Landslide Is Not Construction Defect

Landslide Is Not Construction DefectThis is a commercial property insurance lawsuit and court case, “Landslide Is Not Construction Defect“.

Jim Roberts and Elisa Le (Roberts and Le) noticed cracks in the foundation of a home being built from them on a plot of land on a steep slope in Anaheim, California. The cracks worsened and then a landslide occurred severely damaging the home to the point it was condemned.

Roberts and Le, due to requirements by their mortgage company, asked that their insurance brokers, Linda A. Lee and Ling Jing Feng of Jubilee Insurance Services (Jubilee) purchase course of construction insurance for them. Jubilee procured the coverage in the form of a builders risk policy, from Assurance Company of America (Assurance).

Assurance issued two consecutive annual builders risk policies beginning in September 2002 and then an unsold dwelling policy. All policies provided only first party coverage.

Roberts and Le filed a claim with Assurance claiming that the house next door was the cause of their loss. Assurance denied the claim. Roberts and Le then sued the owners of the neighboring property and their contractors. Those parties filed cross-complaints against Roberts and Le so they sought defense and indemnification of the cross-claims under the Assurance policy which was denied because their policy did not provide third-party liability coverage. Roberts and Le then sued Jubilee and Assurance, claiming that they had requested but had not received general liability insurance.

The lower court found in favor of Jubilee and Assurance and Roberts and Le appealed.

Jubilee argued that Roberts and Le had requested course of construction insurance, which provides only first-party coverage. Roberts and Le argued that because of some explanatory information that Jubilee had supplied that they had expected third-party coverage to exist. However, further testimony revealed that such coverage had never been requested so the appellate court affirmed the lower court’s decision for Jubilee.

The court then addressed the claims against Assurance. On appeal, Roberts argued that Assurance incorrectly decided that the cause of the loss was earth movement rather than the developer’s concealment of an ancient landslide. According to the court, due to a geological study, Assurance had met its burden of proof that the claim was barred under the earth movement exclusion.

The lower court’s decision in favor of Jubilee and Assurance was affirmed.

Roberts vs. Assurance Company of America-No. G038749-Court of Appeal, Fourth District, Division 3, California-May 30, 2008-78 California Reporter 3d 361

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