Call us: 305.350.5300

Monthly Archives: April 2018

24APR 2018

Commercial General Liability (CGL) policies typically include a “your work” exclusion, excluding coverage for “’property damage’ to ‘your work’ arising out of it or any part of it and included in the ‘products-completed operations hazard.’”  These CGL policies define “your work,” in pertinent part, as “work or operations performed by you or on your behalf.” (emphasis added).  As the recent case of Mid-Continent Cas. Co. v. JWN Construction, Inc., 2018 U.S. Dist. LEXIS 20529 (S.D. Fla. 2018) reminds us, the “your work” exclusion can serve to eliminate coverage for a general contractor, even when property damage is caused by a subcontractor.

In JWN Construction, Inc., a residential homeowner discovered water intrusion and related property damage and sued the general contractor, JWN, for damages.  In the ensuing declaratory judgment action filed by JWN’s CGL carrier, the carrier argued it owed no duty to defend or indemnify JWN in the underlying lawsuit under the “your work” exclusion, notwithstanding the fact that the home was actually constructed by a subcontractor of JWN.  The Court in JWN Construction, Inc. agreed with the carrier, granting summary judgment in the carrier’s favor and specifically holding that the “your work” exclusion applied to bar coverage for work performed by JWN’s subcontractor.  In so doing, the Court explained as follows:

If work was performed by JWN or on JWN’s behalf – here by a subcontractor – then the “your work” exclusion applies.  Historically, insurers could be liable under commercial general liability policies resembling the policy in question for certain types of damages caused by subcontractors, if the contract lacked specificity on this topic. Nonetheless, insurers do possess the right to define their coverage as excluding damages arising out of a subcontractor’s defective work by eliminating subcontractor’s exceptions from the policy.An insurer is only liable for a subcontractor’s defective work when the “your work” exclusion does not eliminate coverage for work performed by a subcontractor.  Here, the “your work” exclusion also excludes work performed by a subcontractor.  In conclusion, the insurance policy in this case excluded coverage for work performed not only by JWN, but also by JWN’s subcontractors. . .

Id. at *11-12 (citations omitted; available upon request).

As the Court in JWN Construction, Inc. suggests, the general contractor’s lack of coverage could have been avoided had the CGL policy’s “your work” exclusion included what is known as a “subcontractor exception.”  Under this exception, the “your work” exclusion “does not apply if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor.”  Without this exception in their CGL policies, general contractors may face the horrifying prospect of being sued for substantial damages related to latent defects caused by their subcontractors without any collectible CGL coverage.

To avoid this scenario, general contractors should consult with their insurance brokers and carefully review their CGL policy to ensure the “your work” exclusion includes a subcontractor exception.  This should include a careful review of all endorsements as certain policy endorsements may eliminate the subcontractor exception by expressly excluding coverage for work performed by a subcontractor.   If the “your work” exclusion in the policy does not include a subcontractor exception, general contractors should strongly consider purchasing the additional coverage afforded by the exception so as to avoid the coverage dilemma faced by the general contractor in JWN Construction, Inc.

If you have any questions, please do not hesitate to contact Ryan Charlson, Esq., at 954-343-3919 or

02APR 2018

The situation is one all too familiar to construction defect litigants. A homeowner contracts with a roofing contractor to install a new roof with a life expectancy of ten years.[1] After only five years, the homeowner brings a claim for construction defects in the roof alleging that the roof requires complete replacement due to water intrusion. The homeowner seeks damages for the full replacement cost of the roof. However, under a “useful life” theory, the homeowner would not be entitled to damages for the full amount of the replacement cost. Instead, the homeowner would be entitled to one-half of the cost of the replacement roof, taking into account the fact that he or she had been deprived of only five, rather than ten, years of use. “Useful life” is best understood as the expected length of time that a newly built construction element can be reasonably anticipated to last, subject to routine maintenance and ordinary wear and tear. The “useful life” theory holds that granting the homeowner damages for the full replacement cost of the roof would result in unjust enrichment to the homeowner, who had contracted for a roof with a ten-year, rather than a fifteen-year, useful life.

Indeed, Florida’s Fourth District Court of Appeal decided this very issue in Mall v. Pawelski.[2] The buyer in Mall purchased a seventeen-year-old house with a seventeen-year-old roof from the seller.[3] Shortly after the buyer moved into the house, the roof began leaking.[4] The buyer waited two years and then replaced the entire roof.[5] The buyer sued the seller to recover the replacement cost of the new roof.[6] The court reversed the trial court’s award of damages on the basis that it unjustly enriched the buyer. The court determined that since the old roof was near the end of its life expectancy, and since the new roof had a “guarantee,” e.g., life expectancy, of twenty to twenty-five years, the new roof gave the buyer a roof for which he did not bargain.[7] The court reasoned that the proper measure of damages was the replacement cost of the roof “prorated to account for the increased life expectancy of the new roof.”[8]

Under the “useful life” theory, the measure of damages is premised on the belief that a party should not be compensated in excess of its loss. Per this theory, when calculating the award for damages in a construction defect case, the cost of repair or replacement of a defective item must take into account the fact that a party had the benefit of the use of that property for a percentage of its useful life expectancy. Therefore, when measuring damages, the cost to repair or replace the defective item should be subject to a pro rata reduction to account for the increased life expectancy a party would receive if it were awarded a full replacement.[9] The purpose of employing such a reduction is to ensure that a party is left in the same position he or she was in prior to the alleged defect. Not accounting for the increased lifespan of the replaced property would arguably result in a windfall, and a disproportionate award of damages, to a party.

It is important to take into account the useful life expectancy when litigating construction defect claims because many construction components have an expected useful life. The ability to successfully reduce a party’s damages under a “useful life” theory hinges on expert witness testimony on the component’s life expectancy, and demonstrating the party’s beneficial use of the component.

If you have questions regarding whether the alleged damages associated with a claim are subject to a “useful life” reduction, please do not hesitate to contact Ryan Charlson, Esq., at 954-343-3919 or



[1] In this context, a life expectancy of ten years means that the roof should remain in good condition for roughly ten years, subject to ordinary wear and tear.

[2] 626 So. 2d 291 (Fla. 4th DCA 1993).

[3] Id. at 292.

[4] Id.

[5] Id.

[6] Id.

[7] Id.

[8] Id.

[9] As the Fourth District held in Mall, “we believe the proper measure of damages is the replacement cost of the roof, prorated to account for the increased life expectancy of the new roof.” Id. at 292.