Nebraska Courts Continue to Reject Faulty Workmanship as an “Occurrence”

In Cizek Homes, Inc. v. Columbia National Insurance Co., 22 Neb. App. 361 (Sept. 9, 2014), the Nebraska Court of Appeals reaffirmed that faulty workmanship does not constitute an “occurrence,” reversing the trial court’s finding to the contrary.

As background, Cizek had purchased a lot, sold the lot to the Riekeses, and constructed a home on the lot.  However, the soil beneath the home began settling and caused damage to the home.  The Riekeses sued Cizek alleging that it negligently designed and constructed the home and/or failed to construct the home in accordance with the terms of the building contract, the applicable building codes, manufacturer recommendations, and construction industry standards.  Cizek tendered the Riekeses’ complaint to Columbia National, which denied coverage.

On appeal, the Court of Appeals applied Auto Owners Insurance Co. v. Home Pride Cos., 268 Neb. 528, 684 N.W.2d 571 (2004), and found unequivocally that faulty workmanship like the kind alleged in the Riekeses’ complaint does not set forth a covered “occurrence.”  The court elected not to discuss the application of any exclusions.

This decision is a clear victory for insurers, as Nebraska remains squarely in the camp of courts that refuse to find an “occurrence” resulting from mere faulty workmanship (and alleged damage to the insured’s own work).

 

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