defendants appealed to the New Jersey Supreme Court. The Supreme Court examined whether this right was implicit in the statutory scheme or, alternatively, was mandated under the New Jersey Constitution.

Allstate argued that the IFPA did not specifically provide the right to a jury trial within the statute and, thus, the legislature did not intend to give this right to any defendants sued under this statute. Further, it claimed that the remedies under this law are equitable in nature, which are not constitutionally entitled to a jury trial.

The Supreme Court pointed out that the right to a jury trial is deeply rooted in the English common law and traces its origins as far back as the Magna Carta. This common law tradition was carried over to the American colonies and became a fundamental right. The New Jersey Constitution does contain the right to a jury trial. However, it was never intended to guarantee a right to a jury trial in all civil cases. Rather, the right applies to only claims that are based in law, rather than in equity. Those claims that seek relief in the form of monetary damages, as opposed to equitable relief (such as an injunction) would be “legal” versus  “equitable” claims.

The remedies available to an insurance company for a violation of the IFPA are compensatory damages, treble damages, attorneys fees and costs.  Hence, the relief available to an insurance company under this Act is legal in nature.

The Supreme Court also likened a claim under the IFPA to a common law fraud claim, under which a defendant does have the right to a jury trial. Although its elements are not perfectly aligned, the Court stated that is not necessary to trigger this right.

Hence, it concluded that the Legislature did not intend that in an IFPA action would be inconsistent with the rights granted under our State Constitution. Because the Legislature provided for legal remedies in this statute, it can be inferred that it intended to authorize a jury trial. Thus, it reversed the Appellate Division and remanded the matter back to the trial court for a jury trial.

There is extensive case law in New Jersey about when an adjoining property owner can be liable for an injury resulting from a fall on a public sidewalk. In Qian v. Toll Brothers, 2015 N.J. LEXIS 825 (Aug. 12, 2015), the New Jersey Supreme Court dealt with the issue of liability of whether a homeowner’s association could be liable to the plaintiff who fell not on a public sidewalk, but rather the private common sidewalk owned by the homeowner’s association. The trial court and Appellate Division both found that the Supreme Court’s Luchejko v. City of Hoboken case controlled and dismissed the case. The Supreme Court disagreed and reversed.

In Qian, the plaintiff and her husband lived in a home in the Villas, purchased by their son, whose name was on the deed. The Villas was an over 55 age restricted community, consisting of 102 detached single family homes on 32.5 acres of land. Homeowners at the Villas took title only to their dwelling units. All other areas, including the sidewalks and walkways, were common property owned by the Homeowners Association (“Association”) or the Recreation Association (responsible for the recreation facilities).

All homeowners were obligatory members of the Association. They were charged monthly assessments to pay for the maintenance of the common areas which included services for snow and ice removal. The Association formation documents and its by-laws stated that the Association had the obligation to maintain the common areas. Indeed, it had contracted with the co-defendant Landscape, Inc. for the removal of snow and ice from roadways, parking areas, driveways, and sidewalks.

On the date of the accident, freezing rain fell. The plaintiff alleged that, while on her way home, she slipped and fell on ice on a common area sidewalk within the Villas. She sued the Association, the management company, the developer, and the snow removal company. This appeal only concerned her claim against the Association and the management company.

After examining the facts, the Supreme Court found that its prior decision of Luchejko did not apply. In Luchejko, it found that a condominium association had no liability for an injury that occurred on the public sidewalk in front of its condominium building.

The Supreme Court distinguished Luchejko from the Qian case because its Luchejko decision did not address the condominium’s duty to maintain a private sidewalk or walkway that fell within the common elements of the condominium’s property. Liability of a landowner for a sidewalk injury would depend upon whether the sidewalk was classified as public or private. This classification would be determined based upon who owns it, not how it is used.

The Court found that nothing in the Qian record remotely suggested that this interior sidewalk was controlled or the responsibility of the township (which would make it a public sidewalk). The abutting roadway was private and had not been dedicated to the township. Moreover, the Association documents classified the sidewalks and interior roads within the Villas as common property, i.e., private property.

There is statutory limited immunity available to a homeowner’s association if it provides in its by-laws that the association is not liable for a civil action brought by a unit owner to respond in damages for a bodily injury to the unit owner occurring on the premises of the common areas in the community. By conferring this limited immunity, the Supreme Court found that implicit in this legislation was the belief that the condominium association could have tort liability for its common areas.

Thus, while the condominium association in Luchejko had no common law duty to take reasonable measures to clear the public sidewalk of snow and ice, common law premises liability law did impose such a duty on the Association in Qian to keep its private sidewalks reasonably safe. Thus, the Court found that the Appellate Division erred in affirming the grant of summary judgment in favor of the Association and its management company.

However, the Court did remand back to the trial court to decide the issue whether the plaintiff should be deemed a unit owner for purposes of the immunity provision in the Association’s by-laws. That issue was not reached before summary judgment was granted and the Court found that it must be further explored by the trial court.

An issue that often arises in claims involving a construction project is the scope of coverage for alleged defective work of the contractor or a subcontractor. In the reported decision of Cypress Point Condo Ass’n v. Adria Towers, LLC, 2015 N.J. Super. LEXIS 114 (App. Div. July 9, 2015), the Appellate Division ruled that the consequential damages of the subcontractor of the developer was potentially covered under the developer’s insurance policy.

In Cypress Point, the plaintiff condominium association brought suit against the developer, its insurance companies, and various subcontractors. It claimed that there should be insurance coverage under the developer’s policies for the damages caused by the subcontractor’s defective work.

The question on appeal is whether consequential damages to the common areas of the condominium complex and to the unit owners’ property, caused by the subcontractors’ defective work, constitute “property damage” and an “occurrence” under the policy. The plaintiff alleged that the subcontractors failed to properly install the roof, flashing, gutters and leaders, brick and EIFS facade, windows, doors, and sealant. This faulty workmanship amounted to what has typically been considered in the construction industry as defective work, not covered by policies. However, the paintiff has not argued that the replacement costs constitute “property damage” and an “occurrence” under the policy.

But, the faulty workmanship also caused consequential damages to the “common areas and unit owners’ property [including] damage to steel supports, exterior sheathing and interior sheathing and sheetrock, insulation and other interior areas of the building, both visible and latent[.]” Some unit owners experienced “water infiltration at the interior window jambs and sills[,]” and “roof leaks.” Other unit owners “experienced significant damage to the interior of their units, including exterior wall sheathing, wall cavity insulation, insulation sheetrock, wall finishes, wood flooring, and trim.”

The court pointed out that there was clearly property damage in that the damages constituted physical injury to tangible property. The interior strucutes were alleged to have been damaged by water infiltration from the fualty workmanship. Further, here was an occurrence because the insruers do not reasonably contend that the subcontractors expected or intended for their faulty work to

As to whether there exists “property damage,” the consequential damages clearly constitute “physical injury to tangible property.” The faulty workmanship damaged “the common areas and unit owners’ property[.]” The interior structures, including the drywall, insulation, wall finishes, and wood flooring, were damaged by water infiltration from the faulty workmanship. As a result, the consequential damages constitute “property damage” as defined under the policy.

As to whether there exists an “occurrence,” the consequential damages amount to an unexpected and unintended “continuous or repeated exposure to substantially the same general harmful conditions.” The insurers do not contend, and we cannot reasonably believe, that the subcontractors [*10]  either expected or intended for their faulty workmanship to cause “physical injury to tangible property.” Thus, the consequential damages constitute an “occurrence” as defined in the policy.

The court found a difference for coverage purposes for the defective work of a subcontractor versus a contractor.