A Commercial General Liability (CGL) policy did not provide coverage when a brick face was damaged by improper cleaning after the insured completed its installation according to a recent opinion of the South Carolina Supreme Court. Finding exclusions j.(5) and n applied to remove coverage, the S.C. Supreme Court reversed the decision of the circuit court.
In Bennett & Bennett Construction, Inc. v. Auto Owners Insurance Co.,a homeowner engaged Bennett, a general contractor, to remove the stucco from her home and replace it with decorative brick. Bennett hired M&M, a subcontractor,to install the brick. The brick featured a sandy finish; Bennett and the brick’s instructions warned M&M not to use pressure washing or acid to clean it. M&M completed installation of the brick, informed Bennett the work was complete, and sent a final invoice. Bennett inspected the work and discovered the brick needed to be cleaned. M&M hired a subcontractor to clean the brick. The subcontractor used a pressure washer and acid solution, which discolored the bricks and removed the decorative finish. Attempts to repair the brick were unsuccessful, and Bennett instructed M&M to replace the brick. M&M then ceased communication with Bennett, which replaced the brick at its own expense.
Bennett filed suit against M&M and gave notice of the suit to both M&M and Auto Owners, M&M’s liability insurer. Neither M&M nor Auto Owners defended the suit or appeared at the damages hearing, and default judgment was entered against M&M. Bennett brought an action against Auto Owners and M&M seeking a declaration that M&M’s liability policy provided coverage for the damages caused by M&M’s subcontractor. Following a bench trial, the circuit court found the incident was an occurrence under the policy and that neither exclusion j.(5) nor exclusion n excluded coverage.
On appeal, Auto Owners argued (1) exclusion j.(5) applied even though M&M’s work was complete, and (2) exclusion n barred coverage because M&M’s work was replaced due to deficiency or inadequacy.
Exclusion j.(5): In the policy at issue, exclusion j.(5) excluded from the policy’s coverage “property damage” to: