Insurance Coverage: Court finds that insurance company has a duty to indemnify after plaintiff sufficiently alleges physical injury to tangible property

The defendant, Travelers Property Casualty Company of America, moves to strike counts nine and ten of the insured-plaintiff’s complaint, arguing that it did not breach its contract with the plaintiff and does not owe the plaintiff a duty to defend or indemnify. The case arises out of an incident at a construction site allegedly caused by the plaintiff’s contractors. In 2020, Dimeo Construction, a contractor working for the University of Connecticut, entered into a subcontract with the plaintiff to provide labor, equipment, material and services for the project. The plaintiff then entered into a contract with an engineering firm and another with the defendant, National Shoring, LLC. National Shoring was required to install steel H-piles into the ground with timber lagging between them.

On November 19, 2020, one of the H-piles failed and laterally displaced into the excavation. A firm was retained to determine the cause of the failure and ultimately concluded that the H-pile failure and subsequent damages were a result of National Shoring’s insufficient construction and a deficient design on behalf of the engineering firm. Dimeo Construction sent a letter to the plaintiff stating that it intended to hold the plaintiff responsible for all damages incurred because of the H-pile failure. The defendant’s policy applies to “property damage” that is caused by an “occurrence.” “Property damage” includes “[p]hysical injury to tangible property, including all resulting loss of use of that property.” The plaintiff alleges that the policy covers Dimeo’s claim against it because the H-pile failure is an “occurrence” that resulted in “property damage” to the utilities. To this date, the defendant has not paid for the plaintiff’s losses arising from the H-pile failure. Under its duty to indemnify, the defendant argues that the plaintiff fails to allege property damage but rather seeks coverage for money it is allegedly owed.

The defendant further argues that these purely economic damages do not constitute property damage covered by the policy. The plaintiff argues that it is seeking indemnification for Dimeo Construction’s claim, which is one for damages because of property damage. The court states that because the H-pile failure allegedly caused the sloughing of soil into the excavation and damaged the utilities, it follows that damages due to the H-pile failure include damages from physical injury to the excavation and the utilities, both of which constitute tangible property. Therefore, the plaintiff sufficiently alleges that it seeks coverage for losses that at least partially resulted from the physical injury to tangible property and thus are at least partially covered under the policy. The court states that the defendant’s reliance on several cases is misplaced as the cited cases discuss issues of pure economic loss where as in this case, the plaintiff alleges that the H-pile failure caused physical injury to tangible property. Therefore, the court denies the defendant’s motion to strike, finding a duty to indemnify the plaintiff for the damages to tangible property. C.J. Fucci, Inc. v. National Shoring, LLC, No. UWY-CV-22-6069806-S, 2023 WL 4882416 (Conn. Super. Ct. July 21, 2023).