In Forster v. State Farm Fire & Cas. Co., 2010 WL 4751714 (Ga.App., 2010), the insured entered into a contract to sell a home to the buyers. The contract also provided that the insured would perform certain renovations to the home. The buyers contended that when the closing took place, a number of renovations had not yet been completed or had been completed improperly. Subsequently, the buyers filed suit against the insured, asserting claims for breach of contract and breach of warranty. The buyers also asserted a claim for negligent construction. The insurer sought a declaratory judgment to determine whether the insured’s policies provided coverage for the buyers’ claims. The trial court granted summary judgment to the insurer.
On appeal, the Georgia Court of Appeals affirmed in part and denied in part the trial court’s ruling. The Court found that no coverage existed for damage to the renovation project itself as described in the contract and that the insurer had no duty to defend the buyers’ claims. However, the Court held that “negligently performed faulty workmanship that damages other property may constitute an ‘occurrence’ under the policy.” Accordingly, the insurer would have a duty to provide coverage to the extent that any defects in the work incidentally damaged other property not included in the renovation project. Because it was unclear which of the claimed damages related strictly to the work contemplated by the parties’ agreement and which might relate to other property, the Court affirmed summary judgment as to any defects that constituted a breach of contract or breach of warranty but reversed summary judgment as to any claims for damages to other property.
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