American Family Mutual Insurance Co. v. Lehenbauer Farms, Inc., No. 19-2050 (8th Cir. 2020)
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The Eighth Circuit affirmed the district court's grant of summary judgment in favor of American Family in a declaratory judgment regarding American Family's duty to defend and indemnify Mid-American. American Family had issued a commercial general liability insurance policy (CGL) to Mid-America.
The court held that American Family has no duty to defend or indemnify Mid-American, because Mid-American's alleged defective construction work in the underlying suit is not considered an "occurrence" in the policy. Rather, Lehenbauer's damages are all the normal, expected consequence of MidAmerican's allegedly shoddy work and were the foreseeable or expected result of that work as a matter of law. Therefore, the court held that Mid-American's work causing the damages at issue is not "an accident" within the meaning of the CGL under Missouri law. Because there was no "accident" in this case, there is no "occurrence" and no possibility of coverage.
Court Description: [Gruender, Author, with Wollman and Shepherd, Circuit Judges] Civil case - Insurance. American Family's insured, Mid-American, constructed a grain distribution facility for Lehenbauer and sued Lehenbauer after the contract was terminated; Lehenbauer counterclaimed for breach of contract, breach of implied duties of workmanlike performance and fitness for purpose, as well as negligence. American Family brought this declaratory judgment to determine if it had duty to defend and indemnify Mid-American on the counterclaims. Held: Mid-American's alleged defective construction work is not an occurrence for purposes of the policy; the damages sought in the counterclaim are the normal, expected consequences of the allegedly shoddy work, and were foreseeable as a matter of law; Mid-American's work is not not an accident and thus not an occurrence under the policy.
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