In Wallace v. Nautilus Insurance Co., the Plaintiffs sought compensation for property damage caused by a leaking roof improperly installed by Defendant’s insured. The Defendant insurance company sought a declaratory judgment that it was not required to indemnify the insured for the costs to replace the faulty roof or the plaintiffs’ attorneys’ feed under a commercial general liability policy.
The Defendant argued the negligent construction was not an “occurrence” as defined in the policy. The court held that the water damage from the faulty roof was an occurrence, stating that “this case deals with ‘negligent construction that resulted in an occurrence, rather than an occurrence of alleged negligent construction.’” Although the court determined there was an occurrence, it held that there was no coverage for the replacement of the roof under the CGL policy because there was no property damage caused by the leaking to the roofs themselves.
The court also determined that “there is an ambiguity as to whether attorneys’ fees are compensable as ‘costs taxed against the insured’ under the Supplementary Payments provision.” Accordingly, the court concluded that the plaintiffs’ attorneys’ fees are covered by the CGL policy.