Steel Supply & Engineering Co. (Steel Supply) sought a declaratory judgment that Illinois National Insurance Co. (Illinois National), its insurer, breached its duty to defend and indemnify. For the parties’ cross-motions for summary judgment, the critical issue was whether the alleged faulty workmanship resulted in damage to third-party property. As background, Steel Supply contracted with the City of Carmel, Indiana to erect steel structures in connection with the construction of a performing arts center. The city discovered defects in Steel Supply’s work and was forced to incur extra costs to resolve the problem. The city sued Steel Supply. Illinois National ultimately refused to defend Steel Supply.
The district court held that for faulty workmanship to be an occurrence, it must damage “the property of others.” The court found the damage alleged in the underlying complaint related solely to correcting Steel Supply’s own alleged defective workmanship. The district court thus entered summary judgment in favor of Illinois National, as the underlying complaint failed to allege “property damage” caused by an “occurrence.”