Joseph J. Henderson & Sons, Inc. (Henderson), was hired to install panels on a roof designed to expand the Iowa City’s wastewater treatment facility. Henderson was also a named insured on the builder’s risk insurance policy issued by Travelers Property and Casualty Company of America. The panels were damaged during a windstorm event and Henderson filed a claim with Travelers. Travelers responded by denying the claim, stating they were not liable due to Henderson’s faulty workmanship. The case went to trial where Henderson won $581,235.65 in damages, and Travelers appealed.1
The Circuit Court of Appeals focused on two specific exclusions, the “external event” exclusion and the “faulty workmanship” exclusion. There was also an anti-concurrent cause provision in the policy which excluded loss or damage stemming from these events “regardless of any other cause or event that contributes concurrently or in any sequence to the loss or damage.”
The faulty workmanship exclusion states that Travelers “will not pay for loss or damage caused by or resulting from…[o]mission in, or faulty, inadequate or defective…(2)[materials, workmanship or maintenance.” This exclusion did not contain an anti-concurrent cause provision but did have language that said the faulty workmanship exclusion does not apply “if loss or damage by a Covered Cause of Loss results.”
Both sides had their engineering experts that said the damage was caused by the wind, faulty workmanship, or a combination of the two. In upholding the jury’s verdict in favor of Henderson, the court disagreed with Travelers that the anti-concurrent provision barred recovery, stating the faulty workmanship exclusion did not include an anti-concurrent-cause provision. They interpreted the faulty workmanship exclusion to mean “Travelers will not pay for damage caused by faulty workmanship except when the damage is caused in part by a covered peril, such as windstorm.” The court then noted:
If Travelers intended that the faulty workmanship exclusion applied regardless of any concurrent causes, it could have adopted express language similar to the external event exclusion.
Regarding Travelers second argument that the faulty workmanship was the sole proximate cause of the damages, the court quoted the Iowa Supreme Court:
If a proximate cause of an injury is within the included coverage of an insurance policy, the included coverage is not voided merely because an additional proximate cause of the injury is a cause which is excluded under the policy. Thus, in order for an injury to be excluded from coverage under an insurance policy, the injury must have been caused solely by a proximate cause which is excluded under the policy. The insurance carrier has the burden of proof as to whether the injury was caused solely by a proximate cause which is excluded under the policy.2
In rejecting Travelers argument that the faulty workmanship was the cause of the magnitude of the resulting damage, the appellate court noted that the jury found the windstorm was an independent cause of the harm even if it could not have caused the full extent of the harm on its own.
I leave you with a quote from W. Edwards Deming, who said: “Quality is pride of workmanship.”
1 Joseph J. Henderson & Sons, Inc. v. Travelers Prop. & Cas. Ins. Co., No. 18-3341 (8th Cir. April 20, 2020).
2 Kalell v. Mut. Fire & Auto. Ins. Co., 471 N.W.2d 865, 868 (Iowa 1991) (internal quotation omitted).