Insurer Must Defend Despite Your Work/Your Product Exclusion

The United States Court of Appeals for the Fifth Circuit recently confirmed that liability insurers have a duty to defend their insureds in construction defect cases when the underlying complaint alleges damage to property beyond the product and work of the insured, even if the complaint merely implies that the insured seeks such damage, without explicitly alleging so. Siplast, Incorporated v. Employers Mutual Casualty Company, No. 20-11076, 2022 WL 99303 (5th Cir. Jan. 11, 2022).

The Archdiocese of New York replaced the roof over Cardinal Spellman High School in the Bronx, using a roofing membrane manufactured by Siplast, Inc. (‘Siplast’).

After a rainstorm a few years later, school officials reported water damage to the ceiling tiles throughout the school, and repair attempts only made the leaking worse.

Siplast disputed that the leaks were its fault and refused to replace the roof, so the Archdiocese sued.

Siplast tendered its defense to Employers Mutual Casualty Company (‘EMCC’), which denied the claim pursuant to its policies’ ‘Your Product/Your Work Exclusion.’ Siplast then sued EMCC, seeking a declaratory judgment that it was entitled to a defense.